2009 Annual Report & Accounts
Corporate Profile
Creating a world-leading ConsultanCy, our way.
Michael Page International didn’t become a world-leading specialist recruitment consultancy
overnight. We’ve grown, step-by-step, entirely organically, rather than by mergers or acquisitions,
so that today we have over 3,500 people operating in 136 offices in 28 countries worldwide.
We specialise across a broad range of sectors, with dedicated divisions serving our clients and
candidates within each sector. In fact, specialisation has been key to our success, with each division
acting autonomously, focusing solely on its particular sector. Over the last 30 years Michael Page
has developed a clear brand strategy for the middle to senior management professional market.
Today, we are a high profile FTSE 250 brand, globally recognised and respected, attracting the
best consultants, candidates and clients the world over.
stiCking to a strategy that works.
We make long-term investment decisions to expand organically, growing existing and new teams,
offices, disciplines and countries with a consistent team culture. Our management is almost entirely
home-grown; people steeped in our culture and ready to spread their influence and expertise around
the Michael Page world. As we continue to expand in the UK and abroad, we will always draw on
the skills and experiences of proven Michael Page management and ensure we have the best, most
experienced people in each key position.
Values that mean so muCh.
Putting values that work at the heart of our business is key to everything we do. These values help us
all maximise our potential to achieve individual, team and company success. We have identified five
values that we believe are at the heart of our success. These are not hollow words, but the essence
of our brand, rooted in each and every employee of Michael Page:
Take Pride
To take pride in what we do, of who we are and what we stand for. We are proud of our brand, our
colleagues and our achievements.
Be Passionate
It’s our passion to provide the very best service for our clients and candidates that drives us to
triumph over our competition.
Never give up
We welcome a challenge; we show strength of character and resilience in our approach, we see
difficulty as an opportunity to demonstrate ability.
Work as a Team
Working as a team makes us stronger, more efficient and adding value to our business and brand.
Make it Fun
We recognise that fun is a key factor within our working environment; we’re very sociable and enjoy
celebrating our successes.
MIchAEl PAgE InTErnATIOnAl
Contents
2
4
6
2009 Performance
spreading our talent across our global network
strategy
6 Diversification
8 consistency
10 Business review
11 group strategy
12 review of 2009
14 regional review of 2009
17 Balance sheet
17 cashflow
18 Key performance indicators (“KPIs”)
18 going concern
19 Foreign exchange
19 Treasury management and currency risk
20 Principal risks and uncertainties
21 Summary and outlook
22 Board of directors
24 directors’ report
32 Corporate governance
40 remuneration report
50 auditors’ report
52 Financial statements
53 consolidated Income Statement
53 consolidated Statement of comprehensive Income
54 consolidated and Parent company Balance Sheets
55 consolidated Statement of changes in Equity
56 Statement of changes in Equity – Parent company
57 consolidated and Parent company cash Flow Statements
58 notes to the Financial Statements
87 Five year summary
88 shareholder information and advisers
94
Cautionary statement and statement of directors’ responsibilities
96 our office locations
AnnUAl rEPOrT 2009
1
2009 Performance
revenue (£m)
gross Profit (£m)
716.7
2009
972.8
2008
831.6
2007
649.1
2006
523.8
2005
351.7
2009
552.7
2008
478.1
2007
348.8
2006
267.6
2005
Profit Before tax (£m)
Basic earnings Per share (pence)
21.1
2009
140.1
2008
147.4
97.0
66.1
2007
2006
2005
3.9
30.3
31.1
19.6
14.8
2009
2008
2007
2006
2005
dividend Per share (pence)
headcount at year end
8.0
8.0
8.0
6.0
5.0
2009
2008
2007
2006
2005
3,549
2009
4,943
2008
5,052
3,758
2007
2006
2,926
2005
•
Profit before tax was £21.1m
despite very challenging market
conditions
•
Group headcount at
31 December 2009 of 3,549,
down by 1,394 since start of
2009, largely through natural
attrition
•
Targeted geographic and
discipline diversification of
business continued
•
68% of gross profits generated
from outside the UK
•
50% of gross profit generated
from non Finance and
Accounting disciplines
•
29% of gross profit generated
from temporary placements
•
£114.8m† of cash generated
from operations (2008: £185.2m)
•
Strong balance sheet with net
cash of £137.2m†
(2008: £94.3m)
•
Total dividend maintained
at 8.0p
† Includes net cash received of £41m
in respect of VAT claim.
2
MIchAEl PAgE InTErnATIOnAl
Steve Ingham
Chief Executive Officer
2009 was an extreme test of the group’s strategy and I am
delighted that the business responded well to the challenge.
We maintained our market presence across our network of
offices, disciplines and countries, invested modestly in new
businesses and maintained our track record of being profitable
in every quarter.
We are encouraged by the 10% sequential growth in group
gross profits we recorded in the fourth quarter of 2009, with three
of our four regions recording quarter-on-quarter improvement.
We are now seeing a recovery in several markets and geographies
and whilst the strength of this recovery is uncertain, we believe
that, with a strong balance sheet position and spare capacity in
the business, we are well positioned to improve significantly our
performance in 2010.
AnnUAl rEPOrT 2009
3
Spreading Our Talent Across
Our Global Network
richard Vickers
leeds - london - new York - leeds
andy Bentote
london - Shanghai
alexis de Bretteville
Paris - Madrid - Frankfurt - Brussels - new York
Melbourne - new York - new Jersey - chicago
dale Pearson
olivier lemaitre
Paris - São Paulo - Dusseldorf - Frankfurt
david leithead
london - Tokyo
rémy de Cazalet
Madrid - lisbon - Istanbul
4
MIchAEl PAgE InTErnATIOnAl
We’ve always believed that the only way to grow is organically. Our global network has evolved steadily over the
years, with offices opening only when local market conditions were favourable and we were ready to make our move.
In much the same way, all our leading managers have grown within the company, progressing and earning promotions
at the right time, leading to long and fruitful careers within Michael Page. These talented people are sent around the
Michael Page world, tasked with spreading their influence and bringing the unique Michael Page culture and principles
to every office, in every country we serve. The map below shows just some of the moves our management team have
made to ensure we grow our business organically and consistently.
andy Bentote
london - Shanghai
thibault lefebvre
geneva - Moscow - Zurich
scott mewing
Sydney - london - Sydney - Singapore -
Sydney - Tokyo - Sydney
simon lewis
london - hong Kong - Tokyo - new York
richard king
london - Melbourne - Tokyo
tulika tripathi
geneva - Singapore
gary James
london - new York - Sydney
matt gribble
Melbourne - Sydney - Dubai
AnnUAl rEPOrT 2009
5
Strategy
Diversification
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 is our intention in the
future to maintain our presence in our chosen markets, but with
close control over our cost base. Since the last downturn, we have
accelerated our strategy of diversification, both by geography and
by business discipline.
6
MIchAEl PAgE InTErnATIOnAl
Fig.1
1
1
1
1
1
1
16 years
16 years
Cumulative profit before tax
Cumulative profit before tax
£25m
£25m
4
14
17
12 years
12 years
Cumulative profit before tax
Cumulative profit before tax
£391m
£391m
16
77
92
6 years
6 years
Cumulative profit before tax
Cumulative profit before tax
£511m
£511m
28
216
165
Our aim with these charts is to demonstrate the changing
this commitment to maintaining our market presence and
shape of the group since entering into the last downturn,
continuing our geographic and discipline roll-outs as part of
as well as showing the rapid growth we achieve through the
our long-term strategy to gain market share.
organic growth of new businesses.
Fig 2 below shows latin America as a typical example of our
Fig 1 above represents the profit performance throughout
organic growth strategy. We launched in Sao Paulo in Brazil
the group’s history. During each economic cycle, the group
organically has created a larger business platform from which
in 2000. Our discipline roll-out commenced, with a second
office opening, in rio de Janeiro, in 2003.
it grows a greater profit performance. By following this course
Using our organic growth model, management experience
of action, we typically gain market share during downturns
and meritocratic culture, we now have a significant platform
and position our businesses for leading rates of growth when
in latin America, consisting of 8 offices in 3 countries, Brazil,
economic conditions improve. The increased size of the
Argentina and Mexico, which together have generated over
business platform at the end of a difficult 2009, demonstrates
£81m of gross profit since the last downturn.
Fig.2
1
1
1
1
1
1
5
4 years
4 years
Cumulative Gross Profit
Cumulative Gross Profit
£5.1m
£5.1m
1
2
4
43
Countries
Offices
No. of Country Disciplines
Headcount
6 years
6 years
Cumulative Gross Profit
Cumulative Gross Profit
£81.3m
£81.3m
3
8
39
225
2000
Patrick Hollard
(now RMD) and
Olivier Lemaitre open
in Sao Paulo.
Paulo Pontes and
Robert Machado
first earners.
2001
Rollout of new
disciplines
Engineering,
Supply Chain, Sales
and Marketing.
2003
Robert Machado
opens
Rio de Janeiro.
2005
Gils Van Deft
transfers from
MP Holland.
2006
Christophe Rosset
launches
MP Mexico
in Mexico City.
Opened
Campinas.
2007
Launched
Page Personnel
in Brazil.
Opened Curitaba.
Paulo Pontes MD
of Brazil.
2008
Opened
Belo Horizonte.
Robert Machado
launches
MP Argentina.
2009
Gils Van Deft
promoted to
MD Page
Personnel
Brazil.
2010
Launch
Page
Personnel
in Mexico.
AnnUAl rEPOrT 2009
7
Strategy
Consistency
Overall our strategy remains unchanged. We are
Clear on Brand, with consistent recruitment, training
and development of fee earners, no acquisitions and
one remuneration strategy. Our senior operational
management are deep in experience, and, with
an average tenure of 11 years, have been through a
number of upturns and downturns in the business.
Our team-based culture also means we are Flexible with
headcount, with a manager having overall responsibility
for the performance of a small team. This business
model enables us to rapidly increase our headcount
to achieve growth, or rapidly reduce through natural
attrition when market conditions become difficult.
Clear on Brand
Executive
Search
Qualified Professional
Clerical Professional
Generalist Staffing
to increase the diversification
of michael Page international
by organically growing
existing and new teams,
offices, disciplines and
countries with a consistent
team and meritocratic culture
and consistent client and
candidate delivery.
s
Tea m
C
o
u
Offi
c
e
s
Culture
s
e
ciplin
n
tries
D i s
28 Countries 104 Offices 1,912 Fee Earners
11 Countries 61 Offices 603 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/MDs
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
34
115
165
Average Tenure in
Michael Page
22 years
16 years
13 years
9 years
5 executive Board directors
11 regional managing directors
34 managing directors
Ave c.11 years
115 directors
0
5
10
15
20
25
Average Tenure at Michael Page
•
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
• Hired and trained in one culture
and downturns
• >50% remuneration linked to Group profit
• MDs receive LTIP, Directors share options
Flexible with Headcount
•
c900 teams worldwide, typically a Manager
•
New consultant hired, costs rise ~20%,
and three consultants
consultant lost, costs fall ~20%
•
Manager has full P&L responsibility for team
•
Teams in bull market maximise potential from
•
Significant share of profit each quarter allocated
existing members before hiring after Director authority
to team as bonus
•
Individual bonuses allocated after performance
appraisal, based on contribution and value to team
•
Teams in bear market ensure they reward,
using bonus, to retain strongest /lose weakest
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
-300
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
EMEA
UK
Asia Pacific
Americas
AnnUAl rEPOrT 2009
9
Business Review
to the members of michael Page international plc
Under Section 417 of the Companies Act 2006, all companies,
except companies that file small company accounts, are required
to prepare a Business Review.
A Business Review is a fair review of the company’s business
within the reporting period. The Business Review of a quoted
company must include a balanced and comprehensive analysis
of the development and performance of the company, with a
description of the principal risks. The content within the Business
Review should be to the extent necessary for an understanding
of the development, performance or position of the company’s
business.
The Business Review discusses the following areas:
• Group Strategy ....................................................................p 11
• Review of 2009 ....................................................................p 12
• Regional Review of 2009 .....................................................p 14
• Balance Sheet .....................................................................p 17
• Cashflow ..............................................................................p 17
• Key performance indicators (“KPIs”) ...................................p 18
• Going concern .....................................................................p 18
• Foreign exchange ................................................................p 19
• Treasury management and currency risk ............................p 19
• Principal risks and uncertainties .........................................p 20
• Summary and outlook .........................................................p 21
10
MIchAEl PAgE InTErnATIOnAl
Steve Ingham
chief Executive
Stephen Puckett
group Finance Director
grouP strategy
The group’s strategy is to expand the business with
Our team-based structure and profit-share business model is
the objective of being the leading specialist recruitment
scalable. The small team size also means that we can rapidly
consultancy in our chosen markets. As recruitment activity
increase our headcount to achieve growth. Equally, when
is dependent upon economic cycles, our strategy to counter
market conditions tighten, these teams can rapidly reduce in
the impact of economic downturns is to diversify our
size largely through natural attrition. consequently, our cost
business by industry sectors, professional disciplines and by
base will reduce in a slowdown, but having invested years
geographic markets. By being more diverse, the dependency
in training and developing our highly capable management
on individual businesses or markets is reduced, making the
resources, our objective is to retain this expertise within the
overall group more resilient. This strategy is pursued entirely
group. By following this course of action, we typically gain
through the organic growth of existing and new teams,
market share during downturns and position our businesses for
offices, disciplines and countries with a consistent team and
leading rates of growth when economic conditions improve.
meritocratic culture.
Pursuing this approach does mean that in a downturn our
This growth is achieved by drawing upon the skills and
profitability declines as, in addition to the lower productivity
experiences of proven Michael Page management ensuring
levels that come with a slowdown, we carry spare capacity.
we have the best, most experienced, home grown talent in
Adopting this strategy of “toughing out” economic slowdowns
each key role. When we invest in a new business, we do so
also drives our funding strategy and balance sheet position.
only with a long-term objective and in the knowledge that
In slowdowns, the business continues to produce strong
at some point there will be periods when economic activity
cash flows, as working capital requirements reduce.
slows. While it is difficult to predict accurately when these
With uncertainty around the length and depth of economic
slowdowns will occur and how severe they will be, it has been
slowdowns, a strong balance sheet is essential to support
our practice in the past and is our intention in the future to
the businesses through these tougher periods and, when
maintain our presence in our chosen markets, but with close
conditions improve and the businesses start growing, to fund
control over our cost base.
the increased working capital requirements.
)
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group Quarterly
gross Profit trend:
Q1 2001 to Q4 2009
Q1 Q2 Q3 Q4
2001
Q1 Q2 Q3 Q4
2002
Q1 Q2 Q3 Q4
2003
Q1 Q2 Q3 Q4
2004
Q1 Q2 Q3 Q4
2005
Q1 Q2 Q3 Q4
2006
Q1 Q2 Q3 Q4
2007
Q1 Q2 Q3 Q4
2008
Q1 Q2 Q3 Q4
2009
AnnUAl rEPOrT 2009
11
reView oF 2009
2009 has been one of the most challenging years in the
group’s 33 year history, with every geographic region,
discipline and industry sector in which we operate
experiencing difficult trading conditions as a result of the
global financial crisis. The objective of our strategy to
achieve greater resilience through geographic and discipline
diversification has been successful, with the group remaining
profitable throughout the global recession.
revenue
reported revenue for the year was 26.3% lower at £716.7m
(2008: £972.8m), but benefited from the weakness of Sterling,
as using constant rates of exchange, revenue was 31.5%
lower. As in previous economic slowdowns, permanent
placement activity was affected more than temporary. revenue
from temporary placements decreased by 13% to £456.6m
(2008: £524.4m), representing 63.7% (2008: 53.9%) of group
41.4% lower at £249.4m (2008: £425.7m), with the gross
margin increasing slightly to 95.9% (2008: 94.9%) as a result
of lower numbers of advertised positions.
operating profit and conversion rates
As a result of the group’s organic long-term growth strategy,
tight control on costs and profit-based bonuses, we have a
business model that is operationally geared. The majority of
our cost base, around 75%, relates to our staff, with the other
main components being property and information technology
costs. With a strategy of organic growth, the group incurs
start-up costs and operating losses as investments are made
to grow existing and new businesses, open new offices
and launch new countries. Furthermore, in periods when
headcount increases significantly, 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.
revenue. revenue from permanent placements was £260.2m
generally, in years when economic conditions are benign,
(2008: £448.4m), a decrease of 42%.
revenue and gross profits grow, with operating profits growing
gross profit
gross profit for the year was 36.4% lower at £351.7m
(2008: £552.7m). The reported gross profit also benefited
from Sterling’s weakness, and using constant currencies,
gross profit reduced by 41.2%. The group’s gross margin
decreased to 49.1% (2008: 56.8%), primarily as a result
at a faster rate due to a combination of higher productivity,
stronger pricing and greater utilisation of infrastructure.
In order to grow, we need to increase our headcount and
ensure that we have infrastructure to house and support them.
When economic conditions weaken and recruitment activity
slows, these factors work in reverse and are compounded
by a shortening of earnings visibility.
of the shift in the mix of business between permanent
The majority of our permanent placement activity is undertaken
and temporary placements and partly due to pressure on
on a contingent basis, which means on those assignments
margins. gross profit from temporary placements reduced by
we only generate revenue when a candidate is successfully
19.5% to £102.3m (2008: £127.0m) and represented 29.1%
placed in a role. Our short-term visibility on these earnings
(2008: 23.0%) of group gross profit. The gross margin achieved
is provided by the number of assignments we are working
on temporary placements was 22.4% (2008: 24.2%), reflecting
on, the number of candidates we have at interview and the
the pricing pressure commonly experienced in an economic
stage they are at in the interview process. The average time
downturn. gross profits from permanent placements were
to complete a placement from taking on an assignment
gross profit
£351.7m £238.3m
% of gross profit by discipline
2009
2000
% of gross profit by Region
EMEA
UK
Asia Pacific
Americas
47%
31%
12%
10%
% of gross profit from four largest countries
UK
France
netherlands
Australia
Top 4
12
31%
18%
7%
7%
63%
36%
49%
13%
2%
49%
25%
6%
9%
89%
Finance and Accounting
Marketing, Sales and retail
legal, Technology, hr,
Secretarial and Other
2009
2000
50%
18%
17%
66%
21%
10%
Engineering, Property & Construction,
Procurement & Supply Chain
15%
3%
MIchAEl PAgE InTErnATIOnAl
to successfully placing a candidate tends to lengthen in a
This gearing effect reduced the group’s conversion rate
downturn, reducing productivity, and the risk of the candidate
for the year to 5.7% (2008: 25.4%). The movement in the
being rejected or the assignment being cancelled increases,
conversion rates of our regions reflects the different timings
thereby further reducing our earnings visibility. In a downturn,
and degrees of slowing, stabilisation and then sequential
activity levels can slow quickly and revenue can decline even
growth. conversion rates in all regions improved in the
faster due to the contingent nature of a large proportion of
second half, save the UK, where quarterly gross profits
our placements, jobs being cancelled, companies introducing
declined slightly during 2009 and, as a consequence, their
hiring freezes and candidates becoming more cautious about
conversion rate in the second half was 9.7% compared to
moving jobs. The main opportunity for lowering our own
10.6% in the first half. In the Asia Pacific region, the second
cost base is to reduce headcount, but these reductions
half conversion rate was over 26%.
tend to lag the declines in revenue due to the shortening
earnings visibility. The majority of the initial reductions in our
headcount occur through natural attrition, without incurring
significant costs. however, as greater cost reduction is
required, some redundancies may become necessary.
The costs associated with increasing and decreasing the
headcount capacity in the business are considered to be part
of normal trading expenses and are therefore not separately
disclosed as restructuring charges.
At the start of 2009, operating conditions were at their most
severe. Our quarterly gross profit fell significantly during the
reported administrative expenses in the year reduced by
19.6% to £331.5m (2008: £412.2m), largely as a result of
the reduction in headcount and lower profit-related bonus
payments. With a strategy of maintaining our market presence
and as the group leases all of its office requirements,
the opportunities to reduce property costs are restricted
to situations where we have more than one office in a city
and leases come to an end, or when break clauses can be
exercised. A number of these opportunities were realised
during the year hence, despite opening in a small number
of new locations, the overall number of offices has reduced
first two quarters, stabilised in the third and grew sequentially
from 163 to 136.
by around 10% in the fourth. having reduced our headcount
by around 500 people in the fourth quarter of 2008,
our headcount reduced by a further 1,241 people during
the first half of 2009. In reaction to the market stabilising,
our headcount reduced by around 150 people in the third
quarter and was level during the fourth quarter.
Operating profit for 2009 was £20.2m (2008: £140.5m).
The rapid decline in activity during the first half, with lower
gross profits, together with a significant, but lagging,
reduction in headcount, resulted in first half operating profits
of £5.6m (h1 2008: £84.9m). As gross profit stabilised
during the third quarter and started growing sequentially in
the fourth quarter, operating profits in the second half grew
to £14.6m (h2 2008: £55.6m).
headcount trend
Fee Earners
Non-Fee Earners
5000
4000
t
n
u
o
c
d
a
e
H
3000
2000
1000
0
Administrative expenses include £10.6m of share-based
payment charges (2008: £6.9m) in respect of the group’s
deferred annual bonus scheme, long-term incentive plans and
executive share option schemes. The increase in these share-
based payment charges is due to a combination of new awards
and higher employers’ social charges, as a consequence of
the increase in the share price from 214.8p at the end of
2008, to 378.9p at the end of 2009 and amendments to
assumptions on the likelihood of awards vesting.
ratio
Fee earners : non-Fee earners
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
59:41
58:42
57:43
58:42
60:40
64:36
71:29
74:26
76:24
74:26
71:29
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
H1
2009
H2
2009
AnnUAl rEPOrT 2009
13
regional reView oF 2009
Continental europe, middle east and africa (emea)
EMEA, the group’s largest region, contributing 47% of
the group’s gross profit, reported revenue 27.1% lower at
£311.1m (2008: £426.4m) and gross profit 36.7% lower at
£163.7m (2008: £258.8m). The reported results benefited
from Sterling’s weakness, as in constant currency, revenue
reduced by 35.4% and gross profit by 43.9%.
In continental Europe, which was generally slightly later into
delivered double digit sequential growth in the fourth quarter
and have traded profitably every month throughout 2009.
Despite the difficult conditions, we continue to invest, rolling-
out disciplines and starting Page Personnel in germany.
The other 12 countries in the EMEA region, representing 19%
of the region, combined to produce 12% sequential growth
in the fourth quarter. In certain of these countries, such as
Ireland and Dubai, economic conditions were particularly
challenging, but our teams reacted well by reducing costs
and in the Middle East, further developing revenue streams
the downturn, quarterly gross profit began to decline in the
in Abu Dhabi and Qatar.
third quarter of 2008 and continued to decline in the first two
quarters of 2009, until early signs of stabilisation became
united kingdom
apparent during the third quarter of 2009. While the third
quarter is seasonally somewhat slower, it is encouraging that
in the fourth quarter, gross profit increased sequentially by
20% in constant currency.
The UK contributed 32% of the group’s gross profits in 2009.
revenue was 24.9% lower at £274.6m (2008: £365.6m) and
gross profit was 37.3% lower at £110.8m (2008: £176.7m).
The larger reduction in gross profit is primarily due to a shift in
headcount in the region at the start of the year was 2,155 and
mix, as gross profit from permanent placements declined faster
reduced to 1,572 by the end of the year, with the majority of
than those from temporary placements. While the UK has
the reduction taking place in the first half of 2009. With the
stabilised to a large degree, quarterly gross profit continued to
benefit of a lower cost base and the sequential improvement
decline throughout 2009, albeit at a much reduced rate, with
in fourth quarter gross profits, the region generated an
a sequential decrease of only 2.8% in Q4 over Q3.
operating profit for the full year of £1.1m (2008: £66.3m).
headcount has been reduced from 1,640 at the start of
In France (38% of EMEA), where we have our second
the year to 1,179 at the end of December, with the majority
largest and most established business after the UK, we have
of the headcount reductions taking place in the first half of
weathered the downturn well and in the fourth quarter of
2009. With headcount reductions lagging the reduction in
2009 achieved strong sequential growth, with a noticeable
gross profits and productivity generally being lower because
increase in the number of permanent placements. While the
of tough market conditions, operating profits reduced to
general pattern of decline, stabilisation and sequential growth
£11.3m (2008: £46.6m), representing a conversion rate of
is apparent in the region, the extent of that pattern varies.
10.2% (2008: 26.4%).
In the netherlands (14% of EMEA) and germany (13% of
EMEA), while the rate of decline and signs of stabilisation
were similar to other countries in the region, significant
sequential growth was not achieved in the fourth quarter
of 2009. Italy (8% of EMEA) and Spain (8% of EMEA) both
The global financial crisis of 2008 first affected the banking
sector and then spread across the wider economy, affecting
all disciplines and locations. While conditions remain difficult
in all areas, towards the end of 2009 both our banking and
sales businesses started to show signs of improvement.
emea gross Profit 2009
14%
France
13%
8%
£163.7m
8%
19%
38%
Poland, Portugal, russia, Ireland, luxembourg
Belgium, South Africa, UAE, Sweden, Switzerland,
Italy
Spain
germany
holland
14
MIchAEl PAgE InTErnATIOnAl
asia Pacific
In the Asia Pacific region, revenue was 28.7% lower at
£79.4m (2008: £111.4m), gross profit was 36.8% lower
at £42.2m (2008: £66.8m) and operating profit reduced
to £8.1m (2008: £22.4m), representing a conversion rate
of 19.2% (2008: 33.5%). The reported results benefited
from Sterling’s weakness, as in constant rates of exchange,
revenue reduced by 36.5% and gross profit by 44.3%.
headcount in the region has reduced from 638 at the start,
to 403 at the end of the year.
In the region, market conditions weakened rapidly in
the fourth quarter of 2008 and the first quarter of 2009.
however, since the first quarter, which is seasonally quieter,
the region sequentially grew gross profits each quarter during
the remainder of 2009.
In Australia, which flattened in Q2 and returned to sequential
reduced from 510 at the start, to 395 at the end of the year,
with 37 additions during the fourth quarter. As a result of
the slowing in activity levels and our desire to maintain our
platform, the region recorded an operating loss of £0.2m
for the year (2008: profit £5.3m). Market conditions also
stabilised during 2009 and the region recorded sequential
growth in gross profit in quarters three and four which,
combined with a lower cost base, produced a second half
operating profit of £0.7m.
In north America, while we have diversified, we still have
a significant reliance on the financial services sector. While
this sector was clearly the most affected in the crisis, there
are now signs of conditions improving. In latin America,
we continue to make good progress in developing our
businesses in Mexico and Argentina. In Brazil, we have a
strong business and Page Personnel, launched in 2008 to
develop the clerical specialist market, continues to grow
growth in Q4, up 6% in local currency, we have launched
strongly.
Page Personnel to develop further our share of the clerical
specialist market. In Asia, where we have a greater
discipline development
dependence on the banking sector and our placements are
almost all permanent rather than temporary, it has been a
difficult year. however, as the financial markets stabilised,
confidence returned and activity levels improved. As a result,
revenues grew and with the benefit of lower costs, profits
in the region have started to recover, generating £6m of
operating profit in the second half of 2009, compared to
£2m in the first half.
the americas
revenue for the region was 25.5% lower at £51.6m
(2008: £69.3m) and gross profit was 30.7% lower at £35.0m
(2008: £50.5m). The reported results benefited from Sterling’s
weakness as, at constant rates of exchange, revenue reduced
by 33.8% and gross profit by 37.1%. headcount in the region
Placing people in Finance and Accounting roles, the large
majority of which are professionally qualified accountants
into industry and commerce, generated around half of
the group’s gross profits. revenue from Finance and
Accounting placements was 24.5% lower at £409.0m
(2008: £542.0m) and gross profit reduced by 35.6% to £175.7m
(2008: £273.0m). Using constant rates of exchange, revenue
decreased by 29.7% and gross profit reduced by 40.5%.
Placing Marketing, Sales and retail professionals generates
around 17% of the group’s gross profit. revenue from these
disciplines was 34.7% lower at £91.8m (2008: £140.6m) and
gross profit reduced by 40.9% to £61.4m (2008: £103.9m).
Using constant rates of exchange, revenue decreased by
38.3% and gross profit decreased by 44.8%.
16%
uk gross Profit 2009
Finance & Accounting
Marketing, Sales and retail
£110.8m
52%
11%
legal, hr, Technology, Secretarial and Other
Engineering, Property & Construction,
Procurement & Supply Chain
21%
AnnUAl rEPOrT 2009
15
legal, Technology, human resources, Secretarial and
share repurchases and share options
Other disciplines generate around 17% of group gross
profit. revenue from these disciplines was 25.6% lower
at £125.2m (2008: £168.2m) and gross profit reduced by
34.3% to £61.2m (2008: £93.2m). Using constant rates of
exchange, revenue decreased by 31.1% and gross profit
decreased by 39.6%.
While it is the group’s intention to continue to use share
repurchases to return surplus cash to shareholders, reflecting
the more cautious approach to the group’s funding position,
adopted since the beginning of the crisis, we did not purchase
and cancel any shares during the year (2008: 6.7m shares
cancelled). To satisfy awards under the group’s incentive
Engineering, Property & Construction and Procurement
share plan and deferred annual bonus plan, the employee
& Supply Chain account for around 15% of Group gross
benefit trust purchased approximately 1.0m shares at a cost
profit. revenue from these disciplines was 25.6% lower
of £1.9m (2008: £0.9m).
at £90.8m (2008: £122.0m) and gross profit reduced by
35.4% to £53.3m (2008: £82.6m). Using constant rates of
exchange, revenue decreased by 31.8% and gross profit
decreased by 41.0%.
net interest
The group has a net interest income for the year of £0.9m
(2008: expense £0.4m). As the financial crisis deepened
and the economic outlook deteriorated, we adopted an
At the beginning of 2009, the group had 12.2m share
options outstanding, of which 4.0m had vested. In March
2009, 7.2m share options were granted, this award was
larger than the usual annual grants of share options in order
to retain, motivate and reward staff below Board level.
During the course of the year, options were exercised over
1.4m shares, generating £2.7m in cash and 1.4m share
options lapsed. At the end of 2009, 16.6m share options
remained outstanding, of which 4.2m had vested but had
increasingly cautious approach to the group’s funding
not been exercised.
position. The net interest income reflects the strengthening
of the group’s financial position.
earnings per share and dividends
taxation
Tax on profits was £8.6m (2008: £42.7m), representing an
In 2009, basic earnings per share were 3.9p (2008: 30.3p)
and diluted earnings per share were 3.8p (2008: 29.9p).
The weighted average number of shares for the year was
effective tax rate of 41.0% (2008: 30.5%). The rate is higher
321.6m (2008: 321.5m).
than the effective UK corporation Tax rate for the year of
28%, due to disallowable items of expenditure and profits
being generated in countries where the corporate tax rates
are higher than in the UK. The effective rate was higher than
in 2008, due to an increase in the level of overseas losses
on which deferred tax is not recognised, which was partially
offset by prior year adjustments.
A final dividend of 5.12p (2008: 5.12p) per ordinary share is
proposed which, together with the interim dividend of 2.88p
(2008: 2.88p) per ordinary share, makes an unchanged
total dividend for the year of 8.0p per ordinary share.
The proposed final dividend, which amounts to £16.5m,
will be paid on 7 June 2010 to those shareholders on the
register as at 7 May 2010.
£42.2m
42%
58%
asia Pacific gross Profit 2009
Australia and new Zealand
Asia
16
MIchAEl PAgE InTErnATIOnAl
BalanCe sheet
Cash Flow
The group had net assets of £197.0m at 31 December 2009
At the start of the year, the group had net cash, being cash
(2008: £210.7m). The decrease in net assets comprises profit
and cash equivalents less bank overdrafts and loans, of
for the year of £12.4m, credits relating to share schemes of
£94.3m. During the year, the group generated net cash from
£10.9m and cash received from the exercise of share options
operating activities of £114.8m (includes net cash received
of £2.7m, offset by share repurchases of £1.9m, currency
in respect of the VAT claim) (2008: £185.2m), being £31.9m
movements of £12.0m and dividends paid of £25.9m.
(2008: £151.4m) of EBITDA, £8.5m (2008: £6.7m) of share
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 IT
recruitment system with the next generation continues to
progress and we anticipate that the first full implementations
will take place later this year, with the roll-out continuing
scheme non-cash charges and a reduction in working
capital requirements of £74.4m (2008: increase of £27.1m).
The movement in working capital includes a cash inflow of
£41.0m net in respect of monies received from hMrc in
respect of a claim for over-paid VAT and interest. Without
the VAT claim, underlying net cash received from operating
activities was £73.8m.
throughout 2011 in order to mitigate the implementation risks.
The principal payments were:
capital expenditure, net of disposal proceeds, reduced to
£11.3m (2008: £26.4m) reflecting the investment in new
systems and the absence of expenditure due to headcount
reducing in the year.
The most significant item in the balance sheet is trade
receivables, which were £100.2m at 31 December 2009
(2008: £168.4m). The reduction in trade receivables reflects
• £11.3m (2008: £26.4m) of capital expenditure, net of
disposal proceeds, on property, infrastructure, information
systems and motor vehicles;
• taxes on profits of £28.2m (2008: £53.4m);
• dividends of £25.9m (2008: £27.3m); and
• share repurchases of £1.9m (2008: £16.8m).
both the reduced activity and an improvement in debtor days
Other movements included £2.7m (2008: £2.2m) received in
to 45 (2008: 56 days).
the year from the issue of new shares to satisfy share option
exercises and an exchange loss of £8.2m (2008: exchange
gain £21.4m).
net cash and group borrowing facilities
At 31 December 2009, the group had net cash of £137.2m
(2008: £94.3m) including £41.0m relating to the VAT refund.
The net cash position comprised gross cash deposits of
£137.2m with 12 separate banks.
The group has a three year £50m multi-currency committed
borrowing facility that expires in July 2012.
38%
£35.0m
the americas gross Profit 2009
north America
latin America
62%
AnnUAl rEPOrT 2009
17
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
2009
2008
Definition, method of calculation and analysis
gross margin
49.1%
56.8% gross profit as a percentage of revenue. gross margin reduced from last
year as a result of the mix of permanent and temporary placements.
Source: consolidated income statement in the financial statements.
conversion
5.7%
25.4% 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
£124.0k
£136.2k 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:
71:29
74:26
represents the balance between operational and non-operational staff.
support staff
ratio
The ratio of fee earners to support staff at the end of 2009 has reduced from
the level at the end of 2008. This ratio improves when the 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. Source: Internal data.
Debtor days
45
56
represents the length of time taken for the group to receive payments from its
debtors. calculated by comparing how many days’ billings it takes to cover the
debtor balance. The decrease compared to last year relates to the shift towards
temporary recruitment activity from permanent in a downturn. Temporary
recruitment activity tends to have lower debtor days. Source: Internal data.
The movements in KPIs are in line with expectations set out in the discussions in the business review.
going ConCern
The Board have 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 level of borrowing facilities available, 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.
18
MIchAEl PAgE InTErnATIOnAl
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 this Business review. In addition, note 21 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 2009, the group generated a profit of £12.4m, with cash generated from operating activities of £86.6m.
As at 31 December 2009, the group balance sheet was in a net asset position of £197.0m with net cash of £137.2m.
For this reason, the going concern basis continues to be appropriate in preparing the financial statements and has been
prepared in accordance with going concern and liquidity risk: guidance for Directors of UK companies 2009, published by
the Financial reporting council.
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 2009,
when compared to those prevalent during 2008. In all cases, for profit and loss retranslation, Sterling has weakened against
these main trading currencies.
Currency
Euro
Swiss Franc
Brazilian real
US Dollar
Australian Dollar
hong Kong Dollar
Singapore 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 2008 and 2009
between 2008 and 2009
-11%
-16%
-6%
-16%
-9%
-17%
-13%
-25%
9%
9%
-16%
12%
-13%
12%
9%
15%
treasury management and CurrenCy risk
It is the Directors’ intention to continue to finance the activities and development of the group from retained earnings and to
operate the group’s business while maintaining a strong balance sheet position. In a generally benign economic environment,
this equates to maintaining the Group’s net cash/debt position within a relatively narrow band, with cash generated in excess
of these requirements being used to buy back the group’s shares. In an economic downturn a more cautious funding position
is adopted, with the group being managed in a net cash position.
AnnUAl rEPOrT 2009
19
cash surpluses are invested in short-term deposits, with
any stage in the process, the group receives no remuneration.
any working capital requirements being provided from
As a consequence, the group’s visibility of gross profits is
group cash resources, group facilities, or by local overdraft
generally quite short and reduces further during periods of
facilities. The group has a multi-currency notional cash pool
economic downturn as is currently being experienced.
between the Euro zone subsidiaries and the UK-based
group Treasury subsidiary. The structure facilitates interest
Competition
and balance compensation of cash and bank overdrafts.
The degree of competition varies in each of the group’s
It is the intention to extend the scope of the participation to
main regions. In the UK, Australia and north America, the
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.
PrinCiPal risks and unCertainties
The management of the business and the execution of
the group’s strategy are subject to a number of risks.
recruitment market is well developed, highly competitive
and fragmented. The characteristics of a developed market
are greater competition for clients and candidates, as well
as pricing pressure. In EMEA, latin America and Asia,
the recruitment market is generally less developed, with a large
proportion of all recruitment being carried out by companies’
internal resources, rather than through recruitment specialists.
This is changing due to changes in legislation, increasing job
mobility and the difficulty internal resources face in sourcing
suitably qualified candidates and managing compliance.
If the group does not continue to compete in its markets
effectively, by hiring new staff, opening and expanding
offices and continuing the discipline roll-outs, there is a risk
that competitors may beat us to key strategic opportunities,
which may result in lost business and a reduction in market
share. This risk is mitigated by meetings of the 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,
The following section comprises a summary of the main
principally people.
risks Michael Page International plc believes could potentially
impact the group’s operating and financial performance.
technology
People
The group is reliant on a number of technology systems to
provide services to clients and candidates. These systems are
The resignation of key individuals and the inability to recruit
dependent on a number of important suppliers that provide
talented people with the right skill-sets could adversely
the technology infrastructure and disaster recovery solutions.
affect the group’s results. This is further compounded by
The performance of these suppliers are continually monitored
the group’s organic growth strategy and its policy of not
to ensure business critical services are available and maintained
externally hiring senior operational positions. Mitigation of
as far as practically possible. Due to the rapid advancement
this risk is achieved by succession planning, training of staff,
of technology, there is a risk that systems could become
competitive pay structures and share plans linked to the
outdated with the potential to affect efficiency and have an
group’s results and career progression.
macro economic environment
impact on revenue and client service. This risk is mitigated by
regular reviews of the group’s technology strategy to ensure
that it supports the overall group strategy.
recruitment activity is largely driven by economic cycles
and the levels of business confidence. The Board look to
legal
reduce the group’s cyclical risk by expanding geographically,
The group operates in a large number of jurisdictions that
by increasing the number of disciplines, by building part
have varying legal and compliance regulations. The group
qualified and clerical businesses and by continuing to build
takes its responsibilities seriously and ensures that its policies,
the temporary business.
A substantial portion of the group’s gross profit arises from
fees that are contingent upon the successful placement of a
candidate in a position. If a client cancels the assignment at
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
20
MIchAEl PAgE InTErnATIOnAl
receive regular training and updates of changes in legal and
The vast majority of those people who left the business during
compliance requirements.
requirement to prepare a Business review
2009 were our least experienced people. In line with our long-
term strategy and despite the large headcount reductions,
we maintained our market presence across our network of
The Directors, in preparing this Business review, have
offices and countries. Furthermore, we invested by continuing
complied with s417 of the companies Act 2006. They
the roll-out of disciplines, opening offices in Bologna,
have also sought to comply with the guidance set out in
Abu Dhabi and Monaco and launching Page Personnel in
the Accounting Standards Board’s reporting Statement:
germany, Australia and, at the start of 2010, in the USA.
Operating and Financial review.
This Business review has been prepared for the group as a
whole and therefore gives greater emphasis to those matters
We believe these actions mean that we have increased our
market share and are well positioned for profitable growth
as markets recover.
which are significant to Michael Page International plc and its
This longer-term approach, however, meant that our
subsidiary undertakings when viewed as a whole.
profits reduced at a faster rate than the reduction in gross
update on Vat reclaims
In 2003 Michael Page submitted an initial claim to hMrc for
overpaid VAT which was rejected. Michael Page appealed
and subsequently filed amended claims for £26.5m, net of
fees, covering the period from 1980 to 2004. In March 2009,
Michael Page filed amended claims for a further refund of
an additional £80m, net of fees, of overpaid VAT covering
the same period.
In June 2009 Michael Page received a payment from hMrc of
£26.5m, net of fees, as part settlement of these claims and in
July 2009 received £10.9m, net of fees, of statutory interest.
profit, as we retained our more experienced and therefore
more expensive people, maintained our office network
and market presence, as well as continuing to invest.
The group experienced similar large reductions in profits
during the downturns of the early 1990s and in 2002/03.
Following these downturns, the group grew strongly as
markets recovered and produced record levels of profit.
It is our expectation that having maintained our business
platform during this economic downturn, we will be able to
deliver strong growth in profits again when markets recover.
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
On 25 September 2009, Michael Page received a letter from
through periods of economic slowdown and recession,
hMrc which stated that, ‘hMrc have reviewed the recent
while preparing them for strong growth when economic
payment and are now of the view that the claim in whole or
conditions improve. It has always been, and will continue to
in part should not have been paid’.
be, our intention to take decisions and make investments for
A number of discussions and meetings with hMrc have since
taken place and in respect of the initial claim, subject to legal
contract, an agreement has now been reached in principle for
Michael Page to retain £28.5 million (net of fees) of the £37.4
million it received. however, given the background to the initial
receipt and the subsequent review and reversal of its decision
by hMrc, the group has not recognised any amount in the
Income Statement due to the remaining uncertainty pending
formal contractual agreement.
In respect of the amended claims for a further refund of an
additional £80m, net of fees, of overpaid VAT there have been
no discussions or meetings with hMrc and Michael Page
will continue to pursue the claim.
summary and outlook
the longer-term benefit of our stakeholders.
We are encouraged by the 10% sequential growth in
group gross profits we recorded in the fourth quarter of
2009, with three of our four regions recording quarter on
quarter improvement. We are now seeing a recovery in
several markets and geographies and whilst the strength
of this recovery is uncertain, we believe that, with a strong
balance sheet and spare capacity in the business, we are well
positioned to improve significantly our performance in 2010.
We will next update the market on our first quarter trading in
an announcement on 9 April 2010.
having made significant investments since the previous
downturn, organically diversifying our business, geographically
Steve Ingham
Stephen Puckett
and by discipline, this diversification has undoubtedly
chief Executive
group Finance Director
benefited the group’s performance as every economy around
5 March 2010
the world suffered as a result of the global financial crisis.
AnnUAl rEPOrT 2009
21
Board of Directors
Charles-henri dumon (51)
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 (47)
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.
sir adrian montague CBe (62)
Chairman
Sir Adrian Montague is chairman of Anglian Water group
limited 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, chairman of cross london rail links limited from
2004 to 2005, chairman of British Energy from 2002 to
2009 and chairman of Friends Provident plc from 2005 to
2009. he spent his early career as a solicitor with linklaters
& Paines before joining Kleinwort Benson in1994. 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. he is
also a member of the housing Finance group of the housing
and communities Agency and chairman of the Advisory
Board of reform.
steve ingham (47)
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.
22
MIchAEl PAgE InTErnATIOnAl
MIchAEl PAgE InTErnATIOnAl
dr tim miller (52)
Independent Non-Executive Director
Tim Miller was appointed a Director of Standard chartered
Bank in December 2004. Tim is responsible for the corporate
Real Estate, Corporate Secretariat, Legal, Compliance &
Assurance, Internal Audit and global research functions. Tim
is also chairman of Standard chartered Korea and chairman
of the Bank’s Environment committee. Outside the Bank,
Tim is a Vice President, Organisation and resourcing, at the
chartered Institute of Personnel and Development (“cIPD”),
Chairman of the Governing Body, School of Oriental & African
Studies (“SOAS”), and a Member of the School Advisory
Board, and a Special Professor of Strategy, at nottingham
University Business School, where, in 2007, he completed
a Doctorate in Business Administration. Tim was appointed
to the Board of Michael Page International plc on 15 August
2005 and is chairman of the remuneration committee and
a member of the Audit and nomination committees.
stephen Puckett (48)
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 (69)
Independent Non-Executive Director
Senior Independent 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), gary James (regional Managing Director
- Asia Pacific) and Andrew Wayland (chief Information
Officer).
alexis de Bretteville (47)
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.
gary James (48)
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 (43)
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 2009
AnnUAl rEPOrT 2009
23
Directors’ Report
The Directors present their annual report on the affairs of the Group,
together with the Financial Statements and Auditors’ Report for
the year ended 31 December 2009.
PrinCiPal aCtiVity
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 53 to 86.
Business reView
The Company is required by the Companies Act to include a
business review in their report. The information that fulfils the
requirements of the business review can be found on pages 10
to 21 which are incorporated in this report by reference.
24
MIchAEl PAgE InTErnATIOnAl
CorPoraTe GoverNaNCe
In accordance with the company’s Articles of Association,
The company and the group are committed to high standards
of corporate governance, details of which are provided in
the corporate governance report on pages 32 to 39 and
Sir Adrian Montague and charles-henri Dumon will retire by
rotation at the Annual general Meeting and, being eligible,
offer themselves for re-election.
remuneration report on pages 40 to 49.
Biographical details for all the current Directors are shown
signiFiCant agreements
on pages 22 and 23.
The beneficial interests of Directors in office at 31 December
There are certain agreements to which the company is party
2009 in the shares of the company at 31 December 2009
that take effect, alter or terminate upon a change of control
and at 5 March 2010 are set out in the remuneration report
of the company following a takeover bid.
on pages 40 to 49.
Details of the significant agreements of this kind are as
follows:
•
a £50m revolving credit facility that terminates on a change
of control, with outstanding amounts becoming payable
with interest; and
All of the Executive Directors are deemed to have an interest
in the ordinary shares held in the Employee Benefit Trust.
The company has maintained throughout the year directors’
and officers’ liability insurance in respect of itself and its
directors. The directors also have the benefit of the indemnity
•
provisions of the Company’s share schemes and plans
provision contained in the company’s Articles of Association.
may cause options and awards granted to employees
These provisions, which are qualifying third party indemnity
under such schemes and plans to vest on a takeover.
provisions as defined by Section 234 of the companies Act
2006, were in force throughout the year and are currently
direCtors and interests
in force.
The following were Directors during the year and held office
throughout the year other than as shown below.
results and diVidends
• Sir Adrian Montague CBE‡ (chairman)
• Steve Ingham (Chief Executive)
• Stephen Box‡ (resigned 22 May 2009)
• Charles-Henri Dumon
• Ruby McGregor-Smith‡
• Dr Tim Miller‡
• Stephen Puckett
• Hubert Reid‡*
‡ non-Executive Directors
* Senior Independent Director
Stephen Box, the Senior Independent Director, retired on
22 May 2009 having served on the Board since flotation in
March 2001. The group would like to extend its appreciation
The profit for the year after taxation amounted to £12.4m
(2008: £97.3m).
A final dividend for 2008 of 5.12 pence per ordinary share
was paid on 8 June 2009. An interim dividend for 2009 of
2.88 pence per ordinary share was paid on 9 October 2009.
The Directors recommend the payment of a final dividend
for the year ended 31 December 2009 of 5.12 pence per
ordinary share on 7 June 2010 to shareholders on the register
on 7 May 2010 which, if approved at the Annual general
Meeting, will result in a total dividend for the year of 8.0 pence
per ordinary share (2008: 8.0 pence).
CrediTor days
and warmest thanks to Stephen for his contribution.
The company acts as a holding company for the group.
Following Stephen’s retirement, hubert reid has been
creditor days for the company were nil (2008: nil) as
appointed to the role of Senior Independent Director.
the company does not undertake any transactions with
suppliers. The group’s creditor days at the year end were 29
(2008: 38 days).
AnnUAl rEPOrT 2009
25
share CaPital
CorPorate resPonsiBility (Cr)
The authorised and issued share capital of the company are
At Michael Page International, corporate responsibility (cr)
shown in note 17 to the financial statements.
is not just an obligation, it’s a commitment to causes and
At the Annual general Meeting held on 22 May 2009, the
practices we believe firmly in.
company renewed its authority to make market purchases
Our approach to all cr activities is to engage closely with
of its own ordinary shares up to an increased maximum of
our stakeholders and to understand their needs and issues.
14.99% of the issued share capital. At the forthcoming AgM,
We work hard to deliver real value to all our stakeholders
it is proposed to reduce this maximum back down to 10%.
whether they are shareholders, clients, investors, staff or
During the year, the employee benefit trust purchased
approximately 1.0m shares, held to satisfy share scheme
awards. The total nominal value of shares repurchased was
members of the wider community. Ethical and responsible
practices and a commitment to minimise our impact on the
environment are key motivators behind our strategy.
£10k and represented 0.3% of the issued share capital.
diversity
The shares were purchased for a consideration of £1.9m,
including expenses. 1.4m shares were also issued to satisfy
share options exercised during the year.
suBstantial shareholdings
As at 4 March 2010, the company had been notified in
accordance with chapter 5 of the Disclosure and Transparency
rules of the following voting rights by shareholders of the
company as shown below.
Holder
Capital International Limited
Sleep, Zakaria & Co
Standard Life Investments
Lloyds Banking Group
Fidelity
Legal & General
Number of
ordinary
shares
31,307,869
17,021,321
16,084,626
16,071,702
15,886,847
12,367,334
% of issued
share capital
9.68%
5.26%
4.97%
4.97%
4.91%
3.82%
During 2009, we undertook a comprehensive review of
our diversity strategy covering three key areas: monitoring
(our own staff and candidate population), creating a diverse
and inclusive workforce ourselves, and assisting clients in
fulfilling their own diversity agenda by introducing candidates
from the widest possible talent pool. We have a Diversity
Steering committee which is chaired by a dedicated head
of Resourcing & Diversity and Regional Managing Directors
throughout the business. The committee meets quarterly to
agree new strategies, developments and initiatives and works
towards engendering an increasingly diverse workforce both
for us and our clients. We share experience and best practice
on a global forum to ensure we are in a position to take
advantage of our many diverse cultures.
know it
embrace it
encourage it
Our diversity proposition forms
Our activities involve every
We not only practice what
part of our long-term global
single person working within the
we preach, but continually
plans for growth. It is an integral
Michael Page world. It is part of
encourage our staff to offer ideas
part of our desire to consistently
our everyday life, in every office,
on how we could operate more
offer quality services to our
every country and in everything
responsibly or implement our
stakeholders.
we do.
current policies more effectively.
26
MIchAEl PAgE InTErnATIOnAl
For each key group our diversity strategy is:
our PeoPle
Diversity: For ourselves
employee engagement
We offer a level playing field. We check to make sure it stays
that way.
Diversity: For our clients
We use the widest pipelines to seek your future talent.
Building unique approaches to give you the diverse shortlist
you need. We network with the right people.
Diversity: For our candidates
Show us your skills and you can trust us to do all we can to
create job opportunities for you.
Corporate memberships
To ensure our business is in the best possible position to
work with and advise our clients and candidates on diversity,
Michael Page is a member of the following organisations.
• Race for Opportunity – an organisation committed to
improving employment opportunities for ethnic minorities
across the UK;
• Opportunity Now – a membership organisation for
employers who are committed to creating an inclusive
Maximising Potential is the vision we have created to ensure
each of our employees has the opportunity to succeed and be
fulfilled to their own desired level. We’ve always encouraged
teamwork and camaraderie. As such we are a very sociable
company with regular team building days, quarterly events
and high profile and exclusive trips for our ‘high Flyers’ –
rewarding those who have performed exceptionally well.
hiring the best
Sourcing and retaining the highest calibre employees
from a wide range of backgrounds is key to our success.
The service we provide to all our customers is only as good
as the people who represent our brand. Our strategy to grow
organically by promoting from within, presents enormous
opportunities to employees who range from graduates to
people changing careers – often from the disciplines we
recruit for. It’s also extremely important to us to recognise that
when we recruit, that we are hiring our managers, directors
and indeed Managing Directors of the future.
learning and development - our future
workplace for women;
Every member of staff is given the support and opportunity
• Employers Forum for Disability – the world’s leading
to grow and develop. A dedicated in-house team of
employers’ organisation focused on disability as it affects
learning and development specialists with extensive
business; and
•
Employers Forum on Age – an independent network of
leading employers, who recognise the need to attract and
retain valuable employees, whatever their age.
Our senior staff are actively involved with these bodies and
through work-streams and joint initiatives, ensure we are
constantly learning from their experience and indeed use our
own resources to share best practice and ideas.
industry experience provide a robust personal development
framework from induction and IT training through advanced
skills, presentations and competency based advancement.
Managers undertake a broad management development
and succession planning programme, involving such areas
as coaching and people management, often using 360
degree feedback to progress through director development
and beyond. Quarterly appraisals underpin the individual
ownership of our development programmes and our
employers’
forum on
disability
AnnUAl rEPOrT 2009
27
mentoring scheme provides employees with the opportunity
That’s a significant time commitment we are making available to
to draw upon the wealth of talent and experience available
our employees and something else to feel passionate about.
within the organisation.
It’s an opportunity many take up. Michael Page staff have
95% of our Directors started as trainees within the company
visited retirement homes, wildlife projects, community centres
and have been promoted internally, which is testament to our
and homes of the elderly, offering voluntary help. nearly all
commitment to individual development and organic growth.
of them return with stories to tell, proud, enriched by the
retaining the most talented people
experience and firmly bonded to their team. Since 2008,
more than 400 days have been spent getting involved first
retaining our best people is key to our long-term success
hand with the community.
and continuity. A strong commitment to internal promotion
and employee empowerment, has continually helped us
helping young people prepare for employment
retain our very best people. At the highest level, we want
In schools too, we have people giving talks to young people,
people who are immersed thoroughly in our company culture
helping them prepare for employment with career guidance
and understand the intricacies of our business. It means that
and cV advice.
today, 95% of our Directors have grown within the company
and been promoted internally.
keeping in touch
•
Regular ‘state of the nation’ broadcasts to our staff from
our cEO
•
“More” – our internal intranet site offers discounts on a
wide range of brands
• Monthly newsletters and global updates
• Quarterly team building events
•
High Flyers events – premium international trips for high
performing consultants and managers
Charity and Community
The group made charitable donations of £189,586 during
the year (2008: £153,366).
giving something back
Each year, we give work placements to under-graduates
through the city of london Business Traineeship programme.
The aim is to give individuals from london’s inner-city
boroughs a real taste of working in business, learning skills,
taking on responsibility, and developing their confidence in
the workplace. Since 2008, we have welcomed a number of
people into our offices to experience the working environment.
Many of our staff have given up their time to mentor them on
life and practices within the workplace.
Charity partnerships around the world
Around the world, Michael Page makes substantial donations
to both global charities and local projects.
In Switzerland, Michael Page participated in the course de
l’Escalade, in support of the red cross. In Germany, we
introduced a candidate donation programme in aid of Aktion
Mensch, a disability charity.
Michael Page in France has also been working with several
Our in-house “Moregiving” scheme allows every Michael Page
charities for a number of years: ‘Sport Dans la Ville’ helps
employee one day per year out of the office to help make a
young people develop confidence and social skills; ‘la
difference in their community, the Environment or to a charity.
Fondation de la 2éme chance’ and ‘cadraxion 78’ provide
our Core Values
take Pride
Be Passionate
We have five values that we
believe contribute to our
success. These attributes
are not only the essence of
our brand, but are rooted in
each and every employee of
Michael Page International.
To take pride in what we do,
It’s our passion to provide the
of who we are and what we
very best service for our clients
stand for. We are proud of our
and candidates that drives us to
brand, our colleagues and our
triumph over our competition.
achievements.
28
MIchAEl PAgE InTErnATIOnAl
employment opportunities for older people; and hanploi.com
•
Our staff also joined GOSHCC fundraisers on high profile
champions the employment of people with disabilities.
prestigious events, whereby people from Michael Page
In the Americas, Michael Page Brazil has been involved in
a number of charity events, sponsoring a charity auction in
aid of ‘Boys and girls hope Worldwide’; sponsorship of the
donned gOShcc t-shirts and helped collect cash
contributions from people attending royal Ascot, the
British grand Prix and london christmas celebrations.
‘Projeto guri’ in São Paolo, which brings music and culture
• Numerous office-based activities such as dress-down
to poor areas of the city; and providing ongoing support to
days and tuck shops.
‘gotas de Flor com Amor’, an institution that promotes the
education of children.
In Australia, Michael Page provided sponsorship to children
via the World Vision charity and held events in support of the
Breast cancer Foundation, Juvenile Diabetes Foundation and
ronald McDonald house children’s charity.
In the UK, we operate a ‘give As You Earn’ scheme, matching
any charitable donations made by an employee within that
scheme. cancer research UK was our charity for 2007 and
seeing our efforts come to life
The money we raised for gOSchcc will go towards funding
an adolescent recreation and dining room in the neurosciences
ward of the new clinical Building. Due for completion in 2012,
the total cost of the room will be £120,000 and we expect
to pay for it fully.
enVironment
we raised more than £110,000 on their behalf. In 2008, our
taking responsibility for our environment
chosen charity was The British heart Foundation and we
raised c £90,000, which provided 60 life-saving defibrillators
across various UK locations. Our chosen charity for 2009 was
great Ormond Street hospital children’s charity (gOShcc)
and, against a grey economic backdrop, we set an initial
target of £50,000 for the first 12 months of our two-year
partnership.
In 2009, we raised a remarkable £115,000 through sponsored
events and other fundraising activities across our network.
The figure reached was way over our initial target, quite
an achievement considering what a difficult year 2009 was
for everyone.
here are some of the activities we’ve carried out as part of
our fundraising drive:
• 100+ Michael Page staff took part in the Three Peaks
challenge in Yorkshire, walking 39.2km and climbing
1586m in under 12 hours.
Michael Page is a typical office-based businesses. As such,
our main environmental impacts come from the running of our
businesses around the world, generating carbon emissions
though the consumption of gas and electricity, transport
activities and commuting, as well as office-based waste such
as paper and toners.
As a company, we are acutely aware of our responsibility
and work hard to minimise our impact on the environment.
In a number of areas, we strive to make a difference and act
responsibly in terms of recycling, conservation and usage.
Along with a number of policies on how to use our resources
responsibly around the offices, we also have our own in-house
“Moregreen” scheme, which offers staff the opportunity to
purchase ‘green’ products at reduced prices.
never give up
work as a team
make it Fun
We welcome a challenge; we
Working as a team makes us
We recognise that fun is a
show strength of character and
stronger, more efficient and
key factor within our working
resilience in our approach, we
adding value to our business
environment; we’re very
see difficulty as an opportunity
and brand.
sociable and enjoy celebrating
to demonstrate ability.
our successes.
AnnUAl rEPOrT 2009
29
reducing our carbon footprint
Further details of our cr activities and impacts are shown
Michael Page International does not cause significant pollution,
however we fully recognise our responsibilities. The Board is
in our main cr report, a copy of which can be downloaded
from our website at:
committed to improving the way in which our activities affect
http://investors.michaelpage.co.uk/corporate_governance
the environment by:
• Minimising the extent of the environmental impacts of
supplier payment policy
operations within the company’s sphere of influence;
It is the policy of the group to agree appropriate terms
• Striving to minimise any emissions of effluents in our
properties, that may cause environmental damage;
•
Conserving energy through minimising consumption and
maximising efficiency;
•
Promoting efficient purchasing, which will both minimise
waste and allow materials to be recycled where
appropriate;
• Employing sound waste management practices;
•
Putting in place procedures and supporting information
that enables compliance with the law, regulation and code
of practice relating to environmental issues;
• Monitoring environmental performance and making
improvements where possible
health & saFety
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.
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
following sections of the Annual report:
We recognise that health and Safety is an integral part of our
workforce. The day-to-day services we provide do not pose
• Corporate Governance Statement (Directors);
• Remuneration Report (annual bonus plan);
great risk to either our employees or our clients. however
• Remuneration Report (Directors’ interests and share
Michael Page endeavours to maintain a safe and active
ownership requirements);
environment.
•
Notes to the Accounts (Note 17: Called-up share capital);
Each office is responsible for its own fire risk assessment and
and
emergency procedures and has an allocated Facilities and
•
Shareholder Information and Advisers (Memorandum and
health and Safety representative.
Articles of Association).
The above is only a summary of the many cr activities in
which we are involved and the impact the group has on its
environment.
Each of the above sections is incorporated by reference into,
and forms part of, this Directors’ report.
136,260 kg of paper recycled
555 fluorescent tubes recycled
(Equivalent to = 33,300 light bulbs)
682 reduced
cubic metres by landfill
2,318
trees saved
40,880 kw of energy conserved
30
MIchAEl PAgE InTErnATIOnAl
special business
auditors
The following resolutions have been classed as special
Deloitte llP are willing to continue in office and accordingly
business at the forthcoming Annual general Meeting on
resolutions to re-appoint them as auditors and authorising
21 May 2010:
the Directors to set their remuneration will be proposed at
•
Resolution 8: To amend the Memorandum and Articles
the forthcoming Annual general Meeting.
annual general meeting
The resolutions to be proposed at the Annual general Meeting
to be held on 21 May 2010, together with explanatory notes,
appear in a separate notice of Meeting that has been
posted to all shareholders and is available on our website at
http://investors.michaelpage.co.uk.
By order of the Board
kelvin stagg
company Secretary
5 March 2010
of Association;
• Resolution 10: To authorise Directors to allot shares;
•
Resolution 11: To authorise the Company to purchase its
own shares; and
•
Resolution 12: Length of notice to convene General
Meetings.
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.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the companies
Act 2006.
AnnUAl rEPOrT 2009
31
Corporate Governance
The Board of Directors has a strong commitment to high standards
of corporate governance and has applied the main and supporting
principles of corporate governance as recommended in Section
1 of the Combined Code on Corporate Governance, adopted by
the Financial Reporting Council in June 2008 (the Code), for the
year ended 31 December 2009.
The Directors also seek to comply with guidelines issued by
institutional investors and their representative bodies where it is
practical to do so.
Compliance with the 2009 FrC Code
The Directors consider that the Company has complied with all
the Code provisions set out in Section 1 of the Code throughout
the year ended 31 December 2009.
32
MIchAEl PAgE InTErnATIOnAl
direCtors
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.
The Board currently comprises the chairman, who is deemed
to be independent and has no operational responsibilities,
assisting the chief Executive in the performance of his duties,
including development and implementation of strategy,
operational plans, policies, procedures and budgets.
These activities are performed at a regional level by four
regional Boards, committees of the Board, for the UK,
EMEA, Asia Pacific and the Americas. Each regional Board
meets at least four times a year.
three Executive Directors and three independent non-
Chairman
Executive Directors. collectively, they have a broad balance of
skills and experience. The composition of the Board complies
with code Provision A.3.2. The Board annually reviews
the composition of the Board and considers that there is
an appropriate balance of Executive and non-Executive
Directors on the Board.
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
The chairman’s role is part time. The chairman, Sir Adrian
Montague, is responsible for the leadership and efficient
operation of the Board, setting its agenda and ensuring all
directors provide an effective contribution. The chairman is
also responsible for ensuring the provision of accurate and
timely information to the Board and effective communications
with shareholders.
It is the group’s policy that the roles of chairman and chief
Executive are separate.
at each meeting should be communicated and actioned
In 2009, Sir Adrian Montague became Director of Anglian
beyond the Board. Decisions concerning matters of a more
Water group (AWg) limited and AWg companies Osprey
routine nature are dealt with by management below Board
Acquisitions limited, Osprey holdings limited and AWg Plc.
level. The structure of the group facilitates the day-to-day
he also became a member of the housing Finance group.
running of the business and enables efficient and effective
communication of issues to the Board when required. The
senior independent director
chairman and non-Executive Directors also met during the
year without the Executive Directors being present.
The Senior Independent Director is available to shareholders
when they may have issues or concerns where contact
Each of the committees has formal written terms of reference
through the normal channels of chairman, chief Executive
which were reviewed in 2009.
or Finance Director has either failed to resolve concerns, or
The terms of reference for the Audit, remuneration and
contact is deemed inappropriate.
nomination committees are available on request and can
The Senior Independent Director at the beginning of the
be found on the group’s website. Their composition and
year was Stephen Box, who retired from the Board on 22
the manner in which they discharge their responsibilities are
May 2009. Following Stephen’s retirement, hubert reid was
described in this report.
appointed to the role of Senior Independent Director.
The Executive Board, a committee of the Board, meets
formally at least four times a year, and is responsible for
AnnUAl rEPOrT 2009
33
re-election of directors
nomination Committee
All Directors are subject to retirement by rotation and
The nomination committee comprises the non-Executive
re-election by the shareholders in accordance with the Articles
Directors and is chaired by Sir Adrian Montague. It is
of Association, whereby one third of the Directors retire by
responsible for making recommendations to the Board on
rotation each year. Subject to the Board being satisfied
new appointments, as well as making recommendations
with the effectiveness, independence and commitment of a
as to the composition of the Board generally, the balance
non-Executive Director, there is no defined limit regarding the
between Executive and non-Executive Directors appointed
number of terms a Director may serve. It is the Board’s view
to the Board and reviewing any conflicts of interest. The terms
that the comparatively long tenure of some of the Directors
of reference of the nomination committee can be found on
has been key to the Board’s in-depth understanding of the
our website.
group and its operation. All Directors are subject to election by
the shareholders at the first Annual general Meeting following
induction and training programme
their appointment. All Directors are subject to re-election every
three years in accordance with the code.
On appointment to the Board, each Director discusses with
the company Secretary the extent of training required and
Sir Adrian Montague and charles-henri Dumon will retire by
a tailored induction programme to cover their individual
rotation and offer themselves for re-election at the forthcoming
requirements is then compiled. Elements of the programme
Annual general Meeting on 21 May 2010. As a result of
typically consist of meeting senior management, site visits
their annual performance evaluation, the Board considers
and attending internal conferences. In addition, information
that their individual performances continue to be effective,
is provided on the company’s services, group structure,
with each director demonstrating commitment to their role.
Board arrangements, financial information, major competitors
The Board is therefore pleased to support their re-election
and major risks. After an initial induction phase, updates are
at the forthcoming Annual general Meeting.
provided on a periodic basis.
Company secretary
Performance evaluation
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.
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
The Board, as part of its commitment to ensuring effectiveness
and evaluating its performance, together with that of its
Directors and committees, conducted an internal review
comprising a questionnaire concerning all aspects of procedure
and effectiveness.
Following completion of the questionnaires, the chairman
met with the individual Directors to discuss their views and
to give feedback on their performance. The results of the
evaluation were reported to the Board and where areas of
improvement have been identified, actions have been agreed
upon and training will be provided where required.
chairman and the chief Executive, and, in the case of the most
hubert reid, as the Senior Independent Director, led a
recent appointment, all candidates in the final shortlist were
meeting of the non-Executive Directors to appraise the
interviewed by the nomination committee. Evaluations of all
performance of the chairman. The meeting took into
candidates are discussed with all members of the nomination
account any comments made by the Executive Directors.
committee and recommendations are subsequently made
This evaluation is carried out annually.
to the Board.
34
MIchAEl PAgE InTErnATIOnAl
succession planning
attendance at meetings
One of the basic premises behind the strategic development
The number of meetings of the Board and committees and
of the Michael Page business, is that growth is organic rather
individual attendance by the members of the committees
than through acquisitions of companies or hiring senior
only are shown in Fig.3 below.
people in non-support roles. In order to achieve this organic
growth, we require good people. It is therefore one of the
Conflicts of interest
fundamental principles and a major part of the philosophy
of the company that we train and develop our own people.
This approach creates opportunities for career progression
and helps us attract and retain high calibre individuals.
Due to this philosophy of nurturing our own talent, succession
planning is inherently a key part of the business process.
We do not 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.
The company has implemented robust procedures, in line
with the companies Act 2006, requiring Directors to seek
appropriate authorisation prior to entering into any outside
business interests.
In all cases where a potential conflict is identified, it is Board
policy that the Director in question is not involved in any
discussion of the area or issue giving rise to the conflict.
During the course of the year, the Board reviewed and
authorised, in accordance with the company’s Articles
of Association, a small number of external directorships
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 (retired 22 May 2009)*
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
Board
12
12
12
12
Board
12
12
5
10
12
12
*Stephen Box attended all meetings prior to his retirement.
AnnUAl rEPOrT 2009
Audit
Committee
9
Remuneration
Committee
Nomination
Committee
4
N/A
N/A
5
8
9
9
2
3
4
4
2
2
1
2
2
2
35
and other business interests held by individual directors.
The committee met nine times in 2009 to fulfil its duties and
however, none were regarded as being of such significance
included attendance by the external auditors where required.
as to give rise to a conflict of interest.
The committee also met with the external auditors during
All directors are aware of their continuing obligation to
the year without the presence of management.
report any new interests or changes in existing interests
In 2009, the Audit committee discharged its responsibilities
that might amount to a possible conflict of interest in order
as set out in the terms of reference, which can be found on
that these may be considered by the Board and appropriate
our website, www.investors.michaelpage.co.uk. Its principal
authorisations given.
remuneration
remuneration Committee
The remuneration committee comprises the independent
non-Executive Directors and is chaired by Dr Tim Miller.
tasks are to ensure the integrity of the company’s Financial
reporting process, review the effectiveness of the group’s
internal controls, internal audit and risk management function,
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
The committee reviews the group’s policy on the chairman’s,
areas of management judgement and estimates, as well as
Executive Directors’ and senior executives’ remuneration and
ensuring the independence of the external auditor and the
terms of employment, makes recommendations upon this,
provision of additional services to the company.
along with the specific level of remuneration to the Board,
and also approves the provision of policies for the incentivisation
objectivity and independence of external auditors
of senior employees, including share schemes.
Deloitte are employed to perform work in addition to their
The committee meets at least twice a year and is also attended
statutory duties where it is felt that they are best placed
by the chief Executive, except when his own remuneration
to carry out the engagement as a result of their being the
is under consideration. The remuneration report includes
group’s auditors. All other work is awarded on the basis of
information on the Directors’ service contracts. The terms
competitive tender.
of reference of the remuneration committee can be found
on our website.
The report of the remuneration committee can be found
on pages 40 to 49 of the Annual report.
aCCountaBility and audit
audit Committee
The objectivity and independence of the external auditor is
safeguarded by:
a. obtaining assurances from the external auditor that
adequate policies and procedures exist within its firm to
ensure the firm and its staff are independent of the group
by reason of family, finance, employment, investment and
business relationships (other than in the normal course of
The Audit committee comprises
the
independent
business);
non-Executive Directors and is chaired by ruby Mcgregor-
Smith. The committee members have broad experience and
knowledge of financial reporting. Their relevant qualifications
and experience are shown in their biographies on the Board
of Directors pages 22 and 23. The Board believes that
ruby Mcgregor-Smith and hubert reid have recent and
relevant financial experience. The other member of the Audit
b. enforcing a policy concerning the provision of non-
audit services by the auditor which governs the types of
work:
i.
from which the external auditor is excluded;
ii. for which the external auditor can be engaged without
referral to the Audit committee; and
committee, Dr Tim Miller, has gained wide experience in
iii. for which a case-by-case decision is required, which
regulatory and risk issues.
includes all engagements over certain fee limits.
36
MIchAEl PAgE InTErnATIOnAl
The following areas are considered to be unacceptable
It is also the committee’s policy to consider whether there
for the external auditors to undertake:
should be an audit tender process and whether using auditors
•
selection, design or implementation of key financial
systems;
•
maintaining or preparing the accounting books and
records or the preparation of financial accounts or
other key financial data;
• provision of outsource financial systems;
•
provision of outsource operational management
functions;
• recruitment of senior finance or other executives;
• secondment of senior finance or other executives;
• provision of internal audit services;
• valuation services or fairness opinions; and
•
any services specifically prohibited to be provided
by a listed company’s external auditors under UK
regulations.
The following criteria also need to be met before
the external auditors are contracted to provide such
services:
from one audit network continues to enhance the quality of
the audit. The committee reviews the past service of the
auditors who were first appointed in 1997.
The committee has also considered the likelihood of a
withdrawal of the auditor from the market and noted that
there are no contractual obligations to restrict the choice of
external auditors.
To assess the effectiveness of the external auditors, the Audit
committee reviewed:
• the arrangements for ensuring the external auditors’
independence and objectivity;
•
the external auditors’ fulfilment of the agreed audit plan
and any variations from the plan;
•
the robustness and perceptiveness of the auditors in their
handling of the key accounting and audit judgements;
and
•
the content of the external auditor’s reporting on internal
control.
Following the above, the Audit committee has recommended
•
the firm has the necessary skills and experience to
to the Board that Deloitte llP is re-appointed.
undertake the work;
•
there are no potential conflicts that may arise as a
internal control
result of carrying out this activity;
The responsibilities of the Directors in respect of internal
•
the external audit firm is subject to the company’s
control are defined by the Financial Services Authority’s
normal tendering processes; and
listing rules that incorporate a code of Practice known as
•
in addition to the normal authorisation procedures and
prior to inclusion in a tender, approval has to be given
by the group Finance Director and, if the fee exceeds
a certain level, the Audit committee.
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 in a senior management
position; and
d. monitoring the external auditors’ compliance with
applicable UK ethical guidance on the rotation of audit
partners.
the combined code, which requires that Directors review
the effectiveness of the group’s system of internal controls.
This requirement stipulates that the review shall cover
all controls including operational, compliance and risk
management, as well as financial. Internal control guidance
for Directors on the combined code (“the Turnbull report”)
was published in September 1999, updated October 2005.
The Board has assessed existing risk management
and internal control processes during the year ended
31 December 2009 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 2009 and at the date of this report.
AnnUAl rEPOrT 2009
37
The Directors are responsible for the group’s system
• financial and operational controls.
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
Individual operations complete an annual controls self
assessment and certification statement. Each operational
manager, in addition to the finance function for that
operation, confirms the adequacy of their systems of
internal control and compliance with group policies.
The 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
appropriate steps taken to monitor and mitigate risk;
matters reserved strictly for the Board. The Managing
• public interest disclosure policy (whistleblowing).
Director of each operating division is accountable for
establishing and monitoring internal controls within that
division;
• annual business plan.
The group has a comprehensive budgeting system with
an annual budget approved by the Board;
The audit committee has reviewed arrangements by which
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
• quarterly reforecasting.
•
internal audit activities.
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.
The internal audit function is an independent, dedicated
Internal Audit team, comprising the head of Internal
Audit and an Internal Auditor. Businesses are visited on a
risk- based and rotational basis to assess the effectiveness
of controls in mitigating specific risks. In addition,
risks are regularly reviewed and changes are made to the
Detailed monthly reports are produced showing
risk profile where necessary. All internal audit activities
comparisons of results against budget, forecast and the
are reported to the Audit committee. During the year,
prior year, with performance monitoring and explanations
the Board monitored and reviewed the effectiveness of
provided for significant variances. The group reports to
the internal audit activities.
shareholders on a quarterly basis;
• Audit Committee.
There is an established Audit committee whose activities
are previously described;
The Board has applied principle c.2 of the combined
code and 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.
38
MIchAEl PAgE InTErnATIOnAl
relations with shareholders
Board contact with shareholders
communications with shareholders are given a high priority.
The main contact between the Board and shareholders is
through the chief Executive and the group Finance Director.
They undertake two major investor “roadshows” each
year in February/March and August/September, in which
numerous one-to-one meetings with shareholders take place.
The outcome of these meetings and the views of shareholders
are relayed back to the Board by the corporate brokers,
at the end of each roadshow. The group’s corporate
brokers also report monthly to the Board on broking activity
during the month and any issues that may have been raised
with them.
Shareholders are invited to attend the Annual general
Meeting where they are able to discuss any concerns with
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
(http://investors.michaelpage.co.uk) that contains Company
announcements and other shareholder information.
annual report
The Annual report is designed to present a balanced and
understandable view of the group’s activities and prospects.
The Business review provides 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 94. A statement by the
auditors about their reporting responsibilities is shown in the
Independent Auditors’ report on pages 50 and 51.
AnnUAl rEPOrT 2009
39
Remuneration Report
This report has been prepared in accordance with Schedule 8 to
The Accounting Regulations under the Companies Act 2006. The
report also meets the relevant requirements of the Listing Rules
of the Financial Services Authority and describes how the Board
has applied the principles relating to Directors’ remuneration in the
Combined Code. As required by the Act, a resolution to approve
the report will be proposed at the Annual General Meeting of the
Company at which the financial statements will be approved.
scope and membership of remuneration Committee
The Remuneration Committee, which meets not less than three
times a year, comprises the independent Non-Executive Directors.
The Chief Executive attends the meetings as required, except
when his own remuneration is under consideration. The purpose of
the Remuneration Committee is to review, on behalf of the Board,
the remuneration policy for the Chairman, Executive Directors and
other senior executives and to determine the level of remuneration,
incentives and other benefits, compensation payments and the
terms of employment of the Executive Directors and other senior
executives. It seeks to provide a remuneration package that
aligns strongly the interests of Executive Directors with that of
the shareholders.
40
MIchAEl PAgE InTErnATIOnAl
The committee has continued to review the remuneration of
Base salary and benefits
the Executive Directors with regard to the need to maintain
a balance between the constituent elements of salary,
annual bonus and long-term incentives and other benefits.
It
receives advice
from
independent
remuneration
consultants, Deloitte and hewitt new Bridge Street, and
makes comparisons with similar organisations. Deloitte are
also the group’s auditors and have provided remuneration
services in compliance with the Ethical Standards of the
Auditing Practices Board. Both Deloitte and the group are
comfortable that appropriate measures and controls are in
place to ensure that there is no conflict arising by providing
both these services. no Directors, other than the members
of the remuneration committee, provided material advice
to the committee on Directors’ remuneration.
remuneration policy
The objective of the group’s remuneration policy is to attract
and retain management with the appropriate professional,
managerial and operational expertise necessary to realise
the group’s strategic objectives, as well as to establish a
framework for remunerating all employees.
The committee establishes salaries and benefits by reference
to those prevailing in the employment market generally for
Executive Directors of companies of comparable status and
market value, taking into account the range of incentives
described elsewhere in this report, including a performance
bonus. reviews of such base salary and benefits are
conducted annually by the committee. The group operates
a policy of providing below median salaries, with the balance
of the package provided through incentives aligned with
group performance and shareholder value to ensure a total
remuneration package geared to performance.
In light of the global economic downturn and a desire to
maintain base salaries below the median, no increases to
base salary and benefits have been awarded since the start
of 2008. having completed a review, the committee has
decided to increase the Executive Directors’ base salaries
by 2.5% with effect from 1 January 2010, which is broadly in
line with staff across the wider group. Following the increase,
the base salaries remain significantly below the market
median. The following table shows the base salaries of each
director for 2009 and going forward for 2010, in the currency
It is the company’s policy that all Executive Directors’ service
in which they are paid.
contracts contain a 12 month notice period.
Director
Currency
Steve Ingham
Steve Puckett
Sterling
Sterling
Charles-Henri Dumon
Swiss Francs
2009
‘000s
371
283
603
% Change
2.5%
2.5%
2.5%
2010
‘000s
380
290
618
The remuneration committee reviewed the level of company
pension contribution and recognising that base salaries of
the Executive Directors are below the median for companies
of comparable size and complexity, has decided to increase
the company contribution to 25% of base salary from the
start of 2010.
The non-Executive Directors do not have service contracts
with the company. They are appointed for an initial three
year term and thereafter may be reappointed for a further
two terms of three years, subject to re-election at Annual
general Meetings. Additional details of service contracts are
shown on page 49.
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. The remuneration of the non-Executive Directors
is determined by the Board. The non-Executive Directors
do not receive any other benefits, other than out-of pocket
expenses, from the group, nor do they participate in any of
the bonus or share schemes.
The following sections provide details of the company’s
remuneration policy during 2009 and key changes to the
policy for 2010.
AnnUAl rEPOrT 2009
41
annual bonus plan
Annual bonuses for the Executive Directors are based on
the division of a pool of profits earned during the financial
year. In 2009, the bonus pool for Executive Directors was
equal to 3.85% of profits earned above a threshold equal
to half of targeted profits for the year. If profits exceed 1.1
times the targeted level, then an additional 1.3% of profits
earned above the targeted level is added to the bonus pool.
The remuneration committee retains the discretion to review
Due to the highly uncertain economic environment, limited
earnings visibility and the wide range of market estimates of
earnings, the committee agreed that setting a target level of
profit for 2009 at the start of the year would have risked over
or under rewarding management for the performance of the
business. Instead, the remuneration committee reviewed
the group’s performance throughout 2009 with reference
to both internal and external expectations as well as the
performance of competitors.
this arrangement and set different rates and thresholds as it
During 2009 the company significantly reduced its cost base,
deems appropriate for the business.
maintained the existing platform of business disciplines in
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
Share Plan described below or other share option grants.
The bonus pool calculation is not entirely formulaic as the
committee has the ability to vary the pool both up and down,
established countries and cities, remained profitable and
secured a very robust financial position. The consensus
feedback from shareholders is that the Executive Directors
have performed strongly in very challenging market conditions.
As a result, whilst profit in 2009 was lower than the previous
year, the company’s total shareholder return over 2009 was
over 80% - representing an increase in shareholder value of
by up to 10%, to reflect its view of the performance of the
over £550m over the 12 month period.
company relative to its directly comparable peers.
Unlike all other employees who receive their annual bonuses
in cash, the Executive Directors’ cash element of their annual
bonus is restricted to a multiple of salary. In the event that
the Executive Director’s annual bonus entitlement is greater
than 150% of salary, only an amount equal to 150% of the
executive’s salary is paid in cash. To reward service over a
longer period, any amount of the bonus pool above 150% of
the individual’s salary level is deferred, paid into an employee
benefit trust and invested in the company’s shares with no
matching investment by the company. Such shares are
reserved for the executive and vest in equal annual tranches
In light of this the remuneration committee determined that
it was appropriate for the normal bonus formula to be used
as in previous years, with the targeted level of adjusted profits
set equal to the original base budget for 2009 of £19.7m.
The committee also determined that there would be no
discretionary adjustment to the 2009 bonus pool.
Based on the 2009 results the bonus pool amounted to
£1.0m (2008: £2.3m). This is a significant reduction in the
pool compared to recent years. As no individual Executive
Director’s bonus was in excess of 1.5 times their respective
base salaries, the entire bonus pool has been paid in cash.
over two years, normally so long as the executive is still in
The intention is that the Annual Bonus Plan will operate as
employment at that time. The Income Statement for the year
normal in 2010. The target has been set for 2010 by reference
carries a charge for the Directors’ annual bonus paid in cash
to market expectations and internal forecasts and will be
while the deferred amount is charged in subsequent years
disclosed in next year’s remuneration report.
until the shares vest.
42
MIchAEl PAgE InTErnATIOnAl
long term incentives
The company currently operates two forms of long term
incentive for Executive Directors and senior management:
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
Executive Share Option Scheme (ESOS)
third (“Performance Share Awards”) are also deferred for three
This was established on flotation in 2001. Vesting of share
option awards made under the scheme is subject to growth
years, but are subject to earnings per share (“EPS”) growth
targets over the three year period.
in earnings per share of at least 3% per annum above the
Performance share awards of up to 50% of a Director’s or
growth in the UK retail Price Index (rPI), over the three
senior employee’s salary only vest if EPS grows by an average
year performance period. The Executive Directors and
of 5% over the growth in UK rPI per annum over the three
senior employees are eligible to participate in the ESOS.
year period. Any excess between 50% and 75% of salary only
no payment is required on the grant of an option and no
vests to the extent that EPS grows by 7.5% over the growth
share options are granted at a discount. Benefits received
in UK rPI per annum over the three year period. Finally, to the
under the ESOS are not pensionable. retesting after the
extent that the performance share award is greater than 75%
initial vesting period is not permitted for any grants awarded
of an executive’s salary, the hurdle is 10% over the growth in
in 2004 and subsequent years. no options were granted to
UK rPI per annum over the three year period. If awards do
Executive Directors during 2009.
not vest after three years, they automatically lapse.
The performance criteria on the options awarded under
The performance criteria on the Performance shares and
the Executive Share Option Scheme in 2007 was tested at
Performance share options awarded under the Incentive
the end of 2009 and did not meet the EPS growth criteria.
Share Plan in 2007 was tested at the end of 2009 and did
As no retesting after the initial vesting period is permitted,
not meet the EPS growth criteria. As no retesting after the
these awards have now lapsed in full.
initial vesting period is permitted, these awards have now
Incentive Share Plan (ISP)
The ISP, which was approved by shareholders in 2003, is
funded with a percentage, currently 6%, of group profits. not
more than 30% of this amount is available for awards to the
Executive Directors, the balance being available for awards to
senior employees. Awards vest after a three year period, with
vesting of one-third of the award subject to achievement of
additional performance conditions. 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. Awards under the ISP are satisfied in shares
of the company, which are market purchased and held by
the employee benefit trust.
lapsed in full.
having reviewed the appropriateness of these arrangements
and recognising that recruitment is a cyclical industry, at
the start of 2009, the remuneration committee reviewed
the ISP 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 vest over a four
year period and use the EPS of 2009 as the base from which
growth will be measured. In light of business performance and
share price growth during 2009, the remuneration committee
has determined that no awards will be made under the ISP
in 2010. Instead the committee intends to make grants of
The committee retains the discretion to review the proportion
share options under the Executive Share Option Scheme,
of profits dedicated to the ISP in the light of the growth in
subject to stretching performance conditions.
the size of the company, its profitability and the number of
Executive Directors.
AnnUAl rEPOrT 2009
43
As set out above, previous option awards have been
2010 executive share option scheme
exercisable in full for EPS growth in excess of RPI +3% p.a.
however, recognising that the group delivered lower profits
in 2009, the committee will make vesting of the share
options awarded to Executive Directors in 2010 dependent
on significantly greater growth in profit, as follows:
• Half of the awards will vest if Profit Before Tax (PBT)
reported in 2012 is at least £48m. This represents an
increase in PBT of 128% over the performance period;
As outlined above, the current ESOS was established on
flotation in 2001 and therefore expires in March 2011.
Accordingly, the Board will propose a replacement ESOS at
the Annual general Meeting scheduled for May 2010.
It is intended that the ISP will remain the primary long-term
incentive vehicle for Executive Directors. however, the
committee retains the discretion to make future awards to
Executive Directors under the 2010 ESOS, in appropriate
•
Full vesting of the awards will only occur if PBT is in excess
circumstances.
of £66m. This represents an increase in PBT of 213% over
the performance period;
•
Vesting will be calculated on straight line basis between
these points.
The normal limit under the plan rules is for maximum awards of
200% of salary. This has been reduced from the previous limit
of 200% of ‘Total remuneration’. If awards are made in excess
of 200% of salary, this will be in exceptional circumstances
In addition to the requirement to achieve significant profit
and within the overall limit of 400% of salary.
growth, the use of share options ensures that if the share
price does not increase, participants will not receive any value
from the 2010 long-term incentive awards. The use of options
therefore represents a fair balance of interests between
executives and shareholders, particularly as the company
has seen considerable share price growth over the last
12 months: the share price in January 2010 averaged £4.00
compared with an average in January 2009 of £2.10.
The intention of the remuneration committee is to make
awards of options over 400,000 shares to each of the
Vesting of any awards made under the Scheme will be subject
to performance conditions measured over three years:
•
It is currently intended that if future awards of share options
are made to Executive Directors, then Profit Before Tax will
be the sole performance measure used. PBT targets set
will be no less challenging than those previously described
for the proposed 2010 awards, in light of internal and
external forecasts and the point in the economic cycle at
the time that the awards are made;
Executive Directors in March 2010. At the prevailing share
•
If the Remuneration Committee considers that alternative
price of around £3.80 the expected present value of these
performance measures are appropriate, then the targets
awards is c£465,000.
Although this is around one-third lower than the expected
set will be no less challenging than the PBT targets that
would otherwise have been set;
present value of recent ISP awards, the committee considers
•
Vesting will occur on a phased basis, with 30% of the
the award sizes are appropriate in light of the continuing
award vesting for threshold performance, increasing on
business environment, and will maintain the remuneration
a straight line basis to 100% of the award for maximum
philosophy that provides below median base salaries with
performance.
the total package being geared to performance.
Overall, the committee believes that the structure and
quantum of these awards will meet our objectives of retaining
participants and incentivising them to deliver stretching financial
targets that result in the growth of shareholder value.
•
The intention is that the performance target for participants
below the Board will be a requirement for EPS growth of
at least 6% per annum, in order for awards to vest.
44
MIchAEl PAgE InTErnATIOnAl
emoluments
The aggregate emoluments, excluding pensions, of the Directors of the company who served during the year were as
follows:
2009
Executive
Steve Ingham (Note 1)
Charles-Henri Dumon (Note 2)
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
Total
2008
Executive
Steve Ingham (Note 1)
Charles-Henri Dumon (Note 2)
Stephen Puckett
Non-Executive
Sir Adrian Montague CBE
Stephen Box
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
Total
Salary
and fees
£’000
Benefits
(Note 3)
£’000
Annual
Bonus
£’000
Deferred
Annual Bonus
£’000
Incentive
Share Plan
£’000
Total
£’000
371
357
283
110
18
47
43
43
27
67
22
–
–
–
–
–
413
315
315
–
–
–
–
–
1,272
116
1,043
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Salary
and fees
£’000
Benefits
(Note 3)
£’000
Annual
Bonus
£’000
Deferred
Annual Bonus
£’000
Incentive Share
Plan (Note 4)
£’000
371
299
283
110
45
45
43
43
23
61
22
–
–
–
–
–
371
283
283
–
–
–
–
–
537
427
427
–
–
–
–
–
681
681
681
–
–
–
–
–
811
739
620
110
18
47
43
43
2,431
Total
£’000
1,983
1,751
1,696
110
45
45
43
43
1,239
106
937
1,391
2,043
5,716
Notes to the emoluments:
1. Steve Ingham is the highest paid director
2. charles-henri Dumon’s salary and benefits are paid in Swiss Francs. In line with the other Executive Directors, he received no increase
in salary due in 2009 and therefore the entire change in reported salary is due to movements in foreign exchange.
3. Benefits include, inter alia, items such as company car or cash alternative, fuel and medical insurance.
4. represents the non-performance proportion of the Incentive Share plan awarded in March 2009 and the performance vesting proportion
of the March 2006 award.
AnnUAl rEPOrT 2009
45
Pension benefits
Executive Directors are eligible to participate in the group pension plan which is a defined contribution scheme. In 2009, each
Executive Director received a pension contribution equal to 20% of their base salary or a cash alternative.
Pension contributions
Steve Ingham
Charles-Henri Dumon (note 1)
Stephen Puckett
2009
£’000
2008
£’000
74
66
57
74
56
57
1. The movements in charles-henri Dumon’s pension benefits varied across 2008 and 2009 due to local currency movements.
directors’ interests and share ownership requirements
It is Michael Page policy that 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 2009, 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 2009 to 4 March 2010.
Ordinary shares of 1p
At 1 January 2009
Transferred in year
Disposal in year
Direct Holding
Direct Holding
Direct Holding
Direct Holding
1,305,199
1,202,997
502,200
15,000
250,240
337,110
217,816
–
–
(310,000)
–
–
At year end or date of
resignation
1,555,439
1,230,107
720,016
15,000
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Stephen Box ‡
‡ Non-Executive Director
1. Steve Ingham transferred 60,001 shares from the Incentive Share Plan and 190,239 from the Deferred Annual Bonus to his
Direct holding in the year.
2. charles-henri Dumon transferred 194,496 shares from the Incentive Share Plan and 142,164 from the Deferred Annual Bonus
to his Direct holding in the year.
3. Stephen Puckett transferred 60,001 shares from the Incentive Share Plan and 157,815 from the Deferred Annual Bonus to
his Direct holding in the year.
4. Stephen Box retired on 22 May 2009.
no other Director has a holding in the company.
46
MIchAEl PAgE InTErnATIOnAl
incentive share Plan
Details of awards made under the Incentive Share Plan that remain outstanding at 31 December 2009 are as follows:
Total award at 1 January 2009
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 2009
Performance
shares
Non-
performance
shares
Total
shares
Steve Ingham
186,480
372,957 559,437
153,785
307,569 461,354 (102,200)
306,198
612,393
918,591
Charles-Henri Dumon (Note 4)
186,480
372,957 559,437
153,785
307,569 461,354 (102,200)
306,198
612,393
918,591
Stephen Puckett
186,480
372,957 559,437
153,785
307,569 461,354 (102,200)
306,198
612,393
918,591
1. The value of the award made under the Michael Page Incentive Share Plan in 2009 is £865,038 for each individual Director
and is based on the purchase price of the company’s ordinary shares on 9 March 2009 of 187.5p. The market value of the
shares vested in the year at the date of award was 309.9p
2. The total value of awards at 31 December 2009 for each individual Director in office at the balance sheet date is £3,480,541
and is calculated using the closing market price of the company’s ordinary shares at 31 December 2009 of 378.9p.
3. For awards made in 2009, the performance shares vest over four years and have a base EPS for the performance criteria
of 6.64p.
4. charles-henri Dumon was granted deferred share options to acquire 307,569 ordinary shares and performance share options
to acquire 153,785 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. Both the Performance shares and the Performance options awarded under the Michael Page Incentive Share Plan in 2007
did not meet their vesting criteria and have lapsed as at the end of 2009.
deferred annual Bonus
As described on page 42, in the event that the Executive Directors’ bonus entitlement is greater than 150% (2008: 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. Bonus entitlements in respect of 2009 did not exceed 150% of salary.
Details of awards made under the deferred Annual Bonus Plan that remain outstanding at 31 December 2009 are as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Total award at
1 January 2009
(shares)
529,865
429,143
430,973
Awarded
during the year
(shares)
286,231
227,529
227,529
Vested in year
(shares)
(324,018)
(266,963)
(268,793)
Total award at
31 December 2009
(shares)
492,078
389,709
389,709
The average market value of the shares vested in the year at the date of award was 328.0p.
AnnUAl rEPOrT 2009
47
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 2009 were as follows:
Steve Ingham
Charles-Henri Dumon
Stephen Puckett
Date of Grant
2001
2005
2001
2005
2001
2005
At
1 January
2009
(shares)
93,471
50,000
140,209
50,000
93,471
50,000
Exercised
in year
(shares)
At 31
December
2009
(shares)
Market price
at date of
exercise
(pence)
Gains
made on
exercise
(pounds)
Exercise price
(pence)
Period of
exercise
–
–
–
–
–
–
93,471
50,000
140,209
50,000
93,471
50,000
–
–
–
–
–
–
–
–
–
–
–
–
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 2009 was 378.9p with a range during the year of 174.75p to 384.3p.
total shareholder return (tsr)
The graph below shows Total Shareholder return (TSr) relative to a base index of 100 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.
31 Dec 2004
31 Dec 2005
31 Dec 2006
31 Dec 2007
31 Dec 2008
31 Dec 2009
Versus FTSE 250 and FTSE Support Services
270
250
230
210
190
170
150
130
110
90
70
48
250.34
169.57
150.64
147.36
130.23
121.53
224.34
154.10
131.13
165.40
161.46
135.75
123.73
102.30
98.96
FTSE250
FTSE Support Services
Michael Page International
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.
Contract
date
Unexpired term at
31 December 2009
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
05/03/01
no specific term
12 months
Sir Adrian Montague CBE (Note 1)
27/02/07
Ruby McGregor-Smith
Dr Tim Miller
Hubert Reid
23/05/07
13/08/08
25/02/09
2 months
5 months
20 months
26 months
None
None
None
None
12 months salary plus other
contractual benefits
12 months salary plus other
contractual benefits
12 months salary plus other
contractual benefits
None
None
None
None
None
None
None
None
None
None
None
1. Sir Adrian Montague’s contract was renewed for a further three year term on 26 February 2010.
annual resolution
Shareholders will be given the opportunity to approve the remuneration report at the Annual general Meeting (resolution 5)
on 21 May 2010.
audit requirement
Within the remuneration report, the sections on Emoluments, and Directors’ interests and share ownership requirements, on
pages 45 to 48 inclusive, are audited. All other sections of the remuneration report are unaudited.
dr tim miller
chairman – remuneration committee
5 March 2010
AnnUAl rEPOrT 2009
49
Auditors’ Report
independent auditors’ report to the members of
scope of the audit of the financial statements
michael Page international plc
An audit involves obtaining evidence about the amounts
We have audited the financial statements of Michael Page
and disclosures in the financial statements sufficient to
International plc for the year ended 31 December 2009 which
give reasonable assurance that the financial statements
comprise consolidated Income Statement, the consolidated
are free from material misstatement, whether caused by
Statement of comprehensive Income, the group and Parent
fraud or error. This includes an assessment of: whether the
company Balance Sheets, the consolidated and Parent
accounting policies are appropriate to the group’s and the
company Statements of changes in Equity, the group and
parent company’s circumstances and have been consistently
Parent company cash Flow Statements and the related notes
applied and adequately disclosed; the reasonableness of
1 to 25. The financial reporting framework that has been
significant accounting estimates made by the directors;
applied in their preparation is applicable law and International
and the overall presentation of the financial statements.
Financial reporting Standards (IFrSs) as adopted by the
European Union and as regards the parent company financial
opinion on financial statements
statements, as applied in accordance with the provisions of
In our opinion:
the companies Act 2006.
This report is made solely to the company’s members, as
a body, in accordance with chapter 3 of Part 16 of the
companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditors’ report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
•
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 December 2009 and of the group’s profit for the
year then ended;
• the group financial statements have been properly
prepared in accordance with IFrSs as adopted by the
European Union;
other than the company and the company’s members as a
• the parent company financial statements have been
body, for our audit work, for this report, or for the opinions
properly prepared in accordance with IFrSs as adopted
we have formed.
respective responsibilities of directors and auditors
As explained more fully in the Directors’ responsibilities
Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit the
financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
by the European Union and as applied in accordance with
the provisions of the companies Act 2006; and
•
the financial statements have been prepared in accordance
with the requirements of the companies Act 2006 and,
as regards the group financial statements, Article 4 of the
IAS regulation.
50
MIchAEl PAgE InTErnATIOnAl
opinion on other matters prescribed by the
nigel mercer (senior statutory auditor)
for and on behalf of Deloitte LLP
chartered Accountants and Statutory Auditors
london, United Kingdom
5 March 2010
Companies act 2006
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the companies Act 2006; and
• the information given in the Directors’ Report for the
financial year for which the financial statements are
prepared is consistent with the financial statements.
matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the companies Act 2006 we are required to report to
you if, in our opinion:
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
the parent company financial statements and the part of
the Directors’ remuneration report to be audited are not
in agreement with the accounting records and returns;
or
•
certain disclosures of directors’ remuneration specified
by law are not made; or
•
we have not received all the information and explanations
we require for our audit.
Under the listing rules we are required to review:
•
the directors’ statement contained within the Business
review in relation to going concern; and
•
the part of the Corporate Governance Statement relating
to the company’s compliance with the nine provisions
of the June 2008 combined code specified for our
review.
AnnUAl rEPOrT 2009
51
Financial Statements
Consolidated Income Statement ................................... 53
Consolidated Statement of Comprehensive Income .... 53
Consolidated and Parent Company Balance Sheets .... 54
Consolidated Statement of Changes in Equity ............. 55
Statement of Changes in Equity – Parent Company .... 56
Consolidated and Parent Company
Cash Flow Statements ................................................... 57
Notes to the Financial Statements ................................ 58
1.
2.
3.
4.
5.
6.
7.
8.
9.
Significant accounting policies..........................58
Segment reporting ...........................................65
Profit for the year ..............................................67
Employee information .......................................67
Financial income/(expenses) .............................68
Taxation on profits on ordinary activities ...........68
current tax assets and liabilities .......................69
Dividends .........................................................69
Earnings per ordinary share ..............................70
10. Property, plant and equipment .........................71
11.
Intangible assets ..............................................71
12.
Investments......................................................72
13. Trade and other receivables .............................74
14. Trade and other payables .................................74
15. Bank overdrafts ................................................75
16. Deferred tax .....................................................75
17. called-up share capital .....................................76
18. reserves ..........................................................79
19. cash flows from operating activities .................80
20. cash and cash equivalents ..............................80
21. Financial risk management ...............................81
22. commitments ..................................................85
23. contingent liabilities ..........................................86
24. Events after the balance sheet date .................86
25. related party transactions ................................86
52
MIchAEl PAgE InTErnATIOnAl
Consolidated Income Statement
For the year ended 31 december 2009
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
Consolidated Statement of Comprehensive Income
For the year ended 31 december 2009
Profit for the year
Other comprehensive income for the year
Currency translation differences
Total comprehensive income for the year
Attributed to:
Owners of the parent
AnnUAl rEPOrT 2009
2009
£’000
716,722
(365,028)
351,694
(331,491)
20,203
2,027
(1,162)
21,068
(8,638)
12,430
2008
£’000
972,782
(420,080)
552,702
(412,201)
140,501
3,878
(4,323)
140,056
(42,717)
97,339
12,430
97,339
3.9
3.8
30.3
29.9
2009
£’000
12,430
(11,978)
452
452
2008
£’000
97,339
40,064
137,403
137,403
53
Consolidated and Parent Company Balance Sheets
aS at 31 december 2009
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
Current liabilities
Trade and other payables
Bank overdrafts
Current tax payable
Net current assets
Non-current liabilities
Other payables
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium
Capital redemption reserve
Reserve for shares held in the employee benefit trust
Currency translation reserve
Retained earnings
Total equity
Note
2, 10
2, 11
12
16
13
13
7
20
2
14
15
7
14
16
Group
Company
2009
£’000
2008
£’000
2009
£’000
2008
£’000
31,432
20,051
–
10,179
2,021
63,683
133,402
14,174
137,228
284,804
39,097
13,855
–
6,496
1,955
–
–
–
–
422,577
424,649
–
–
–
–
61,403
422,577
424,649
203,813
5,358
156,980
366,151
481,679
381,812
1,305
–
1,306
–
482,984
383,118
348,487
427,554
905,561
807,767
(142,750)
(137,021)
(450,492)
(43)
(5,470)
(62,697)
(14,938)
(43)
–
(340,505)
(62,697)
–
(148,263)
(214,656)
(450,535)
(403,202)
136,541
151,495
32,449
(20,084)
(2,881)
(327)
(3,208)
(1,337)
(897)
(2,234)
–
–
–
–
–
–
2
(151,471)
(216,890)
(450,535)
(403,202)
197,016
210,664
455,026
404,565
17
18
18
18
18
3,234
51,589
838
(19,409)
33,401
127,363
197,016
3,220
48,856
838
(21,078)
45,379
133,449
210,664
3,234
51,589
838
–
–
399,365
455,026
3,220
48,856
838
–
–
351,651
404,565
These financial statements of Michael Page International plc, company number 3310225, were approved by the Board of
Directors and authorised for issue on 5 March 2010. On behalf of the Board of Directors.
S Ingham
chief Executive
54
S R Puckett
group Finance Director
MIchAEl PAgE InTErnATIOnAl
Consolidated Statement of Changes in Equity
For the year ended 31 december 2009
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
3,274
46,635
771
(22,740)
5,315
74,595
107,850
Group
Balance at 1 January 2008
Currency translation differences
Net income recognised directly in equity
Profit for the year
Total comprehensive 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
Credit in respect of tax on share schemes
Dividends
8
–
–
–
–
(67)
–
13
–
–
–
–
–
–
–
–
–
–
2,221
–
–
–
–
Balance at 31 December 2008 and 1 January 2009
3,220
48,856
(54)
2,221
Currency translation differences
Net expense recognised directly in equity
Profit for the year
Total comprehensive (loss)/income for the year
Purchase of shares held in the employee benefit trust
–
–
–
–
–
–
–
–
–
–
Issue of share capital
14
2,733
Transfer to reserve for shares held in the employee
benefit trust
Credit in respect of share schemes
Credit in respect of tax on share schemes
Dividends
8
–
–
–
–
–
–
–
–
14
2,733
–
–
–
–
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)
–
6,667
6,667
612
612
(27,263)
(27,263)
(38,485)
(34,589)
(21,078)
45,379
133,449
210,664
–
–
–
–
(11,978)
(11,978)
–
–
(11,978)
(11,978)
–
12,430
12,430
(11,978)
12,430
452
(1,903)
–
3,572
–
–
–
1,669
–
–
–
–
–
–
–
–
–
(1,903)
2,747
(3,572)
–
8,491
2,418
8,491
2,418
(25,853)
(25,853)
(18,516)
(14,100)
Balance at 31 December 2009
3,234
51,589
838
(19,409)
33,401
127,363
197,016
AnnUAl rEPOrT 2009
55
Statement of Changes in Equity – Parent Company
For the year ended 31 december 2009
Company
Balance at 1 January 2008
Profit for the year
Total comprehensive income for the year
Purchase of own shares for cancellation
Issue of share capital
Dividends
Balance at 31 December 2008 and 1 January 2009
Profit for the year
Total comprehensive income for the year
Issue of share capital
Dividends
Balance at 31 December 2009
Called-up
share capital
£’000
Share
premium
£’000
Note
Capital
redemption
reserve
£’000
3,274
46,635
771
–
–
(67)
13
–
(54)
3,220
–
–
14
–
14
3,234
–
–
–
2,221
–
2,221
48,856
–
–
2,733
–
2,733
51,589
8
8
Retained
earnings
£’000
74,808
320,091
320,091
(15,985)
–
(27,263)
(43,248)
Total
equity
£’000
125,488
320,091
320,091
(15,985)
2,234
(27,263)
(41,014)
351,651
404,565
73,567
73,567
–
(25,853)
(25,853)
73,567
73,567
2,747
(25,853)
(23,106)
–
–
67
–
–
67
838
–
–
–
–
–
838
399,365
455,026
56
MIchAEl PAgE InTErnATIOnAl
Consolidated and Parent Company Cash Flow Statements
For the year ended 31 december 2009
Group
Company
Cash generated from underlying operations
Net cash received in respect of VAT claim
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
19
19
2009
£’000
73,759
41,018
114,777
(28,196)
86,581
(5,757)
(7,645)
2,061
2,027
2008
£’000
185,206
–
185,206
(53,409)
131,797
(17,173)
(10,260)
1,009
3,878
Net cash (used in)/received from investing activities
(9,314)
(22,546)
2009
£’000
45,074
41,018
86,092
–
2008
£’000
55,281
–
55,281
28
86,092
55,309
–
–
–
448
448
–
–
–
297
297
Cash flows from financing activities
Dividends paid
Interest paid
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
(25,853)
(27,263)
(25,853)
(27,263)
(1,160)
(4,782)
(780)
(4,556)
–
(25,300)
–
(25,300)
2,747
2,234
2,747
–
(15,985)
(1,903)
(854)
–
–
2,234
(15,985)
–
Net cash used in financing activities
(26,169)
(71,950)
(23,886)
(70,870)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange (loss)/gains on cash and cash equivalents
51,098
94,283
(8,196)
Cash and cash equivalents at the end of the year
20
137,185
37,301
35,557
21,425
94,283
62,654
(62,697)
–
(43)
(15,264)
(47,433)
–
(62,697)
AnnUAl rEPOrT 2009
57
Notes to the Financial Statements
For the year ended 31 december 2009
1. siGNiFiCaNT aCCouNTiNG PoliCies
statement of compliance
Michael Page International plc is a company incorporated in the United Kingdom under the companies Act. 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 408 of the companies Act 2006, 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 £73.6m (2008: £320.1m).
The decrease in the company’s profit this year is as a result of decreased dividend income. The financial statements have been
prepared on a going concern basis. refer to page 18 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
The accounting policies applied by the group in these consolidated Financial Statements are the same as those applied by the
group in its consolidated financial statements as at and for the year ended 31 December 2008 except as described below.
In the current financial year, the group has adopted International Accounting Standard 1 “Presentation of Financial Statements”
(revised 2007) (IAS 1) and International Financial reporting Standard 8 “Operating Segments” (IFrS 8).
The implementation of IAS 1 (revised 2007) resulted in changes to disclosure with the inclusion of a consolidated Statement of
comprehensive Income.
IFrS 8 requires operating segments to be identified on the basis of internal reports about components of the group that are
regularly reviewed by the chief Executive to allocate resources to the segments and to assess their performance. In contrast,
the predecessor Standard (IAS 14 “Segment reporting”) required the group to identify two sets of segments (business and
geographical), using a risks and rewards approach, with the group’s system of internal financial reporting to key management
personnel serving only as the starting point for the identification of such segments. Information reported to the group’s chief
Executive for the purposes of resource allocation and assessment of segment performance is focused on regions and, as such,
the implementation of IFrS 8 resulted in no significant changes, as disclosures over and above those required by IAS 14 were
previously made.
58
MIchAEl PAgE InTErnATIOnAl
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
new standards and interpretations (continued)
The amendments to IFrS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The group
has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the
transitional reliefs offered in these amendments.
IFrS 2 Share-based Payment – Vesting conditions and cancellations has been amended to clarify the definition of vesting
conditions. The concept of ‘non-vesting’ conditions has been introduced and the accounting treatment for cancellations was
clarified. These amendments have not resulted in significant changes.
Below is a summary of other new and revised Standards and Interpretations that have been adopted in the current year, where
their adoption has not had any significant impact on the amounts reported in these financial statements, but may impact the
accounting for future transactions and arrangements.
Amendment to IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 20 has been amended to require that the benefit of a government loan at a below-market rate of interest to be treated as a
government grant. This accounting treatment was not permitted prior to this amendment.
IAS 23 (revised 2007) Borrowing Costs
The principal change to the Standard was to eliminate the option to expense all borrowing costs when incurred.
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements –
Puttable Financial Instruments and Obligations Arising on Liquidation
The revisions to IAS 32 amend the criteria for debt/equity classification by permitting certain puttable financial instruments and
instruments (or components of instruments) that impose on an entity an obligation to deliver to another party a pro-rate share of
the net assets of the entity only on liquidation, to be classified as equity, subject to specified criteria being met.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items
The amendments provide clarification on two aspects of hedge accounting: identifying inflation as a hedged risk or portion, and
hedging with options.
Embedded Derivatives (Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial
Instruments: Recognition and Measurement)
The amendments clarify the accounting for embedded derivatives in the case of a reclassification of a financial asset out of the ‘fair
value through profit or loss’ (FVTPl) category as permitted by the October 2008 amendments to IAS 39 Financial Instruments:
recognition and Measurement (see above).
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
The Interpretation provides guidance on the detailed requirements for net investment hedging for certain hedge accounting
designations.
IFRIC 18 Transfers of Assets from Customers (adopted for transfers of assets from customers received on or after
1 July 2009)
The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from ‘customers’
and concludes what item of property, plant and equipment transferred meets the definition of an asset from the perspective
of the recipient, the recipient should recognise the asset at its fair value on the date of transfer, with the credit recognised in
accordance with IAS 18 revenue.
AnnUAl rEPOrT 2009
59
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
new standards and interpretations (continued)
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 (and in some cases had not yet
been adopted by the EU):
IFRS 1 (amended)/IAS 27 (amended) Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
IFrS 3 (revised 2008)
IAS 27 (revised 2008)
IAS 28 (revised 2008)
IFrIc 17
Improvements to IFrSs (April 2009)
Business combinations
consolidated and Separate Financial Statements
Investments in Associates
Distributions of non-cash Assets to Owners
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 2010.
going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the company and the
group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the financial statements. Further detail is contained in the Business review
on page 18.
a) revenue and income recognition
revenue, which excludes value added tax (“VAT”), constitutes the value of services undertaken by the group from 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.
60
MIchAEl PAgE InTErnATIOnAl
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
d) Foreign currency translation (continued)
(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.
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). Included with computer
software, are assets under construction which are amortised from the point they go live.
(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 (2008: £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.
AnnUAl rEPOrT 2009
61
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
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.
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.
62
MIchAEl PAgE InTErnATIOnAl
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
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
IFrS 8 requires operating segments to be identified on the basis of internal reports about components of the group that are
regularly reviewed by the chief Executive to allocate resources to the segments and to assess their performance. Information
provided to the chief Executive is focused on regions and as a result, reportable segments are on a regional basis.
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.
AnnUAl rEPOrT 2009
63
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
p) Provisions
A provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured
at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted
to present value where the effect is material.
q) Borrowing costs
All borrowing costs are accrued in the income statement on a time basis.
r) Financial assets and liabilities
Financial assets and liabilities are recognised in the group’s balance sheet when the group becomes a party to the contractual
provisions of the instrument. non-derivative financial instruments comprise trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables.
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. loans and receivables are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when
the recognition of interest would be immaterial.
cash and cash equivalents includes cash-in-hand, deposits held at call with banks, and other short-term highly liquid investments
with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the
group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
Trade and other payables are stated at cost. Other financial liabilities, including borrowings, are initially measured at fair value,
net of transaction costs.
The group has derivative contracts at the balance sheet date that have been valued at fair value through the income
statement.
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
In making its judgement, management considered the detailed criteria for the recognition of revenue from permanent placements
where a position has been accepted by a candidate, a start date agreed, but employment has not yet commenced. A provision
is made by management, based on past historical experience, for the proportion of those placements where the candidate is
expected to reverse their acceptance prior to the start date.
64
MIchAEl PAgE InTErnATIOnAl
1. siGNiFiCaNT aCCouNTiNG PoliCies (CoNTiNued)
s) Critical accounting estimates and judgements (continued)
• Note 13 – trade and other receivables
In the current economic climate, there is increased uncertainty regarding customers who may not be able to pay as their invoices
fall due. In reviewing the appropriateness of the provisions in respect of recoverability of trade receivables, consideration has been
given to the ageing of the debt and the potential likelihood of default, taking into account current economic conditions.
• Note 14 – trade and other payables
In 2003 Michael Page submitted an initial claim to hMrc for overpaid VAT which was rejected. Michael Page appealed and
subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, Michael Page filed
amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period. In June 2009
Michael Page received a payment from hMrc of £26.5m, net of fees, as part settlement of these claims and in July 2009 received
£10.9m, net of fees, of statutory interest. On 25 September, Michael Page received a letter from hMrc which stated that, ‘hMrc
have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid’.
A number of discussions and meetings with hMrc have since taken place and in respect of the initial claim, subject to legal contract,
an agreement has now been reached in principle for Michael Page to retain £28.5 million (net of fees) of the £37.4 million it received.
however, given the background to the initial receipt and the subsequent review and reversal of its decision by hMrc, the group has
not recognised any amount in the Income Statement due to the remaining uncertainty pending formal contractual agreement.
• Note 16 – deferred tax
Management has estimated the likely value of deferred tax assets in respect of trading losses carried forward.
• Note 17 – called-up share capital
The group’s policy for share-based payments is stated in note 1 (n). The fair value of equity settled share-based payments is
partly derived from estimates of factors such as lapse rates and achievement of performance criteria. It is also derived from
assumptions such as the future volatility of the company’s share price, expected dividend yields and risk-free interest rates.
2. seGmeNT rePorTiNG
All revenues disclosed are derived from external customers.
The accounting policies of the reportable segments are the same as the group’s accounting policies described in note 1. Segment
operating profit represents the profit earned by each segment without allocation of central administration costs and certain
recharges. This is the measure reported to the group’s chief Executive for the purpose of resource allocation and assessment
of segment performance.
(a) revenue, gross profit and operating profit by reportable segment
EMEA
United Kingdom
Asia Pacific Australia and New Zealand
Other
Total
Americas
Revenue
Gross Profit
Operating Profit
2009
£’000
311,070
274,599
59,108
20,301
79,409
51,644
716,722
2008
£’000
426,436
365,602
83,643
27,800
111,443
69,301
972,782
2009
£’000
163,729
110,784
23,881
18,329
42,210
34,971
2008
£’000
258,772
176,685
40,521
26,254
66,775
50,470
2009
£’000
1,055
11,275
4,287
3,798
8,085
(212)
2008
£’000
66,271
46,557
12,760
9,591
22,351
5,322
351,694
552,702
20,203
140,501
The above analysis by destination is not materially different to the analysis by origin.
AnnUAl rEPOrT 2009
65
2. seGmeNT rePorTiNG (CoNTiNued)
The analysis below is of the carrying amount of reportable segment assets, liabilities and non-current assets. 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 reportable segments exclude income tax assets and liabilities. non-current assets include property, plant and
equipment, computer software and goodwill.
(b) segment assets, liabilities and non-current assets by reportable segment
EMEA
United Kingdom
Asia Pacific Australia and New Zealand
Other
Total
Americas
Segment assets/liabilities
Income tax
EMEA
United Kingdom
Asia Pacific Australia and New Zealand
Other
Total
Americas
Total Assets
Total Liabilities
2009
£’000
117,863
161,653
18,025
13,025
31,050
23,747
2008
£’000
212,004
128,338
28,129
24,473
52,602
29,252
2009
£’000
49,504
83,341
6,622
2,322
8,944
4,212
2008
£’000
79,517
104,697
6,943
2,680
9,623
8,115
334,313
422,196
146,001
201,952
14,174
348,487
5,358
5,470
427,554
151,471
14,938
216,890
Property, Plant and Equipment
Intangible Assets
2009
£’000
13,016
9,985
2,411
708
3,119
5,312
2008
£’000
16,778
12,472
2,546
1,291
3,837
6,010
2009
£’000
1,166
2008
£’000
1,321
17,933
11,614
258
310
568
384
379
66
445
475
31,432
39,097
20,051
13,855
The below analyses in notes (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 IFrS 8 “Operating Segments”.
(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
2009
£’000
408,951
91,811
125,199
90,761
716,722
2008
£’000
541,984
140,599
168,167
122,032
972,782
2009
£’000
175,743
61,404
61,217
53,330
2008
£’000
273,017
103,907
93,193
82,585
351,694
552,702
66
MIchAEl PAgE InTErnATIOnAl
2. seGmeNT rePorTiNG (CoNTiNued)
(d) revenue and gross profit generated from permanent and temporary placements
Permanent
Temporary
3. ProFiT For The year
Profit for the year is stated after charging/(crediting):
Employment costs (Note 4)
Net exchange losses/(gains)*
Depreciation of property, plant and equipment - owned
Amortisation of computer software
Loss on sale of property, plant and equipment and 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
Operating lease rentals - land and buildings
- plant and machinery
Revenue
Gross Profit
2009
£’000
260,161
456,561
716,722
2008
£’000
448,403
524,379
972,782
2009
£’000
249,387
102,307
351,694
2008
£’000
425,655
127,047
552,702
2009
£’000
2008
£’000
226,692
144
9,926
1,342
383
65
466
531
22
114
78
214
745
308,421
(4,766)
9,144
1,173
596
65
459
524
32
110
20
162
686
25,794
5,785
20,198
4,294
*This includes £80k of losses (2008: gains of £987k) 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 £82k (2008: £1,040k), which is
directly offset by foreign exchange losses on the underlying intercompany loans, with an offsetting £2k (2008: £53k) 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 2009 were as follows:
Management
Client services
Administration
AnnUAl rEPOrT 2009
2009
Average No.
2008
Average No.
172
2,664
1,099
3,935
182
3,877
1,303
5,362
2009
No.
165
2,351
1,033
3,549
2008
No.
183
3,471
1,289
4,943
67
4. emPloyee iNFormaTioN (CoNTiNued)
Employment costs (including Directors’ emoluments) comprised:
Wages and salaries
Social security costs
Pension costs - defined contribution plans
Equity settled transactions
2009
£’000
182,656
27,007
8,538
8,491
2008
£’000
259,734
33,332
8,688
6,667
226,692
308,421
Details of Directors’ remuneration for the year are provided in the Directors’ remuneration report on pages 40 to 49.
no staff are employed by the parent company (2008: nil) hence no remuneration has been disclosed.
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 41.0% on profit before tax (2008: 30.5%).
analysis of charge in the year
UK income tax at 28% (2008: 28.5%) for year
Adjustments in respect of prior periods
Overseas income tax
Deferred tax expense
Origination and reversal of temporary differences
Benefit of tax losses recognised
Deferred tax benefit
Total income tax expense in the income statement
2009
£’000
2008
£’000
2,027
3,878
(1,162)
(4,323)
2009
£’000
8,556
(2,536)
4,589
10,609
(1,639)
(332)
(1,971)
8,638
2008
£’000
19,636
(364)
24,073
43,345
946
(1,574)
(628)
42,717
68
MIchAEl PAgE InTErnATIOnAl
6. TaxaTioN oN ProFiTs oN ordiNary aCTiviTies (CoNTiNued)
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
Derecognition of overseas losses
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
7. CurreNT Tax asseTs aNd liabiliTies
2009
£’000
21,068
5,899
894
2,051
–
2,256
–
74
(2,536)
8,638
%
28.0
4.2
9.7
–
10.7
–
0.4
(12.0)
41.0
2008
£’000
140,056
39,916
893
716
(146)
–
730
972
(364)
42,717
2009
£’000
2,418
%
28.5
0.5
0.5
(0.1)
–
0.5
0.8
(0.2)
30.5
2008
£’000
612
The current tax asset of £14.2m (2008: £5.4m), and current tax liability of £5.5m (2008: £14.9m) for the group, and current
tax asset of £1.3m (2008: £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 2008 of 5.12p per ordinary share (2007: 5.6p)
Interim dividend for the year ended 31 December 2009 of 2.88p per ordinary share (2008: 2.88p)
2009
£’000
16,487
9,366
25,853
2008
£’000
17,934
9,329
27,263
Amounts proposed as distributions to equity holders:
Proposed final dividend for the year ended 31 December 2009 of 5.12p per ordinary share (2008: 5.12p)
16,535
16,316
The proposed final dividend had not been approved by shareholders at 31 December 2009 and therefore has not been included
as a liability. The comparative final dividend at 31 December 2008 was also not recognised as a liability in the prior year.
The proposed final dividend of 5.12p per ordinary share will be paid on 7 June 2010 to shareholders on the register at the close
of business on 7 May 2010, 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.
AnnUAl rEPOrT 2009
69
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
2009
12,430
2008
97,339
321,643
321,475
7,412
4,178
329,055
325,653
3.9
3.8
30.3
29.9
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.
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.
70
MIchAEl PAgE InTErnATIOnAl
10. ProPerTy, PlaNT aNd equiPmeNT
2009
Leasehold
improvements
£’000
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
Leasehold
improvements
£’000
Total
£’000
2008
Furniture,
fixtures and
equipment
£’000
Motor
vehicles
£’000
29,184
1,346
(1,765)
(990)
27,775
13,099
3,781
(1,182)
(820)
14,878
45,895
3,859
(3,846)
(1,622)
44,286
24,823
5,496
(2,587)
(682)
27,050
3,108
552
(1,319)
(9)
2,332
1,168
649
(780)
(4)
1,033
78,187
5,757
(6,930)
(2,621)
74,393
39,090
9,926
(4,549)
(1,506)
42,961
20,877
7,068
(2,890)
4,129
29,184
9,944
3,235
(2,052)
1,972
13,099
34,831
8,693
(4,415)
6,786
45,895
20,272
5,163
(4,147)
3,535
24,823
2,581
1,412
(1,037)
152
3,108
924
746
(589)
87
1,168
39,090
Total
£’000
58,289
17,173
(8,342)
11,067
78,187
31,140
9,144
(6,788)
5,594
12,897
17,236
1,299
31,432
16,085
21,072
1,940
39,097
2009
Computer
software,
assets under
construction
£’000
Computer
software
£’000
Goodwill
£’000
Total
£’000
Computer
software
£’000
2008
Computer
software,
assets under
construction
£’000
9,518
902
(253)
(190)
9,977
6,333
1,342
(190)
(153)
7,332
9,131
6,743
–
(7)
1,539
20,188
–
–
–
7,645
(253)
(197)
15,867
1,539
27,383
–
–
–
–
–
–
–
–
–
–
6,333
1,342
(190)
(153)
7,332
6,694
1,522
(381)
1,683
9,518
4,583
1,173
(330)
907
6,333
646
8,738
–
(253)
9,131
–
–
–
–
–
Goodwill
£’000
Total
£’000
1,539
–
–
–
8,879
10,260
(381)
1,430
1,539
20,188
–
–
–
–
–
4,583
1,173
(330)
907
6,333
2,645
15,867
1,539
20,051
3,185
9,131
1,539
13,855
Group
Cost
At 1 January
Additions
Disposals
Effect of movements in foreign exchange
At 31 December
Depreciation
At 1 January
Charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December
Net book value
At 31 December
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
AnnUAl rEPOrT 2009
71
11. iNTaNGible asseTs (CoNTiNued)
impairment tests for goodwill
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
2009
£’000
1,274
214
51
1,539
2008
£’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, management projections for five years, followed by an assumed growth rate of 3%, which does not
exceed the long-term average growth rate of the relevant markets and reflects long-term wage inflation fee growth. Management
applied a discount rate of 10% 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 2009 there was no impairment of intangible assets.
12. iNvesTmeNTs
Company
Cost
At 1 January 2009
Derecognised on vesting of LTIPs and deferred bonus shares
At 31 December 2009
Subsidiary undertakings
£’000
424,649
(2,072)
422,577
The derecognition of assets represents the decrease of the parent company’s holding of own shares which have vested and
transferred to beneficial holders.
72
MIchAEl PAgE InTErnATIOnAl
12. iNvesTmeNTs (CoNTiNued)
The company’s principal subsidiary undertakings at 31 December 2009, 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
Page Personnel (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 Austria GmbH
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 Seleccion España 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 (Beijing) Recruitment Co. Ltd
Michael Page (Shanghai) Recruitment Co. Ltd
Michael Page International (Shanghai) Consulting Ltd
Michael Page International (Japan) K.K.
Michael Page International (NZ) Limited.
Michael Page International Pte Limited*
Michael Page International Argentina SA
Michael Page Do International (Brasil) Recrutamento Especializado Ltda
Page Personnel Do Recruit. Especializ. E Servs. Corpor. Ltda
Michael Page International Canada Limited
Michael Page International Mexico Reclutamiento Especializado, S.A. de C.V.
Michael Page International Inc*
Country of incorporation
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Austria
Belgium
Belgium
France
France
Germany
Germany
Ireland
Italy
Italy
Luxembourg
Netherlands
Netherlands
Poland
Austria
Portugal
Russia
South Africa
Spain
Spain
Sweden
Switzerland
Turkey
United Arab Emirates
Australia
Hong Kong
China
China
China
Japan
New Zealand
Singapore
Argentina
Brazil
Brazil
Canada
Mexico
United States
Principal activity
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
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
Recruitment consultancy
*The equity of these subsidiary undertakings is held directly by Michael Page International plc. All companies have been included
in the consolidation and 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.
AnnUAl rEPOrT 2009
73
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
2009
£’000
107,156
(6,959)
100,197
–
13,102
20,103
2008
£’000
176,077
(7,708)
168,369
2009
£’000
2008
£’000
–
–
–
–
–
–
–
472,676
381,457
6,888
28,556
8,972
31
–
355
133,402
203,813
481,679
381,812
2,021
1,955
–
–
Within other receivables is a balance of £9.0m for fees paid in respect of the VAT refund by hMrc (see note 14).
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 21.
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
2009
£’000
2008
£’000
2009
£’000
2008
£’000
7,304
–
75,262
18,583
40,223
1,378
9,780
–
40,332
18,742
67,872
295
–
400,476
49,990
–
26
–
–
340,505
–
–
–
–
142,750
137,021
450,492
340,505
2,334
547
2,881
1,192
145
1,337
–
–
–
–
–
–
Within other tax and social security is a balance of £50.0m relating to VAT repaid by hMrc.
In 2003 Michael Page submitted an initial claim to hMrc for overpaid VAT which was rejected. Michael Page appealed and
subsequently filed amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, Michael Page
filed amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.
In June 2009 Michael Page received a payment from hMrc of £26.5m, net of fees, as part settlement of these claims and in
July 2009 received £10.9m, net of fees, of statutory interest.
On 25 September, Michael Page received a letter from hMrc which stated that, ‘hMrc have reviewed the recent payment and
are now of the view that the claim in whole or in part should not have been paid’.
A number of discussions and meetings with hMrc have since taken place and in respect of the initial claim, subject to legal contract,
an agreement has now been reached in principle for Michael Page to retain £28.5 million (net of fees) of the £37.4 million it received.
however, given the background to the initial receipt and the subsequent review and reversal of its decision by hMrc, the group has
not recognised any amount in the Income Statement due to the remaining uncertainty pending formal contractual agreement.
74
MIchAEl PAgE InTErnATIOnAl
14. Trade aNd oTher Payables (CoNTiNued)
In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT there have been no
discussions or meetings and Michael Page will continue to pursue the claim.
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 £2.5m (2008: £0.8m) 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 21.
15. baNk overdraFTs
Bank overdrafts
The carrying amounts of the group’s borrowings are all denominated in sterling.
Bank overdrafts are repayable on demand.
Group
Company
2009
£’000
43
2008
£’000
62,697
2009
£’000
43
2008
£’000
62,697
At 31 December 2009, the group had available £50.0m (2008: £50.0m) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.
The bank overdraft of £43k (2008: £62.7m) arose 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 20.
The group’s exposure to interest rate, foreign currency and liquidity risk for financial assets and liabilities is disclosed in note 21.
16. 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 2008
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 1 January 2009
Recognised in equity for the year
Recognised in profit or loss for the year
Exchange differences
At 31 December 2009
Accelerated tax
depreciation
£’000
Share-based
payments
£’000
Tax losses
£’000
184
(1,947)
(1,022)
Other
£’000
(2,196)
–
474
–
–
(1,624)
–
(2,646)
(1,722)
–
(331)
–
–
(899)
–
Total
£’000
(4,981)
24
(642)
–
(5,599)
(2,283)
(1,970)
–
–
–
–
184
–
–
–
24
508
–
(1,415)
(2,283)
(740)
–
184
(4,438)
(2,977)
(2,621)
(9,852)
AnnUAl rEPOrT 2009
75
16. deFerred Tax (CoNTiNued)
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
2009
£’000
(10,179)
327
(9,852)
2008
£’000
(6,496)
897
(5,599)
At 31 December 2009, unremitted earnings of overseas group companies amounted to £52.2m (2008: £104.6m). Unremitted
earnings may be liable to some overseas tax, but should not be liable to UK tax if they were to be distributed as dividends.
certain of the group’s overseas operations have current and prior year tax losses, the future utilisation of which is uncertain.
Accordingly the group has not recognised a deferred tax asset of £5.5m (2008: £1.4m) 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 £3.0m is dependent on generating future taxable profits. Of the recognised deferred
tax asset, £2.3m is recognised within territories that were loss making in the current year.
17. 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
2009
2008
£’000
Number of
shares
£’000
Number of
shares
5,713
571,250,000
5,713
571,250,000
3,220
321,990,067
3,274
327,393,734
14
-
1,434,808
-
13
(67)
1,276,768
(6,680,435)
3,234
323,424,875
3,220
321,990,067
76
MIchAEl PAgE InTErnATIOnAl
17. Called-uP share CaPiTal (CoNTiNued)
share option Plans
The group currently has share option awards outstanding under an Executive share option scheme (ESOS) and a share option
scheme (SOS). These plans are described below.
At 31 December 2009 the following options had been granted and remained outstanding in respect of the company’s ordinary
shares of 1p under both the Michael Page Executive Share Option Scheme and the 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)
2009 (Note 3)
Total 2009
Weighted average exercise price
2009 (£)
Balance at
1 January
2009
2,224,052
150,000
142,500
362,300
572,000
1,544,889
1,695,312
2,530,389
2,979,500
Granted
in year
Exercised
in year
No. of options
outstanding at 31
December 2009
Lapsed
in year
Base
EPS
Exercise price
per share
Exercise period
–
–
–
–
–
–
–
–
–
(457,258)
(96,777)
1,670,017
n/a
175p March 2004 - March 2011
(35,000)
(35,000)
(127,300)
(133,000)
–
–
–
–
115,000
10.6
186p March 2005 - March 2012
107,500
235,000
439,000
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
(439,250)
(25,639)
1,080,000
7.5
190.75p-191.5p March 2008 - March 2015
(208,000)
(231,000)
1,256,312
15.5
309.9p March 2009 - March 2016
–
–
–
(348,500)
2,181,889
21.3
464.5p-494.1p March 2010 - March 2017
(357,000)
2,622,500
30.4
255.94-285p March 2011 - March 2018
(295,000)
6,910,000
n/a
187.5-211.84p March 2012 - March 2019
–
7,205,000
12,200,942
7,205,000
(1,434,808)
(1,353,916)
16,617,218
2.79
1.91
1.91
3.04
2.46
Total 2008
11,090,941
3,141,000
(1,276,768)
(754,231)
12,200,942
Weighted average exercise price
2008 (£)
*These options have fully vested
2.69
2.80
1.75
3.15
2.79
4,232,333 options were exercisable at the end of 2009 at a weighted average exercise price of £2.14 (2008: £1.74).
executive share option scheme (esos)
Using the ESOS, awards of share options can be made to key management personnel and senior employees to receive shares
in the entity. Share 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”.
no awards were made under the ESOS scheme in 2009.
AnnUAl rEPOrT 2009
77
17. Called-uP share CaPiTal (CoNTiNued)
esos 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.
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 2009, the performance conditions were met for 81.8% (2008: 81.8%) of
the outstanding share price dependent options.
At 31 December 2009, 18.2% of the options remained unvested (2008: 18.2%). In order for these remaining options to have
vested by 31 December 2009 a share price of £10.96 (2008: £9.64) would have been required.
At this stage it is not expected that the remaining 18.2% of options will vest prior to the awards lapsing on 30 March 2011.
Note 2 Grants post flotation
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.
The respective base earnings per share for each grant are shown in the table on page 77.
share option scheme (sos)
Note 3
Executive Directors of the company are not eligible to participate in this scheme. Any exercises of awards made under this plan
must be settled by market purchased shares.
This new scheme was created in 2009 to provide an effective plan under which to grant awards in 2009. It was the Board’s view
that grants made under the existing ESOS plan, which would have required an increase over the 2008 base earnings per share
of at least 3% per annum above the growth in the UK retail Price Index by 2011, would be achievable due to the impact of the
global downturn on the group’s EPS and thus would not provide the required retention incentive.
The 2009 grant made under the SOS plan is subject to a performance condition that will be tested, initially, three years after the
date of grant and then annually until either the entire grant has vested, or ten years from the date of the award have elapsed,
in which case any awards outstanding under the grant will lapse. The performance condition is directly linked to the group’s
Operating Profit. If Operating Profit is £30m then 30% of the award would vest. For every £1m of Operating Profit over £30m,
a further 1% would vest. 100% of the award would vest if Operating Profit was £100m.
78
MIchAEl PAgE InTErnATIOnAl
17. Called-uP share CaPiTal (CoNTiNued)
share option valuation and measurement
In 2009, options were granted on 9 March with the estimated fair values of the options granted on that day of £0.76. In 2008,
options were granted on 6 March. The estimated fair values of the options granted on that date was £1.17.
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 2009 have an exercise price in the range of 81.5 pence to 494.1 pence and a weighted
average contractual life of 6.2 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 Plans
Incentive Share Scheme
Deferred Bonus Shares
2009
1.88
1.91
0.76
63%
5 years
2.19%
4.27%
2008
2.85
2.85
1.17
52%
5 years
5.25%
2.81%
2009
1.88
Nil
1.88
63%
3 years
2.04%
Nil
2008
2.85
Nil
2.80
52%
3 years
5.25%
Nil
2009
1.88
Nil
1.88
63%
2 years
1.46%
Nil
2008
2.85
Nil
2.80
52%
2 years
5.25%
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 £8.5m (2008: £6.7m) related to equity-settled share-based payment transactions
during the year.
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 42 to 44, 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.
18. 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. There was no movement in the year
as any shares repurchased were purchased into the employee benefit trust rather than cancelled.
reserve for shares held in the employee benefit trust
At 31 December 2009, the reserve for shares held in the employee benefit trust consisted of 5,925,597 ordinary shares
(2008: 7,010,335 ordinary shares) held for the purpose of satisfying awards made under the Incentive Share Plan and
deferred shares under the Annual Bonus Plan, representing 1.8% of the called-up share capital with a market value of £22.5m
(2008: £15.1m).
AnnUAl rEPOrT 2009
79
18. reserves (CoNTiNued)
reserve for shares held in the employee benefit trust (continued)
A total of 4,370,402 shares have been allocated to satisfy share awards made under the Incentive Share Plan, and 881,787
deferred shares have been allocated under the Annual Bonus Plan. Dividends are paid on these shares and they are included
in the EPS calculation.
Following the allocation of awards made under the above mentioned plans, to date 673,408 ordinary shares remain unallocated
in the reserve. Dividends on these shares are 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.
19. 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 (income)/expense
Operating cash flow before changes in working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
Cash generated from underlying operations
Increase in VAT claim related receivables
Increase in VAT claim related payables
Cash generated from operations
20. 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
Net funds/(debt)
Group
Company
2009
£’000
21,068
11,268
383
8,491
(865)
40,345
70,911
(37,497)
73,759
(8,972)
49,990
2008
£’000
140,056
10,317
596
6,667
445
158,081
24,963
2,162
185,206
–
–
114,777
185,206
2009
£’000
2008
£’000
73,567
320,091
–
–
–
332
73,899
(90,895)
62,070
45,074
(8,972)
49,990
86,092
–
–
–
3,800
323,891
(263)
(268,347)
55,281
–
–
55,281
Group
Company
2009
£’000
127,293
9,935
137,228
(43)
137,185
137,185
2008
£’000
133,467
23,513
156,980
(62,697)
94,283
94,283
2009
£’000
2008
£’000
–
–
–
(43)
(43)
(43)
–
–
–
(62,697)
(62,697)
(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 £43k lower, resulting in £137.2m cash and cash equivalents and £nil bank overdraft balances.
Within cash generated from operations is a net balance of £41.0m relating to a VAT refund by hMrc (see note 14).
80
MIchAEl PAgE InTErnATIOnAl
21. 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.
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 2009 amounted to £100.2m (2008: £168.4m).
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 £37.4m (2008: £77.0m) 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 40 days in excess of the initial credit
period (2008: 56 days).
AnnUAl rEPOrT 2009
81
21. FiNaNCial risk maNaGemeNT (CoNTiNued)
trade and other receivables (continued)
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
2009
£’000
Provision
2009
£’000
Gross trade
receivables
2008
£’000
62,942
27,880
11,466
4,868
107,156
167
85
1,839
4,868
6,959
91,600
48,883
30,414
5,180
176,077
Provision
2008
£’000
272
233
2,023
5,180
7,708
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 2% 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,
ageing profile, maturity and existence of previous financial difficulties.
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
2009
£’000
7,708
8,665
(1,932)
(4,131)
(3,351)
6,959
2008
£’000
3,733
13,017
(602)
(2,738)
(5,702)
7,708
The majority of the allowance for doubtful debts are individually impaired trade receivables with a balance of £3.4m (2008: £2.6m)
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
82
Carrying amount
2009
£’000
55,783
28,705
9,384
6,325
2008
£’000
97,445
49,619
11,860
9,445
100,197
168,369
MIchAEl PAgE InTErnATIOnAl
21. FiNaNCial risk maNaGemeNT (CoNTiNued)
exposure to credit risk (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
2009
£’000
586
5,830
3,577
1,183
2008
£’000
778
9,321
4,354
2,106
11,176
16,559
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 and in note 13. 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.
2009
Trade payables
Accruals and other payables
Bank overdraft
2008
Trade payables
Accruals and other payables
Bank overdraft
Less than
1 month
£’000
5,360
26,849
43
Less than
1 month
£’000
7,920
45,540
62,697
Carrying amount
1-3 months
£’000
3-12 months
£’000
1,728
71,327
–
216
13,425
–
Carrying amount
1-3 months
£’000
3-12 months
£’000
501
34,350
–
1,359
24,923
–
More than
12 months
£’000
_
2,881
–
More than
12 months
£’000
–
1,337
–
AnnUAl rEPOrT 2009
83
21. FiNaNCial risk maNaGemeNT (CoNTiNued)
(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 85. 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 Business review.
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 rate paid on bank overdrafts was 2.4% (2008: 6.0%).
Currency rate risk
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
2009
£m
10.0
(10.0)
2008
£m
15.1
(15.1)
2009
£m
10.0
(10.1)
2008
£m
16.1
(15.6)
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 85. 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 2008.
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.
84
MIchAEl PAgE InTErnATIOnAl
21. FiNaNCial risk maNaGemeNT (CoNTiNued)
sensitivity analysis - currency risk (continued)
Euro
Australian Dollar
Swiss Franc
Hong Kong Dollar
Brazilian Real
United States Dollar
Other
Euro
Australian Dollar
Hong Kong Dollar
Swiss Franc
Brazilian Real
United States Dollar
Other
2009 Equity
£’000
(3,915)
(1,342)
(706)
(492)
(1,035)
169
(783)
2008 Equity
£’000
(9,811)
(2,892)
(1,520)
(1,317)
(838)
(299)
(1,913)
PBT
£’000
5,167
1,317
486
711
25
641
950
PBT
£’000
(1,798)
(1,465)
(694)
(490)
(568)
320
(415)
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.
22. CommiTmeNTs
operating lease commitments
At 31 December 2009 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
2009
£’000
2008
£’000
1,677
38,034
55,386
95,097
4,681
41,749
65,034
111,464
2009
£’000
316
4,901
–
5,217
2008
£’000
2,412
9,354
–
11,766
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.
Capital commitments
The group had contractual capital commitments of £0.1m as at 31 December 2009 (2008: £0.2m) relating to property, plant
and equipment. The group had contractual capital commitments of £1.6m as at 31 December 2009 (2008: £0.1m) relating to
computer software.
AnnUAl rEPOrT 2009
85
23. CoNTiNGeNT liabiliTies
The company has provided guarantees to other group undertakings amounting to £2.3m (2008: £2.3m) 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 2009 amounted to £2.6m (2008: £5.0m).
24. eveNTs aFTer The balaNCe sheeT daTe
•
•
Between 31 December 2009 and 4 March 2010, 174,012 options were exercised, leading to an increase in share capital
of £1,740 and an increase in share premium of £375,770.
A number of discussions and meetings with HMRC have taken place since the year end in relation to the VAT claim, see
note 14.
25. 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 49. Over and above
these transactions, equity settled transactions for the year were £1.1m (2008: £0.9m). Transactions with the remaining members
of the Executive Board are disclosed below:
Short-term employee benefits
Pension costs - defined contribution plans
2009
£’000
1,822
112
2008
£’000
2,232
142
The decrease in emoluments in the current year represents a decrease in the bonus award.
In addition to their salaries, the group also provides non-cash benefits to members of the Executive Board, and contributes to
a post-employment defined contribution pension plan on their behalf, details of which are given in note 1.
Transactions between the group and its subsidiaries, which are related parties of the company, have been eliminated on
consolidation. Details of transactions between the parent company and subsidiary undertakings are shown below.
Dividends received
Amounts owed by
related parties
Amounts owed to
related parties
2009
£’000
2008
£’000
2009
£’000
2008
£’000
2009
£’000
2008
£’000
75,965
325,264
472,676
381,457
400,476
340,505
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Five Year Summary
Revenue
Gross profit
Operating profit
Profit before tax
Profit attributable to equity holders
Conversion
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%
2009
£’000
716,722
351,694
20,203
21,068
12,430
5.7%
Basic earnings per share (pence)
14.8
19.6
31.1
30.3
3.9
AnnUAl rEPOrT 2009
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Shareholder Information
and Advisers
annual General meeting
To be held on 21 May 2010 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 2009
To be paid (if approved) on 7 June 2010 to shareholders on the register on 7 May 2010.
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
capita registrars ltd
northern house
Woodsome Park
Fenay Bridge
huddersfield
West Yorkshire hD8 0lA
bankers
hSBc Bank plc
West End Business
Banking centre
70 Pall Mall
london SW1Y 5gZ
Deloitte llP
chartered Accountants
2 new Street Square
london Ec4A 3BZ
herbert Smith llP
Exchange house
Primrose Street
london Ec2A 2hS
Joint Corporate brokers
citigroup
33 canada Square
canary Wharf
london E14 5lB
Deutsche Bank
Winchester house
1 great Winchester Street
london Ec2n 2DB
key dates
Ex-Dividend date
record date
Annual general Meeting
Payment of proposed final ordinary dividend
Interim results announcement
ABn AMrO Bank n.V.
corporate clients
De Entree 99
1101 hE Amsterdam
The netherlands
5 May 2010
7 May 2010
21 May 2010
7 June 2010
16 August 2010
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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
2009, 323,424,875 ordinary shares have been allotted, called-up and fully paid (see note 17, notes to the Accounts).
alteration of capital
The company may from time to time by ordinary resolution:
(a)
increase its share capital by new shares of such amount as the resolution prescribes;
(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(c)
subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of a smaller amount than is fixed by
the memorandum;
(d) determine that, as between the shares resulting from such a sub-division, any of them may have any preference or advantage
as compared with the others; and
(e)
cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person,
and diminish the amount of its share capital by the amount of the shares so cancelled.
Subject to the provisions of the Act, the company may by special resolution reduce its share capital, any capital redemption
reserve and any share premium account, in any way.
Purchase of own shares
Subject to the provisions of the Act, the company may purchase its own shares, including redeemable shares. The company
proposes to renew its authority to purchase its own shares for another year in item 11 of the Annual general Meeting notice.
general meetings and voting rights
The Directors may call general meetings whenever and at whatever time and location they so determine. Subject to the provisions
of the Act, an annual general meeting and an extraordinary general meeting called to pass a special resolution shall be called
by at least 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.
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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,
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.
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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.
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;
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(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
(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.
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Subject to the Act, the company may, by extraordinary resolution, remove a director before the expiration of his period of office
(without prejudice to any claim for damages for breach of any contract of service between the director and the company) and,
subject to the Articles of Association, may by ordinary resolution, appoint another person instead of him. The newly appointed
person shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose
place he is appointed was last appointed or reappointed as a Director.
A Director shall be disqualified from holding office if:
(a) he ceases to be a director under the provisions of the Act or he becomes prohibited by law from being a Director;
(b) he becomes bankrupt or makes an arrangement or composition with his creditors generally;
(c) he is, or may be suffering from mental disorder in certain circumstance;
(d) he resigns his office by notice in writing to the company;
(e)
in the case of an Executive Director, his appointment as such is terminated or expires and the Directors resolve that his office
be vacated;
(f)
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 2009
93
Cautionary statement
The Business review has been prepared solely to provide additional information to shareholders to assess the company’s
strategies and the potential for those strategies to succeed.
The Business review 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.
directors’ responsibilities
The directors are responsible for preparing the Annual report and the financial statements in accordance with applicable laws
and regulations. company law requires the directors to prepare such financial statements for each financial year. Under that law
the directors are required to prepare group financial statements in accordance with International Financial reporting Standards
(IFrSs) as adopted by the European Union and Article 4 of the lAS regulation and have also chosen to prepare the parent
company financial statements under IFrSs as adopted by the European Union. Under company law the directors must not
approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the
profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• properly select and apply accounting policies;
•
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
•
provide additional disclosures when compliance with the specific requirements in lFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial
performance; and
•
make an assessment of the company’s ability to continue as a going concern.
The directors are responsible for keeping proper accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure
that the financial statements comply with the companies Act 2006. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors
are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.
legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
directors’ responsibility statement
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with International Financial reporting Standards as adopted by the EU, give
a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included
in the consolidation taken as a whole; and
2. the Business review, which is incorporated into the directors’ report, includes a fair review of the development and performance
of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
On behalf of the Board
S Ingham
chief Executive
5 March 2010
94
S Puckett
group Finance Director
5 March 2010
MIchAEl PAgE InTErnATIOnAl
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Our Office Locations
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in 136 offices in 28 countries worldwide.
AnnUAl rEPOrT 2009
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