PageGroup PLC · LSE:PAGE
PageGroup — Michael Page International — FY2006 Earnings Presentation
53 slides from PageGroup's earnings presentation, February 2007
Slide 1: Preliminary Results 2006
LONDON PARIS SYDNEY NEW YORK PRELIMINARY RESULTS 2006 February 2007 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 2: Agenda
Agenda LONDON Financial Highlights .............................................................................................................. 3 Financial Results and Segmental Analysis .................................................................. 4 - 11 Geographical Review .................
Slide 3: Financial Highlights
Financial Highlights 2006 2005 Change TORONTO Turnover £649.1m £523.8m 24% Gross profit £348.8m £267.6m 30% Operating profit £97.4m £66.5m 46% Profit before tax £97.0m £66.1m 47% Basic earnings per share (pence) 19.6 14.8 32% Diluted earnings per share (pence) 19.0 14.4 32% Dividends (pence) 6.0 5.0
Slide 4: Financial Results and Segmental Analysis
LONDON PARIS SYDNEY NEW YORK FINANCIAL RESULTS AND SEGMENTAL ANALYSIS Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 5: Profit and Loss
Profit and Loss 2006 2005 £m £m Change MADRID Turnover 649.1 523.8 23.9% Gross profit 348.8 267.6 30.4% Operating profit 97.4 66.5 46.4% Net interest expense (0.4) (0.4) Profit before tax 97.0 66.1 46.6% Taxation (31.5) (16.5) 90.9% Profit after tax 65.4 49.6 31.9% Effective tax rate on profit 32.5%
Slide 6: Earnings per share and dividends
Earnings per share and dividends 2006 2005 Change MILAN Earnings per share Basic (pence) 19.6 14.8 32.4% Diluted (pence) 19.0 14.4 31.9% Weighted average number of shares Basic (000’s) 334,744 336,283 Diluted (000’s) 343,632 345,297 Dividend Interim - pence per share 1.8 1.5 Final - pence per share
Slide 7: Share Repurchases and Share Options
Share Repurchases and Share Options LONDON Share Repurchases • Repurchased and cancelled 23.3m shares (7.0% of total share capital) in the year • Total cost of repurchases £83.4m • Average repurchase price 355.8p per share • Range of prices 307.3p to 404.0p Share Options • Options exercised over 23.
Slide 8: Cash Flow
Cash Flow 2006 2005 £m £m PARIS Operating profit 97.4 66.5 Depreciation/share scheme charges 10.6 8.7 Net movement in working capital (28.7) (8.5) Profit on sale of business – (0.6) Decrease in provisions (0.4) (0.6) Net cash inflow from operating activities 78.9 65.4 Net interest expense (0.4) (0.4
Slide 9: Balance Sheet
Balance Sheet 31 December 31 December 2006 2005 SAO PAULO £m £m Intangible assets - Goodwill 1.5 1.5 - Computer software 2.1 2.2 Tangible assets 21.6 19.7 25.2 23.4 Trade and other receivables 145.7 106.0 Trade and other payables (84.7) (72.3) 61.0 33.7 Current and deferred taxes (2.0) (0.8) Net (de
Slide 10: Discipline Analysis of Gross Profit
Discipline Analysis of Gross Profit 2006 2005 2006 2005 SHANGHAI Gross profit £m £m Change % share % share Finance & Accounting 202.5 159.5 27.0% 58.0% 59.6% Marketing, Sales, Retail 67.9 55.1 23.1% 19.5% 20.6% Legal, Technology, HR, Secretarial and Other 46.6 31.8 46.6% 13.4% 11.9% Engineering, Pro
Slide 11: Perm/Temp analysis
Perm/Temp analysis 2006 2005 2006 2005 Turnover £m £m Change % share % share SINGAPORE Permanent 276.3 205.5 34.5% 42.6% 39.2% Temporary 372.7 318.3 17.1% 57.4% 60.8% 649.1 523.8 23.9% Gross profit Permanent 261.0 195.0 33.9% 74.8% 72.9% Temporary 87.8 72.6 20.9% 25.2% 27.1% 348.8 267.6 30.4% Gross
Slide 12: Geographical Review
LONDON PARIS SYDNEY NEW YORK GEOGRAPHICAL REVIEW Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 13: Geographical analysis of gross profit
Geographical analysis of gross profit 2005 2006 GP: £267.6m GP: £348.8m LONDON 6.2% 4.8% 12.9% 14.6% 48.4% 44.7% 30.4% Growth 32.2% 36.3% United Kingdom +20.3% EMEA +46.9% Asia Pacific +15.2% Americas +66.8% 13 Michael Page International is a world leading recruitment consultancy 136 offices in 24 c
Slide 14: United Kingdom
United Kingdom 2005 2006 Turnover: £269.6m Turnover: £312.4m LONDON Gross Profit: £129.5m Gross Profit: £155.8m Headcount: 1,318 Headcount: 1,537 5% 5% 12% Gross profit 15% 3% 4% 57% 20.3% Growth 54% 22% 21% Finance & Accounting +14% Marketing, Sales & Retail +14% Legal, HR, Technology, Secretarial
Slide 15: EMEA
EMEA 2005 2006 Turnover: £159.2m Turnover: £223.0m MILAN Gross Profit: £86.1m Gross Profit: £126.6m Headcount: 1,041 Headcount: 1,438 16% 19% Gross profit 38% 11% 46% 46.9% Growth 12% 9% 11% 9% 9% France +22% 12% 8% Holland +76% Belgium, Switzerland, South +112% Africa, UAE, Sweden, Poland, Portugal
Slide 16: Asia Pacific
Asia Pacific 2005 2006 Turnover: £76.7m Turnover: £83.6m TOKYO Gross Profit: £39.0m Gross Profit: £45.0m Headcount: 359 Headcount: 441 Gross profit 37% 15.2% Growth 42% 58% 63% Australia +5% Rest of Asia Pacific +32% 16 Michael Page International is a world leading recruitment consultancy 136 office
Slide 17: Australia Overview
Australia Overview WHEELERS HILL Gross profit performance AUS$ 2005 2006 Q1 +26% +6% Q2 +22% +2% Q3 +11% +3% Q4 -7% +24% • New Management team installed in Q3 • Restructured by discipline rather than by geography in Q4 • Expect benefits to become gradually evident as 2007 progresses • Weak Q4 2005 c
Slide 18: The Americas
The Americas 2005 2006 Turnover: £18.3m Turnover: £30.1m PHILADELPHIA Gross Profit: £12.9m Gross Profit: £21.5m Headcount: 208 Headcount: 342 Gross profit 42% 58% 66.8% Growth 40% 60% North America +73% Latin America +58% 18 Michael Page International is a world leading recruitment consultancy 136 o
Slide 19: Our Investment Strategy
LONDON PARIS SYDNEY NEW YORK OUR INVESTMENT STRATEGY Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 20: Michael Page International - Strategy
Michael Page International - Strategy LONDON s Of m fi ce a Te To organically grow s existing and new teams, offices, disciplines and countries with a Culture consistent team and s Co ine meritocratic culture nt u rie i pl c s Dis 20 Michael Page International is a world leading recruitment consulta
Slide 21: 30 years of organic growth
30 years of organic growth 1986 1996 2006 GENEVA Turnover £m* 18.8 142.1 649.1 Operating Profit £m* 2.3 28.9 97.4 Average number of staff 262 737 3,305 *as reported. 21 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 22: 30 years of organic growth: Disciplines
30 years of organic growth: Disciplines 1986 1996 2006 MANCHESTER 4 6 14 Finance & Accounting Finance & Accounting Finance & Accounting Banking Banking Banking Legal Legal Legal Marketing Marketing Marketing Sales Sales Technology Technology Engineering & Manufacturing Procurement & Supply Chain Pro
Slide 23: 30 years of organic growth: Countries
30 years of organic growth: Countries 1986 1996 2006 3 7 24 BRUSSELS UK UK UK Australia Australia Australia France France France Holland Holland Germany Germany China China Singapore Singapore Spain USA Italy Brazil Portugal Switzerland Japan Sweden Belgium Poland Canada Mexico Russia Republic of Ir
Slide 24: Rolling out the global strategy
Rolling out the global strategy • Increase revenue from existing consultants • New consultants into existing teams • New teams into existing offices, e.g. FRANKFURT – MP Finance teams in New York, Boston, New Jersey, Stamford, Amsterdam, Dusseldorf, Frankfurt • Rolling out existing disciplines into
Slide 25: 2006 Spread of Investment
2006 Spread of Investment Allocation of the new headcount Estimated MILAN New consultants, existing teams 50% New teams/disciplines, existing offices 20% New disciplines, existing countries 15% New office, existing countries 10% New countries 5% Including bonuses and share based charges approximatel
Slide 26: Return on investment
Return on investment New Consultant Typically Month 3 Profitable ROTTERDAM New Team, Existing Office Typically 2nd Quarter Profitable New Office, Existing Country Typically Year 1 Profitable New Discipline, Existing Country Typically Year 1 Breakeven Typically Year 2 Profitable New Country Typically
Slide 27: Depth of management resource to drive organic growth
Depth of management resource to drive organic growth Senior Management No. Tenure in MP LISBON Executive Directors 3 15 years Regional Managing Directors 9 16 years Managing Directors 30 12 years Directors 98 9 years 140 Average c.10 years Retained by: • Culture fit • Clear long term career paths •
Slide 28: Investment in management resource
Investment in management resource To fuel growth in existing region, e.g. The Americas Alexi de Bretteville (8/06) CONNECTICUT RMD (14 years) Americas Ex N. Europe, S. Europe, France Mark Sharland (8/05) Patrick Hollard (7/00) MD (18 years) MD (10 years) USA Canada Latin America Ex UK Christophe Ros
Slide 29: Investment in new countries
Investment in new countries Mexico, Russia, South Africa, UAE, Republic of Ireland JOHANNESBURG • Managing Director responsible averages 13 years at MP • All ahead of plan • Typically 5 to 10 people in each country • Limited/fragmented competition • Serviced offices moving to leased premises • Targe
Slide 30: Headcount - Operational Gearing
Headcount - Operational Gearing LONDON SYDNEY 30 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 31: Current Trading
LONDON PARIS SYDNEY NEW YORK CURRENT TRADING Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 32: Current trading
Current trading TORONTO • Good activity levels continue in all regions • MP job count at end of Feb 2007 c. 39,000 (Feb 2006: c. 27,000) • Since year end opened: - New country - Luxembourg - New offices - Hamburg, Hartford (Connecticut), Leicester • Continue to invest in our businesses for future gr
Slide 33: Appendix
LONDON PARIS SYDNEY NEW YORK APPENDIX Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 34: Appendix Agenda
Appendix Agenda JOHANNESBURG Michael Page International Overview ........................................................................ 35 - 39 Geographical Review .................................................................................................40 - 44 Global MP Job Count and Quart
Slide 35: Michael Page International Overview
Michael Page International Overview AMSTERDAM • Specialist recruitment company focused on placing ‘white-collar’ professionals into permanent, contract and temporary positions: - Gross profit ratio 75:25 Perm/Temp • Specialisms: Finance & Accounting, Banking, Legal, Marketing, Sales, Technology, Eng
Slide 36: Positioning
Positioning Korn Ferry Executive Search Egon Zehnder Spencer Stuart Whitehead Mann Russell Reynolds BRUSSELS H IG D H DE ER Harvey Nash AD OPD FE UE Qualified Professional N ES SThree O L Recruitment I Robert Walters VA AT Mercuri Urval ER Hudson UN M RE D AN RY LA SA Hays Clerical Staffing (Profess
Slide 37: Power of the Brand
Power of the Brand One of the strongest global brands in recruitment • Leading advertiser in the Financial Times (UK), South China Morning Post, FRANKFURT Straits Times (Singapore), The Melbourne Age, The Sydney Morning Herald, The Australian Financial Review, FT (Deutschland), Süddeutsche Zeitung,
Slide 38: Power of the Brand Online
Power of the Brand Online Globally per month: GENEVA 10 million Page Views 2.2 million Visitors 167,000 Job Apps/General CV Submissions website as at 23 Feb 07 38 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 39: Current Clients advertising on the MP website
Current Clients advertising on the MP website LONDON 39 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 40: Geographical analysis of gross profit
Geographical analysis of gross profit 2006 2005 2006 2005 £m £m Change % share % share TOKYO United Kingdom 155.8 129.5 20.3% 44.7% 48.4% EMEA 126.6 86.1 46.9% 36.3% 32.2% Asia Pacific 45.0 39.0 15.2% 12.9% 14.6% Americas 21.4 12.9 66.8% 6.2% 4.8% 348.8 267.6 30.4% 40 Michael Page International is a
Slide 41: United Kingdom Preliminary Results 2006
United Kingdom Preliminary Results 2006 2006 2005 £m £m Change MANCHESTER Turnover 312.4 269.6 15.9% Gross profit 155.8 129.5 20.3% Operating profit before share based charges 48.7 34.6 41.3% Share based charges (4.4) (2.7) Operating profit 44.3 31.9 38.6% Operating margin before share based charges
Slide 42: EMEA Preliminary Results 2006
EMEA Preliminary Results 2006 2006 2005 £m £m Change ROTTERDAM Turnover 223.0 159.2 40.1% Gross profit 126.6 86.1 46.9% Operating profit 34.2 19.4 75.8% Operating margin 27.0% 22.6% Headcount at year end 1,438 1,041 38.1% 42 Michael Page International is a world leading recruitment consultancy 136 o
Slide 43: Asia Pacific Preliminary Results 2006
Asia Pacific Preliminary Results 2006 2006 2005 £m £m Change PARRAMATTA Turnover 83.6 76.7 8.9% Gross profit 45.0 39.0 15.2% Operating profit 17.1 14.1 20.9% Operating margin 37.9% 36.1% Headcount at year end 441 359 22.8% 43 Michael Page International is a world leading recruitment consultancy 136
Slide 44: The Americas Preliminary Results 2006
The Americas Preliminary Results 2006 2006 2005 £m £m Change SAO PAULO Turnover 30.1 18.3 64.3% Gross profit 21.5 12.9 66.8% Operating profit 1.9 1.0 81.4% Operating margin 8.7% 8.0% Headcount at year end 342 208 64.4% 44 Michael Page International is a world leading recruitment consultancy 136 offi
Slide 45: Global MP Job Count: Website
Global MP Job Count: Website • Only MP jobs, not total Group LONDON MANCHESTER • Mix of Perm and Temp 45 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 46: Group quarterly gross profit trend
Group quarterly gross profit trend Q1 2001 to Q4 2006 LONDON SINGAPORE 100 93.1 89.0 87.4 80 79.2 69.6 69.2 70.2 Gross Profit (£m) 68.3 66.9 60 58.7 59.9 56.7 53.5 52.3 49.9 51.4 49.5 48.1 47.8 45.0 45.0 45.7 43.9 42.8 40 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 200
Slide 47: Scope for Growth: Number of offices
Scope for Growth Number of UK offices per discipline 40 NEW YORK Added during 2006 35 30 31 Number of offices 22 20 21 10 8 8 8 8 8 7 6 6 6 5 5 4 1 1 1 l l il cy ce ga ia Ci ty in g le s ta es & t& & gy tan ns an Le tar et Sa Re urc r g in ring en ain erty ion olo n io n e k t ou ddit Fi cr ar so ee
Slide 48: Scope for Growth: Number of disciplines
Scope for Growth Number of disciplines in each country Relative size of economies Vs. UK by GDP France 1.0x Sweden 0.2x FRANKFURT Spain 0.5x Portugal 0.1x 20 Netherlands 0.3x Poland 0.1x Australia 0.3x Canada 0.5x United States 5.6x Japan 2.0x Germany 1.3x Singapore 0.1x 15 Italy 0.8x Mexico 0.3x 14
Slide 49: Scope for Growth: Number of offices
Scope for Growth Number of offices in each country 50 Relative size of economies Vs. UK by GDP STOCKHOLM 2006 – 46 47 France 1.0x Sweden 0.2x Spain 0.5x Portugal 0.1x 40 Netherlands 0.3x Poland 0.1x Australia 0.3x Canada 0.5x United States 5.6x Japan 2.0x Germany 1.3x Singapore 0.1x Number of office
Slide 50: Scope for Growth - Conversion
Scope for Growth - Conversion LONDON STOCKHOLM Operating Profit (excl all share based costs) Operating Profit (after Share Option costs) Operating Profit (after all share based costs) 50 Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www
Slide 51: Share Based Payment Charges
Share Based Payment Charges LISBON Share options charge £4.6m (2005: £2.9m) • 2006 charge higher due largely to increased social charges as a consequence of higher share price. 452.25p at 31 December 2006 (31 December 2005: 270.0p) LTIP* and Deferred Bonus Plan* charge £3.7m (2005: £1.5m) • 2006 cha
Slide 52: Share options
Share options Summary of Exercised and Outstanding Share Options at 31 December 2006 LONDON 2001 IPO Options % of total Shares (m) share capital Vested 15.9 4.7 of which exercised 14.2 4.2 Unvested 4.0 1.2 Total 19.8 5.9 Shares (m) Original grants 33.8 Earliest exercise dates for non-vested share op
Slide 53: LONDON PARIS SYDNEY
LONDON PARIS SYDNEY NEW YORK Michael Page International is a world leading recruitment consultancy 136 offices in 24 countries worldwide | www.michaelpage.co.uk
Michael Page International — FY2006 Earnings Presentation on 6ix