PageGroup Regulatory News (PAGE)

5 March 2013

 PageGroup

Full Year Results for the Year Ended 31 December 2012

Michael Page International plc ("PageGroup"), the specialist professional recruitment company, announces its full year results for the year ended 31 December 2012.

*Constant Exchange Rates †Exceptional items of £7.8m relate to a regional management restructure

Highlights

·; Group gross profit reduced by -4.9% (-1.5%*)

·; Continued investment in diversification

o 77% of gross profit generated outside the UK vs 61% five years ago

o 58% of gross profit generated from non-Finance and Accounting disciplines vs 46% five years ago

·; New businesses launched (Colombia and Morocco)

·; New offices opened in Cape Town, Macaé (Rio de Janeiro), Suzhou and Taipei

·; Gross profit from permanent placements reduced by 7% (-3%*)

·; Gross profit from temporary placements increased by 2% (+5%*)

·; Headcount reduced by 187 (-3.5%) in 2012

·; Share repurchases of £18.0m during 2012

·; Strong balance sheet with net cash at 31 December 2012 of £61.4m

·; Total dividend maintained at 10.0p

Commenting, Steve Ingham, Chief Executive of PageGroup, said:

"Despite market conditions deteriorating in the second half of 2012, the Group delivered a robust performance with gross profit down 4.9% compared to 2011, a decrease of only 1.5% at constant rates of exchange.

"Trading became more challenging in the second half of the year as business confidence deteriorated. Decision-making processes and time-to-hire lengthened, shortening earnings visibility. Our headcount continued to adjust down to reflect this. It increased, however, in areas where we experienced growth, principally Asia and our newer businesses. Overall headcount reduced during 2012 by 187 (-3.5%) to 5,099 having reached a high of 5,377 in the second quarter of the year.

"It is our clear priority that we continue to manage the cost base to reflect market conditions and, at the same time, invest to create a platform for greater growth when markets improve. During the year, we opened offices in Cape Town and in Macaé (Rio de Janeiro), adding to the new offices in Taipei, Suzhou, Bogota and Casablanca opened earlier in the year. We now have 16 offices in Asia and 20 in Latin America, with combined headcount of 1,129. These two regions produced 21% of our gross profit during 2012.

"Although we anticipate another challenging year in 2013, we expect to see improvement in some markets as the year progresses. We are also encouraged by the sequential increase in the Group's gross profit growth rate during the fourth quarter of 2012, with three of our four regions recording an improvement. We remain financially strong, with net cash of £61.4m at the year end.

"While the strength of any recovery is uncertain, we believe that, with a strong balance sheet and spare capacity in the business, we are well positioned to take advantage of any recovery and to respond to improvements in market conditions in 2013."

Analyst meeting

The company will be presenting to a meeting of analysis at 9.00am today. The presentation and a recording of the meeting will be available on the company's website later today at

http://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2013.aspx

Enquiries:

MANAGEMENT REPORT

Cautionary Statement

The Management Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.

The Management Report 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.

GROUP STRATEGY

The Group's strategy is to expand and diversify the business by industry sectors, by professional disciplines, by geography and by level of focus (Page Personnel, Michael Page or Page Executive), with the objective of being the leading specialist recruitment consultancy in each of its chosen markets.

As recruitment activity is dependent upon economic cycles, 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.

Our organic growth is achieved by drawing upon the skills and experiences of proven PageGroup management, ensuring we have the best and 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 remains our intention, to maintain our presence in our chosen markets, while keeping close control over our cost base.

Our team-based structure and profit share business model is scalable. The small size of our specialist teams also means we can increase headcount rapidly to achieve growth. When market conditions tighten, these teams then reduce in size, largely through natural attrition. Consequently, our cost base reduces in a slowdown. Having invested many years in training and developing our highly capable management teams, our objective is to ensure we retain this expertise within the Group. By following this course of action, we typically gain market share during downturns and position our businesses for market leading rates of growth when economic conditions improve.

Pursuing this approach means that in an economic downturn our profitability declines as, in addition to the lower productivity levels that come with a slowdown, we also carry spare capacity. However, when market conditions improve, the Group's profitability recovers more quickly as spare capacity is utilised. Adopting this strategy in times of economic slowdown also drives our financing strategy and the management of our balance sheet position. In periods of economic slowdown, the business has continued to produce strong cash flows as working capital requirements reduce. However, in uncertain markets, a strong balance sheet is essential to support the business through difficult periods and, as economic conditions improve, to fund increased working capital requirements as the business grows.

REVIEW OF 2012

With challenging economic conditions remaining throughout 2012, currency exchange rates moving against us and tough year-on-year comparators, we believe we have performed well.

As the demand for recruitment services increases, the number of positions to be filled rises, candidate shortages begin to emerge, the time-to-hire period reduces and there is less pressure on pricing. With the increased uncertainty and resultant reduction in market confidence, many of these factors trended negatively, albeit to differing degrees in our geographic regions. This created an environment where productivity fell with less gross profit per fee earner. The Group's strategy of organic growth, as well as maintaining market presence and a degree of spare capacity, means that the Group is operationally geared, which resulted in a proportionally greater reduction in operating profit than in gross profit. This conversion of gross profit to operating profit was also reduced by the amount of investment being made to facilitate and maintain growth in our newer markets, typically where we see longer term potential.

During the course of 2012, we maintained our strategy of organic investment in developing and diversifying our business. The rollout of disciplines under the Michael Page, Page Personnel and Page Executive brands continued and we launched new businesses in two new countries in Bogota, in Colombia, and in Casablanca, in Morocco. We also opened four new offices in Cape Town, Macaé (Rio de Janeiro), Suzhou and Taipei.

Revenue

Reported revenue for the year was 2.9% lower (0.3%* higher) at £989.9m (2011: £1,019.1m). As in previous economic slowdowns, permanent placement activity is impacted more than temporary. The latter being more resilient to slowing activity levels. As economic conditions and market confidence remained poor throughout 2012, this trend was reflected in revenue, with revenue from permanent placements in 2012 falling by 6.9% (down 3.4%*) to £422.0m (2011: £453.1m), representing 42.6% (2011: 44.5%) of Group revenue. Revenue from temporary placements for the year grew by 0.3% (up 3.3%*) to £567.9m (2011: £566.0m).

Gross profit

Gross profit for the year fell by 4.9% (down 1.5%*) to £526.9m (2011: £553.8m). Gross profit increased by 2%* year-on-year in the first half, but as market conditions deteriorated, the year-on-year growth rate slowed to -5%* in the second half.

Group gross margin decreased to 53.2% (2011: 54.3%), largely as a result of the shift in the mix of business due to the growth in temporary compared to permanent placements. Gross profit from permanent placements fell by 6.6% (down 3.2%*) to £409.7m (2011: £438.4m), representing 77.8% (2011: 79.2%) of Group gross profit. The gross margin from permanent placements remained broadly flat at 97.1% (2011: 96.8%). Gross profit from temporary placements increased by 1.6% (up by 5.0%*) to £117.2m (2011: £115.4m), representing 22.2% (2011: 20.8%) of Group gross profit. The gross margin achieved on temporary placements was 20.6% (2011: 20.4%) and was relatively stable throughout 2012.

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 highly 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, start new disciplines and launch in new countries. Furthermore, in periods when headcount is increasing significantly, it takes time to train and develop 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.

The majority of our permanent placement activity is undertaken on a contingent basis, which means on those assignments we only generate revenue when a candidate is successfully placed in a role. Our short-term visibility on these earnings is provided by the number of assignments we are working on, the number of candidates we have at interview and the stage they are at in the interview process. The average time to complete a placement from taking on an assignment to successfully placing a candidate tends to shorten in a recovery, increasing productivity, and the risk of the candidate being rejected or the assignment being cancelled decreases, thereby improving our earnings visibility. When economic conditions weaken and recruitment activity slows, these factors work in reverse and result in a rapid shortening of earnings visibility.

As a result of the continuing macroeconomic uncertainty and the slowing in our growth rates, following selective increases in our headcount in the first half, headcount reduced by 66 in the third quarter and by 156 in the fourth quarter. Our headcount at the end of 2012 was 5,099, which is 187 (3.5%) lower than at the end of 2011.

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.

The Group's strategy of growing organically using home-grown talent, maintaining market presence and maintaining spare capacity, means that the Group is highly operationally geared to an increase in gross profit as economies recover, tempered only by the rate of investment for future growth. However, when economic conditions weaken and recruitment activity slows, these factors work in reverse and are compounded by a shortening of earnings visibility. This is reflected in the 24.3% decrease in operating profit from £86.0m in 2011, to £65.1m before exceptional items in 2012. Accordingly, the Group's conversion rate of operating profit before exceptional items from gross profit fell to 12.4% (2011: 15.5%).

Administrative expenses in the year decreased by 1.3% to £461.7m (2011: £467.7m), largely as a result of the decrease in headcount. Administrative expenses included £13.2m of share-based payment charges (2011: £13.0m) in respect of the Group's deferred annual bonus scheme, long-term incentive plan and share option schemes.

During the first half of 2012, we restructured the Group's management, which resulted in the removal of the Continental Europe and Americas regional management team, including one Executive Director. Severance packages for this team, (employed by the Group for many years and largely based in France, with accompanying high employment protection and social charges), totalled £7.8m, within which were £1.5m of accelerated share plan related charges. These have been presented as an exceptional charge in the income statement. The payback period for this investment is around two years.

REGIONAL REVIEW OF 2012

Continental Europe, Middle East and Africa (EMEA)

In EMEA, the Group's largest region, contributing 41% of Group gross profit for the year (2011: 43%), revenue fell by 4.3% (increased by 2.2%*) to £403.2m (2011: £421.2m) and gross profit fell by 8.8% (fell by 2.8%*) to £218.4m (2011: £239.6m).

Market conditions in Continental Europe worsened during the year, with the economic uncertainty impacting market confidence. The weakening of the Euro relative to Sterling also impacted the results, with year-on-year reported growth rates some 5% lower than in constant currency.

Generally in Europe the employer has less flexibility with permanent staff than in most other regions. With challenging market conditions, Europe as a whole has been impacted more severely, as clients are even more reluctant to hire permanent staff if there is an alternative viable temporary or contractor option. In France and Germany, gross profit was down as a result of the greater part of the business being permanent recruitment. However, our temporary businesses have grown.

Elsewhere, our larger businesses such as Spain, Italy, Switzerland and Holland were similarly affected. The newer investments such as Africa, Austria, Luxembourg, Qatar, Russia, Turkey and the UAE all performed well. In most of the European countries in which we operate, we are the market leader and by continuing to manage our cost base with gross profit performance, we remain profitable in all major countries.

Headcount in the region was 2,210 at the start of the year and decreased by 7.7% to 2,040 by the end of December, reflecting the difficult market conditions. With the lower level of gross profit, the region recorded a fall in operating profit before exceptional items to £22.1m (2011: £31.7m), a conversion rate of 10.1% (2011: 13.2%).

During the year, we launched a new business in Casablanca, Morocco, and opened a new office in Cape Town, South Africa.

United Kingdom

The UK contributed 23% of Group gross profit in 2012 (2011: 24%). Revenue fell by 8.9% to £295.9m (2011: £324.9m) and gross profit fell by 6.6% to £121.4m (2011: £130.0m). The gross margin in the UK remained broadly flat at 41%, with both the mix of permanent and temporary gross profit and their respective gross profit margins remaining largely the same as in 2011.

Market conditions remained difficult but stable throughout 2012, with clients and candidates remaining cautious. Our UK business is well-diversified in terms of geography and disciplines, as well as the mix of permanent and temporary revenues and is substantially less dependent on Financial Services than in the past (now only 4% of UK gross profit). Our strongest performances in the UK came from more technical disciplines such as procurement, supply chain, logistics, property and construction, technology, digital and energy. These have helped to offset the more established disciplines.

UK headcount was 1,292 at the start of the year and decreased to 1,237 by the end of December, a reduction of 4.3%. The headcount trend followed the performance of the business, falling throughout the year, with the exception of the third quarter when we hired a small number of graduates continuing our investment in training and exporting talent. In a difficult economic environment, operating profit before exceptional items for the full year was 13.9% lower at £15.8m (2011: £18.3m), representing a conversion rate of 13.0% (2011: 14.1%).

Asia Pacific

The Asia Pacific region contributed 22% of Group gross profit in 2012 (2011: 19%). Revenue increased by 15.7% (increased by 14.6%*) at £192.2m (2011: £166.1m) and gross profit increased by 11.1% (increased by 9.8%*) at £114.9m (2011: £103.4m), with all countries in the region showing growth. Operating profit increased to £29.0m (2011: £26.2m), representing a conversion rate of 25.2% (2011: 25.3%), flat on 2011 as a result of headcount growth in the first half and new business investment in the region, including two new offices.

Headcount across the Asia Pacific region increased from 971 at the start of the year, to 1,036 at the end of the year, an increase of 7%, reflecting both increased activity levels and our intention to continue building a substantial business in Asia over the medium to long-term.

In Australia and New Zealand, gross profit grew 3%*, notably due to growth in Western Australia, driven by the mining and commodities sector. However, these sectors experienced a slowing in the second half of 2012. In Asia, gross profit grew 17%*. Our businesses across Japan and Greater China remained resilient and we opened new offices in Taipei and Suzhou. Our newest businesses in Malaysia and India both finished 2012 with strong performances.

The Americas

The Americas region contributed 14% of Group gross profit in 2012 (2011: 14%). Revenue for the region fell by 7.8% (fell by 1.3%*) to £98.6m (2011: £106.9m) and gross profit fell by 10.7% (down 3.7%*) to £72.2m (2011: £80.9m). With falls in revenue and gross profit, the region produced an operating loss of £1.7m (2011: profit £9.9m). This was in part due to management changes in North America and it represented a conversion rate of -2.3% (2011: 12.2%). Headcount in the region decreased by 3.3% from 813 to 786 at the end of the year, with limited increases in the first quarter offset by reductions during the latter part of the year.

Approximately two-thirds of the Americas region is in Latin America, of which our largest business is in Brazil, our fourth largest country in gross profit terms. Brazil's economy slowed towards the end of 2011 and through the first half of 2012. This quickly impacted hiring decisions and therefore our business. With 15 offices, in what is an underdeveloped recruitment market, as hiring volumes shrink a proportion of recruitment is brought back in house. However, we have a strong and well-established Brazilian management team and we continue to invest to ensure we are able to capitalise on our market-leading position when economic conditions improve.

Elsewhere in Latin America our businesses performed well. Chile and Mexico delivered record performances in 2012 and our new office in Bogota, Colombia, had a strong start. We also opened an additional office in Macaé, Rio de Janeiro, to invest further in our growing global Oil and Gas business.

In North America, we were impacted by the difficulties in the financial services sector and year-on-year gross profit was down by 3% in constant currency in the first half. We have strengthened significantly the management team in the region and the early signs of these changes are promising.

Discipline development

Our strategy of diversifying the Group by professional disciplines has continued with the investment in the roll-out of existing and new disciplines throughout our country and office network. Structurally, the Group is now more broadly diversified, having a wider range of disciplines. Over the last 25 years there has been a consistent strategy of diversifying PageGroup, so it is less dependent on any one profession or industry. The heritage of the business is in placing candidates in Finance and Accounting roles, the large majority of which are professionally qualified accountants into industry and commerce. It is also the discipline where the PageGroup brands are strongest and therefore tends to be the discipline we start with when we enter a new geographic market, following which we roll out other disciplines. While Finance and Accounting remains our largest area of business, it now represents approximately 42% of the Group's 2012 gross profit. Revenue from Finance and Accounting placements fell by 10.7% (fell by 7.8%*) to £465.4m (2011: £521.4m) and gross profit fell by 11.1% (fell by 8.1%*) to £220.6m (2011: £248.0m).

Placements of candidates in Engineering, Property & Construction and Procurement & Supply Chain roles accounted for around 20% of Group gross profit. Revenue from these disciplines increased by 8.0% (12.2%*) to £177.9m (2011: £164.7m) and gross profit increased by 1.5% (5.9%*) to £102.8m (2011: £101.3m).

Legal, Technology, Human Resources, Secretarial and Other disciplines generated around 20% of Group gross profit. Revenue from these disciplines increased by 7.2% (10.5%*) to £220.0m (2011: £205.2m) and gross profit increased by 0.8% (4.4%*) to £106.4m (2011: £105.6m).

Placements of Marketing, Sales and Retail professionals generated around 18% of Group gross profit. Revenue from these disciplines fell by 1.0% (increased by 1.9%*) to £126.6m (2011: £127.9m) and gross profit fell by 1.8% (increased by 1.3%*) to £97.1m (2011: £98.9m).

FINANCIAL REVIEW OF 2012

2012 Exceptional items

The Group has taken a restructuring cost in the first half of 2012 of £7.8m, relating to changes in management structure where an entire layer of management was removed. These costs represent direct expenditure incurred as a result of the restructuring and are not associated with the ongoing costs of the Group.

Intangible assets

We expect to commence operating our new software in 2013, which will generate operational efficiencies, and therefore savings, as it is rolled-out across the business. We intend to begin the amortisation of this intangible asset in 2013. It is our current intention to amortise the software and associated development costs over 5 years or their useful life, whichever is the shorter.

Taxation

Tax on profit was £20.8m (2011: £29.3m). This represented an effective tax rate of 36.5% (2011: 34.0%). The rate is higher than the effective UK Corporation Tax rate for the year of 24.5% due to disallowable items of expenditure and profits being generated in countries where corporation tax rates are higher than in the UK. The effective tax rate is higher than in 2011 due to the increased relative sizes of both the French Professional tax and non-deductible share option charges to the underlying profits. Excluding these two items, the overall tax charge would have been £16.1m, or 28.3%

Share repurchases and share options

During the year, the Group's employee benefit trust purchased 5.0m shares for £18.0m at an average price of £3.57 to satisfy employee share plan awards. No shares were repurchased and cancelled during the year.

At the beginning of 2012, the Group had 22.9m share options outstanding, of which 1.3m had vested, but had not been exercised. In March 2012, 5.0m share options were granted under the Group's Share Option Scheme. During the course of the year, options were exercised over 3.6m shares, generating £7.8m in cash and 1.5m share options lapsed. At the end of 2012, 22.8m share options remained outstanding, of which 3.5m had vested, but had not been exercised.

Earnings per share and dividends

In 2012, basic earnings per share before exceptional items was 13.6p (down 27.3%) (2011: 18.7p) and diluted earnings per share before exceptional items was 13.5p (2011: 18.2p). After exceptional items, basic earnings per share was 11.9p (2011: 18.7p) and diluted earnings per share was 11.7p (2011: 18.2p). The weighted average number of shares for the year was 305.3m (2011: 304.5m).

In line with the Group's strategy for returns to shareholders, the dividend is being maintained at a level that the Board believes is sustainable. A final dividend of 6.75p, (2011: 6.75p) per ordinary share is proposed, which, together with the interim dividend of 3.25p (2011: 3.25p) per ordinary share, holds the total dividend for the year at 10.0p per ordinary share (2011: 10.0p). The proposed final dividend, which amounts to £20.5m, will be paid on 21 June 2013 to those shareholders on the register as at 24 May 2013.

BALANCE SHEET

The Group had net assets of £181.4m at 31 December 2012 (2011: £180.6m). The increase in net assets comprises profit after tax for the year of £36.2m, credits relating to share schemes of £10.5m, cash received from the exercise of share options of £7.8m, offset by adverse currency movements of £5.2m, share repurchases by the employee benefit trust of £18.0m and dividends paid of £30.6m.

Our capital expenditure is driven primarily by two main factors, being headcount, in terms of expenditure on office accommodation and infrastructure, as well as the development and maintenance of our IT systems. Capital expenditure, net of disposal proceeds, decreased to £16.5m (2011: £29.4m), reflecting the reduction in headcount and a lower level of capital expenditure in the development of our new IT systems.

The most significant item in the Group balance sheet is trade receivables of £141.7m at 31 December 2012 (2011: £157.0m). The decrease in trade receivables reflects both the decreased activity and a decrease in debtor days to 47 (2011: 50 days). The movement in debtor days is due largely to the increased proportion of revenue being derived from temporary placements where our debtor days are lower than from permanent placements.

CASH FLOW

The Group started the year with net cash of £58.2m. In 2012, we generated £62.3m from operations, after a decrease in working capital of £2.4m (2011: increase of £7.1m), reflecting decreased activity. Tax paid was £24.4m and net capital expenditure was £16.5m (2011: £29.3m), with net interest paid of £0.3m. During the year, £18.0m was spent on the repurchase of shares into the employee benefit trust to satisfy future share plan awards, £7.8m was received from the exercise of share options and dividends of £30.6m were paid. The Group had net cash of £61.4m at 31 December 2012.

NET CASH AND GROUP BORROWING FACILITIES

At 31 December 2012, the Group had net cash of £61.4m (2011: £58.2m). The net cash position comprised gross cash deposits of £70.8m with 18 separate banks.

In June 2012, the Group extended its £50m three-year multi-currency committed revolving credit facility with Deutsche Bank for a further three months to facilitate a smooth transition of funding arrangements. In July 2012, it was replaced by a £50m three-year Invoice Financing arrangement with HSBC Bank. This arrangement provides a term drawdown borrowing facility in Sterling, with availability directly linked to UK trade receivables. The arrangement is subject to conventional banking covenants. In November 2012, the Group also put in place a £10m committed overdraft facility with Deutsche Bank to facilitate smooth operation of its European cash management structure.

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 movements in KPIs are consistent with the business performance as discussed in the Business Review.

The source of data and calculation methods year-on-year are on a consistent basis.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities and 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. As a result, the going concern basis continues to be appropriate in preparing the financial statements.

FOREIGN EXCHANGE

At the end of 2012, the Group was operating in 34 countries around the world and carried out transactions recorded in twenty-five 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 respective 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 2012, when compared to those prevalent during 2011. Negative percentages indicate that Sterling has weakened against the foreign currency during the period.

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 a period of economic uncertainty, a more cautious funding position is adopted, with the Group being managed in a net cash position.

Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash resources, Group facilities, or by local overdraft facilities. The Group has a multi-currency notional cash pool between the Eurozone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts.

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. The following section comprises a summary of the main risks PageGroup believes could potentially impact the Group's operating and financial performance.

People

The resignation of key individuals and the inability to recruit talented people with the right skill-sets could adversely affect the Group's results. This is further compounded by the Group's organic growth strategy and its policy of not externally hiring senior operational positions. Mitigation of this risk is achieved by succession planning, training of staff, competitive pay structures and share plans linked to the Group's results and career progression.

Macroeconomic environment

Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board look to reduce the Group's cyclical risk by diversifying the business by expanding geographically, increasing the number of disciplines, building part qualified and clerical businesses and continuing to build 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 any stage in the process, the Group receives no remuneration. As a consequence, the Group's visibility of gross profits is generally quite short and reduces further during periods of economic downturn.

Competition

The degree of competition varies in each of the Group's main regions. In the UK, Australia and North America, the 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 the majority of 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 increasing levels of 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, principally people.

Technology

The Group is reliant on a number of technology systems to provide services to clients and candidates. These systems are dependent on a number of important suppliers that provide the technology infrastructure and disaster recovery solutions. The performance of these suppliers is continually monitored to ensure business critical services are available and maintained as far as practically possible. Due to the rapid advancement of technology, there is a risk that systems could become outdated with the potential to affect efficiency and have an 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.

Legal

The Group operates in a large number of jurisdictions that have varying legal and compliance regulations. The Group takes its responsibilities seriously and ensures that its policies, systems and procedures are continually updated to reflect best practice and to comply with the legal requirements in all the markets in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates of changes in legal and compliance requirements.

BOARD CHANGES

There were a number of changes to the Board during the year.

On 31st December 2011, the Chairman for ten years, Sir Adrian Montague, retired from the Board and Robin Buchanan, who joined the Board as a non-executive director in August 2011, succeeded him in the role.

In January 2012, Andrew Bracey agreed to join the Board as Chief Financial Officer. He started in April.

In February 2012, Charles-Henri Dumon left the Board. His responsibilities were assumed directly by Steve Ingham, the Chief Executive Officer.

Hubert Reid, our Senior Independent Director, stepped down at the 2012 AGM after nine years on the Board. Ruby McGregor-Smith, Chairman of the Audit Committee, succeeded him in the role.

In August 2012, Reg Sindall left the board.

David Lowden and Simon Boddie both joined the Board as non-executive directors in 2012.

SUMMARY AND CURRENT TRADING

Despite market conditions deteriorating considerably since Q2 2012, the Group delivered a good performance in a tough economic environment with gross profit down 4.9% compared to 2011, a decrease of only 1.5% at constant rates of exchange.

As in previous economic slowdowns, we have reacted according to the prevailing economic climate in each market in which we operate and managed each business appropriately, adjusting headcount to reflect market conditions, while continuing to invest where we have opportunities for long-term growth. Group headcount remained broadly flat in the first half, increasing in areas where we had growth, principally Asia and our newer businesses and reducing in other areas, largely from natural attrition. Reflecting the increasingly challenging conditions since the first quarter, in the second half our headcount reduced, through natural attrition, by 222 people.

We continue to invest in geographic diversification where we see long-term growth potential. In 2012 we opened offices in Cape Town and a further office in Macaé (Rio de Janeiro), adding to new offices in Taipei, Suzhou, Bogota and Casablanca opened earlier in the year. It is a clear priority that we continue to manage the cost base to reflect market conditions, whilst investing to create a platform for greater growth when markets improve. We believe strongly that we have the balance right.

We are encouraged by the improvement in the growth rate in Group gross profit we recorded in the fourth quarter of 2012, with three of our four regions recording a sequential improvement. While the strength of any recovery is uncertain, we believe that, with a strong balance sheet, an outstanding geographic footprint and spare capacity in the business, we are well positioned to respond to improvements in market conditions in 2013.

We will next update the market on our first quarter trading in an announcement on 16 April 2013.

Steve Ingham Andrew Bracey

Chief Executive Officer Chief Financial Officer

5 March 2013 5 March 2013

Condensed Consolidated Income Statement

Year ended 31 December 2012

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

Year ended 31 December 2012

Condensed Consolidated Balance Sheet

At 31 December 2012

Condensed Consolidated Statement of Changes in Equity

Year ended 31 December 2012

Consolidated Statement of Cash Flows

For the year ended 31 December 2012

Notes to the consolidated preliminary results

For the year ended 31 December 2012

1. General information

Michael Page International plc (the "Company") is a limited liability company incorporated in Great Britain and domiciled within the United Kingdom whose shares are publicly traded. The consolidated preliminary results of the Company as at and for the year ended 31 December 2012 comprises the Company and its subsidiaries (together referred to as the "Group").

The consolidated preliminary results of the Group for the year ended 31 December 2012 were approved by the directors on 5 March 2013. The Annual General Meeting of Michael Page International plc will be held at the registered office, Page House, The Bourne Business Park, 1 Dashwood Lang Road, Addlestone, Surrey, KT15 2QW on 6 June 2013 at 12.00 noon.

2. Accounting policies

Basis of preparation

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs.

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2012 and are presented in UK sterling and all values are rounded to the nearest thousand (UK £'000), except when otherwise indicated.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Management Report. The Management Report also includes a summary of the Group's financial position, its cash flows and its borrowing facilities.

The Directors believe the Group is well placed to manage its business risks successfully, despite the current uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Nature of financial information

The financial information contained within this preliminary announcement for the 12 months to 31 December 2012 and 12 months to 31 December 2011 do not comprise statutory financial statements for the purpose of the Companies Act 2006, but are derived from those statements. The statutory accounts for Michael Page International plc for the 12 months to 31 December 2011 have been filed with the Registrar of Companies and those for the 12 months to 31 December 2012 will be filed following the Company's Annual General Meeting.

The auditors' reports on the accounts for both the 12 months to 31 December 2012 and 12 months to 31 December 2011 were unqualified and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Annual Report and Accounts will be available for shareholders in April 2013.

Significant accounting policies

The accounting policies applied by the Group in these consolidated preliminary results are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2011 except as described below. None have had a material impact on the Group's financial statements.

IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets

IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) - Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

3. 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. Segment operating profit represents the profit earned by each segment including allocation of central administration costs and certain recharges. This is the measure reported to the Group's Chief Executive Officer, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance.

a) Revenue, gross profit and operating profit by reportable segment

The above analysis by destination is not materially different to analysis by origin.

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, goodwill and other intangibles.

b) Segment assets, liabilities and non-current assets by reportable segment

The below analysis 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

d) Revenue and gross profit generated from permanent and temporary placements

4. Exceptional items

5. Financial income/(expenses)

6. Taxation

The Group's consolidated effective tax rate in respect of continuing operations for the year ended 31 December 2012 was 36.5% (2011: 34.0%).

7. Dividends

The proposed final dividend had not been approved by shareholders at 31 December 2012 and therefore has not been included as a liability. The comparative final dividend at 31 December 2011 was also not recognised as a liability in the prior year.

The proposed final dividend of 6.75 pence (2011: 6.75 pence) per ordinary share will be paid on 21 June 2013 to shareholders on the register at the close of business on 24 May 2013.

8. Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £7.9m has been recognised for share options (including social charges) (2011: £6.2m), and £5.3m has been recognised for other share-based payment arrangements (including social charges) (2011: £6.8m).

During the year, options over 5.0m shares were granted at an average exercise price of £4.77p and 3.6m share options were exercised which led to an increase in share capital of £11k and an increase in share premium of £3,006k.

9. Earnings per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:

The above results all relate to continuing operations.

10. Property, plant and equipment

Acquisitions and disposals

During the year ended 31 December 2012 the Group acquired property, plant and equipment with a cost of £7.9m (2011: £16.3m).

Property, plant and equipment with a carrying amount of £0.3m were disposed of during the year ended 31 December 2012 (2011: £0.2m), resulting in a loss on disposal of £5k (2011: profit of £22k).

Capital Commitments

The Group had contractual capital commitments of £0.5m as at 31 December 2012 relating to property, plant and equipment (2011: £1.1m). The Group had contractual capital commitments of £2.3m as at 31 December 2012 relating to computer software (2011: £5.3m).

11. Trade and other receivables

12. Trade and other payables

13. Cash flows from operating activities