PageGroup PLC · LSE:PAGE
PageGroup — Michael Page International — H1 2007 Earnings Presentation
62 slides from PageGroup's earnings presentation, August 2007
Slide 1: Michael Page International Interim Results 2007
LONDON PARIS SYDNEY NEW YORK MICHAEL PAGE INTERNATIONAL INTERIM RESULTS 2007 August 2007 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 2: Agenda
Agenda LONDON Financial Results . ........................................................................................................ 4 - 10 Segmental Analysis ................................................................................................... 11 - 23 How we are achieving these
Slide 3: Overview Interim Results 2007
Overview Interim Results 2007 HONG KONG • Record gross profits • Group gross profit increased by 36.0% to £226.5m (2006: £166.6m) • Operating profit increased by 54.9% to £69.8m (2006: £45.1m) • Conversion rate* 30.8% (2006: 27.1%) • £58.8m of cash generated from operations (2006: £26.7m) • Basic ea
Slide 4: Financial Results
LONDON PARIS SYDNEY NEW YORK FINANCIAL RESULTS Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 5: Profit and Loss Interim Results 2007
Profit and Loss Interim Results 2007 2007 2006 £m £m Change MADRID Turnover 395.8 312.0 26.8% Gross profit 226.5 166.6 36.0% Operating profit 69.8 45.1 54.9% Net interest (0.6) 0.1 Profit before tax 69.2 45.2 53.1% Conversion rate 30.8% 27.1% Conversion rate before share based charges 32.7% 30.2% Mi
Slide 6: Taxation, earnings per share and dividends
Taxation, earnings per share and dividends 2007 2006 MILAN Effective tax rate on profits 31.5% 32.5% Earnings per share Basic 14.3p 9.1p +57.1% Diluted 14.0p 8.8p +59.1% Full year Weighted average number of shares Half year Half year estimate Basic (000’s) 328,986 330,317 336,276 Diluted (000’s) 336
Slide 7: Share Repurchases and Share Options
Share Repurchases and Share Options LONDON Share Repurchases • Repurchased and cancelled 8.36m shares (2.5% of total share capital) in H1 • Cost of repurchases £45.0m • Average repurchase price 534.5p per share • Range 489.6p to 568.7p Share Options • Options exercised over 5.0m shares (1.5%) in H1
Slide 8: Cash Flow
Cash Flow 2007 2006 £m £m PARIS Operating profit 69.2 45.1 Depreciation/amortisation/share scheme charges 7.2 5.4 Increase in receivables (30.6) (28.4) Increase in payables 13.1 4.7 Decrease in provisions (0.1) (0.2) Net cash inflow from operating activities 58.8 26.6 Net interest (paid)/received (0
Slide 9: Balance Sheet
Balance Sheet 30 June 31 December 2007 2006 SAO PAULO £m £m Intangible assets - Goodwill 1.5 1.5 - Computer software 2.0 2.1 Tangible assets 23.6 21.6 27.1 25.2 Trade and other receivables 176.5 145.7 Trade and other payables (97.9) (84.7) 78.6 61.0 Current and deferred taxes (8.1) (2.0) Net debt (1
Slide 10: Perm/Temp analysis
Perm/Temp analysis 2007 2006 2007 2006 Turnover £m £m Change % share % share SINGAPORE Permanent 186.2 132.4 40.6% 47.1% 42.4% Temporary 209.6 179.6 16.7% 52.9% 57.6% 395.8 312.0 26.8% Gross profit Permanent 176.1 124.9 41.0% 77.7% 75.0% Temporary 50.4 41.7 20.9% 22.3% 25.0% 226.5 166.6 36.0% Gross
Slide 11: Segmental Analysis
LONDON PARIS SYDNEY NEW YORK SEGMENTAL ANALYSIS Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 12: Discipline analysis of gross profit
Discipline analysis of gross profit H1 2006 H1 2007 GP: £166.6m GP: £226.5m LONDON 11.1% 9.0% 12.9% 14.8% 58.5% 36.0% Growth 55.3% 19.6% 18.8% Growth Finance & Accounting +28.7% Marketing, Sales & Retail +29.8% Legal, HR, Technology, Secretarial +56.0% and Other Engineering, Property & Construction,
Slide 13: Geographical analysis of gross profit
Geographical analysis of gross profit H1 2006 H1 2007 GP: £166.6m GP: £226.5m ATLANTA 7.5% 5.8% 12.9% 12.0% 40.6% 45.6% 36.0% Growth 35.7% 39.9% Growth United Kingdom +21.0% EMEA +52.5% Asia Pacific +25.2% Americas +76.1% 13 Michael Page International is a world leading recruitment consultancy 141 o
Slide 14: United Kingdom
United Kingdom H1 2006 H1 2007 Gross Profit: £76.0m Gross Profit: £92.0m LONDON Operating Profit: £19.6m +46.2% Operating Profit: £28.6m Headcount: 1,387 +16.4% Headcount: 1,615 6% 5% 15% Gross profit 16% 4% 4% 55% 52% 21.0% Growth 21% 22% Growth Finance & Accounting +14% Marketing, Sales & Retail +
Slide 15: United Kingdom Overview
United Kingdom Overview MANCHESTER • Banking and Retail improved on 2006 growth • S imilar pattern of growth in the other disciplines to 2006 • Consistent rate of growth throughout first half • Conversion rate* increased to 34% (31% in 2006) • MP opened 2 new offices in Leicester and London’s West E
Slide 16: EMEA
EMEA H1 2006 H1 2007 Gross Profit: £59.3m Gross Profit: £90.4m +76.5% ROTTERDAM Operating Profit: £16.1m Operating Profit: £28.5m Headcount: 1,181 +51.1% Headcount: 1,785 7% 5% Gross profit 18% 18% 33% 40% 52.5% Growth 11% 13% Growth* 11% France +29% 7% 9% 8% Holland +62% Germany +82% 12% 8% Spain +
Slide 17: EMEA Overview - France
EMEA Overview - France MILAN • Gradual improvement in growth rate throughout H1 • Now 33% of region (40% H1 2006) • Changes in ‘Borloo Law’ created growth opportunity for perm in Page Personnel • Headcount 589 (+31%) • New office in Bordeaux 17 Michael Page International is a world leading recruitme
Slide 18: EMEA Overview - Rest of EMEA
EMEA Overview - Rest of EMEA JOHANNESBURG • High growth rates continue as largest competitor (HR depts.) outsource • Strong brand | office network | first mover | consistent business model creating very significant advantages • Italy improved growth rate on 2006 (Europe’s 4th largest economy) • New
Slide 19: Asia Pacific
Asia Pacific H1 2006 H1 2007 Gross Profit: £21.6m Gross Profit: £27.0m PARRAMATTA Operating Profit: £7.8m +26.4% Operating Profit: £9.8m Headcount: 390 +28.5% Headcount: 501 Gross profit 40% 25.2% Growth 43% 57% 60% Growth* Australia +20% Rest of Asia Pacific +49% *Growth rates are based on local cu
Slide 20: Asia Pacific Overview
Asia Pacific Overview TOKYO • Australia restructure completed and having beneficial impact on gross profit growth rate (+20%) • Newest disciplines (HR/Legal/Engineering/Supply Chain) growth +45% • Investing heavily in new headcount, making up for lost momentum (+30%) • Rest of Asia seeing strong gro
Slide 21: The Americas
The Americas H1 2006 H1 2007 Gross Profit: £9.7m Gross Profit: £17.1m SAO PAULO Operating Profit: £1.6m +83.4% Operating Profit: £2.9m Headcount: 272 +55.1% Headcount: 422 Gross profit 41% 59% 76.1% Growth 42% 58% Growth* North America +90% Latin America +85% *Growth rates are based on local currenc
Slide 22: The Americas Overview
The Americas Overview TORONTO North America • Now have presence in 3 regions in US – East, Mid West, South • East has 6 offices with addition of Hartford (Connecticut) in H1 • Rollout of Sales, Marketing, HR continuing across network • Midwest (Chicago) now established. New replacement office in H2
Slide 23: The Americas Overview
The Americas Overview MEXICO Latin America • Brazil’s growth continues, now 8 disciplines • Launched Page Personnel in H1 • Headcount grown significantly +64% to 176 • Newest office (Campinas) performing ahead of expectations • Mexico ahead of plan and profitable • Sales/Marketing discipline launche
Slide 24: How we are achieving these results
LONDON PARIS SYDNEY NEW YORK how WE are achieving these results Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 25: Business Model
Business Model WEYBRIDGE • Creates strong and consistent international brands • Profit focus throughout business creates highest margins • Promotion from within, long term careers ensures highest candidate/client customer service maximises repeat business • Team rewards maximises internal candidate/
Slide 26: Business Strategy
Business Strategy LEICESTER • Organic growth leads to one brand, one platform • Consistent delivery, consistent culture • Home grown management maximises reporting efficiencies, consistency, integrity, ownership • Creates depth of Michael Page experience in management and our ability to rollout new
Slide 27: Scope for Growth - Headcount
Scope for Growth - Headcount Ratio Fee earners: Non Fee earners LONDON SYDNEY 1999 59:41 2000 58:42 2001 57:43 2002 58:42 2003 60:40 2004 64:36 2005 71:29 2006 74:26 H1 2007 75:25 27 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.mic
Slide 28: Scope for Growth - Conversion
Scope for Growth - Conversion LONDON STOCKHOLM H1 conversion rates before share based charges 2007 2006 UK 34.0 30.9 EMEA 32.5 28.5 Asia Pac 37.5 37.3 Americas 19.5 18.7 28 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.c
Slide 29: Scope for Growth - Number of offices per discipline
Scope for Growth Added during 2007 Number of UK offices per discipline Added during 2006 40 NEW YORK 37 • Very competitive market but very fragmented (circa ten thousand agencies) 35 • Very few strong national brands apart from MP • Increasing compliance/candidate shortages driving business towards
Slide 30: Scope for Growth - Number of offices by country
Scope for Growth Added during 2007 Number of offices in each country Added during 2006 50 STOCKHOLM 48 46 • Ratio of offices to GDP when compared to what we have in UK presents huge scope 40 • Many markets under developed e.g. Europe, Latin America, 80-90% of recruitment not outsourced • Candidate s
Slide 31: Scope for Growth - Number of disciplines
Scope for Growth Number of disciplines in each country Added during 2007 FRANKFURT Added during 2006 15 14 • Offices already established 13 13 • Brand already known 12 12 • MP management already in situ 11 11 • Clients have similar issues across disciplines 10 often prefer fewer suppliers Number of
Slide 32: Market Opportunity
Market Opportunity ROTTERDAM • Very few global, white-collar, multi-disciplined brands • Many markets under-developed or very fragmented/poor quality • Many other markets where MP has no presence e.g. India, other countries in Eastern Europe, other Asia Countries, West Coast of US, other countries i
Slide 33: Current Trading
LONDON PARIS SYDNEY NEW YORK CURRENT TRADING Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 34: Group quarterly gross profit trend
Group quarterly gross profit trend Q1 2001 to Q2 2007 121.0 120 LONDON SINGAPORE 105.5 100 93.1 89.1 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
Slide 35: Current trading
Current trading TORONTO • Similar pattern of growth and activity levels in all regions • Invest in our businesses for future growth • Discipline roll-outs continue • Several offices are being replaced to cope with increasing headcount • New offices planned for H2 – Canary Wharf, Aberdeen, Paramus NJ
Slide 36: Michael Page International Overview
LONDON PARIS SYDNEY NEW YORK MICHAEL PAGE INTERNATIONAL OVERVIEW Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 37: 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 78:22 Perm/Temp • Specialisms: Finance & Accounting, Banking, Legal, Marketing, Sales, Technology, Eng
Slide 38: 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 39: Power of the Brand
Power of the Brand The brand drives organic growth • Attracts the best clients, candidates and employees FRANKFURT • Facilitates organic expansion in existing markets and entry into new markets • Leading advertiser in the Financial Times (UK), South China Morning Post, Straits Times (Singapore), The
Slide 40: Power of the Brand Online
Power of the Brand Online Globally per month: GENEVA 13 million Page Views 1.6 million Visitors 300,000 Job Apps/General CV Submissions August 2007 40 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 41: Our Strategy
LONDON PARIS SYDNEY NEW YORK OUR STRATEGY Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 42: 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 42 Michael Page International is a world leading recruitment consultanc
Slide 43: Strategy - Organic
Strategy - Organic PHILADELPHIA Ensures consistency around the World: • Culture • Customer Service • Brand Values • Reputation • Quality • Systems and software Avoids the risks associated with acquisitions: • Lose key people • Overlap • Dilute reputation • Brand confusion and dilution 43 Michael Pag
Slide 44: Strategy - Existing
Strategy - Existing GENEVA • Existing teams – every team adds one consultant that’s 800 new fee earners • Existing disciplines – more focus, more knowledge, more value • Existing offices – increases margin, infrastructure established, improves referrals, culture • Existing countries – established cl
Slide 45: Strategy - New
Strategy - New SHANGHAI • Always with experienced and proven Michael Page management • New teams add value to clients and candidates as we offer more specialist knowledge • New disciplines creates new profit streams adding value to existing clients. Builds awareness in overall ‘white collar’ populat
Slide 46: Strategy - Culture
Strategy - Culture Entrepreneurial MILAN • Staff motivated by long term careers • Scope for promotion • Scope for international placement • Organic growth maintains entrepreneurial culture Meritocratic • The ‘fittest’ get rewarded the most • Retains the best performers • Motivates for over achieveme
Slide 47: 30 years of organic growth
30 years of organic growth 1986 1996 2006 LISBON 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. 47 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 48: 30 years of organic growth: Disciplines
30 years of organic growth: Disciplines 1986 1996 2006 STOCKHOLM 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 Prop
Slide 49: 30 years of organic growth: Countries
30 years of organic growth: Countries 1986 1996 2006 3 7 24 CONNECTICUT 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
Slide 50: 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. WHEELERS HILL – MP Finance teams in New York, Boston, New Jersey, Stamford, Amsterdam, Dusseldorf, Frankfurt • Rolling out existing disciplines i
Slide 51: Spread of Investment
Spread of Investment Allocation of the new headcount Estimated MUNICH 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 approximately 75
Slide 52: Return on investment
Return on investment New Consultant Typically Month 3 Profitable SINGAPORE 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 53: Depth of management resource to drive organic growth
Depth of management resource to drive organic growth Senior Management No. Tenure in MP PHILADELPHIA Executive Directors 3 16 years Regional Managing Directors 9 16 years Managing Directors 32 12 years Directors 117 8 years 161 Average c.10 years Retained by: • Culture fit • Clear long term career p
Slide 54: Appendix
LONDON PARIS SYDNEY NEW YORK APPENDIX Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 55: United Kingdom Interim Results 2007
United Kingdom Interim Results 2007 2007 2006 £m £m Change LONDON Turnover 176.6 153.1 15.3% Gross profit 92.0 76.0 21.0% Operating profit before share based charges 31.3 23.5 33.2% Share based charges (2.7) (3.9) Operating profit 28.6 19.6 46.2% Conversion rate 31.1% 25.7% Conversion rate before sh
Slide 56: EMEA Interim Results 2007
EMEA Interim Results 2007 2007 2006 £m £m Change PARIS Turnover 149.2 104.4 43.0% Gross profit 90.4 59.3 52.5% Operating profit 28.5 16.1 76.5% Conversion rate 31.5% 27.2% Conversion rate before share based charges 32.5% 28.5% Headcount at half year 1,785 1,181 51.1% 56 Michael Page International is
Slide 57: Asia Pacific Interim Results 2007
Asia Pacific Interim Results 2007 2007 2006 £m £m Change SYDNEY Turnover 46.9 41.0 14.4% Gross profit 27.0 21.6 25.2% Operating profit 9.8 7.8 26.4% Conversion rate 36.5% 36.2% Conversion rate before share based charges 37.5% 37.3% Headcount at half year 501 390 28.5% 57 Michael Page International i
Slide 58: The Americas Interim Results 2007
The Americas Interim Results 2007 2007 2006 £m £m Change NEW YORK Turnover 23.1 13.5 70.8% Gross profit 17.1 9.7 76.1% Operating profit 2.9 1.6 83.4% Conversion rate 17.1% 16.4% Conversion rate before share based charges 19.5% 18.7% Headcount at half year 422 272 55.1% 58 Michael Page International
Slide 59: Share based charge
Share based charge 2007 2006 2006 6m 6m FY JOHANNESBURG £m £m £m Share option charges 2.0 3.2 4.6 LTIP* and deferred bonus plan* charges 2.3 2.0 3.7 4.3 5.2 8.3 If the share price was 525.5p at 31 December 2007, H2 combined charge would be £4.7m *Approved by shareholders in December 2003 59 Michael
Slide 60: Share Options
Share Options Summary of Exercised and Outstandings WEYBRIDGE Shares millions Earliest exercise dates for non-vested share options 60 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Slide 61: Debtor Days
Debtor Days H1 H2 H1 2007 2006 2006 TOKYO Turnover (6 months) £395.8m £337.1m £312.0m Trade debtors (at period end) £143.3m £118.2m £106.6m Debtor days 51.2 days 55.4 days 50.8 days 61 Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.m
Slide 62: LONDON PARIS SYDNEY
LONDON PARIS SYDNEY NEW YORK Michael Page International is a world leading recruitment consultancy 141 offices in 24 countries worldwide | www.michaelpage.co.uk
Michael Page International — H1 2007 Earnings Presentation on 6ix