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UK — Michael Page revenue up by +8% amid signs of gradual recovery in the UK

16 August 2010

Revenue was up by +8% from 364.7 million Pounds in H1 2009 to 393.5 million Pounds in H1 2010 at Michael Page International Plc (MPI:LSE), the UK's ninth largest recruitment company. On a constant currency basis, revenue was up by +6%.

Half year results for the six months ended 30 June 2010 show that gross profit was up by +17% from 178.8 million Pounds in H1 2009 to 209.6 million Pounds in H1 2010. On a constant currency basis, gross profit was up by +15%.

Operating profit was up by +54% from 32.2 million Pounds in H1 2009 to 49.6 million Pounds in H1 2010. However, operating profit before non-recurring items (relating to the Company's long-running dispute with Her Majesty's Revenue and Customs (HMRC) over claims for overpaid VAT) was up by +479% from 5.6 million Pounds in H1 2009 to 32.5 million Pounds in H1 2010.

Profit before tax was up by +42% from 43.2 million Pounds in H1 2009 to 61.4 million Pounds in H1 2010.

Group headcount at 31 June 2010 was up by +311 to 3,860 compared to 31 December 2009.

Europe, Middle East and Africa (EMEA) is the group's largest region, contributing 44% of group gross profit. Revenue in the region decreased by -2.3% to 161.3 million Pounds (2009: 165.2 million Pounds), but gross profit increased by +6.4% to 91.3 million Pounds (2009: 85.8 million Pounds) due to increased activity, primarily in permanent placements. In constant currency, revenue was flat on the first half of 2009, but gross profit increased by +8.6%. The increase in gross profit, combined with a lower cost base, resulted in an operating profit for the first half of 2010 of 9.6 million Pounds (2009: loss of 1.5 million Pounds).

In all countries in the region, market conditions have gradually improved throughout the first half apart from in The Netherlands, which appears to be one of the last economies to start to recover. Whilst headcount was reduced across the region in 2009, we maintained the platform of businesses and held spare capacity in the larger more established countries. As this spare capacity is utilised and the newer and smaller countries invest for growth, headcount has increased by 73 across the region in the first half of 2010.

In the UK, representing 29% of the group's gross profit, revenue increased by +3.6% to 142.8 million Pounds (2009: 137.8 million Pounds), gross profit increased by +7.3% to 61.2 million Pounds (2009: 57.0 million Pounds) and operating profit increased by -58.5% to 9.6 million Pounds (2009: 6.1 million Pounds).

In the UK, market conditions stabilised in the latter part of 2009 and there is growing evidence of a gradual recovery in the first half of 2010. This recovery first became evident in our Financial Services, Sales and Retail disciplines and now virtually all disciplines are showing an improving trend. Headcount across the UK has remained largely flat over the last 12 months and stands at 1,218 at the end of June 2010 (1,220 at 30 June 2009), with the increased productivity from fee earners being the main driver of the increase in operating profit.

Commenting on the results, Steve Ingham, Chief Executive of Michael Page, said "we delivered a strong performance in the first half of 2010, driven largely by greater permanent recruitment activity as confidence levels improved, leading to higher rates of job churn. While we are now entering the seasonally quieter holiday period, we have seen a continuation of these trends in the group's performance during July."

"We are benefiting from our investment in diversifying the group internationally, with over 70% of our gross profit in the first half derived from areas outside of the UK and more than 50% of our gross profit generated from non-Finance and Accounting disciplines. Over 40% of our fee earners are located in developing recruitment markets, where prospects for long-term growth are strong. We have market-leading positions in specialist recruitment in Asia and Latin America and are particularly optimistic about the opportunities available to us in these regions, where we will continue to invest in additional headcount. In the UK, Continental Europe and North America, we have experienced improvements in job flow in virtually all markets."

"It is the nature of our business that visibility is short and the general level of business confidence and economic activity may be threatened by fiscal consolidation in the UK and Europe, however, we remain quick to react to changing market conditions. Having maintained our presence in all our markets, the strength of our geographic discipline and industry sector diversification, combined with our operational gearing, means that our profitability is much improved over last year."

In early trading Michael Page's shares were down by -0.48% to 371.20 Pence.



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