Coats Regulatory News (COA)

GUINNESS PEAT GROUP plc('GPG' or the 'Company')

2013 HALF YEAR FINANCIAL REPORT

Chairman's Statement for Half Year Financial Report

The six months to 30 June 2013 has been a period of mixed events for GPG. Further progress has been made towards completion of GPG's investment portfolio realisation programme, Coats has traded positively and a new Chairman, Mike Clasper, has been selected to lead that business through the next phase of its development.

However, the launch by the UK Pensions Regulator ('tPR') of investigations into GPG's three UK defined benefit pension schemes has introduced an element of uncertainty into the timetable for the transition from an investment group into one focussed on the global industrial thread and consumer textile crafts markets and the capital return process.

During the current year the business model has continued to be rationalised and this is reflected in the simplified balance sheet at the period end date, more on this later. As detailed in the appendix to this statement, divestments from the investment portfolio between 1 January and 30 June 2013 totalled £172 million (NZ$338 million) with a further £4 million (NZ$8 million) realised since the period end. During 2013 we have fully exited our positions in CIC Australia, AV Jennings, Tandou, PrimeAg, Capral and Ridley and have seen a partial return of our investment in Tower.

In March 2013 the Company completed its £70 million share buy-back programme. As previously reported, further capital returns have been deferred for the present time and this is addressed in the section dealing with pensions later in the report. The Board is very conscious of the need to manage costs during this interruption in the capital return process. Actions taken and planned include:

· reductions in Board fees to be implemented from 1 October in recognition of the simplification of the group, notwithstanding the need to address the pensions regulatory investigations;

· closure of GPG's last Australian office by November 2013 and its principal London office at year end;

· permanent headcount reductions from 15 at December 2012 to 12 in August 2013 and 8 by December 2013; and

· implementation of regular Board meetings by conference call to reduce travel and associated costs.

REPORTED FINANCIAL RESULTS

Shareholders' funds increased in the period by £38 million (NZ$74 million) to £472 million (NZ$927 million) and the net asset backing per share increased from 27.7p (NZ54.4¢) to 33.5p (NZ65.8¢):

The primary components of the movement in shareholders' funds in the period were the improved IAS19 funding position (£81 million) partially offset by the share buy-backs (£45 million). The overall result represents a 21% increase in the net asset backing per share.

Consolidated Income Statement:

The key elements of GPG's result for the period are presented in a non-statutory format below:

Simplified balance sheet

Set out below is a simplified balance sheet for GPG as at 30 June 2013.

The reduction in net assets excluding Coats from £386 million to £351 million is mainly a consequence of share buy-backs (£45 million) and overhead expenditure partially offset by reduced pension deficits.

OVERVIEW OF GPG'S NET ASSET VALUE COMPONENTS

The constituent parts of the GPG simplified balance sheet are addressed below.

Investment portfolio (excluding Coats)

The current investment portfolio of £74 million compares to a starting valuation on 1 January 2011 of £677 million and on 1 January 2013 of £231 million. Net cash proceeds from investment activities to 30 June 2013 total £630 million or 93% of the initial valuation.

In all material respects GPG's only remaining investment other than Coats is Tower. Following the sale of Tower's health insurance and investments businesses, Tower completed a capital return of NZ$119 million in April 2013. Further to these transactions, in August 2013 Tower announced the completion of the sale of the bulk of its life insurance business and the arrangements which had been agreed with the Reserve Bank of New Zealand relating to its licensing conditions and in particular its minimum solvency capital requirements. The Tower board is now considering its capital management strategy while also exploring disposal options for the balance of its life business.

GPG's investment in Tower is recorded at 30 June 2013 at its then market price of NZ$1.95 per share (total value to GPG £69 million). Subsequent to the period end, and following the announcements referred to above, the share price has reduced and was NZ$1.72 on 23 August 2013. GPG remains fully supportive of Tower's Board and management as they complete the significant restructuring process embarked upon last year. Furthermore, GPG considers the on-going Tower business has an intrinsic value in excess of the current share price. GPG's strategic holding in the company will continue to be managed in this context.

Cash

At 30 June 2013 the GPG Parent Group had cash of £347 million (NZ$682 million) (31 December 2012 (£243 million) (NZ$477 million)). A breakdown of this balance by currency is included later under Capital Management.

Pensions

The carrying values of the Coats UK Pension Plan and the two GPG pension schemes, Brunel and Staveley, (together the 'UK Pension Schemes') on an IAS19 financial reporting basis have improved from the position at 31 December 2012. This improvement was driven by increased nominal corporate bond yields, which reduce liabilities, and good asset performance.

The relative period end positions are set out in the table below:

The UK Pension Regulator's investigations

As noted above and previously advised to the market, tPR has launched investigations into each of GPG's three UK defined benefit pension schemes. tPR is exploring whether there is scope to impose a Financial Support Direction ('FSD') or Contribution Notice on GPG or one or more of the entities connected or associated with the UK Pension Schemes' respective sponsoring employers under the provisions of the UK Pensions Act 2004 (the 'Act').

An FSD requires a company to put in place financial support for a pension scheme acceptable to tPR. tPR may only impose an FSD if certain technical tests including demonstrating that the sponsoring employer of the scheme is "insufficiently resourced" are met and then only to the extent such action is reasonable, as defined in the Act. There is very little precedent indicating what reasonableness means in the FSD context. A Contribution Notice is an obligation for a person or one or more of the entities connected or associated with the UK Pension Schemes' respective sponsoring employers to make a payment into a pension scheme. A Contribution Notice can only be imposed in cases where an act or deliberate omission has been effected that has caused, in broad terms, material detriment to the likelihood of members receiving their accrued benefits in full from the pension scheme.

GPG has been working with the relevant parties, including tPR. Certain companies within the Group have received requests for information from tPR relating to each of the three UK Pension Schemes and have been asked to perform calculations of their resources pertinent to the technical tests associated with FSDs. tPR has a statutory process which it needs to follow and it is required by the Act to consider all relevant factors. In parallel with dealing with tPR's requirements, the Board and executive management are working with advisors to undertake a detailed review of matters potentially relevant to each UK Pension Scheme.

Discussions regarding the Coats UK Pension Plan 2012 triennial valuation have progressed well during the period and an in principle agreement with the trustee has been reached. This agreement, which remains subject to bank approval and submission to tPR, has been structured to provide Coats with the flexibility it needs to invest in the business to support its strategic plans while maintaining the Company's covenant from the trustee's perspective, and would see the doubling of annual contributions in respect of past service to £14 million as previously outlined to the market. More details on the terms of the triennial valuation will be announced once they have been approved by all relevant parties.

In parallel with the pensions review, the Board is working with advisors to develop its views on the most appropriate capital structure for the Group. The Board has determined that while these plans are developed and there is uncertainty as to the outcome of tPR's investigations, there will be no further returns of capital.

COATS

Coats' trading performance has shown good progress in the period and from a shareholder perspective, GPG has encouraged management to explore areas of further profit enhancement which would impact favourably on future core profitability. This has manifested itself into a series of projects aimed at both business growth and cost reduction.

Coats' sales increased year-on-year by 2% to US$840 million (£544 million) and by 4% at constant currencies. Sales growth was achieved in both the Industrial and the Crafts Divisions at this rate and this builds on the performance improvement experienced in the second half of 2012. Operating profit before exceptional items of £41 million (US$64 million) compares favourably to the equivalent figure of £36 million (US$57 million) in the comparable period in 2012.

The overall result for the six months to June 2013 before taking account of exceptional items was an attributable profit of £7 million (US$11 million). The attributable profit before exceptional items, restated for the amendments to IAS19 "Employee Benefits", was £6 million (US$9 million) for the first half of 2012 and £11 million (US$17 million) for 2012 as a whole.

Total exceptional items after tax, including gains on the sale of surplus property, amounted to a net charge of £3 million (US$4 million) in the period ended 30 June 2013 (period ended 30 June 2012: net charge of £86 million (US$135 million), year ended 31 December 2012: net charge of £103 million (US$164 million)).

Profit attributable to GPG for the six month period was £4 million (US$7 million) (6 months to 30 June 2012: loss of £80 million (US$126 million)).

The intra year cyclical nature of Coats' business is such that operating cash flow during the first half is generally negative. After taking account of temporary funding provided by GPG at June 2012, the year-on-year performance is relatively stable. Net debt at the period end was £254 million (US$387 million) (31 December 2012: £226 million (US$368 million)) and based on the definitions contained within the Coats banking agreement, the business was comfortably inside its financial covenants.

The carrying value of Coats in GPG's consolidated balance sheet has increased during the period from £48 million (US$78 million) to £121 million (US$185 million) principally due to the improved IAS19 valuation of employee benefits, as described earlier in this report.

A full review of Coats' performance and financial position is included later.

OVERHEAD COSTS

The Parent Group overheads for the prior periods have been restated to reflect the impact of amendments to IAS19 on the accounting for the Brunel and Staveley pension schemes.

The expenses for the period ended 30 June 2013 include significant advisory costs in respect of both the execution of the strategy to realise value and return capital to shareholders and tPR's investigation of the group's UK Pension Schemes. Staff costs in the period, including incentive schemes and redundancies, total £6 million (six months to 30 June 2012: £7 million, year ended 31 December 2012: £12 million).

CAPITAL MANAGEMENT

The management of foreign currency risk remains a key focus. The table below summarises the position at 31 December 2012, 30 June 2013 and 23 August 2013:

The Parent Group's cash balances have been rebalanced during the year following the share buybacks on the London Stock Exchange and the receipt of investment proceeds primarily in AUD and NZD. The GBP and AUD balances mainly reflect expected commitments in those currencies. As noted in the May 2013 Interim Management Statement a portion of the potentially surplus cash has been converted into USD with the remainder held in NZD. It is the Board's current plan to retain this currency position for the foreseeable future.

BOARD CHANGES AND STRUCTURE

On 6 March 2013 Waldemar Szlezak was appointed a Non-Executive Director of the Company. The Board currently comprises six Non-Executive Directors, of whom three are considered independent.

As noted earlier in the report, Board fees have been reviewed. This review was completed with the assistance of an external consultant and fees will be reduced with effect from 1 October 2013. Waldemar Szlezak does not receive a fee from the Company.

Rob Campbell, Chairman

28 August 2013

Note: All NZ$ comparatives to £ amounts are for illustrative purposes only, based on the NZ$:GBP exchange rate on 30 June 2013, NZ$1.9648 : £1.00.

APPENDIX

Net proceeds from portfolio disinvestments from 1 January 2011 to 23 August 2013

Coats Group Limited: Unaudited results 1

for the six months ended 30 June 2013

Financial summary

Highlights

· Continued improved trading performance despite mixed market conditions

· Like-for-like half year sales up 4% - both Divisions growing

· 13% like-for-like improvement in operating profit before exceptionals

· Pre-exceptional operating margins increased from 6.9% to 7.6%

· 18% increase in profit before tax, before exceptional items

· Reorganisation activity on track

· US antitrust litigation settled - exceptional net charge of $2.7 million net of tax

· H1 free cash flow profile in line with prior half year excluding GPG short term financing

· New Coats Chairman appointed (see separate announcement of 21 August)

'Coats' performance during the first half of 2013 has continued to improve and build on the growth achieved in the second half of 2012, despite market conditions remaining mixed. Both divisions have grown sales with the productivity, procurement and reorganisation activity resulting in improved profitability and we are confident of continued progress in the second half.'

Paul Forman,

Group Chief Executive

Coats plc

Operating Review

In the following commentary, all comparisons with 2012 are on a like-for-like constant currency basis and all references to operating profit are to pre-exceptional operating profit.

Coats' trading over the last two quarters has been encouraging despite the continued mixed market conditions. Driven by growth across both operating divisions; sales during the first half increased by 3.7% year-on-year on a like-for-like constant currency basis. This measure gives the best view of underlying performance.

The Industrial Division's sales increase was largely driven by demand for clothing and footwear in developed economies, primarily North America, as well as a normalisation of inventory levels in the related retail supply chains. Demand over the last six months has again been impacted by uncertain economic conditions, particularly in Europe. In addition, the trend in our key Brazilian market for local apparel and footwear production to be replaced by imports has continued to place pressure on this market. Despite these challenges first half sales in this Division increased by 3.7% on a like-for-like basis reflecting Coats' global footprint and strong relationships with the major brands in the apparel and footwear sectors.

Crafts sales were up 3.6% on a like-for-like basis driven by further expansion in shelf space with large US retail customers. There was also on-going strong growth in handknittings, particularly in North America and Europe.

Coats' pre-exceptional operating profit of $63.6 million represents 13.2% growth. Both divisions continued to offset inflationary cost rises in the business with procurement and productivity improvements coupled with pricing initiatives.

The Industrial Division's operating profit rose by $4.0 million (7.9%), with the operating profit margin up to 9.0% from 8.6% in 2012. Successful reorganisation of the Crafts Division has driven a 60.7% rise in operating profit to $9.0 million, with margins up to 3.9% from 2.5% in 2012.

Sales growth at actual exchange rates of 2.5% and 2.4% has been achieved in the Industrial and Crafts Divisions respectively.

Industrial Division

In the following commentary, all comparisons with 2012 are on a like-for-like constant currency basis and all references to operating profit are to pre-exceptional operating profit.

The Industrial Division's sales rose 3.7% primarily following increased demand for thread in the apparel markets. Sales of trim and zips products continue to grow at a more modest rate, as does the general footwear market. Speciality thread also continued to grow as we increased sales in Asian and Latin American markets.

Asia and Australasia sales increased by 7.9% year-on-year across the region, primarily driven by demand across the US and Western Europe.

The EMEA sales increase of 3.7% was driven by improvements in most geographies and all key regions showed a year-on-year increase.

The Americas sales decline (4.8% in the period under review) reflected the performance within Latin America where softer demand in Brazil and some short term supply chain pressures due to a major ERP implementation adversely impacted performance. North American manufacturing and defence sector weakness also had a negative impact on Speciality product sales in that region.

While the positive mix impact from premium product sales primarily in Asia was offset to an extent by the ERP issues in Brazil, the more stable raw material prices, productivity gains, procurement activity and pricing initiatives have offset inflationary pressures. These elements drove an increase in pre-exceptional operating profit margin to 9.0% from 8.6% in the prior year.

Crafts Division

In the following commentary, all comparisons with 2012 are on a like-for-like constant currency basis and all references to operating profit are to pre-exceptional operating profit.

Sales in the Crafts Division rose 3.6% despite some disruption from on-going reorganisation activity in the period. Sales of handknitting products, rather than the traditional sewing products, continued to drive growth.

Within EMEA there was consistent demand in the period for handknittings, the largest product category. Overall growth in EMEA sales was 7.2% year-on-year. This builds on the positive performance during the second half of 2012, following several years of decline.

Sales growth of 1.8% in the Americas is again primarily due to handknittings, especially in the fashion yarn segment which includes Red Heart's Sashay yarn. North America was particularly strong, and digital activity continues to grow. However, performance in Latin America has been adversely impacted on a short term basis by poor availability of goods as a result of ERP implementation operational challenges in Brazil.

The continued operational efficiency focus driven primarily by the reorganisation activity in the EMEA region underpinned the increase in pre-exceptional operating profit margin of the Crafts division to 3.9% from 2.5% in the prior year. EMEA operating losses were $4.6 million lower year-on-year.

Financial overview

Summary

For the first half of 2013 reported Coats revenues were $840 million, representing growth of 2.5%. Growth on a like-for-like constant currency basis was 3.7%. Reported pre-exceptional operating profit was $63.6 million, representing growth of 12.0%. Post-exceptional items, the operating profit for the period was $59.4 million (2012 - $44.3 million loss).

Tax

The taxation charge for the first six months of 2013 is $27.5 million (2012 - $19.4 million). Excluding all exceptional items and prior year tax adjustments, the rate on pre-tax profits of $43.1 million (2012 - $36.6 million) is 61% (2012 - 59%). The tax rate has been adversely impacted by the adoption of IAS19 (revised). The increase in the 2013 tax rate as a result of the adoption of this accounting standard is 19% and, following the restatement of the 2012 comparatives to comply with IAS19 (revised), the 2012 tax rate has increased by 18% from the 41% reported in the 2012 half year report. The 2% increase in the period in the effective tax rate has primarily been driven by the impact of changes to the geographical mix of profits and losses, in particular Brazil.

During the period, Coats engaged external consultants to assist in a global review of the corporate tax affairs of the company. This review is expected to conclude during the second half of the year.

Exceptional items

Net exceptional costs charged to profit before taxation totalled $4.2 million (2012 - $136.9 million, of which $84.6 million related to the previously announced European Commission fine and $35.8 million to associated interest charges).

Included in net exceptional costs is the profit on sale of property in Peru of $18.4 million (2012 - $nil). Exceptional expense items include reorganisation, $14.7 million (2012 - $11.2 million); US antitrust settlement, net of existing provisions, $7.1 million (2012 - $nil); and other exceptional costs, $0.8 million (2012 - $5.3 million).

US antitrust settlement

Settlement has been reached in the US antitrust litigation which had been pending in the US District Court for the Eastern District of Pennsylvania. The settlement is subject to the Court's approval and relates to alleged activity in the period from 1991-2007. While Coats denies that it breached any US antitrust law and continues to believe it has good defences to the claims alleged, it decided to enter into the settlement to avoid further expense and the distraction of on-going and protracted litigation in the US.

The settlement amount of $9.9 million includes plaintiffs' legal costs and expenses. The net exceptional charge arising from this settlement is $2.7 million post US tax deductions of $4.4 million.

Investment

Investment continued in the first half of 2013 to support the growth of the business and to improve its operational performance.

Investment in new plant and systems amounted to $12.7 million (2012 - $19.8 million). This capital expenditure was focussed on productivity improvements in the Industrial Division, primarily in EMEA. Capital expenditure was lower than anticipated at 0.5 times depreciation due to the phasing of spend in the first half of the year versus the second half across the regions.

Reorganisation costs were $14.7 million (2012 - $11.2 million), concentrated on the continued restructuring of the European Industrial thread and EMEA Crafts operations.

Cash flow

EBITDA (defined as pre-exceptional operating profit before depreciation and amortisation) was $88.6 million (2012 - $84.0 million).

The historic free cash flow trend, whereby the second half cash inflow significantly exceeds that in the first half, continued with the first half cash outflow of $15.4 million (2012 - $10.7 million inflow). The higher cash inflow in 2012 primarily reflected the benefit of assignment of receivables to GPG not repeated in 2013 (2012 - $25.0 million), while 2013 has seen increases in the underlying net working capital outflow ($19.6 million higher) driven by business growth and taxation payments ($13.1 million higher), partly offset by reduced capital expenditure ($7.1 million lower) and proceeds of $18.4 million from a property sale in Peru.

The higher taxation payments in 2013 primarily reflected the increased first half operating profit and the timing of "on account" payments, including the payment deferral of a $4.9 million 2012 US tax liability into 2013.

Net cash outflow for reorganisation activity ($11.2 million in the period under review) was primarily in relation to restructuring the EMEA Crafts operation announced in 2012 and the European Industrial thread operation undertaken in 2013. This reorganisation is part of the accelerated programme announced in 2012 to bring forward projects planned for future years, with the aim of not incurring separately identifiable reorganisation expenditure from 2014 onwards.

Following a review of the reorganisation programme, one of the proposed projects will be scaled back, reducing the expected exceptional reorganisation P&L charge in 2013 from $35 million to approximately $20 million. The planned disposal of the properties associated with the project will no longer take place and, as a consequence, the overall accelerated reorganisation programme announced in 2012 will no longer be self-financing. We therefore now expect a net cash outflow across the years 2013 and 2014 of c. $20 million, excluding the benefits associated with the accelerated programme. All other reorganisation activity remains on track.

Net debt increased from $367.6 million at the 2012 year end to $386.6 million at the end of June 2013, and was $16.4 million below the June 2012 like-for-like level of $403.0 million (adjusted for the European Commission fine paid in July 2012 of $174.8 million, including interest).

A key metric for the Group is the leverage ratio of net debt to EBITDA. Under the definitions of net debt and EBITDA prescribed in Coats' senior debt facility put in place in October 2011, net debt at 30 June 2013 was 2.1 times EBITDA of the preceding twelve months (June 2012 - 2.3 times), well within Coats' covenant limit of 3.0 times.

Balance sheet

Equity shareholders' funds increased from $77.9 million at the end of 2012 to $184.6 million at June 2013. This primarily reflects the attributable profit of $6.6 million and actuarial gains in respect of retirement schemes of $98.0 million due to good asset performance in the period and increasing nominal interest rates (see below).

Pensions and other post-employment benefits

The Group's most significant funded defined benefit pension arrangement is the Coats Pension Plan in the UK. As at June 2013, the deficit in the UK scheme on an IAS19 accounting basis reduced significantly from $261.8 million at the 2012 year end to $151.6 million as a result of improved asset performance and an upturn in nominal interest rates in the UK.

Total company contributions to the UK scheme remain at $13.1 million per annum (at 30 June 2013 exchange rates) in line with the ten year recovery plan agreed with the scheme's trustee as part of the April 2009 triennial valuation. An in-principle agreement has been reached with the trustee in relation to the 2012 triennial valuation. This agreement, which remains subject to approval from the Company's banks and submission to the UK Pensions Regulator, would see annual contributions increase by approximately $11 million to $24 million per annum. A further update will be given once the terms of the agreement have been approved by all parties.

Prospects and conclusion

Coats continues to make good progress and the business is well placed to sustain and grow both revenue and profit, although trading conditions remain mixed across different geographies. The combination of Coats' market-leading position, relationship with leading brands and unparalleled geographic footprint represents a robust and defendable business model. In addition, the actions being taken, both in terms of restructuring and in new product development, digital technology and other commercial enablers will support profitable and cash generative growth.

The recent appointment of Mike Clasper as Coats' Chairman is a very positive development. His knowledge and expertise will help Coats in its on-going evolution and I am very much looking forward to working with him. On stepping down as Coats' Chairman, Mike Allen will remain on the Coats Board as a Non-Executive Director.

Paul Forman,Group Chief Executive

Coats plc28 August 2013

About Coats

With a rich heritage dating back to the 1750s, Coats is the world's leading industrial thread and consumer textile crafts business, at home in more than 70 countries, employing more than 20,000 people across six continents. Revenues in 2012 were US$1.7bn.

Our well-known brands and strong relationships with customers and consumers mean our products and services meet current and future needs. Our company-wide understanding of our business partners and consumers, coupled with the deep expertise of our people, builds trust and certainty.

Coats' pioneering history and innovative culture ensure the company continues leading the way around the world: providing complementary and value added products and services to the apparel and footwear industries; extending the crafts offer into new markets and online; and applying innovative techniques to develop products in new areas such as tracer threads, aramids and fibre optics.

· One in five garments on the planet is held together using Coats' thread

· 75 million car airbags are made using Coats' thread every year

· Coats produces enough yarn to knit 65 million scarves a year

· In three and a half hours, Coats makes enough thread to go to the moon and back

· 300 million pairs of shoes are made every year using Coats' thread

· One million teabags using Coats' thread are brewed every 10 minutes

· Thousands of surgical operations take place every day using Coats' thread

· Thomas Edison used Coats' thread in 1879 to invent the light bulb

· Coats produces enough thread to reach around the Equator every 11 minutes

· Coats is the second largest and fastest growing global zip manufacturer

To find out more about Coats visit www.coats.com

INDEPENDENT REVIEW REPORT TO GUINNESS PEAT GROUP PLC

We have been engaged by the Guinness Peat Group plc (the 'Company') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the reconciliation of consolidated changes in equity, the condensed statement of consolidated cash flows and related notes 1 to 18, Coats consolidated income statement for the six months ended 30 June 2013, the Coats consolidated statement of comprehensive income, the Coats consolidated statement of financial position, the Coats consolidated statement of changes in equity, the Coats consolidated statement of cash flows and related Coats notes 1 to 7 as presented within the Guinness Peat Group plc financial statements. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the GPG condensed consolidated financial statements, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

28 August 2013