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7 Oct 2009 07:00
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7Β OctoberΒ 2009
Q3Β 2009Β TRADING UPDATE
Financial Summary
Group Q3 grossΒ profit of Β£82.2mΒ a decrease of 41.8% (45.3%*) against Q3 2008,Β sequentially Β£1.6m orΒ 1.9% (0.7%*) lowerΒ than Q2
Group Q3 operating profit from trading activities in the region of Β£5m
EMEA Q3 gross profit (43% of Group) of Β£35.7mΒ a decrease of 44.0% (49.0%*) against Q3 2008, sequentially Β£2.5m orΒ 6.6% (4.7%*) lower than Q2
UK Q3 gross profit (33% of Group) of Β£27.3mΒ a decrease ofΒ 39.4% against Q3 2008,Β sequentially Β£0.8m orΒ 3.0%Β lower than Q2Β
Asia Pacific Q3 gross profit (13% of Group) of Β£10.8mΒ a decrease of 41.4% (48.5%*) against Q3 2008, sequentially Β£1.1m orΒ 10.8% (10.0%*)Β higherΒ than Q2
AmericasΒ Q3 gross profitΒ (10% of Group) of Β£8.5mΒ a decrease of 40.4% (43.4%*) against Q3 2008, sequentially Β£0.7m orΒ 9.2% (15.1%*)Β higherΒ than Q2
Q3 Permanent gross profit (71% of Group)Β decreased byΒ 46.2% (49.6%*)Β against Q3 2008,Β sequentially Β£0.8m orΒ 1.3% (2.7%*)Β higherΒ than Q2
Q3 Temporary gross profit (29% of Group)Β decreased byΒ 26.8% (30.5%*) against Q3 2008,Β sequentially Β£2.4m orΒ 9.0% (8.1%*) lower than Q2
Group headcountΒ decreasedΒ byΒ 35% against 30 September 2008, sequentiallyΒ 158Β lowerΒ (4%)Β in Q3Β toΒ 3,544Β at 30 September 2009
Net cash at 30Β SeptemberΒ 2009 in the region of Β£138m
* Denotes where overseas results denominated in foreign currencies have been translated at constant rates of exchange for constant currency illustrative purposes.
Commenting on theΒ thirdΒ quarter trading, Steve Ingham, Chief Executive said:
"WeΒ hadΒ anticipated that the seasonally quieter third quarter would be challenging,Β particularly in Continental Europe,Β which was generally later into the downturn.Β However, as the third quarter progressed,Β market conditions inΒ an increasingΒ number of the countries in which we operate began toΒ show signs ofΒ stabilisationΒ and,Β with our lower cost base,Β we have recorded an operatingΒ profit in the quarter.
"InΒ bothΒ the last quarter of 2008 and the first quarter of 2009, gross profit fell sequentially by Β£23m as every region experienced rapidly declining market conditions.Β In the second quarter of 2009, the sequential fall was Β£11m.Β During the third quarter of 2009,Β weΒ experienced increasing degrees of stabilisationΒ across our regionsΒ resulting in a Group fall of only Β£1.6m,Β and indeedΒ theΒ Asia Pacific andΒ AmericasΒ regions both recordedΒ sequential growth."Β
Enquiries:
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Michael Page International plc |
01932 264144 |
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Steve Ingham, Chief Executive |
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Stephen Puckett, Group Finance Director |
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Financial Dynamics |
020 7269 7291 |
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RichardΒ MountainΒ /Β Susanne Yule |
The company will host a conference call for analysts and investors at 9.00am today. TheΒ liveΒ presentation can be viewed by following the link:Β
http://w.on24.com/r.htm?e=163234&s=1&k=1632B4F73C4E149370EAA674B4980A35Β
The dial-in details for the conference call are as follows:
Dial-In: +44 (0)20 7162 0025 ConferenceΒ ID: 845627 Please quoteΒ "Michael Page Q3 Trading Update"Β to gain access to the call.
TheΒ presentationΒ and recording ofΒ the callΒ will be availableΒ on the company's websiteΒ later todayΒ atΒ
http://investors.michaelpage.co.uk/presentations
The Group will issue its 4thΒ Quarter and full year trading update on 8thΒ January 2010.Β Β Trading update
Michael Page International plcΒ (MPI), the specialist recruitment consultancy, reportsΒ third quarterΒ GroupΒ gross profitΒ of Β£82.2mΒ (Q3 2008: Β£141.3m),Β which was Β£1.6m (1.9%Β or 0.7%*) lower thanΒ the second quarter ofΒ 2009.Β Headcount reduced byΒ 158Β people during the quarter (4%)Β toΒ 3,544Β at the end ofΒ September,Β 1,906Β (35%)Β lower than the headcount at the end ofΒ SeptemberΒ 2008.Β This lower cost base has enabled us toΒ record an operatingΒ profit in theΒ third quarterΒ of around Β£5m. Net cash at 30Β SeptemberΒ 2009 was in the region of Β£138m, benefiting fromΒ the receiptΒ in JulyΒ of Β£10.9m ofΒ netΒ interest received on the VAT refund.
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EMEA Gross Profit (44% of GroupΒ inΒ Q3Β 2009) |
Growth rates |
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Reported |
Constant currency |
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Q3 2009 vs.Β Q3 2008 |
Β£35.7m |
Β£63.6m |
-44.0% |
-49.0% |
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Q3Β 2009 vs.Β Q2 2009 |
Β£35.7m |
Β£38.2m |
-6.6% |
-4.7% |
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Headcount at 30 SeptemberΒ 1,609Β (30Β JuneΒ 1,680) At constant rates of exchange: FranceΒ (16% ofΒ theΒ Group)Β was lowerΒ byΒ 42%Β against Q3 2008 (8%Β lower thanΒ Q2 2009) NetherlandsΒ (6% of the Group)Β was lowerΒ byΒ 58%Β against Q3 2008 (17%Β lower thanΒ Q2 2009) GermanyΒ (6% of the Group)Β was lowerΒ byΒ 54%Β against Q3 2008 (2%Β lower thanΒ Q2 2009) ItalyΒ (4% of the Group)Β was lowerΒ byΒ 45%Β against Q3 2008 (7%Β lower thanΒ Q2 2009) SpainΒ (3% of the Group)Β was lower by 47%Β against Q3 2008 (7%Β lower thanΒ Q2 2009) Austria, Belgium,Β Ireland, Luxembourg, Poland, Portugal, Russia,Β South Africa, Sweden,Β Switzerland,Β Turkey, U.A.E.Β (9% of the Group)Β was lowerΒ byΒ 52%Β against Q3 2008 (14%Β higherΒ thanΒ Q2 2009) |
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InΒ our largest region,Β Europe,Β Middle East and Africa (EMEA),Β representingΒ 44% of Group gross profit,Β thirdΒ quarter gross profit was Β£35.7m,Β a decreaseΒ ofΒ 44.0%Β (49.0%*)Β over the Β£63.6m recorded in theΒ thirdΒ quarter ofΒ 2008,Β a period when the region grew by 12.5%*.
As theΒ thirdΒ quarter progressedΒ market conditions began to stabilise in an increasing number of countries, with the EMEA region Β£2.5mΒ (6.6%Β or 4.7%*) lower than the second quarter of 2009. Of the larger countries, the most stabilisation was seen inΒ Germany, where sequential third quarter gross profit was 2% lower than in the second quarter.
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UKΒ Gross Profit (33% of Group inΒ Q3Β 2009) |
Growth rates |
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Q3 2009 vs.Β Q3 2008 |
Β£27.3m |
Β£45.0m |
-39.4% |
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Q3 2009 vs.Β Q2 2009 |
Β£27.3m |
Β£28.1m |
-3.0% |
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Headcount at 30 SeptemberΒ 1,179Β (30 June 1,220) Finance & Accounting (17% of the Group)Β wasΒ 36%Β lowerΒ against Q3 2008 (5%Β lower thanΒ Q2 2009) Marketing, Sales and Retail (7% of Group)Β was lowerΒ byΒ 46%Β against Q3 2008 (3%Β higher thanΒ Q2 2009) Legal, Technology, HR and Secretarial (5% of the Group)Β was lowerΒ byΒ 46%Β against Q3 2008 (8%Β lower thanΒ Q2 2009) Engineering & Manufacturing, Procurement & Supply Chain, Property & Construction (4% of the Group)Β was lowerΒ byΒ 30%Β against Q3 2008 (3%Β higher thanΒ Q2 2009) |
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In theΒ UK,Β representingΒ 33% of Group gross profit,Β thirdΒ quarterΒ gross profitΒ wasΒ Β£27.3m,Β 39.4%Β lower thanΒ the Β£45.0mΒ recorded in theΒ thirdΒ quarter ofΒ 2008. TheΒ stabilisationΒ thatΒ startedΒ to become evident in the banking sectorΒ isΒ nowΒ spreading toΒ other sectorsΒ and in most businesses the revenue remained broadly flat on the previous quarter, despite the effect of summer.Β The headcount reductionΒ in the quarterΒ ofΒ 3% orΒ 41Β to 1,179Β occurredΒ mainly in July, with headcount in September showing a small rise asΒ some teams made selective hiring decisionsΒ to continue toΒ increaseΒ ourΒ market share.Β
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AsiaΒ Pacific Gross Profit (13% of Group inΒ Q3Β 2009) |
Growth rates |
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Reported |
Constant currency |
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Q3 2009 vs.Β Q3 2008 |
Β£10.8m |
Β£18.4m |
-41.4% |
-48.5% |
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Q3 2009 vs.Β Q2 2009 |
Β£10.8m |
Β£9.7m |
+10.8% |
+10.0% |
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Headcount at 30 SeptemberΒ 398Β (30 June:Β 426) At constant rates of exchange: AustraliaΒ andΒ New ZealandΒ (7% of the Group)Β was lowerΒ byΒ 52%Β against Q3 2008 (flatΒ against Q2 2009) AsiaΒ (5% of Group)Β was lowerΒ byΒ 43%Β against Q3 2008 (27%Β higher thanΒ Q2 2009) |
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In Asia Pacific,Β thirdΒ quarter gross profit was Β£10.8m, aΒ decrease ofΒ 41.4%Β (48.5%*)Β over the Β£18.4m recorded in theΒ thirdΒ quarter ofΒ 2008Β in what remain difficult market conditions.Β However, sequentially the region grew by Β£1.1m (10.8%Β or 10.0%*).Β InΒ AustraliaΒ andΒ New Zealand,Β which representsΒ 7% ofΒ theΒ Group,Β thirdΒ quarterΒ year-on-yearΒ gross profitΒ fell byΒ 52%*.Β InΒ Asia,Β the businessesΒ were lowerΒ year-on-yearΒ in theΒ thirdΒ quarterΒ byΒ 43%*, but grew sequentially byΒ 27%*.
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AmericasΒ Gross Profit (10% of Group inΒ Q3Β 2009) |
Growth rates |
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Reported |
Constant currency |
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Q3 2009 vs Q3 2008 |
Β£8.5m |
Β£14.3m |
-40.4% |
-43.4% |
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Q3 2009 vs Q2 2009 |
Β£8.5m |
Β£7.8m |
+9.2% |
+15.1% |
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Headcount at 30 SeptemberΒ 358Β (30 June:Β 376) At constant rates of exchange: Brazil,Β MexicoΒ &Β ArgentinaΒ (7% of the Group)Β was lowerΒ byΒ 38%, against Q3 2008 (18%Β higher thanΒ Q2 2009) USAΒ &Β CanadaΒ (4% of the Group)Β was lower byΒ 51%, against Q3 2008 (11%Β higher thanΒ Q2 2009)Β |
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In theΒ Americas,Β thirdΒ quarter gross profit was Β£8.5m, aΒ decreaseΒ ofΒ 40.4%Β (43.4%*)Β overΒ the Β£14.3m recorded in theΒ thirdΒ quarter ofΒ 2008, but grew sequentially by Β£0.7m (9.2%Β or 15.1%*). In Latin America, our newer businesses inΒ MexicoΒ andΒ ArgentinaΒ performedΒ well in difficult market conditions. Our larger business inΒ BrazilΒ stabilised after theΒ severe market deterioration seen earlier in the year, assisted by a good performance from the recentlyΒ launchedΒ Page Personnel business.Β OurΒ North American businesses contractedΒ in the third quarter year-on-yearΒ byΒ 51%, but sequentially increased byΒ 11%*,Β despiteΒ trading conditions in theΒ USAΒ remaining particularly difficult. Headcount inΒ the region was accordingly largely flat, downΒ 18Β toΒ 358Β at the end of September.
Group Strategy
While market conditions remain weak, we continue to experience similar behaviour from our clients, candidates and competitors as we witnessed in previous economic slowdowns. Likewise, permanent recruitment is being impacted more than temporary placements, but is expected to recover faster when economic conditions improve.
With our profit share model,Β the teams have managed to reduce their cost bases to reflect the lower levels of activity. We anticipate thatΒ our overall cost base andΒ headcount willΒ continue to react appropriately to changes in market conditions during the fourth quarter. However, in most markets and disciplines we are not planning further headcount reductions and some teams are making selective hiring decisions to continue to increase our market share.Β Headcount movedΒ broadlyΒ in line with market conditions during Q3, decreasing for the Group as a whole byΒ 158Β toΒ 3,544Β at the end of September.
We have proved resilient in the face of the downturn and are well positioned for growth when economic conditions improve. With a lower cost base we have remained profitable in each quarter of 2009 and can be confident that, with our strong balance sheet, leading brand and experienced management team, we can maintain our market presence and continue to gain market share.
VAT reclaim
In 2003 MPI submitted an initial claim to HMRC for overpaid VAT which was rejected. MPI appealed and subsequently filed amended claims for Β£26.5m, net of fees, covering the period from 1980 to 2004.Β In March 2009, MPI filed amended claimsΒ for a further refund of an additional Β£80m, net of fees, of overpaid VAT covering the same period.
In June 2009 MPI received a payment from HMRC of Β£26.5m, net of fees, as part settlement of these claims and in July 2009 received Β£10.9m, net of fees, of statutory interest.
On 25thΒ September,Β MPIΒ received a letterΒ from HMRC which stated that,Β 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid. We have a duty to protect the revenue and are considering taking steps to recover the amounts overpaid. We apologise that a mistake has been made and wish to reassure you that HMRC are treating this as a matter of utmost importance and that every effort is being made to expedite matters. We are currently reviewing the details of the claim and will write to you shortly to explain our views in detail.'
We will continue to update the market when we have any further information relating to the VAT reclaimΒ and whether any repayment of the amounts received from HMRC in June and July 2009 will be required.
FinancialΒ Position
Save forΒ the effectsΒ of tradingΒ in the third quarter asΒ described above, there hasΒ been noΒ otherΒ significant changes in the financial position of the GroupΒ since the publication of theΒ half yearΒ results for theΒ six monthsΒ endedΒ 30Β JuneΒ 2009.
Net cash at 30 September 2009 was in the region of Β£138m,Β inclusiveΒ of theΒ VAT refundΒ and related interest, both net of fees,Β of Β£37.5m.
The Group will pay the 2009 Interim dividend of Β£9.3m on 9 October 2009.Β
At 30 September 2009, there wereΒ approximatelyΒ 323m shares in issue.Β
The Group willΒ issue its 4thΒ Quarter and full year trading update on 8thΒ January 2010.Β
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