PageGroup Regulatory News (PAGE)

13 August 2013

PageGroup

Half Year Results for the Period Ended 30 June 2013

Michael Page International plc ("PageGroup"), the specialist professional recruitment company, announces its unaudited half year results for the period ended 30 June 2013.

*Constant Exchange Rates † Exceptional items in the prior year relate to a regional management restructure

Highlights

· Group gross profit -4.4% year-on-year, the business is profitable in all established markets

· Signs of improvement in many markets as the period progressed

· 77% of gross profit generated from outside the UK

· 59% of gross profit generated from non Finance and Accounting disciplines

· Gross profit from permanent placements reduced by 6% (-7%*)

· Gross profit from temporary placements grew by 2% (+1%*)

· Continued focus on operational efficiency, with headcount down by 144 (-2.8%) in first half of 2013, primarily in operational support

· Strong balance sheet with net cash at 30 June 2013 of £47.6m

· Interim dividend held at 3.25p

Commenting on the results, Steve Ingham, Chief Executive Officer of PageGroup, said:

"PageGroup delivered a robust performance throughout the first half, against a backdrop of challenging market conditions across most of our regions, reporting gross profit of £261.9m, down 4.4% year-on-year. Market conditions also showed signs of improvement during the second quarter of 2013, with a 6.6% increase in gross profit compared to the first quarter.

"We have made excellent progress on our key strategic objectives following the management changes last year:

· continued investment in each of our 5 high potential markets: China, South East Asia, Germany, Latin America and the USA;

· increased focus on consistency and efficiency in our operational support teams;

· the turnaround of our USA business, where we are up 27%* in gross profit this year; and

· further discipline diversification.

"During the six months to June we saw good performances in a number of regions, most notably in North America. Our offices in Japan, Mexico, Spain and the Middle East also performed particularly well, as did some smaller and newer businesses in Europe, Latin America and Asia. However, in Australia, our business experienced a difficult first half.

"As we indicated earlier in the year, we continue to manage our cost base actively, both to take account of market conditions as well as to improve the Group's operating performance. As a result, headcount has reduced by 144 since the start of the year, primarily in operational support staff.

"Our focus remains fixed on our long-term growth and profit objectives. We will continue to invest in our key, high-potential markets, to manage our fee earner headcount actively, reflecting market conditions and to seek out efficiencies to drive down the costs of operational support. Combined, these initiatives will deliver long-term profitable growth for our shareholders.

"Activity levels remained strong throughout the second quarter, but with difficult conditions likely to continue in several markets and as this is the seasonally quieter summer period in both Continental Europe and the UK, we expect Q3 will be another challenging quarter. The Group is financially strong, with net cash of £47.6m and remains well-placed to take advantage of any recovery in the markets in which we operate. At this time, we expect our full year operating profit from trading activities to be in line with current market estimates**."

** Reuters £70.9m

Analyst meeting

The company will be presenting to a meeting of analysts at 9.00am today. The presentation and a recording of the meeting will be available on the company's website later on today at http://www.page.com/investors/reports-and-presentations/presentations-and-webcasts/2013.aspx

Enquiries:

INTERIM MANAGEMENT REPORT

To the members of Michael Page International plc

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.

GROUP STRATEGY

PageGroup's strategy is to expand and diversify the Group by industry sectors, by professional disciplines as well as by geography. This includes the Page Personnel, Michael Page and Page Executive businesses; the clear objective is to be the leading specialist recruitment consultancy in each of our chosen markets. As recruitment activity is dependent upon economic cycles, by being more diverse the dependency on individual businesses or markets is reduced making the overall Group more resilient. This strategy is pursued entirely through the organic growth of existing and new teams, offices, disciplines and countries, with a consistent team and meritocratic culture.

Our organic growth is 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. When we invest in a new business, we do so only with a long-term objective and in the knowledge that at some point there will be periods when economic activity slows. While it is difficult to predict accurately when these slowdowns will occur and how severe they will be, it has been our practice in the past and our intention in the future to maintain our presence in our chosen markets, but with close control over our cost base. Our team-based structure and primarily profit-share business model is scalable and the small team size also means that we can increase rapidly our headcount to achieve and maintain growth.

The focus of our organic growth in the last eleven years has been to grow in emerging markets, where the outsourcing of recruitment particularly for specialist roles is underdeveloped and where there is limited competition. In many of these markets, we have achieved a market-leading position and intend to embrace fully the opportunity by investing rapidly in headcount and opening in new cities and countries. The investment to take advantage of these opportunities in terms of new headcount, international transfers of management, new office space and start-up losses will limit short-term profitability but should provide a substantial platform for longer term returns.

Our intention is always to maintain a strong balance sheet. With uncertainty around the length and depth of economic slowdowns, a strong balance sheet is essential to support the Group through tougher periods and, when conditions improve and the businesses start growing, to fund increased working capital requirements. Any surplus cash is returned to shareholders through dividends and share repurchases.

Last year we made some key management changes with very specific objectives in mind. The first of the four most significant is that as a more unified business we have absolute clarity on our geographic priorities for investment. We believe the greatest opportunities for long-term growth are the 5 markets of China, South East Asia, Germany, Latin America and the USA. Our platform across these 5 markets gives us an enviable competitive advantage; with 45 offices and 1,436 headcount, they represent 30% of our total business. We intend to invest in these markets consistently every year.

In part, this investment will be funded by the second key objective that is now possible as a result of the management changes. We are working to be consistent and therefore more efficient in the operational support that underpins the business. Already this has meant that our operational support headcount has fallen significantly this year. Many of these reductions were made across our European businesses. Although the costs of reducing headcount are high in Europe, we have still made substantial cost savings and these changes will therefore improve conversion rates in the future.

The third objective that resulted from the changes was to put a key high potential market, North America, back on track.

The fourth is to diversify by discipline, rolling out existing and new disciplines across our office network.

While investing in our 5 key high potential markets, we will continue to manage all our other businesses according to the market conditions they experience. This, we believe, will continue to deliver the best long-term profitable growth opportunity for our shareholders.

GROUP RESULTS

The Group's revenue for the six months ended 30 June 2013 increased by 0.1% to £503.2m (2012: £502.6m) and gross profit decreased by 4.4% to £261.9m (2012: £273.9m). At constant exchange rates, the Group's revenue decreased by 0.9% and gross profit by 5.2%. Typically, as economic conditions become more uncertain, permanent recruitment activity slows compared to temporary recruitment. This is evidenced in the first half, where the mix of the Group's revenue and gross profit between permanent and temporary placements decreased slightly to 42:58 (2012: 44:56) and 77:23 (2012: 79:21), respectively. The gross margin on temporary placements in the first half of 2013 fell slightly to 20.2% (2012: 20.8%). Pricing has remained relatively stable throughout the first half of 2013, with a stronger pricing environment in rapidly growing markets, being offset by competitive pressures in weaker markets.

As the demand for recruitment services increases, the number of positions to be filled rises, candidate shortages begin to emerge, the time-to-hire period starts to reduce and there is less pressure on pricing. With the ongoing uncertainty and lack of market confidence that impacted parts of the Group during the first half of 2013, many of these factors trended negatively, albeit to differing degrees in our different geographic regions, creating an environment where productivity remained at relatively low levels with less gross profit per fee earner able to be generated. The Group's strategy of growing organically, as well as maintaining market presence and a degree of spare capacity, means that the Group is operationally geared, which resulted in a proportionally larger decrease in operating profit than in gross profit. This conversion of gross profit to operating profit was also reduced by the amount of investment being made to facilitate and maintain growth in our newer markets and in markets where we see longer term potential.

Our focus remains on improving conversion with a strong focus on operational efficiency. In the first half, headcount was reduced by 144, the vast majority of which were in our operational support functions. As the largest share of this reduction was from our European operations, the one-off costs associated will offset the savings in the first half, with some benefit in the second half, and the full benefit in 2014.

With a 5% decrease in gross profit, continued weakness in many of the Group's markets and investment for the future, operating profit from trading activities for the first half of 2013 decreased to £32.1m (2012: £36.0m before exceptional items). The Group's conversion rate of gross profit to operating profit from trading activities is now 12.3% (2012: 13.1% before exceptional items).

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

Europe, Middle East and Africa (EMEA) is the Group's largest region, contributing 41% of Group gross profit in the first half. Revenue in the region decreased by 2.9% to £205.3m (2012: £211.5m) and gross profit decreased by 9.2% to £107.1m (2012: £117.9m). In constant currency, revenue decreased by 5.8% on the first half of 2012 and gross profit decreased by 11.7%. The 9.2% decrease in gross profit resulted in a 22.2% decrease in operating profit for the first half of 2013 to £10.4m (2012: £13.4m before exceptional items), and a conversion rate of 9.7% (2012: 11.3%).

Market conditions remained challenging across the region, but showed signs of improvement through the second quarter. 10 of our countries in this region grew in constant currency compared to the first half of 2012, including Spain, Portugal, Turkey, Sweden, Poland, Russia and the UAE. Trading conditions in our Northern European businesses continued to remain challenging, with economic uncertainty further impacting market confidence.

Our larger and predominantly permanent recruitment businesses in France and Germany, representing 49% of the region, continued to be impacted by the wider Eurozone issues, but in the circumstances performed well, showing improvement as the first half progressed. Reflecting these trading conditions, headcount across the region decreased by 159 (8%) in the first half of 2013 to 1,881 at the end of June 2013 (2,040 at 31 December 2012), the majority of which were in operational support.

UNITED KINGDOM

In the UK, representing 23% of the Group's gross profit in the first half, both revenue at £146.1m (2012: £146.0m), and gross profit at £61.4m (2012: £61.7m) were broadly flat, while operating profit was up 11.2% at £9.6m (2012: £8.6m before exceptional items).

Market conditions remained tough but stable throughout the first half of 2013, against which we delivered a robust performance. We continued to capitalise on our discipline diversification and depth of management experience, with our Logistics, Procurement & Supply Chain, Buying & Merchandising, Digital and Public Sector businesses delivering the strongest performances. Overall, operating profit increased by 11%, with the conversion rate up at 15.6% (2012: 14.0%). Headcount in the UK was up 2% during the first half of 2013 to 1,256 at the end of June 2013 (1,237 at 31 December 2012), and we are well positioned to take advantage of any recovery.

ASIA PACIFIC

In Asia Pacific, representing 21% of the Group's gross profit in the first half, revenue increased by 1.2% to a record £95.7m (2012: £94.6m) and gross profit decreased by 4.5% to £54.3m (2012: £56.9m). In constant currency, revenue increased by 1.6% and gross profit decreased by 4.4%. Operating profit fell by 30.4% to £9.6m (2012: £13.8m), resulting in a decrease in the conversion rate to 17.7% (2012: 24.3%).

In Australia, our largest business in the region, gross profit was down 20% in constant currency as we continued to be impacted by the downturn in the mining and commodities sector. Market conditions here, particularly in Western Australia, remain difficult but stable. In Asia, comprising 13% of the Group and 61% of the Asia Pacific region, we had a record first half in many of our businesses and, although trading conditions in China have become tougher since last year, activity levels remain strong. Gross profit in Asia grew 8% in constant currency, with our newer businesses in Kuala Lumpur and Taipei also progressing well. Headcount across the region increased by 40 (4%) in the first half of 2013 to 1,076 at the end of June 2013 (1,036 at 31 December 2012) and, assuming market conditions remain strong, we expect that further headcount will be added during the second half of 2013.

THE AMERICAS

In the Americas, representing 15% of the Group's gross profit in the first half, revenue increased by 11.2% to £56.2m (2012: £50.6m) and gross profit increased by 4.5% to £39.1m (2012: £37.4m). In constant currency, revenue increased by 12.3% and gross profit increased by 5.9%. Operating profit increased significantly to £2.5m (2012: £0.2m), with a conversion rate of 6.4% (2012: 0.5%).

In North America, our businesses performed extremely well, particularly in the USA, with gross profit up by 23% in constant currency. Market sentiment is improving in North America and this, along with last year's changes to the top level management and investment to strengthen the teams across the region, has driven improvements in both the conversion rate and operating profit.

In Latin America, gross profit was down 2% year-on-year in constant currency. In Brazil, where we are the clear market leader, we saw signs of improvement as the first half progressed. With the exception of Argentina, where trading remains difficult, our other businesses in Latin America grew strongly, with record gross profit performances in both Mexico and Colombia.

Our new operating software was successfully piloted in our Boston office in May. The roll-out will begin in the rest of North America before being extended across the wider Group.

Headcount across the region decreased by 44 (6%) in the first half of 2013 to 742 at the end of June 2013 (786 at 31 December 2012). However, with increasingly stronger quarters, improving economies in North America and Brazil, as well as a stronger management team, we feel increasingly optimistic about the outlook for this region.

OPERATING PROFIT AND CONVERSION RATES

As a result of the Group's organic long-term growth strategy, tight control on costs and profit-based bonuses, we have a business model that is operationally geared. The majority of our cost base, around 75%, relates to our staff, with the other main components being property and information technology costs. With a strategy of organic growth, the Group incurs start-up costs and operating losses as investments are made to grow existing and new businesses, open new offices and launch businesses in new countries. Furthermore, significant increases in headcount mean that it takes time to train staff before they become fully productive. These characteristics of our growth strategy and the levels of investment affect the conversion rates in any one reporting period. Generally, in years when economic conditions are benign, revenue and gross profit grow. Operating profit grows at a faster rate due to a combination of higher productivity, stronger pricing and greater utilisation of infrastructure. In order to grow, we need to increase our headcount and ensure that we have the infrastructure to house and support them. When economic conditions weaken and recruitment activity slows, these factors work in reverse and are compounded by a shortening of earnings visibility.

The majority of our permanent placement activity is undertaken on a contingent basis, which means that on those assignments we only generate revenue when a candidate is successfully placed in a role. Our short-term visibility on these earnings is provided by the number of assignments we are working on, the number of candidates we have at interview and the stage they are at in the interview process. The average time to complete a placement, from taking on an assignment to successfully placing a candidate, tends to lengthen in a downturn, reducing productivity and the risk of the candidate being rejected or the assignment being cancelled increases, thereby further reducing our earnings visibility.

In a downturn, activity levels can slow quickly, causing revenue to decline quickly due to the contingent nature of a large proportion of our placements. The main opportunity for reducing our own cost base is headcount, but these reductions tend to lag the declines in revenue due to the shortening visibility. The majority of the initial reductions in our headcount occur through natural attrition, but these are treated as a component of our normal operating expenses and do not incur significant restructuring charges. However, as greater reductions become necessary, such charges may be incurred.

As economic conditions begin to improve, the confidence levels of both candidates and clients also improves and the rate at which people change jobs starts to increase. This increase in activity is serviced from the spare capacity we maintain during a downturn and therefore profits have the potential to increase rapidly. As different markets recover and grow at different rates, we invest in infrastructure and additional headcount in some markets to maintain their growth, while carrying some spare capacity in others. Where possible, we redeploy resources to match market conditions. The Group's conversion rate for the period was 12.3% (2012: 13.1%), which reflects the ongoing difficult market conditions seen through the first half of 2013. The movement in the conversion rates of the four regions and the levels of conversion now being achieved reflects the market conditions in those regions, the levels of investment in each region and the levels of spare capacity still available to be utilised.

Administrative expenses in the year decreased by 3.4% to £229.8m (2012: £237.8m). Administrative expenses included £5.0m of share-based payment charges (2012: £7.9m) in respect of the Group's deferred annual bonus scheme, long-term incentive plan and share option schemes.

TAXATION AND EARNINGS PER SHARE

The charge for taxation is based on the expected effective annual tax rate of 33.0% (2012: 33.5%) on profit before taxation. Excluding French Professional taxes, the effective rate would be 29.8%.

Basic and diluted earnings per share for the six months ended 30 June 2013 were both 7.0p (2012: 6.1p).

CASH FLOW

The Group started the year with net cash of £61.4m. In the first half we generated £17.3m from operations after funding an increase in working capital of £27.1m, primarily due to the timing of bonus payments for 2012. Tax paid was £12.3m and net capital expenditure was £6.6m, with net interest paid of £0.1m. During the first half, £7.9m was received from the exercise of share options and dividends of £20.8m were paid to shareholders. After favourable currency movements of £0.8m, the Group had net cash of £47.6m at 30 June 2013.

INTANGIBLE ASSETS

In May, we commenced operating our new software in Boston in the USA, and will now roll it out across the business. Accordingly, we began the amortisation of this intangible asset in 2013. The full year charge is expected to be c. £5.4m, with £1.4m of this in the first half.

DIVIDENDS AND SHARE REPURCHASES

It is the Board's intention to pay dividends at a level that it believes is sustainable throughout economic cycles and to continue to use share repurchases to return surplus cash to shareholders. The Board remains confident of the Group's longer term prospects and has therefore decided to maintain the interim dividend at 3.25p (2012: 3.25p) per share. The interim dividend will be paid on 4 October 2013 to shareholders on the register at 6 September 2013.

No shares were repurchased into the employee benefit trust or cancelled during the first half.

CURRENT TRADING AND OUTLOOK

Overall, we had an improved second quarter and a robust first half.

It is a clear priority that we continue to manage the cost base to reflect market conditions, while investing to create a platform for greater growth when markets improve. We believe strongly that we have the balance right and we remain profitable in all established markets.

Activity levels remained strong throughout the second quarter, but with difficult conditions likely to continue in several markets and as this is the seasonally quieter summer period in both Continental Europe and the UK, we expect Q3 will be another challenging quarter. The Group is financially strong, with net cash of £47.6m and we remain well-placed to take advantage of any recovery in the markets in which we operate. At this time, we expect our full year operating profit from trading activities to be in line with current market estimates**.

KEY PERFORMANCE INDICATORS

Financial and non-financial key performance indicators (KPIs) used by the Board to monitor progress are listed in the table below. The source of data and calculation methods year-on-year are on a consistent basis.

The movements in KPIs are in line with expectations.

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 following section comprises a summary of the main risks PageGroup believes could potentially impact the Group's operating and financial performance.

People

The resignation of key individuals and the inability to recruit talented people with the right skill-sets could adversely affect the Group's results. This is further compounded by the Group's organic growth strategy and its policy of not externally hiring senior operational positions. Mitigation of this risk is achieved by succession planning, training and development of staff, competitive pay structures and share plans linked to the Group's results and career progression.

Macroeconomic environment

Recruitment activity is largely driven by economic cycles and the levels of business confidence. The Board look to reduce the Group's cyclical risk by diversifying the business by expanding geographically, increasing the number of disciplines, building part qualified and clerical businesses and continuing to build the temporary business. A substantial portion of the Group's gross profit arises from fees that are contingent upon the successful placement of a candidate in a position. If a client cancels the assignment at any stage in the process, the Group receives no remuneration. As a consequence, the Group's visibility of gross profits is generally quite short and reduces further during periods of economic downturn.

Competition

The degree of competition varies in each of the Group's main regions. In the UK, Australia and North America, the recruitment market is well developed, highly competitive and fragmented. The characteristics of a developed market are greater competition for clients and candidates, as well as pricing pressure. In the majority of EMEA, Latin America and Asia, the recruitment market is generally less-developed, with a large proportion of all recruitment being carried out by companies' internal resources, rather than through recruitment specialists. This is changing due to changes in legislation, increasing job mobility and the difficulty internal resources face in sourcing suitably qualified candidates and managing increasing levels of compliance. If the Group does not continue to compete in its markets effectively, by hiring new staff, opening and expanding offices and continuing the discipline roll-outs, there is a risk that competitors may beat us to key strategic opportunities, which may result in lost business and a reduction in market share. This risk is mitigated by meetings of the Board, Executive Board and Regional and Country Management Boards where Group strategy is continually reviewed and decisions made over the allocation of the Group's resources, principally people.

Technology

The Group is reliant on a number of technology systems to provide services to clients and candidates. These systems are dependent on a number of important suppliers that provide the technology infrastructure and disaster recovery solutions. The performance of these suppliers is continually monitored to ensure business critical services are available and maintained as far as practically possible. Due to the rapid advancement of technology, there is a risk that systems could become outdated with the potential to affect efficiency and have an impact on revenue and client service. This risk is mitigated by regular reviews of the Group's technology strategy to ensure that it supports the overall Group strategy. 

Legal

The Group operates in a large number of jurisdictions that have varying legal and compliance regulations. The Group takes its responsibilities seriously and ensures that its policies, systems and procedures are continually updated to reflect best practice and to comply with the legal requirements in all the markets in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates of changes in legal and compliance requirements.

Financial

The Group has a risk management process to assess risks and places significant emphasis on maintaining adequate financial and management controls. The risk management process is viewed as a dynamic part of operations and is assessed globally on an annual basis. The Group has developed a framework to manage risk and respond to the global financial crisis, with emphasis upon liquidity as well as credit exposure, management of currency risk and business and operational continuity.

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 the Group's business while maintaining a strong balance sheet position. In a generally benign economic environment this equates to maintaining the Group's net cash/debt position within a relatively narrow band, with cash generated in excess of operational and investment requirements being returned to shareholders. In a period of economic uncertainty, a more cautious funding position will be adopted, with the Group being managed in a net cash position.

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, 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. Our policy is not 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 significant 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.

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

Steve Ingham Andrew Bracey

Chief Executive Officer Chief Financial Officer

13 August 2013 13 August 2013

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 2013 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 14. 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 Services 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 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 Services Authority.

Ernst & Young LLP

London

13 August 2013

Condensed Consolidated Income Statement

Six months ended 30 June 2013

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2013

Condensed Consolidated Balance Sheet

At 30 June 2013

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2013

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2013

Notes to the condensed set of interim financial statements

Six months ended 30 June 2013

1. General information

The information for the year ended 31 December 2012 does not constitute statutory accounts as defined in section 434 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 2013 have been prepared in accordance with IAS 34 'Interim financial reporting' and with the Disclosure and Transparency Rules of the Financial Services 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 2012, were approved by the directors on 5 March 2013. The interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2012, 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, despite the current uncertain economic outlook. 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

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 ending 31 December 2012, except for the adoption of new standards and interpretations effective as of 1 January 2013.

None of the new standards and interpretations adopted had a material impact on the consolidated financial statements of the Group other than as described below:

IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1

The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g., net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) now have to be presented separately from items that will never be reclassified (e.g., actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affected presentation only and had no impact on the Group's financial position or performance.

The Group has not early adopted any other 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 cost. This is the measure reported to the Group's Chief Executive Officer 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 and 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 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