Full Year Results 2015 3 2015 Group Financial Highlights 2015 vs - - PowerPoint PPT Presentation

Full Year Results 2015

3

2015 Group Financial Highlights

2015 vs 2014 constant

Gross Profit £556.1m 4.4% 9.3% Operating Profit before exceptional items £90.1m 14.8% 20.2% Profit before tax £90.7m 15.6% Diluted EPS before exceptional items 21.3p 15.8% Net cash £95.0m £5.0m Special Dividend 16.0p Total Ordinary Dividend (proposed) 11.5p 4.5%

5

Income Statement

£m

2015 2014 Change Constant currency change

Revenue

1,064.9 1,046.9 +1.7% +7.1%

Gross Profit

556.1 532.8 +4.4% +9.3%

Operating Profit before exceptional items

90.1 78.5 +14.8% +20.2%

Exceptional items

• 1.6

Net interest income

0.6 0.3

Profit before tax

90.7 78.4 +15.6%

Taxation including exceptional items

(24.5) (21.1) +16.4%

Effective tax rate on profit

27.0% 26.2%

Profit after tax

66.2 59.3 +11.6%

Earnings per share before exceptional items

Basic (pence)

21.3 18.4 +15.8%

Diluted (pence)

21.1 18.2 +15.9%

Earnings per share after exceptional items

Basic (pence)

21.3 19.3 +10.4%

Diluted (pence)

21.1 19.1 +10.5%

6

75% 10% 6% 9%

• Total operating costs: +3% increase in reported rates (+7%*)
• Employee costs (77% of total costs) +5% (+11%*) driven by +4.6% headcount,

salary rises of c. 3% and higher share plan charges

• PRS amortisation: 5 years useful life aligned with timing of benefit

Operating Costs

Support staff as % of Group headcount

%

£m Actual % Constant % 2014 Employee 357.9 +5% 375.8 +11% 340.0 Other costs 108.1

• 6%

112.6

• 2%

114.4 Total 466.0 +3% 487.9 +7% 454.4

2007 2008 2009 2010 2011 2012 2013 2014 2015 * In constant currencies

Headcount 2015 2014 % 5,835 5,578 +4.6 FY15 77:23

7

Gross Profit (£m) Constant Currency Actual vs Constant Actual Rates

UK 151.6 – 151.6 EMEA 237.3 (20.3) 217.0 Asia Pacific 110.7 (1.6) 109.1 Americas 82.5 (4.1) 78.4 Group 582.1 (26.0) 556.1 Operating Profit 94.2 (4.1) 90.1

2015 impact:

• Gross profit reduced by c. 5% or £26m
• Operating profit reduced by c. 4% or £4m
• A 1% strengthening of our 5 primary foreign currencies (EUR, USD, AUD, CNY & HKD)

would impact gross profit by c. £3m and operating profit by c. £0.3m

Impact of Foreign Exchange

8

2015 2014 %

Profit Before Tax

90.7

78.4 +15.6 Tax Charge

24.5

21.0 +16.4 Underlying * 29.4 31.0 US losses and deferred tax on share plans (2.4) (3.1) ETR before exceptional items

27.0

27.9 Exceptional items

• (1.7)

ETR after exceptional items

27.0%

26.2%

• UK corporation tax rate reduced by 1.25%
• Lower profit in higher tax jurisdictions such as Brazil and Australia
• Higher profit in lower tax jurisdictions such as the Netherlands

One Offs:

• Recognition of US Federal & State taxes reduced rate by 1.2%
• Share options reduced rate by 1.2%

Group Effective Tax Rate (ETR)

* Including China adjustments in 2014

9

PageGroup Michael Page Page Personnel

£m 2015 2014 Growth rates 2015 2014 Growth rates 2015 2014 Growth rates Gross Profit Reported Constant Currency Reported Constant Currency Reported Constant Currency Permanent 424.0 406.4 +4.3% +8.9% 339.1 328.1 +3.3% +7.1% 84.9 78.3 +8.5% +16.5% Temporary 132.1 126.4 +4.5% +10.4% 67.0 63.1 +6.1% +9.2% 65.1 63.3 +2.9% +11.5% Ratio (Perm:Temp) 76:24 76:24 84:16 84:16 57:43 55:45

Permanent vs Temporary

76% 24% 16% 84% 43%

Perm Temp

10

Balance Sheet

£m

2015 2014

Intangible assets

36.3 38.5

Tangible assets

21.4 21.8 57.7 60.3

Trade and other receivables

217.4 204.9

Trade, other payables, current and deferred taxes

(148.3) (139.0) 69.1 65.9

Net cash

95.0 90.0

Net assets

221.8 216.2

• Strong balance sheet with £95.0m net cash at 31 December 2015
• Movements principally reflect increased trading activity

11

Cash Flow

(£m)

• Increase in ordinary dividends paid; additional £50m special dividend paid
• Working capital outflow increase in line with trading activity
• Increase of £5.0m in net cash vs Dec 2014
• £22.6m generated from share option exercises

90.0 95.0 113.1 22.6 (1.1) (11.4) (18.3) (14.8) (85.1)

50 75 100 125 150 175 200 225

Dec 2014 EBITDA Working Capital Tax and net interest Net Capex Net Option exercises Dividends Paid Exchange Dec 2015

Cash Increase Decrease

12

Dividends

2015 2014

(Pence per Share) £m (Pence per Share) £m Interim 3.60 11.3 3.42 10.5 Final 7.90 24.7 7.58 23.7 Special 16.0 50.1

• Total

27.5 86.1 11.0 34.2 Number of shares (m) 313.3 306.5

• Final dividend proposed of 7.90p (+4.2%)
• Payable on 20 June 2016
• Special dividend paid in October 2015 of £50.1m
• Total dividend for year of 27.5p

14

Review of Operations

Gross profit +9%

• Gross profit records for the Group, North America, South East Asia and

17 of our 35 countries

• Challenging conditions in Brazil, Australia and the Middle East
• Slowdown in Greater China, and the UK in the fourth quarter

Headcount 5,835

• Fee-earner to support staff ratio at a record 77:23
• Fee-earner headcount up 206, +5% to 4,484, a Group record
• Support staff up 51, partly due to Shared Service Centre transition

Key initiatives

• PRS rolled out to c. 85% of fee earners, ahead of 80% target
• Continued transition to European Shared Service Centre
• Shared Service Centre headcount now 120

15

Regional Results Summary

EMEA (39%*)

+11.9% gross profit 1,784 FE headcount (+7.5%) 14.7% conversion £31.9m operating profit

Americas (14%*)

+7.4% gross profit 686 FE headcount (-5.1%) 7.9% conversion £6.2m operating profit

UK (27%*)

+9.6% gross profit 1,099 FE headcount (+6.8%) 19.3% conversion £29.2m operating profit

Asia Pacific (20%*)

+4.9% gross profit 915 FE headcount (+5.5%) 20.8% conversion £22.7m operating profit

* Percentage of Group gross profit. Growth rates are 2015 vs 2014 in constant currencies

16

Europe, Middle East, Africa

£m

2015 2014

Reported rates Constant currency

Gross Profit

217.0 212.0 +2.3% +11.9%

Operating Profit

31.9 30.1 +5.9% +18.5%

Conversion

14.7% 14.2% +0.5pts +0.8pts

Headcount

2,295 2,113 +8.6%

Gross Profit by geography

32% 21% 15% 6% 26%

France Germany

• S. Europe

ME & Africa Other

• Gross profit records in 4 countries and Southern Europe overall
• Negative FX impact on operating profit of £4m
• France: +7%, Page Personnel +5%
• Germany: +14%, Page Personnel +32%
• Southern Europe: +28%, improved momentum through year
• Benelux: +17%
• Middle East: -8% (4% of region)

71:29

Perm vs Temp

39%

• f Gross

Profit

70

Offices

14

Disciplines

17

United Kingdom

£m 2015 2014

Change

Gross Profit 151.6 138.4 +9.6% Operating Profit 29.2 24.1 +21.5% Conversion 19.3% 17.4% +1.9pts Headcount 1,516 1,441 +5.2%

• Strong regional performance from London +12%
• Key discipline performances:
• Property & Construction +42%; Legal +20%
• Page Personnel: +19%; Michael Page +7%
• Public sector: +9% (13% of UK business)
• Conversion rate up 1.9pts to 19.3%

London South North Midlands

38% 24% 22% 16%

Gross Profit by geography

70:30

Perm vs Temp

27%

• f Gross

Profit

28

Offices

13

Disciplines

18

Asia Pacific

87:13

£m 2015 2014

Reported rates Constant currency

Gross Profit 109.1 105.5 +3.4% +4.9% Operating Profit 22.7 20.0 +13.7% +15.1% Conversion 20.8% 18.9% +1.9pts

• 0.1pts

Headcount 1,180 1,141 +3.4%

• In Asia Pacific 6 of 8 countries had record years including Greater

China and Japan

• Greater China: +11%, now around 450 people
• Japan, Malaysia, Indonesia and India had record gross profit
• Australia: -2%, Page Personnel +15%

18% 27% 44% 11%

Gross Profit by geography SE Asia & India Greater China Japan Australasia

87:13

Perm vs Temp

20%

• f Gross

Profit

24

Offices

14

Disciplines

19

Americas

£m 2015 2014

Reported rates Constant currency

Gross Profit 78.4 76.9 +2.0% +7.4% Operating Profit 6.2 4.3 +44.9% +46.6% Conversion 7.9% 5.6% +2.3pts

• 0.3pts

Headcount 844 883

• 4.4%
• LatAm region ex-Brazil (58%): +29%
• Greater geographic diversity across LatAm
• All countries had record years except Brazil
• Brazil: -23%, Mexico: +32%, clear #1 in market
• US: +19%, record gross profit performance driven by New York
• Canada: +15% despite tough macro-economic conditions

19% 7% 26% 48%

Gross Profit by geography Brazil Rest of LatAm Canada USA

85:15

Perm vs Temp

14%

• f Gross

Profit

30

Offices

14

Disciplines

21

Market Categories

Growth rates in constant currency

Germany, Greater China, Latin America, SE Asia, US Australia, France, Holland, Italy, Spain, UK Canada, India, Japan, New Zealand, smaller EMEA countries

30.7% 55.4% 13.9% 8.7% 10.5% 5.6% 14% 4% 10% 2% (+24) 10% (+211)

• 4% (-28)

14.5% 17.8% 13.4%

Invest through cycle Investment reflects gross profit growth and market conditions Respond to market conditions, focus on high margin opportunities Create a market leading network of offices, management and headcount. c.40% of Group gross profit/ fee-earners; 30% conversion rates Collectively return to 2007 peak levels of operating profit & conversion rates; equivalent to c.45% of Group gross profit/ fee-earners Investment responsive to market conditions. Expected to represent c.15% of Group gross profit/ fee-earners; 30% conversion rates

Category Countries/regions % Group gross profit GP growth YoY GP 5yr CAGR FE headcount growth YoY Conversion rate (cc) Investment approach Medium/ long-term objectives

Large, High Potential Large, Proven Medium & Small, High Margin

23

Summary and Outlook

• Record gross profit performance, with EMEA +12%
• Record fee-earner headcount & support staff ratio
• Good progress on PRS roll-out and SSC transition
• Conversion rate increased by 1.5% to 16.2%
• Total Dividends paid of £85.1m; year end cash balance £95m

Summary Outlook

• Q1 trading pattern similar to Q4 2015 except in Greater China,

where trading conditions have deteriorated further, particularly with multinational clients and in Hong Kong

• Diversification by business, geography and discipline hedges

exposure

• Profit share model reacts quickly to changing conditions

24

Cautionary Statement

This presentation contains certain statements that are neither reported financial results nor other historical

• information. The information contained in this presentation is not audited, is for personal use and informational

purposes only and is not intended for distribution to, or use by, any person or entity in any jurisdiction in any country where such distribution or use would be contrary to law or regulation, or which would subject any member

• f the Michael Page International plc group of companies to any registration requirement. No representation or

warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this presentation. Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” that are based on current expectations or beliefs, as well as assumptions about future events. There are risk factors that can cause actual results to differ materially from those expressed in or implied by such

• statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance

should not be placed on any forward-looking statement. Michael Page International plc disclaims any intention or obligation to revise or update any forward-looking statements that may be made in this presentation, regardless of whether those statements are affected as a result

• f new information, future events or otherwise. Nothing in this presentation should be construed as a profit

forecast. This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in Michael Page International plc, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the shares of Michael Page International plc. Past performance cannot be relied upon as a guide to future performance. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.