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UK – Michael Page's 2011 profits up +25% but slowed in Q4

11 January 2012

Group gross profit was up by +13.4% from 119.9 million Pounds in Q4 2010 to 135.9 million Pounds in Q4 2011 at Michael Page International Plc (MPI:LSE), the specialist recruitment consultancy. In constant currency, group gross profit was up by +13.3%.

A full-year and Q4 2011 trading update published today reveals that full-year gross profit was up by +25.2% to 553.7 million Pounds in 2011 when compared with 2010. In constant currency, it was up by +23.1%.

Group gross profit generated from permanent recruitment was up by +14.3% (+14.4% in constant currency) from 93.1 million Pounds in Q4 2010 to 106.4 million Pounds in Q4 2011.

Group gross profit generated from temporary recruitment was up by +10% (+9.2% in constant currency) from 26.8 million Pounds in Q4 2010 to 29.5 million Pounds in Q4 2011.

The permanent/temporary recruitment ratio was 78:22 in Q4 2011, unchanged from Q4 2010.

Gross profit generated from finance and accounting (44% of total) was up by +7.9% in constant currency from 55.7 million Pounds in Q4 2010 to 60.1 million Pounds in Q4 2011.

Gross profit generated from legal, technology, HR, secretarial and healthcare (20% of total) was up by +16.5% in constant currency from 22.6 million Pounds in Q4 2010 to 26.4 million Pounds in Q4 2011.

Gross profit generated from engineering, property & construction and procurement & supply chain (19% of total) was up by +35.3% in constant currency from 19.4 million Pounds in Q4 2010 to 26.4 million Pounds in Q4 2011.

Gross profit generated from marketing and sales & retail (17% of total) was up by +4% in constant currency from 22.2 million Pounds in Q4 2010 to 23 million Pounds in Q4 2011.

Group headcount reduced by -64 or -1.2% during the quarter to 5,286 at the end of December 2011, which is +17.5% higher than the 4,498 at the end of December 2010.

In the UK (23% of group gross profit) Q4 gross profit was 30.9 million Pounds, +0.6% higher than the 30.7 million Pounds recorded in Q4 2010.

While market conditions remained tough in the UK, the group believes it continued to gain market share in the fourth quarter and with the exception of the financial services and the public sectors, in the broader private sector it achieved modest growth. There was a reduction in headcount, through natural attrition, during the fourth quarter, by -122 to 1,292, -2.4% lower than at the end of 2010.

In the group's largest region, Europe, Middle East and Africa (45% of group gross profit) Q4 gross profit was 60.9 million Pounds, an increase of +15.3% (15.1% in constant currency) over the 52.8 million Pounds recorded in Q4 2010. During the quarter the group opened new offices in Cologne, a second in Barcelona and its eighth in Paris.

EMEA gross profit by country:

• France (17% of the group) was higher by +12% against Q4 2010.

• Germany (7% of the group) was higher by +41% against Q4 2010.

• The Netherlands (4% of the group) was higher by +15% against Q4 2010.

• Italy (4% of the group) was higher by +7% against Q4 2010.

• Spain (3% of the group) was higher by +6% against Q4 2010.

• Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Qatar, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (10% of the group) was higher by +13% against Q4 2010.

Headcount increased by +20 (+0.9%) in Q4 to 2,210 at 31 December 2011 (+20.7% on 31 December 2010: 1,831).

In Asia Pacific, representing 19% of group gross profit, fourth quarter gross profit was 25.6 million Pounds, an increase of +23.3% (+19.4% in constant currency) over the 20.8 million Pounds recorded in the fourth quarter of 2010. Headcount across the region increased by +15 during the quarter, with continued headcount investment in China and India, offset by modest reductions in Australia and New Zealand.

In the Americas, representing 13% of group gross profit, Q4 gross profit was 18.5 million Pounds, an increase of +18.6% (+23.6% in constant currency) over the 15.6 million Pounds recorded in Q4 2010. Headcount in the region increased by +23 (+2.9%), as the group continued to invest in long-term growth opportunities, particularly in Latin America.

Steve Ingham, Chief Executive, commented "in 2011, we grew our full year gross profits by +25% to a record 553.7 million Pounds. We expect our pre tax profit from trading activities to be in the region of 85 million Pounds, approximately +18% up on 2010. We continue to benefit from our geographic and discipline diversification, achieving growth during the year in all reported disciplines and geographic regions. Our financial position is strong, with approximately 60 million Pounds of cash at the end of the year."

"The uncertainty caused by the concerns surrounding the Eurozone and the lowering of worldwide Gross Domestic Product forecasts during the fourth quarter impacted significantly on our clients' recruitment plans, with many hiring decisions being deferred or cancelled. As a consequence, year-on-year growth in the fourth quarter gross profit slowed to +13%."

"As in previous economic slowdowns, we will react according to the prevailing economic climate in each market in which we operate and manage each business appropriately, adjusting headcount to reflect market conditions, while continuing to invest where we have opportunities for long-term growth. Group headcount increased by over 850 people in the first three quarters of 2011, as we invested in growth opportunities through geographic and discipline expansion. Reflecting the more uncertain outlook, in the fourth quarter, our headcount reduced by -64 people, as a result of not replacing those who left through natural attrition."

"While mindful and cautious of the current macro-economic outlook, we are in a position to continue our geographic expansion, as there remain many long-term growth opportunities in our newer territories, particularly Latin America and Asia. During the course of 2012, we currently expect new country openings in Colombia, Morocco and Taiwan, as well as several new office openings in existing countries."

In early trading Michael Page's shares were up by +1.04% to 348.8 Pence.

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