PageGroup PLC · LSE:PAGE
PageGroup — Michael Page International — FY2008 Earnings Presentation
35 slides from PageGroup's earnings presentation, March 2009
Slide 1: 2008 Results
2008 Results March 2009 Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.uk
Slide 2: Financial Results
Financial Results Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.uk
Slide 3: Income Statement
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 3 Income Statement Constant 2008 2007 Currency £m £m Change Change Revenue 972.8 831.6 17.0% 7.9% Gross profit 552.7 478.1 15.6% 5.8% Operating profit 140.5 149.4 -6.0% -16.4% Net interest expense (0.4) (2.0) Profit before tax 140.1 147.4 -5.0% Tax
Slide 4: Dividends and share repurchases
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 4 Dividends and share repurchases 2008 2007 (pence 2008 (pence 2007 Dividend per share) £m per share) £m Interim 2.88 9.3 2.4 7.8 Final 5.12* 16.3 5.6 18.0 Total 8.0 25.6 8.0 25.8 *Proposed and payable on 8 June 2009 2008 2007 Shares 2008 Shares 20
Slide 5: Cash Flow
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 5 Cash Flow 2008 2007 £m £m Operating profit 140.5 149.4 Depreciation and share scheme charges 17.6 14.5 Decrease/(increase) in working capital 27.1 (15.0) Decrease in provisions – (0.2) Net cash inflow from operating activities 185.2 148.7 Net int
Slide 6: Working Capital
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 6 Working Capital 2008 2007 £m £m Decrease/(increase) in receivables 25.0 (40.8) Increase in payables 2.1 25.8 Decrease/(increase) in working capital 27.1 (15.0) • Cash inflow from reduction in trade receivables as activity level slowed • Debtor da
Slide 7: Net capital expenditure
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 7 Net capital expenditure 2008 2007 £m £m Purchases of fixtures, plant and equipment 16.1 11.2 Purchase of software 10.3 1.6 Total 26.4 12.8 • Capex to support growth in headcount • Reduce to maintenance levels as headcount declines • Project to re
Slide 8: Balance Sheet
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 8 Balance Sheet 2008 2007 £m £m Intangible assets - Goodwill 1.5 1.5 - Computer software 12.3 2.8 Tangible assets 39.1 27.1 52.9 31.4 Trade and other receivables 205.8 195.1 Trade and other payables (138.4) (116.1) 67.4 79.0 Current and deferred ta
Slide 9: Segmental Analysis
Segmental Analysis Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.uk
Slide 10: Gross profit by discipline
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 10 Discipline analysis of gross profit Gross profit 2008 2007 £552.7m +16% £478.1m - benefit of being more diverse Operating profit £140.5m -6% £149.4m 600 • Finance and Accounting, impacted by £552.7m Banking, now less than half of Group 500 £478.
Slide 11: Gross profit by geography
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 11 Geographical analysis of gross profit Gross profit 2008 2007 £552.7m +16% £478.1m - benefit of being more diverse Operating profit £140.5m -6% £149.4m 600 • 68% of gross profit from non-UK £552.7m +31% businesses 500 £478.1m • EMEA largest regio
Slide 12: EMEA gross profit
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 12 EMEA Gross profit 2008 2007 £258.8m +32% £196.4m Operating profit £66.3m +5% £63.0m Country growth rates in local currency 300 • Region grew by 14% in local currency £258.8m • Range of country growth rates 250 +21% highlights benefit of diversif
Slide 13: United Kingdom gross profit
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 13 United Kingdom Gross profit 2008 £176.7m 2007 -5% £186.0m Operating profit £46.6m -22% £59.4m 200 • Impact of financial crisis on Finance £186.0m £176.7m and Accounting with Banking +30% significantly down 150 • Marketing grew in year with incre
Slide 14: Asia Pacific gross profit
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 14 Asia Pacific Gross profit 2008 £66.8m +17% 2007 £57.2m Operating profit £22.4m +7% £20.8m Country growth rates in local currency 80 • Australia grew strongly in first half, slowed Q3 then weakened rapidly 70 £66.8m in Q4 60 £57.2m • Opened in Au
Slide 15: The Americas gross profit
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 15 The Americas Gross profit 2008 £50.5m +32% 2007 £38.4m Operating profit £5.3m -14% £6.2m Country growth rates in local currency 60 • North America trading conditions very weak £50.5m 50 • Benefiting from newer disciplines: Marketing, Procurement
Slide 16: Michael Page International strategy
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 16 Michael Page International strategy To increase the diversification Of s fi of Michael Page International by m ce a organically growing existing and Te s new teams, offices, disciplines and Culture countries with a consistent team and s Co ine m
Slide 17: Diversification - Gross Profit 2000
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 17 Diversification Gross Profit – 2000 by Region by DISCIPLINE 300 300 Businesses in 2000 250 250 200 200 Gross Profit (£m) Gross Profit (£m) 150 150 100 100 50 50 0 0 UK EMEA Americas Asia Pacific Finance & Marketing, Eng, P&C Other Accounting Sal
Slide 18: Diversification - Gross Profit 2008
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 18 Diversification Gross Profit – 2008 by Region by DISCIPLINE 300 300 Businesses in 2000 Organically grown businesses since 2000 250 250 200 200 Gross Profit (£m) Gross Profit (£m) 150 150 100 100 50 50 0 0 UK EMEA Americas Asia Pacific Finance &
Slide 19: Organically Growing
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 19 Organically Growing DepTH of experience Senior Operational Management No. Tenure in MP 5 Executive Executive Board 5 20 years Board Directors Regional Managing Directors 11 14 years Managing Directors 37 12 years 11 Directors 138 8 years Regiona
Slide 20: Business Model – Flexible with Headcount
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 20 Team Business Model – Flexible with Headcount • c900 teams worldwide, typically a Manager and 3 Consultants • Manager has full P&L responsibility for team • Significant share of profit each quarter allocated to team as bonus • Individual bonuses
Slide 21: Managing costs
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 21 Team Managing costs IT (c10%) MISCELLANEOUS (c5%) • Reduce contractor rates • Travel on IT project (£0.3m) • Staff welfare • Accelerate data centre consolidation Staff Costs (c75%) - reduces support staff • Headcount - reacting - greater resilie
Slide 22: Headcount – Reacting to market conditions
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 22 Meritocratic Headcount – Reacting to market conditions 200 150 Change in Headcount 100 50 Q1 0 Q2 Q3 (50) Q4 (100) Jan/Feb 2009 (150) (200) (250) EMEA UK Asia Pacific Americas Group End 2007 2,078 1,799 632 543 5,052 Q1 2008 177 73 69 54 373 Q2
Slide 23: Current Trading
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 23 Current Trading First two months of 2009: • Market conditions increasingly challenging - very limited visibility - decreasing job flow - lengthening process/job cancellations - decreasing churn • Gross profit 30% lower (38% lower in constant cur
Slide 24: Strategic and measured investment in downturns maximises growth in upturns
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 24 “Strategic and measured investment and ongoing commitment to existing businesses in downturns has maximised growth in upturns” 28 16 4 1 1 1 14 77 202 17 92 191 Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.u
Slide 25: Appendices
Appendices Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.uk
Slide 26: Michael Page International overview
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 26 Michael Page International overview • Specialist recruitment company focused on placing ‘white-collar’ professionals into permanent, contract and temporary positions: - Gross profit ratio: 77:23 Perm/Temp • Specialisms: Finance & Accounting, Ban
Slide 27: Clear on Brand
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 27 Clear on Brand Executive Search 28 Countries 108 Offices Qualified Professional 2,774 Fee Earners 10 Countries 81 Offices 880 Fee Earners Clerical Professional Generalist Staffing Specialists in Global Recruitment 163 offices in 28 countries | w
Slide 28: Power of the Brand
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 28 Power of the Brand The brand drives organic growth • Attracts the best clients, candidates and employees • Facilitates organic expansion in existing markets and entry into new markets • Leading advertiser in national newspapers Online awareness
Slide 29: Consistent over time
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 29 Consistent over time • 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
Slide 30: Long term on investment
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 30 Long term on investment 1996 2001 2006 Singapore Switzerland South Africa Japan Russia Ireland 2008 1976 1985 1993 1998 2002 U.A.E. Austria United Kingdom Australia Germany USA Belgium Mexico Turkey Sweden New Zealand 1997 2000 2005 2007 1987 Sp
Slide 31: Group quarterly gross profit trend: 2001 to 2008
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 31 Group quarterly gross profit trend: 2001 to 2008 200 152.4 141.3 140.3 150 128.2 123.4 121.0 118.7 Gross Profit (£m) 105.5 93.1 100 89.1 87.4 79.2 70.2 69.2 69.6 68.3 66.9 59.9 58.7 56.7 53.5 52.3 51.4 49.9 49.5 48.1 47.8 45.7 45.0 45.0 43.9 42.
Slide 32: Headcount Trend
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 32 Headcount Trend 5,000 Ratio Fee Earners Fee Earners : Non Fee Earners 1999 59:41 Non-Fee Earners 4,000 2000 58:42 2001 57:43 2002 58:42 2003 60:40 2004 64:36 3,000 2005 71:29 Headcount 2006 74:26 2007 76:24 2008 74:26 2,000 1,000 0 H1 H2 H1 H2 H
Slide 33: Conversion rates through cycles
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 33 Conversion rates through cycles 40% Conversion Rate (excl all share based charges) Conversion Rate (incl share based charges) 30% Operating Profit/Gross Profit 20% Conversion rates after share based charges 2008 2007 EMEA 25.6 32.1 10% UK 26.4 3
Slide 34: Perm/Temp Analysis
MICHAEL PAGE INTERNATIONAL FINANCIAL RESULTS 2008 | 34 Perm/Temp Analysis 2008 2007 2008 2007 Revenue £m £m Change % share % share Permanent 448.4 392.6 14.2% 46% 47% Temporary 524.4 439.0 19.4% 54% 53% 972.8 831.6 17.0% Gross profit Permanent 425.7 372.0 14.4% 77% 78% Temporary 127.0 106.1 19.7% 23
Slide 35: Specialists in Global Recruitment
Specialists in Global Recruitment 163 offices in 28 countries | www.michaelpage.co.uk
Michael Page International — FY2008 Earnings Presentation on 6ix