PageGroup Regulatory News (PAGE)

13 August 2015

Half Year Results for the Period Ended 30 June 2015

Michael Page International plc ("PageGroup"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2015.

*Constant Exchange Rates

Highlights (Constant Exchange Rates)

· Group gross profit up 10.7% to £280.9m

· All four regions delivered year-on-year growth: UK +12.0%, EMEA +11.8%

· Operating profit increased 16.3%

· FX headwinds reduced reported gross profit by £11m and operating profit by £2m

· Fee earner to operational support staff ratio at record 77:23 (H1 2014: 75:25)

· Conversion rate of gross profit to operating profit increased to 14.3% (H1 2014: 13.5%)

· Tax rate of 30% (H1 2014: 34%)

· Interim dividend up 5.3% to 3.6 pence per share, totalling £11.3m

· Special dividend of 16.0 pence per share, totalling £50m

Commenting, Steve Ingham, Chief Executive Officer, said:

"For the fourth successive quarter we delivered double-digit gross profit growth in constant currencies and have continued to see improvement in all our regions. Our five high-potential markets of Germany, Greater China, South East Asia, the US and Latin America, despite the challenges in Brazil, are performing at a record level and now represent 30% of Group gross profit. 

"Movements in foreign exchange rates, particularly the Euro, continue to impact our results negatively. This affected our year to date results adversely by £11m of gross profit and £2m of operating profit. At June closing rates, this implies a full year impact of £28m of gross profit and £6m of operating profit.

"The Group's conversion rate rose from 13.5% to 14.3% year-on-year. This reflected our ongoing focus on conversion as well as benefits from improving market conditions. There were a number of specific items in the period which reduced operating profit. Excluding these, the conversion rate would have been 15.2%.

"As at 30 June 2015, the Group held net cash of c.£100m, a position the Board believes contains surplus capital of £50m. As a result the Board is announcing today a supplementary return which, following consultation with shareholders, will be by way of a special dividend of 16 pence per share. The Board is also announcing an interim dividend of 3.6 pence per share, an increase of 5.3% over last year. In total, this amounts to a cash return of £61.3m payable in the second half of 2015.

"We are pleased with the first half performance and the outlook is positive for all our regions in the second half. We remain focused on continuing our investment in the future of the Group while at the same time, improving our productivity and conversion rate. Aside from the impact of foreign exchange, the Board's expectations for the full year remain unchanged."

PageGroup will host a conference call, with on-line slide presentation, for analysts and investors at 8.30am on 13 August 2015, the details of which are below.

Link:

http://www.investis-live.com/pagegroup/55bb49f2b4691b070005cf12/hy-15 

Please use the following dial-in number to join the conference:

+ 44 (0)20 3059 8125

Please quote "PageGroup" to gain access to the call

A presentation and recording to accompany the call will be posted on the PageGroup's website during the course of the morning of 13 August 2015 at:

http://www.page.com/investors/reports-and-presentations/presentations-and-webcasts/2015.aspx

Enquiries:

INTERIM MANAGEMENT REPORT

To the members of Michael Page International plc

GROUP STRATEGY

PageGroup's strategy is to expand and diversify the Group both by geography and professional disciplines, and to become the leading specialist recruitment consultancy in each of our chosen markets. This strategy has been pursued through organic growth of existing and new teams, and diversification by region and discipline. Investment in the business has been focused on developing the long-term sustainability of the business and is supported by significant balance sheet strength and cash flow generation. We invest significantly in our people, as the recruitment, retention and development of the best talent available is central to our ability to grow the business and to manage our resources through economic cycles.

Organic growth

Our strategy is to grow organically, achieved by drawing upon the skills and experiences of proven PageGroup management, ensuring we have the best and most experienced, home-grown talent in each key role. Our team-based structure and profit share business model is highly scalable. The small size of our specialist teams means we can increase headcount rapidly to achieve growth when market conditions are good. Conversely, when market conditions tighten, these entrepreneurial, profit sharing teams reduce in size through natural attrition. Consequently, our cost base contracts during the lean times. Our strategy for organic growth has served the business well over nearly forty years since its inception and we believe it will continue to do so. We have grown from a small, single discipline management recruitment company operating in one country to a large multidiscipline, multinational business, operating in 35 countries represented by three key brands.

Diversification by region and discipline

Our strategy is to expand and diversify the Group by industry sectors, professional disciplines, geography and level of focus, be it Page Executive, Michael Page or Page Personnel, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets. As recruitment is a cyclical business, impacted significantly by the strength of economies, diversification is an important element of our strategy in order to reduce our dependency on individual businesses or markets and to increase the resilience of the Group. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, maintaining a consistent team and meritocratic culture as we grow.

Build for the long-term

When we invest in a new business, be it a new country, a new office or a new discipline, we do so for the long-term. Downturns in the general economy of a country or in specific industries will inevitably have a knock-on effect on the recruitment market. However, it has been our practice in the past, and remains our intention, to maintain our presence in our chosen markets through these downturns, while closely controlling our cost base. In this way, we are able to retain our highly capable management teams in whom we have invested and, normally, we find that we gain market share during downturns which positions our business for market-leading rates of growth when the economy improves. Pursuing this approach means that we carry spare capacity during downturns that has a negative effect on profitability in the short-term. Whilst we have never made a loss in any financial year, a strong balance sheet is, therefore, essential to support the business through these times.

Recruit the best people, develop their talent and promote from within

We recognise that it is our people who are at the heart of everything we do, particularly as an organically grown business. Investing in them is, therefore, a vital element of our strategy. Our strategy is to find the highest calibre staff from a wide range of backgrounds and then do our very best to retain them through a team-based structure, a profit share business model and continuous career development, often internationally. Our strong track record of internal career moves and promotion from within means that people who join us know that they could be our future directors and executive board directors.

Our current strategic priorities comprise the following:

· Increase the scale and diversification of PageGroup by growing organically existing and new teams, offices, disciplines and countries;

· Scale the business with a team and meritocratic culture whilst delivering a consistent and high quality client and candidate experience;

· Invest through cycles in our high priority high potential markets - Greater China, Germany, Latin America, South East Asia and the USA;

· Manage our fee earner headcount in all other markets to reflect market conditions, also to move senior people to growing markets;

· Focus on operational support consistency and efficiency including the roll-out of our new technology operating platform, 'Page Recruitment System' (PRS); and

· Focus on succession planning and international career paths to encourage retention and development of key staff.

GROUP RESULTS

The Group's revenue for the six months ended 30 June 2015 increased by 3.5% to £530.4m (2014: £512.2m) and gross profit increased by 6.5% to £280.9m (2014: £263.7m). At constant exchange rates, the Group's revenue increased by 8.3% and gross profit by 10.7%. The Group's revenue mix between permanent and temporary placements was 42:58 (2014: 41:59) and for gross profit was 78:22 (2014: 77:23).

Revenue from temporary placements comprises the salaries of those placed, together with the margin charged. This margin on temporary placements improved slightly to 20.4% (2014: 19.9%) in the first half of 2015. Overall, pricing has remained relatively stable across all regions, although pricing has improved in markets and disciplines where there have been increasing instances of candidate shortages.

Headcount increased modestly by 44, with our ongoing focus on conversion rates and maximising productivity from the investment in 468 fee earners added in 2014. This was after the closure of our business in Russia and the downsizing, due to market conditions, of our business in Brazil which together reduced fee earners by around 75. Our fee earner to operational support staff ratio has now returned to its record level of 77:23. We have committed to increase our number of fee earners during the second half, particularly in our high potential markets as well as those regions where we see most growth.

In total, administrative expenses in the first half increased by 5.7% to £240.9m (2014: £228.0m), driven by increases in headcount. At constant exchange rates the Group's operating profit from trading activities increased by 16.3%, although this reduced to £40.0m (2014: £35.7m) or 12.3% at reported rates.

The Group's conversion rate of gross profit to operating profit from trading activities improved to 14.3% (2014: 13.5%), reflecting a combination of full run-rate cost savings, steadily improving market conditions in many markets and improving consultant productivity. This was however in part offset by more challenging conditions in Australia and Brazil and a number of specific items reducing operating profit in the period.

OPERATING PROFIT AND CONVERSION RATES

The Group's organic growth model and profit-based team bonus ensures cost control remains tight. Approximately 75% of first half costs were employee related, including wages, bonuses, share-based long-term incentives, and training and relocation costs.

Our fee earner to operational support staff ratio returned to its record level of 77:23, with our ongoing focus on conversion rates and maximising productivity from the investment in 468 fee earners added in 2014.

Our two key initiatives outside of the operational performance of the business: the roll-out of our new operating system, PRS, and the creation of a shared service centre for Europe, have progressed well and are on target. 53% of all fee earners now operate on PRS with the most recent successful roll-outs in Switzerland, 7 countries in Asia and Germany.

In the first half, there were a number of one-off items within underlying operating profit. We closed our business in Russia; the costs associated with exiting this market were c. £1m. We are also establishing a European shared service centre; as such there were associated redundancy costs which stand at c. £1m in the first half. There was also an additional £2.1m of costs resulting from higher share based payment charges (including Social Security), principally as a result of the increase in the share price from 411p at 31 December to 545p at the half year.

With the majority of the Group's fee earners going live on our new operating system, PRS, in 2015, we have aligned the 5 year useful life of the system with the timing of the benefit. The effect of this decision has reduced this year's amortisation charge by c. £1.5m at the half year compared to that previously forecasted, and we expect the full year charge to be £7m, a reduction of c. £3m.

The Group views its conversion rate, which represents the ratio of operating profit to gross profit, as a key metric for the business. This conversion rate is affected by macro-economic conditions, the level of investment, particularly in fee earners and the degree of spare capacity within the business. The Group's conversion rate of 14.3% (2014: 13.5 %) was an improvement on H1 2014, with all regions up on 2014 with the exception of Australasia and Latin America as a result of macro-economic challenges in the major markets of Australia and Brazil. Excluding the one-off items described earlier, the conversion rate would have been 15.2%.

The Group was affected adversely in the period by the impact of movements in foreign exchange rates, as Sterling strengthened against almost all of the currencies relevant to the Group's operations. In the first half, this reduced the Group's revenue, gross profit and operating profit when expressed in Sterling by £25m, £11m and £2m, respectively. At June closing rates, this implies a full year impact of £28m of gross profit and £6m of operating profit.

OTHER ITEMS

Net interest income of £0.4m (2014: charge of £0.1m) reflects the higher level of cash held this year compared to 2014 and the continuing low interest rate environment. Interest income of £0.6m on cash balances held through the period was offset by financial charges related to the Group's Invoice Discounting Facility and overdrafts used to support local operations.

The charge for taxation is based on the expected effective annual tax rate of 30% (2014: 34%) on profit before taxation. This rate is lower than 2014 due to the reduction in the UK corporation tax rate, mix of country profits and tax rates. There was also a reduction of 2% due to the number of share option exercises in the period.

Basic and diluted earnings per share for the six months ended 30 June 2015 were 9.1p and 9.0p, respectively (2014: basic earnings per share 7.6p; diluted earnings per share 7.5p).

CASH FLOW

The Group started the year with net cash of £90.0m. In the first half £28.2m was generated from operations after funding an increase in working capital of £23.4m, primarily due to an increase in trade receivables. Tax paid was £10.3m and net capital expenditure was £5.3m, with net interest received of £0.4m. During the first half, £20.5m was received from the exercise of share options and dividends of £23.7m were paid to shareholders. As a result, the Group had net cash of £100.5m at 30 June 2015.

DIVIDENDS AND SHARE REPURCHASES

It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.

The Group's first use of cash is to satisfy operational and investment requirements, as well as hedging its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.

Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in line with our long-term growth rate. In this way we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.

Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and / or share buybacks. Historically, the Group has returned cash to shareholders by buying back and cancelling its shares. Over the 14 years since flotation the Group has returned over £275m by share buybacks and cancelled around 30% of its issued share capital. This is on top of almost £300m of ordinary dividend payments during the same period.

As at 30 June 2015, the Group held net cash of c.£100m, a position the Board believes contains surplus capital of £50m. As a result the Board is announcing today a supplementary return which, following consultation with shareholders, will be by way of a special dividend of 16 pence per share. The Board is also announcing an interim dividend of 3.6 pence per share, an increase of 5.3% over last year. In total, this amounts to a cash return of £61.3m payable in the second half of 2015.

This supplementary dividend will be paid at the same time as the interim dividend on 2 October to shareholders on the register as at 4 September.

No shares were purchased into the employee benefit trust during the first half (2014: 5.5m shares were purchased at a cost of £25.4m).

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

EMEA is the Group's largest region, contributing 39% of Group first half gross profit. Revenue in the region increased by 1.3% to £213.5m (2014: £210.6m) and gross profit increased by 1.6% to £109.1m (2014: £107.5m). In constant currency, revenue increased by 12.1% on the first half of 2014 and gross profit increased by 11.8%.

The EMEA region experienced improving market conditions throughout the first half. Page Personnel performed well across the region, with growth of 16%. Our largest businesses in France and Germany, together representing 47% of the region by gross profit, grew by 6% and 16% respectively in the first half. In France, Page Personnel represents over 60% of the business and had a record first half performance. Similarly, Page Personnel Germany, which represents 31% of the business, had an excellent first half, growing 29%. Elsewhere in the region, Southern Europe delivered yet another excellent set of results, collectively up 27%, with growth in excess of 20% also achieved in Poland and Switzerland.

Our business in the Middle East, despite the impact of the fall in oil prices and wider regional instability, performed well, with a record quarter in the UAE.

During the period, we closed our business in Russia. The costs associated with exiting this market were c. £1m. There were also redundancy costs relating to the transition to the shared service centre of c. £1m in the first half.

The 6.4% increase in operating profit for the first half of 2015 to £15.6m (2014: £14.7m), and improvement in the conversion rate to 14.3% (2014: 13.7%) was due principally to the cost savings achieved in the prior period through the reduction in operational support staff and related costs as well as the gross profit growth achieved. Without the costs associated with exiting our business in Russia, and redundancy costs relating to transitioning processes into our European shared service centre, the conversion rate would have been 16.2%. Headcount across the region increased by 41 (2%) in the first half of 2015 to 2,154 at the end of June 2015 (2,113 at 31 December 2014).

UNITED KINGDOM

In the UK, representing 27% of Group first half gross profit, revenue increased by 5.4% to £164.0m (2014: £155.6m), and gross profit by 12.0% to £75.7m (2014: £67.6m), reflecting continued progression of the business as the UK recovery maintained its steady momentum.

Good levels of demand and candidate shortages provided further signs of improvement, including a small rise in temporary margins.

With clients continuing to focus on hiring at the lower salary levels, Page Personnel, which represents 20% of the UK, performed strongly, with growth of 23%. Page Personnel Finance was strong across the UK, while the newer Page Personnel HR, Secretarial, and Property & Construction disciplines continued to expand their footprint successfully. Our Michael Page brand improved as the first half progressed (+9%). Within this, our Finance and Accounting, Property & Construction, Legal, and Procurement & Supply Chain disciplines all performed particularly well.

Headcount grew modestly, up 1% during the first half of 2015 to 1,453 at the end of June 2015 (1,441 at 31 December 2014). Operating profit increased 15.5% to £12.5m (2014: £10.8m) and the conversion rate increased to 16.5% (2014: 16.0%).

ASIA PACIFIC

In Asia Pacific, representing 20% of Group first half gross profit, revenue increased by 5.3% to £98.0m (2014: £93.1m) and gross profit increased by 9.2% to £56.0m (2014: £51.3m). In constant currency, revenue increased by 7.3% and gross profit increased by 7.9%.

Asia, comprising 14% of the Group and 72% of Asia Pacific had a record first half. We had a record half in Greater China, which grew 14% despite the exceptional 22% growth seen in H1 2014. Hong Kong also had their best ever result in its 20 years, with Page Personnel Hong Kong up 33%. Elsewhere in Asia, Malaysia, Indonesia and India, all had record first halves, each growing by over 35% in constant currencies. India was profitable in the first half.

In Australasia, where Australia was up 1%, the number of placements at lower salary levels increased. As a consequence, we saw a strong performance from Page Personnel, which grew 23% in H1. In Michael Page, trading conditions were particularly difficult in Queensland and Victoria, and in the Engineering and Property & Construction disciplines.

Operating profit increased 16.3% to £9.9m (2014: £8.5m), resulting in an increase in the conversion rate to 17.6% (2014: 16.5%). Headcount across the region was broadly flat through the first half at 1,138 at the end of June 2015 (1,141 at 31 December 2014).

THE AMERICAS

In the Americas, representing 14% of Group first half gross profit, revenue increased by 3.8% to £54.9m (2014: £52.9m) and gross profit increased by 7.5% to £40.1m (2014: £37.3m). In constant currency, revenue increased by 3.7% and gross profit increased by 9.3%.

North America performed strongly, up 16%, with both the US and Canada producing their best ever results. New York, in particular, had a very strong performance, driven by Financial Services. We also saw improvements in both our Chicago and Los Angeles offices. Our Canadian business had a strong first half, and overall grew 33%.

Latin America was up 4%, despite variable market conditions across the region. Brazil (46% of LatAm) experienced another challenging half, down 15%. The political and economic uncertainty continued to impact trading conditions in Brazil and, with this expected to continue for some time, we reduced our fee earner headcount by 42, or 20%. We believe that the short-term prospects for our business in Brazil, while profitable, will remain difficult. However, with our dominant market position, strong brand and highly experienced management team, we believe that there will be opportunities to take market share that will ensure we emerge even stronger, when this market recovers.

Elsewhere, our other countries, which now represent 54% of gross profit in LatAm, had another strong half, growing at 32%. Our performances in Mexico and Argentina were particularly strong. Mexico, which in the second quarter was two thirds the size of Brazil, grew 35% in the first half.

Headcount fell slightly by 1% in the first half of 2015 to 877 at the end of June 2015 (883 at 31 December 2014). Operating profit increased 23.4% to £2.0m (2014: £1.6m), with a conversion rate of 5.0% (2014: 4.4%). 

OUTLOOK

We are pleased with the first half performance and the outlook is positive for all our regions in the second half. We remain focused on continuing our investment in the future of the Group while at the same time, improving our productivity and conversion rate. Aside from the impact of foreign exchange, the Board's expectations for the full year remain unchanged.

KEY PERFORMANCE INDICATORS ("KPIs")

We measure our progress against our strategic objectives using the following key performance indicators:

The source of data and calculation methods year-on-year are on a consistent basis. The movements in KPIs are in line with expectations except for the percentage of gross profit generated outside the UK. Disclosure has not been made for GHG emissions and People KPIs as there is no update from the full year results.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Group's strategy are subject to a number of risks. The main risks that PageGroup believes could potentially impact the Group's operating and financial performance for the remainder of the financial year remain those set out in the Annual Report and Accounts for the year ending 31 December 2014 on pages 43 to 46. There have been no changes to these risks in the first half to 30 June 2015.

TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK

It is the Directors' intention to continue to finance the activities and development of the Group from retained earnings and to operate while maintaining a strong balance sheet position.

The Group's first use of cash is to satisfy operational and investment requirements, as well as hedging its liabilities under the Group's share plans. The level of cash required for this purpose will vary depending upon the revenue mix of geographies, permanent and temporary recruitment, and point in the economic cycle.

Our second use of cash is to make returns to shareholders by way of an ordinary dividend. Our policy is to grow the ordinary dividend over the course of the economic cycle in line with our long-term growth rate. In this way we can sustain the level of ordinary dividend payment during downturns, as well as increasing it during more prosperous times.

Cash generated in excess of these first two priorities will be returned to shareholders through supplementary returns, using special dividends and / or share buybacks.

Cash surpluses are invested in short-term deposits, with any working capital requirements being provided from Group cash resources, Group facilities, or by local overdraft facilities. The Group has a multi-currency notional cash pool between the Eurozone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts. The Group has an Invoice Financing facility with HSBC Bank, the availability of which is limited to the level of UK trade receivable available for financing. This facility is subject to conventional banking covenants.

The main functional currencies of the Group are Sterling, Euro, Chinese Renminbi, US Dollar, Australian Dollar and Brazilian Real. The Group does not have material transactional currency exposures, nor is there a material exposure to foreign denominated monetary assets and liabilities. The Group is exposed to foreign currency translation differences in accounting for its overseas operations although it is not possible to hedge this exposure.

In certain cases, where the Group gives or receives short-term loans to and from other Group companies with different reporting currencies, it may use short-dated foreign exchange swap derivative financial instruments to manage the currency and interest rate exposure that arises on these loans. It is the Group's policy not to seek to designate these derivatives as hedges.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of cash in the business and Group borrowing facilities, the geographical and discipline diversification, limited concentration risk, as well as the ability to manage the cost base, that the Group has adequate resources to continue in operational existence for the foreseeable future being a period of at least 12 months.

CAUTIONARY STATEMENT

This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. This IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

Steve Ingham Kelvin Stagg

Chief Executive Officer Chief Financial Officer

12 August 2015 12 August 2015

INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 13. 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 guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our 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 2, 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 enquiries, 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 2015 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.

Ernst & Young LLP

London

12 August 2015

Condensed Consolidated Income Statement

For the six months ended 30 June 2015

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2015

Condensed Consolidated Balance Sheet

As at 30 June 2015

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2015

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2015

Notes to the condensed set of interim financial statements

For the six months ended 30 June 2015

1. General information

The information for the year ended 31 December 2014 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2. Accounting policies

Basis of preparation

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2015 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure and Transparency Rules of the Financial Conduct Authority.

The unaudited interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 December 2014, were approved by the directors on 10 March 2015. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report. The interim management report also includes a summary of the Group's financial position, its cash flows and its borrowing facilities.

The directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial report.

New accounting standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2014.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

3. Segment reporting

All revenues disclosed are derived from external customers.

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profit represents the profit earned by each segment including allocation of central administration costs. This is the measure reported to the Group's Board, the chief operating decision maker, for the purpose of resource allocation and assessment of segment performance.

(a) Revenue, gross profit and operating profit by reportable segment

The above analysis by destination is not materially different to analysis by origin.

The analysis below is of the carrying amount of reportable segment assets, liabilities and non-current assets. Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The individual reportable segments exclude current income tax assets and liabilities. Non-current assets include property, plant and equipment, computer software, goodwill and other intangible.

(b) Segment assets, liabilities and non current assets by reportable segment