contents 1 HIGHLIGHTS 2 performance in H business structure 7 Interim management report 19 independent review report

Transcription

1 interim Report 2013

2 contents 1 HIGHLIGHTS 2 performance in H business structure for growth 6 positioned for growth 7 Interim management report 19 independent review report 21 financial statements 37 responsibility statement In just thirty-seven years, PageGroup has grown to become one of the world s bestknown and most respected recruitment consultancies. Today, we are proud to set the standard within our profession for specialist service, with a personal touch.

3 highlights Revenue ( m) Gross Profit ( m) Profit Before Tax ( m) Earnings Per Share (p) Group gross profit -4.4% (-5.2%*), the business remains 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 2013 of 47.6m Interim dividend held at 3.25p Dividend Per Share (p) Headcount At Year End , , , , ,702 1 Before non-recurring/exceptional items. * Constant exchange rates

4 PERFORMANCE IN H PROPORTION OF GROUP GROSS PROFIT HY % Geographic analysis of gross profit 80 21% 77% of gross profit generated outside the UK Different growth rates across geographies, rapidly changing shape of the Group % % Americas, now 15% of the Group, up +6%* on H Headcount down by 144, -2.8% from 5,099 end 2012, largely support staff % KEY: EMEA United Kingdom Asia Pacific Americas YOY: -12%* -0%* -4%* +6%* * Growth rates in local currency Discipline analysis of gross profit Continued diversification avoids exposure to any one discipline or sector PROPORTION OF GROUP GROSS PROFIT HY % 20% Finance & Accounting now 41% of Group 60 Financial Services 8% of Group % 40 19% Technical disciplines 20% of Group Ongoing launch and roll-out of new and existing disciplines 20 41% KEY: Finance & Accounting -7%* Marketing, Sales & Retail -4%* Engineering, Property & Construction, Procurement & Supply Chain -4%* Legal, Technology, HR, Secretarial, Healthcare -3%* * Growth rates in local currency 2

5 PERFORMANCE IN H EMEA Continental Europe, Middle East and Africa (41% of Group) 107.1m Gross profit 72 Offices 14 Disciplines 1,881 Employees Market conditions remain challenging but signs of improvement m Headcount Profitable in all major countries Record performances in UAE, South Africa, Russia, Turkey and Poland Strong performance from Spain +4%* on H United Kingdom (23% of Group) m Gross profit Market conditions tough but stable 30 Offices 12 Disciplines 1,256 Employees m Headcount UK remains diversified in geography, disciplines and permanent/ temporary revenue mix Technical disciplines such as procurement, supply chain and logistics performed well as did public sector Financial Services now 4% of UK * Constant exchange rates. 3

6 Asia Pacific (21% of Group) 54.3m Gross profit Asia +8%* in gross profits 23 Offices 13 Disciplines 1,076 Employees m Headcount Record performances for Japan, Malaysia, India and Taiwan Southern China and Hong Kong performed well Market conditions in Australia remain challenging Americas (15% of Group) m Gross profit 28 Offices 14 Disciplines 742 Employees Clear market leader in Latin America with 5 countries, 18 offices and 506 headcount m Headcount Continuing to invest in platform for future growth Record first half: Mexico, Colombia, Chile and Canada Changes to North American management team in 2012 driving positive results * Constant exchange rates. 4

7 business structure for growth One clear, consistent strategy of organic growth, continuing diversification by geography and discipline Clear, consistent strategy of organic growth continuing diversification by geography and discipline H Meritocratic, building trust, clear values and culture retaining high flyers and entrepreneurs years Cumulative profit before tax 25m years Cumulative profit before tax 391m ,260 6 years Cumulative profit before tax 511m KEY: Countries Country Disciplines Directors Headcount 3,549 4,955 5

8 POSITIONED FOR GROWTH Toachievegrowth,diversificationisimportant. Differentmarkets,bothgeographiesand disciplines,reactdifferentlytodifferent conditions.inpartit saboutspreadingthe risk,butmoreimportantlyit salsoabout positioningthebusinessintolarger,less competitivemarkets,theeconomiesofmany ofwhicharealsopredictedtogrowfaster. Heretheyarerepresentedbythedarkblue andinthelast12 1 /2yearstheproportion ofourbusinessthat sinthiscategoryhas improvedfrom12%toaroundhalfof ourbusiness Fee earners 1,657 12% HY Fee earners: 3,591 49% % 15% 10% 13% 30% % 680 Rest of EMEA* Asia Latin America Canada, Germany, Italy, New Zealand, Spain France, Holland and USA TRACK RECORD (GROSS PROFIT CAGR) YEARS % 23% 28% 3% 28% 2% FEE EARNER CHANGE (CAGR) YEARS % 21% 29% 3% 24% 1% 58% % 1141 Australia and UK PROPORTION OF RECRUITMENT THAT IS OUTSOURCED KEY: <30% 30-70% >70% Fee Earners *Austria,Belgium,Ireland,Luxembourg,Morocco,Poland,Portugal,Qatar,Russia,SouthAfrica,Sweden,Switzerland,Turkey,UAE. 6

9 interim management report 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 forwardlooking 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 forwardlooking 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. 7

10 GROUP STRATEGY PageGroup sstrategyistoexpandanddiversifythegroupbyindustrysectors,by professionaldisciplinesaswellasbygeography.thisincludesthepagepersonnel, MichaelPageandPageExecutivebusinesses;theclearobjectiveistobetheleading specialistrecruitmentconsultancyineachofourchosenmarkets.asrecruitmentactivity isdependentuponeconomiccycles,bybeingmorediversethedependencyonindividual businessesormarketsisreducedmakingtheoverallgroupmoreresilient.thisstrategy ispursuedentirelythroughtheorganicgrowthofexistingandnewteams,offices, disciplinesandcountries,withaconsistentteamandmeritocraticculture. Teams Offices Countries Offices Disciplines Disciplines Countries Teams Offices Countries Offices Teams CULTURE Disciplines Teams Countries Offices Teams Countries Disciplines Countries Disciplines Offices Teams Offices TARGETED SECTORS EXECUTIVE SEARCH QUALIFIED PROFESSIONAL CLERICAL PROFESSIONAL GENERALIST STAFFING Ourorganicgrowthisachievedbydrawingupontheskillsandexperiencesofproven PageGroupmanagement,ensuringwehavethebestandmostexperienced, home-growntalentineachkeyrole.whenweinvestinanewbusiness,wedosoonly withalong-termobjectiveandintheknowledgethatatsomepointtherewillbeperiods wheneconomicactivityslows.whileitisdifficulttopredictaccuratelywhenthese slowdownswilloccurandhowseveretheywillbe,ithasbeenourpracticeinthepast andourintentioninthefuturetomaintainourpresenceinourchosenmarkets,butwith closecontroloverourcostbase.ourteam-basedstructureandprimarilyprofit-share businessmodelisscalableandthesmallteamsizealsomeansthatwecanincrease rapidlyourheadcounttoachieveandmaintaingrowth. Ourintentionisalwaystomaintainastrongbalancesheet.Withuncertaintyaroundthe lengthanddepthofeconomicslowdowns,astrongbalancesheetisessentialtosupport thegroupthroughtougherperiodsand,whenconditionsimproveandthebusinessesstart Thefocusofourorganicgrowthinthelastelevenyearshasbeentogrowinemerging markets,wheretheoutsourcingofrecruitmentparticularlyforspecialistrolesis underdevelopedandwherethereislimitedcompetition.inmanyofthesemarkets,we haveachievedamarket-leadingpositionandintendtoembracefullytheopportunityby investingrapidlyinheadcountandopeninginnewcitiesandcountries.theinvestmentto takeadvantageoftheseopportunitiesintermsofnewheadcount,internationaltransfers ofmanagement,newofficespaceandstart-uplosseswilllimitshort-termprofitabilitybut shouldprovideasubstantialplatformforlongertermreturns. 8

11 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 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. We believe the greatest opportunities for long-term growth are the 5 markets of China, South East Asia, Germany, Latin America and the USA. 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 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). 9

12 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%). Gross Profit in Asia grew 8% in constant currency, with our newer businesses in Kuala Lumpur and Taipei also progressing well. 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

13 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 years 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. In North America, our businesses performed extremely well, particularly in the USA, with gross profit up by 23% in constant currency. 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. 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 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. 11

14 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 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, longterm 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 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 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 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 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 No shares were repurchased into the employee benefit trust or cancelled during the first half. 12

15 long-term on investment United Kingdom 1985 Australia 1986 France 1987 Netherlands 1993 Germany 1996 Singapore 1997 Spai n Italy 1995 Hon g Kong 1998 USA 2001 Switzerland Japan 2000 Portu gal Brazil 2002 Belgium Sweden 2003 China 2006 South Africa Russia Ireland UAE Mexico 2005 Poland Canada a 2007 Luxembourg Argentina 2010 Chile Austria Turkey New Zealan nd 2011 India Malaysia Qatar 2012 Colombia Morocco Taiwan 4000 Headcount Thro ugh economic om cycles: Maintain n infrastructur ru ure and market presenc e Strategic and measur ed investments e s for the longer r- -term

16 Group quarterly gross profit trend Gross Profit ( m) as reported

17 Current trading and outlook Overall, we have 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. 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. 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 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. 15

18 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. KPI H H Definition, method of calculation and analysis Gross margin 52.0% 54.5% Gross profit as a percentage of revenue. Gross margin has decreased, largely as a result of the mix of permanent and temporary placements. In tougher trading conditions, there tends to be a swing to lower margin temporary placements. Source: Condensed consolidated income statement in the financial statements. Conversion (before exceptional items) 12.3% 13.1% Operating profit as a percentage of gross profit showing the Group s effectiveness at controlling the costs and expenses associated with its normal business operations and the level of investment for future growth. Conversion has declined compared to last year, reflecting the impact of the economic uncertainty on demand for the Group s services, lower productivity and the investment in maintaining market presence and carrying spare capacity. Source: Condensed consolidated income statement in the financial statements. Productivity (gross profit per fee earner) 72.0k 72.5k Represents productivity of fee earners and is calculated by dividing the gross profit for the period by the average number of fee earners and directors. The higher the number, the higher their productivity. Productivity is a function of the speed of change in the numbers and the experience of fee earners, the impact of pricing and the general conditions of the recruitment market. Productivity has remained broadly flat, with the small decrease a result of the general worsening of market conditions compared to the first half last year. Source: Internal data. Fee earner: support staff ratio 72:28 71:29 Represents the balance between operational and non-operational staff. The balance in the period reflects the relative reduction in support staff, as a result of ongoing operational efficiencies across the Group, against the movement in the number of fee earners. Source: Internal data. Debtor days () Represents the length of time before the Group receives payments from its debtors. Calculated by comparing how many days billings it takes to cover the debtor balance. The decrease in the period reflects the continued focus on cash collections and a greater proportion of temporary business, with the average debtor days being lower for the temporary business compared to the permanent business. Source: Internal data. The movements in KPIs are in line with expectations 16

19 PRINCIPLE 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. 17

20 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, Chief Executive Officer 13 August 2013 Andrew Bracey, Chief Financial Officer 13 August

21 independent review report INDEPENDENT REVIEW REPORT TO THE MEMBERS OF 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 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. 19

22 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 halfyearly financial report based on our review. 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 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 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. 20

23 CONDENSED CONSOLIDATED INCOME STATEMENT financial statements CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONDENSED CONSOLIDATED BALANCE SHEET CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONDENSED SET OF INTERIM FINANCIAL STATEMENTS General information Accounting policies Segment reporting Exceptional items Financial income/(expenses) Taxation Dividends Share-based payments Earnings per ordinary share Property, plant and equipment Trade and other receivables Trade and other payables Cash flows from operating activities Cash and cash equivalents Responsibility statement

24 Condensed consolidated income statement Six months ended 2013 Six months ended Year ended December 2012 Note 000 Unaudited 000 Unaudited 000 Audited Revenue 3 503, , ,882 Cost of sales (241,308) (228,774) (463,013) Gross profit 3 261, , ,869 Administrative expenses (229,820) (237,848) (461,748) Operating profit before exceptional items 3 32,120 36,007 65,121 Exceptional items 4 (7,845) (7,834) Operating profit after exceptional items 3 32,120 28,162 57,287 Financial income Financial expenses 5 (350) (342) (1,191) Profit before tax 3 32,021 28,243 57,003 Income tax expense 6 (10,567) (9,475) (20,806) Profit for the period 21,454 18,768 36,197 Attributable to: Owners of the parent 21,454 18,768 36,197 Earnings per share Basic earnings per share (pence) Diluted earnings per share (pence) The above results all relate to continuing operations. 22

25 Condensed consolidated statement of comprehensive income Six months ended 2013 Six months ended Year ended Unaudited Unaudited 31 December Audited Profit for the period 21,454 18,768 36,197 Other comprehensive income/(loss) for the period Items that may subsequently be reclassified to profit and loss: Currency translation differences 2,567 (3,815) (5,171) Total comprehensive income for the period 24,021 14,953 31,026 Attributed to: Owners of the parent 24,021 14,953 31,026 Condensed consolidated balance sheet At 2013 Non-current assets Note Unaudited Unaudited 31 December Audited Property, plant and equipment 10 27,503 31,685 28,913 Intangible assets Goodwill and other intangible 2,036 1,950 2,091 Computer software 42,613 42,198 42,006 Deferred tax assets 9,908 8,548 9,192 Other receivables 11 3,827 5,209 3,310 Current assets 85,887 89,590 85,512 Trade and other receivables , , ,507 Current tax receivable 6,970 3,981 6,970 Cash and cash equivalents 14 53,981 57,443 70, , , ,246 Total assets 3 345, , ,758 23

26 Condensed consolidated balance sheet (continued) At 2013 Current liabilities Note Unaudited Unaudited 31 December Audited Trade and other payables 12 (127,043) (142,673) (138,733) Bank overdrafts 14 (6,366) (25,031) (9,396) Current tax payable (11,107) (2,581) (12,612) (144,516) (170,285) (160,741) Net current assets 115,379 92,697 99,505 Non-current liabilities Other payables 12 (3,074) (2,622) (2,779) Deferred tax liabilities (851) (233) (850) (3,925) (2,855) (3,629) Total liabilities 3 (148,441) (173,140) (164,370) Net assets 197, , ,388 Capital and reserves Called-up share capital 3,194 3,173 3,178 Share premium 66,138 58,470 60,221 Capital redemption reserve Reserve for shares held in the employee benefit trust (51,907) (57,277) (62,071) Currency translation reserve 27,682 26,471 25,115 Retained earnings 151, , ,013 Total equity 197, , ,388 (196,334 24

27 Condensed consolidated statement of changes in equity Called-up share capital 000 Share premium 000 Capital redemption reserve 000 Reserve for shares held in the employee benefit trust 000 Currency translation reserve 000 Retained earnings 000 Total equity 000 Balance at 1 January ,167 57, (65,652) 30, , ,598 Currency translation differences (3,815) (3,815) Net loss recognised directly in equity (3,815) (3,815) Profit for the six months ended ,768 18,768 Total comprehensive loss/income for the period (3,815) 18,768 14,953 Purchase of shares held in the employee benefit trust (9,388) (9,388) Exercise of share plans 6 1,255 4,271 5,532 Reserve transfer when shares held in the employee benefit trust vest 17,763 (17,763) Credit in respect of share schemes 7,461 7,461 Debit in respect of tax on share schemes 1,054 1,054 Dividends (20,778) (20,778) 6 1,255 8,375 (25,755) (16,119) Balance at ,173 58, (57,277) 26, , ,432 Currency translation differences (1,356) (1,356) Net loss recognised directly in equity (1,356) (1,356) Profit for the six months ended 31 December ,429 17,429 Total comprehensive (loss)/income for the period (1,356) 17,429 16,073 Purchase of shares held in the employee benefit trust (8,564) (8,564) Exercise of share plans 5 1, ,284 Reserve transfer when shares held in the employee benefit trust vest 3,770 (3,770) Credit in respect of share schemes 4,382 4,382 Debit in respect of tax on share schemes (2,363) (2,363) Dividends (9,856) (9,856) 5 1,751 (4,794) (11,079) (14,117) Balance at 31 December 2012 and 1 January ,178 60, (62,071) 25, , ,388 25

28 Condensed consolidated statement of changes in equity (continued) Called-up share capital 000 Share premium 000 Capital redemption reserve 000 Reserve for shares held in the employee benefit trust 000 Currency translation reserve 000 Retained earnings 000 Total equity 000 Balance at 1 January ,178 60, (62,071) 25, , ,388 Currency translation differences 2,567 2,567 Net gain recognised directly in equity 2,567 2,567 Profit for the six months ended ,454 21,454 Total comprehensive income for the period 2,567 21,454 24,021 Exercise of share plans 16 5,917 2,012 7,945 Reserve transfer when shares held in the employee benefit trust vest 10,164 (10,164) Credit in respect of share schemes 4,117 4,117 Credit in respect of tax on share schemes Dividends (20,798) (20,798) 16 5,917 10,164 (24,165) (8,068) Balance at ,194 66, (51,907) 27, , ,341 26

29 Condensed consolidated statement of cash flows Six months ended 2013 Note Unaudited Six months ended Year ended Unaudited 31 December Audited Cash generated from underlying operations 13 17,325 35,320 94,471 Exceptional items 4 (7,845) (7,834) Cash generated from operations 17,325 27,475 86,637 Income tax paid (12,331) (17,532) (24,371) Net cash from operating activities 4,994 9,943 62,266 Cash flows from investing activities Purchases of property, plant and equipment (4,325) (4,627) (7,919) Purchases of intangible assets (2,582) (5,013) (9,012) Proceeds from the sale of property, plant and equipment, and computer software Interest received Net cash used in investing activities (6,346) (9,182) (15,575) Cash flows from financing activities Dividends paid Interest paid (20,798) (20,778) (30,634) (364) (344) (1,218) Issue of own shares for the exercise of options 7,945 5,532 7,816 Purchase of shares into the employee benefit trust (9,388) (17,952) Net cash used in financing activities (13,217) (24,978) (41,988) Net (decrease)/increase in cash and cash equivalents (14,569) (24,217) 4,703 Cash and cash equivalents at the beginning of the period 61,373 58,168 58,168 Exchange gain/(loss) on cash and cash equivalents 811 (1,539) (1,498) Cash and cash equivalents at the end of the period 14 47,615 32,412 61,373 27

30 Notes to the condensed set of interim financial statements Six months ended 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 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 Accounting policies Basis of preparation The unaudited interim condensed consolidated financial statements for the six months ended 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 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. 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 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 availablefor-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. 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. 28

31 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 Revenue Gross Profit Six months ended Year ended Six months ended Year ended 31 December 31 December EMEA 205, , , , , ,382 United Kingdom 146, , ,876 61,414 61, ,408 Asia Pacific Australia and New Zealand 57,054 59, ,344 21,400 26,343 51,677 Other 38,672 34,888 72,853 32,907 30,508 63,177 Total 95,726 94, ,197 54,307 56, ,854 Americas 56,222 50,560 98,586 39,082 37,383 72, , , , , , ,869 29

32 (a) Revenue, gross profit and operating profit by reportable segment (continued) Operating Profit Six months ended Year ended 31 December EMEA 10,408 13,385 22,070 United Kingdom 9,579 8,614 15,771 Asia Pacific Australia and New Zealand 3,367 7,679 14,164 Other 6,248 6,131 14,803 Total 9,615 13,810 28,967 Americas 2, (1,687) Operating profit 32,120 36,007 65,121 Exceptional items (note 4) (7,845) (7,834) Operating profit after exceptional items 32,120 28,162 57,287 Financial (expense)/income (99) 81 (284) Profit before tax 32,021 28,243 57,003 The above analysis by destination is not materially different to the 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. 30

33 (b) Segment assets, liabilities and non-current assets by reportable segment Total Assets Total Liabilities Six months ended Year ended Six months ended Year ended December December EMEA 123, , ,560 69,775 71,666 70,596 United Kingdom 111, , ,392 34,928 64,518 48,414 Asia Pacific Australia and New Zealand 24,086 29,313 26,842 12,146 14,768 11,809 Other 39,774 38,572 43,159 9,364 8,660 9,182 Total 63,860 67,885 70,001 21,510 23,428 20,991 Americas 39,463 42,297 38,835 11,121 10,947 11,757 Segment assets/liabilities 338, , , , , ,758 Income tax 6,970 3,981 6,970 11,107 2,581 12, , , , , , ,370 Property, Plant & Equipment Intangible Assets Six months ended Year ended Six months ended Year ended December December EMEA 8,836 9,678 9, United Kingdom 7,253 8,904 7,968 43,365 42,760 42,712 Asia Pacific Australia and New Zealand 1,345 1,639 1, Other 2,620 2,814 2, Total 3,965 4,453 4, Americas 7,449 8,650 7, ,503 31,685 28,913 44,649 44,148 44,097 31

34 Thebelowanalysesinnotes(c)revenueandgrossprofitbydiscipline(beingtheprofessionsofcandidatesplaced)and(d)revenueandgrossprofitgeneratedfrompermanentand temporaryplacementshavebeenincludedasadditionaldisclosureoverandabovetherequirementsofifrs8 OperatingSegments. (c) Revenue and gross profit by discipline Revenue Gross Profit Six months ended Year ended Six months ended Year ended December December Finance and Accounting 232, , , , , ,561 Legal, Technology, HR, Secretarial and Other 115, , ,980 53,982 55, ,422 Engineering, Property & Construction, Procurement & Supply Chain 90,258 90, ,883 52,024 53, ,817 Marketing, Sales and Retail 64,960 64, ,641 48,567 50,213 97, , , , , , ,869 (d) Revenue and gross profit generated from permanent and temporary placements Revenue Gross Profit Six months ended Year ended Six months ended Year ended December December Permanent 208, , , , , ,660 Temporary 294, , ,877 59,336 58, , , , , , , ,869 32

35 4. Exceptional items The exceptional item in the prior period refers to a restructuring cost taken by the Group in the first half of 2012 relating to changes in management structure where an entire layer of management was removed. The costs represented direct expenditure necessarily incurred by the restructuring. The expenditure did not include any ongoing costs of the Group. 5. Financial income/(expenses) Financial income Six months ended Year ended 31 December Bank interest receivable Financial expenses Bank interest payable (350) (342) (1,191) 6. Taxation Taxation for the six month period is charged at 33.0% (six months ended 2012: 33.5%; year ended 31 December 2012: 36.5%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period. 7. Dividends Amounts recognised as distributions to equity holders in the period: Six months ended Year ended 31 December Final dividend for the year 31 December 2012 of 6.75p per ordinary share (2011: 6.75p) 20,798 20,778 20,778 Interim dividend for the period ended 2012 of 3.25p per ordinary share 9,856 20,798 20,778 30,634 Amounts proposed as distributions to equity holders in the period: Proposed interim dividend for the period ended 2013 of 3.25p per ordinary share (2012: 3.25p) 10,016 9,924 Proposed final dividend for the year ended 31 December 2012 of 6.75p per ordinary share 20,503 The proposed interim dividend had not been approved by the Board at 2013 and therefore has not been included as a liability. The comparative interim dividend at 2012 was also not recognised as a liability in the prior period. 33 The proposed interim dividend of 3.25 pence (2012: 3.25 pence) per ordinary share will be paid on 4 October 2013 to shareholders on the register at the close of business on 6 September 2013.

36 8. Share-based payments In accordance with IFRS 2 Share-based Payment, a charge of 5.0m has been recognised for share options and other share-based payment arrangements (including social charges) ( 2012: 7.9m, 31 December 2012: 14.2m). 9. Earnings per ordinary share The calculation of the basic and diluted earnings per share is based on the following data: Six months ended Year ended December 2012 Earnings Earnings for basic and diluted earnings per share ( 000) 21,454 18,768 36,197 Exceptional items ( 000) (note 4) 5,315 5,308 Earnings for basic and diluted earnings per share before exceptional items ( 000) 21,454 24,083 41,505 Number of shares Weighted average number of shares used for basic earnings per share ( 000) 306, , ,345 Dilution effect of share plans ( 000) 2,445 4,271 3,136 Diluted weighted average number of shares used for diluted earnings per share ( 000) 308, , ,481 Basic earnings per share (pence) Diluted earnings per share (pence) Basic earnings per share before exceptional items (pence) Diluted earnings per share before exceptional items (pence) The above results all relate to continuing operations. 10. Property, plant and equipment Acquisitions and disposals During the period ended 2013 the Group acquired property, plant and equipment with a cost of 4.3m ( 2012: 4.6m, 31 December 2012: 7.9m) Property, plant and equipment with a carrying amount of 0.4m were disposed of during the period ended 2013 ( 2012: 0.1m, 31 December 2012: 0.3m), resulting in a loss on disposal of 46k ( 2012: loss of 5k, 31 December 2012: loss of 5k). 34

37 11. Trade and other receivables Current Six months ended Year ended 31 December Trade receivables 158, , ,706 Other receivables 6,237 5,112 4,653 Prepayments and accrued income 34,655 37,285 36,148 Non-current 198, , ,507 Prepayments 3,827 5,209 3, Trade and other payables Current Six months ended Year ended 31 December Trade payables 4,868 5,536 9,605 Other tax and social security 41,318 42,299 39,709 Other payables 14,619 22,777 16,679 Accruals 65,571 71,179 71,920 Deferred income Non-current 127, , ,733 Deferred income 2,993 2,569 2,653 Other tax and social security ,074 2,622 2,779 35

38 13. Cash flows from operating activities Six months ended Year ended December Profit before tax 32,021 28,243 57,003 Exceptional items (note 4) 7,845 7,834 Profit before tax and exceptional items 32,021 36,088 64,837 Depreciation and amortisation charges 8,125 5,830 15,073 Loss on sale of property, plant & equipment, and computer software Share scheme charges 4,089 7,461 11,884 Net finance income costs/(income) 99 (81) 284 Operating cash flow before changes in working capital and exceptional items 44,380 49,303 92,083 (Increase)/decrease in receivables Decrease in payables (12,442) (11,750) 7,454 (14,613) (2,233) (5,066) Cash generated from underlying operations 17,325 35,320 94, Cash and cash equivalents Six months ended Year ended 31 December Cash at bank and in hand 47,769 47,907 62,431 Short-term deposits 6,212 9,536 8,338 Cash and cash equivalents 53,981 57,443 70,769 Bank overdrafts (6,366) (25,031) (9,396) Cash and cash equivalents in the statement of cash flows 47,615 32,412 61,373 The Group operates a multi-currency notional cash pool. Currently the main Eurozone subsidiaries and the UK-based Group Treasury subsidiary participate in this cash pool, although it is the Group s intention to extend the scope of the participation to other Group companies going forward. The structure facilitates interest and balance compensation of cash and bank overdrafts. 36

39 Responsibility statement The Directors confirm that to the best of their knowledge:- a) the condensed set of interim financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting ; b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein). On behalf of the Board Steve Ingham Andrew Bracey Chief Executive Officer Chief Financial Officer 13 August August

40 38 Notes

41 39