Half Yearly Report

RNS Number : 9081V

Michael Page International PLC

13 August 2015

Half Year Results for the Period Ended 30 June 2015

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

Financial summary (6 months to 30 June 2015)	2015	2014	Change	Change CER*
Revenue	£530.4m	£512.2m	+3.5%	+8.3%
Gross profit	£280.9m	£263.7m	+6.5%	+10.7%
Operating profit	£40.0m	£35.7m	+12.3%	+16.3%
Profit before tax	£40.4m	£35.6m	+13.7%
Basic earnings per share	9.1p	7.6p	+19.7%
Diluted earnings per share	9.0p	7.5p	+20.0%
Interim dividend per share	3.6p	3.42p	+5.3%
Special dividend per share	16.0p

*Constant Exchange Rates

Highlights (Constant Exchange Rates)

· Group gross profit up 10.7% to £280.9m

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

· Operating profit increased 16.3%

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

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

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

· Tax rate of 30% (H1 2014: 34%)

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

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

Commenting, Steve Ingham, Chief Executive Officer, said:

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

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

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

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

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

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

Link:

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

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

+ 44 (0)20 3059 8125

Please quote "PageGroup" to gain access to the call

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

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

Enquiries:

PageGroup	+44 (0)20 3077 8425
Steve Ingham, Chief Executive Officer Kelvin Stagg, Chief Financial Officer


FTI Consulting	+44 (0)20 3727 1340
Richard Mountain / Susanne Yule

INTERIM MANAGEMENT REPORT

To the members of Michael Page International plc

GROUP STRATEGY

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

Organic growth

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

Diversification by region and discipline

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

Build for the long-term

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

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

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

Our current strategic priorities comprise the following:

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

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

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

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

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

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

GROUP RESULTS

GROSS PROFIT		Reported (£m)			Constant
Year-on-year	% of Group	H1 2015	H1 2014	%	%
EMEA	39%	109.1	107.5	+1.6%	+11.8%
UK	27%	75.7	67.6	+12.0%	+12.0%
Asia Pacific	20%	56.0	51.3	+9.2%	+7.9%
Americas	14%	40.1	37.3	+7.5%	+9.3%
Total	100%	280.9	263.7	+6.5%	+10.7%

Permanent	78%	218.0	203.5	+7.2%	+10.9%
Temporary	22%	62.9	60.2	+4.4%	+10.2%

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

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

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

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

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

OPERATING PROFIT AND CONVERSION RATES

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

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

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

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

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

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

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

OTHER ITEMS

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

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

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

CASH FLOW

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

DIVIDENDS AND SHARE REPURCHASES

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

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

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

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

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

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

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

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

EMEA	£m		Growth rates
(39% of Group in H1 2015)	H1 2015	H1 2014	Reported	Constant
Gross Profit	109.1	107.5	+1.6%	+11.8%
Operating Profit	15.6	14.7	+6.4%	+17.7%
Conversion Rate (%)	14.3%	13.7%

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

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

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

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

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

UNITED KINGDOM

UK	£m		Growth rates
(27% of Group in H1 2015)	H1 2015	H1 2014
Gross Profit	75.7	67.6	+12.0%
Operating Profit	12.5	10.8	+15.5%
Conversion Rate (%)	16.5%	16.0%

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

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

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

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

ASIA PACIFIC

Asia Pacific	£m		Growth rates
(20% of Group in H1 2015)	H1 2015	H1 2014	Reported	Constant
Gross Profit	56.0	51.3	+9.2%	+7.9%
Operating Profit	9.9	8.5	+16.3%	+13.8%
Conversion Rate (%)	17.6%	16.5%

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

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

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

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

THE AMERICAS

Americas	£m		Growth rates
(14% of Group in H1 2015)	H1 2015	H1 2014	Reported	Constant
Gross Profit	40.1	37.3	+7.5%	+9.3%
Operating Profit	2.0	1.6	+23.4%	+21.2%
Conversion Rate (%)	5.0%	4.4%

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

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

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

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

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

OUTLOOK

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

KEY PERFORMANCE INDICATORS ("KPIs")

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

KPI	Definition, method of calculation and analysis

Gross profit growth	How measured: Gross profit represents revenue less cost of sales and consists of the total placement fees of permanent candidates, the margin earned on the placement of temporary candidates and the margin on advertising income, i.e. it represents net fee income. The measure used is the increase or decrease in gross profit as a percentage of the prior year gross profit. Why it's important: The growth of gross profit relative to the previous year is an indicator of the growth of the net fees from the business as a whole. It demonstrates whether we are in line with our strategy to grow the business. How we performed in H1 2015: With signs of improvement in many of our markets, gross profit income in H1 2015 increased by 10.7% in constant currency, although this reduced to 6.5% at reported rates after the impact of foreign exchange (H1 2014: 7.9% in constant currency, 0.7% in reported rates). The Group remains profitable in all established markets. Relevant strategic objective: Organic growth
Percentage of gross profit generated outside the UK	How measured: Total gross profit from regions outside the UK expressed as a percentage of total gross profit. Why it's important: To measure the success of our strategy to diversify into new markets which are less competitive/less developed than the UK market. How we performed in H1 2015: 73% of our gross profit was generated outside the UK. We have continued our strategy of geographic diversification. However, the proportion of business generated outside the UK has reduced slightly due to a strong performance in the UK and tougher economic conditions in some overseas markets, particularly Australia and Brazil (H1 2014: 74%), as well as adverse foreign exchange movements. Relevant strategic objective: Diversification
Gross profit outside finance and accountancy	How measured: Total gross profit from disciplines outside of finance and accounting expressed as a percentage of total gross profit. Why it's important: We look at the proportion of gross profit from the different disciplines to measure the success of our strategy of diversification into more disciplines to reduce our exposure to any one sector. A key indicator is the percentage outside of our original core discipline of finance and accountancy. How we performed in H1 2015: 61% of our gross profit was generated from disciplines outside the core areas of finance and accounting. This remained in line with H1 2014. Relevant strategic objective: Diversification
Ratio of gross profits generated from permanent and temporary placements	How measured: Gross profit from each type of placement expressed as a percentage of total gross profit. Why it's important: This ratio helps us to understand where we are in the economic cycle since the temporary market tends to be more resilient when the economy is weak, although in several of our core strategic markets, working in a temporary role, or as a contractor or interim employee, is not currently normal practice, for example mainland China and Latin America. How we performed in H1 2015: In H1 2015, the continued improvement in the UK and Western Europe saw trading improve in the Michael Page brand, which operates at higher salary levels and naturally has a higher proportion of permanent recruitment, together with strong trading in mainland China. The improved trading conditions in these markets meant 78% of our gross profit was generated from permanent placements and 22% from temporary. H1 2014 (77:23). Relevant strategic objective: Organic growth
Gross profit per fee earner	How measured: Gross profit for the year divided by the average number of fee generating operating staff in the year Why it's important: This is a key indicator of productivity. How we performed in H1 2015: Gross profit per fee earner was £64.9k in H1 2015 compared to £66.7k in H1 2014. There has been a decrease in productivity compared to 2014 as a result of the impact of adverse currency movements. If stated in constant currency, productivity is up 1% on H1 2014. Relevant strategic objective: Organic growth
Conversion before exceptional items	How measured: Operating profit before interest and taxation (EBIT) before exceptional items as a percentage of gross profit. Why it's important: This demonstrates the Group's effectiveness at controlling the costs and expenses associated with its normal business operations. It will be impacted by the level of productivity and the level of investment for future growth. How we performed in H1 2015: Operating profit as a percentage of gross profit increased to 14.3% in 2015, up from 13.5% in the prior year, driven by the work done in 2014 to achieve consistency and efficiency across the Group, as well as a steady improvement in trading conditions. Excluding the effect of the one-off items taken in underlying profit, conversion would have been 15.2%. Relevant strategic objective: Build for the long-term
Basic earnings per share before exceptional items	How measured: Profit for the year attributable to the Group's equity shareholders, divided by the weighted average number of shares in issue during the year Why it's important: This measures the overall profitability of the Group. How we performed in H1 2015: Earnings per share in H1 2015 was 9.1p, a 19.7% improvement on the EPS in 2014 of 7.6p. Relevant strategic objective: Build for the long-term, Organic growth
Fee-earner: operational support staff ratio	How measured: The percentage of fee-earners compared to operational support staff at the period-end, expressed as a ratio Why it's important: This reflects the operational efficiency in the business in terms of our ability to grow the revenue-generating platform at a faster rate than the staff needed to support this growth. How we performed in H1 2015: The ratio improved to a record 77:23 driven by operational efficiencies achieved in the business that enabled 8% fee-earner growth, while reducing the number of support staff by 2%. (H1 2014: 75:25). Relevant strategic objective: Sustainable growth
Fee-earner headcount growth	How measured: Number of fee-earners and directors involved in revenue-generating activities at the period end, expressed as the percentage change compared to the prior year. Why it's important: Growth in fee-earners is a guide to our confidence in the business and macro-economic outlook, as it reflects expectations as to the level of future demand above the existing capacity within the business How we performed in H1 2015: Fee earner headcount grew at 8%, resulting in 4,303 fee-earners at the period end (H1 2014: 11%). Relevant strategic objective: Sustainable growth
Net cash	How measured: Cash and short-term deposits less bank overdrafts and loans. Why it's important: The level of net cash is a key measure of our success in managing our working capital and determines our ability to reinvest in the business and to return cash to shareholders. How we performed in H1 2015: Net cash is higher than June 2014, increasing during the first half of the year to £100.5m. This was as a result of £20.5m income from the exercise of share options by our employees, and share purchases into the Employee Benefit Trust of £25.4m in 2014 that has not been incurred in 2015 (Net cash 30 June 2014: £42.9m, 31 December 2014: £90.0m). Relevant strategic objective: Build for the long-term

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

PRINCIPAL RISKS AND UNCERTAINTIES

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

TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK

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

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

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

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

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

GOING CONCERN

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

CAUTIONARY STATEMENT

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

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

Page House

The Bourne Business Park

1 Dashwood Lang Road

Addlestone

Weybridge

Surrey

KT15 2QW

By order of the Board,

Steve Ingham Kelvin Stagg

Chief Executive Officer Chief Financial Officer

12 August 2015 12 August 2015

INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

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

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

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

Scope of Review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

12 August 2015

Condensed Consolidated Income Statement

For the six months ended 30 June 2015

		Six months ended		Year ended
		30 June	30 June	31 December
		2015	2014	2014
		Unaudited	Unaudited	Audited
	Note	£'000	£'000	£'000

Revenue	3	530,374	512,222	1,046,887
Cost of sales		(249,430)	(248,546)	(514,070)
Gross profit	3	280,944	263,676	532,817
Administrative expenses		(240,904)	(228,017)	(454,356)
Operating profit before exceptional items	3	40,040	35,659	78,461
Administrative expenses - exceptional items	4	-	-	1,631
Operating profit after exceptional items	3	40,040	35,659	80,092
Financial income	5	625	276	488
Financial expenses - exceptional items	4	-	-	298
Financial expenses	5	(238)	(371)	(517)
Profit before tax	3	40,427	35,564	80,361
Income tax expense	6	(12,140)	(12,092)	(21,863)
Income tax income - exceptional items	4	-	-	833
Profit for the period		28,287	23,472	59,331

Attributable to:
Owners of the parent		28,287	23,472	59,331

Earnings per share
Basic earnings per share (pence)	9	9.1	7.6	19.3
Diluted earnings per share (pence)	9	9.0	7.5	19.1

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2015

	Six months ended		Year ended
	30 June	30 June	31 December
	2015	2014	2014
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000

Profit for the period	28,287	23,472	59,331

Other comprehensive loss for the period
Items that may subsequently be reclassified to profit and loss:
Currency translation differences	(4,603)	(2,772)	(3,949)

Total comprehensive income for the period	23,684	20,700	55,382

Attributable to:
Owners of the parent	23,684	20,700	55,382

Condensed Consolidated Balance Sheet

As at 30 June 2015

		30 June	30 June	31 December
		2015	2014	2014
		Unaudited	Unaudited	Audited
	Note	£'000	£'000	£'000
Non-current assets
Property, plant and equipment		20,347	23,069	21,808
Intangible assets - Goodwill and other intangibles		1,793	1,913	1,853
- Computer software		34,731	39,126	36,693
Deferred tax assets		10,104	8,240	11,644
Other receivables	10	2,083	2,364	1,842
		69,058	74,712	73,840
Current assets
Trade and other receivables	10	216,273	207,103	203,042
Current tax receivable		6,779	7,060	7,479
Cash and cash equivalents	13	100,520	52,695	90,012
		323,572	266,858	300,533

Total assets	3	392,630	341,570	374,373

Current liabilities
Trade and other payables	11	(131,093)	(129,761)	(135,888)
Bank overdrafts	13	-	(9,771)	-
Current tax payable		(16,408)	(9,504)	(14,910)
		(147,501)	(149,036)	(150,798)

Net current assets		176,071	117,822	149,735

Non-current liabilities
Other payables	11	(3,450)	(4,583)	(4,743)
Deferred tax liabilities		(556)	(891)	(2,609)
		(4,006)	(5,474)	(7,352)


Total liabilities	3	(151,507)	(154,510)	(158,150)

Net assets		241,123	187,060	216,223

Capital and reserves
Called-up share capital		3,254	3,215	3,219
Share premium		88,717	74,011	75,215
Capital redemption reserve		932	932	932
Reserve for shares held in the employee benefit trust		(62,345)	(72,653)	(72,407)
Currency translation reserve		11,863	17,643	16,466
Retained earnings		198,702	163,912	192,798
Total equity		241,123	187,060	216,223

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2015

				Reserve
				for shares
	Called-up		Capital	held in the	Currency
	share	Share	redemption	employee	translation	Retained	Total
	capital	premium	reserve	benefit trust	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2014	3,208	71,739	932	(50,022)	20,415	162,215	208,487
Currency translation differences	-	-	-	-	(2,772)	-	(2,772)
Net expense recognised directly in equity	-	-	-	-	(2,772)	-	(2,772)
Profit for the six months ended 30 June 2014	-	-	-	-	-	23,472	23,472
Total comprehensive (loss)/income for the period	-	-	-	-	(2,772)	23,472	20,700
Purchase of shares held in employee benefit trust	-	-	-	(25,445)	-	-	(25,445)
Exercise of share plans	7	2,272	-	-	-	398	2,677
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	2,814	-	(2,814)	-
Credit in respect of share schemes	-	-	-	-	-	3,648	3,648
Debit in respect of tax on share schemes	-	-	-	-	-	(787)	(787)
Dividends	-	-	-	-	-	(22,220)	(22,220)
	7	2,272	-	(22,631)	-	(21,775)	(42,127)

Balance at 30 June 2014	3,215	74,011	932	(72,653)	17,643	163,912	187,060

Currency translation differences	-	-	-	-	(1,177)	-	(1,177)
Net expense recognised directly in equity	-	-	-	-	(1,177)	-	(1,177)
Profit for the six months ended 31 December 2014	-	-	-	-	-	35,859	35,859
Total comprehensive (loss)/income for the period	-	-	-	-	(1,177)	35,859	34,682
Purchase of shares held in employee benefit trust	-	-	-	-	-	-	-
Exercise of share plans	4	1,204	-	-	-	69	1,277
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	246	-	(246)	-
Credit in respect of share schemes	-	-	-	-	-	3,421	3,421
Credit in respect of tax on share schemes	-	-	-	-	-	269	269
Dividends	-	-	-	-	-	(10,486)	(10,486)
	4	1,204	-	246	-	(6,973)	(5,519)

Balance at 31 December 2014 and 1 January 2015	3,219	75,215	932	(72,407)	16,466	192,798	216,223

Currency translation differences	-	-	-	-	(4,603)	-	(4,603)
Net expense recognised directly in equity	-	-	-	-	(4,603)	-	(4,603)
Profit for the six months ended 30 June 2015	-	-	-	-	-	28,287	28,287
Total comprehensive (loss)/income for the period	-	-	-	-	(4,603)	28,287	23,684
Purchase of shares held in employee benefit trust	-	-	-	-	-	-	-
Exercise of share plans	35	13,502	-	-	-	6,989	20,526
Reserve transfer when shares held in the employee benefit trust vest	-	-	-	10,062	-	(10,062)	-
Credit in respect of share schemes	-	-	-	-	-	3,896	3,896
Credit in respect of tax on share schemes	-	-	-	-	-	496	496
Dividends	-	-	-	-	-	(23,702)	(23,702)
	35	13,502	-	10,062	-	(22,383)	1,216

Balance at 30 June 2015	3,254	88,717	932	(62,345)	11,863	198,702	241,123

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2015

				Year ended
		30 June	30 June	31 December
		2015	2014	2014
		Unaudited	Unaudited	Audited
	Note	£'000	£'000	£'000


Cash generated from underlying operations	12	28,156	22,692	88,092
Exceptional items	4	-	-	(1,098)
Cash generated from operations		28,156	22,692	86,994
Income tax paid		(10,338)	(13,081)	(15,357)
Net cash from operating activities		17,818	9,611	71,637

Cash flows from investing activities
Purchases of property, plant and equipment		(3,611)	(2,875)	(6,231)
Purchases of intangible assets		(2,055)	(3,763)	(6,468)
Proceeds from the sale of property, plant and equipment, and computer software		335	201	824
Interest received		625	276	505
Net cash used in investing activities		(4,706)	(6,161)	(11,370)

Cash flows from financing activities
Dividends paid		(23,702)	(22,220)	(32,706)
Interest paid		(241)	(211)	-
Issue of own shares for the exercise of options		20,526	2,687	3,954
Purchase of shares into the employee benefit trust		-	(25,445)	(25,445)
Net cash used in financing activities		(3,417)	(45,189)	(54,197)

Net increase/(decrease) in cash and cash equivalents		9,695	(41,739)	6,070
Cash and cash equivalents at the beginning of the period		90,012	85,394	85,394
Exchange gain/(loss) on cash and cash equivalents		813	(731)	(1,452)
Cash and cash equivalents at the end of the period	13	100,520	42,924	90,012

Notes to the condensed set of interim financial statements

For the six months ended 30 June 2015

1. General information

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

2. Accounting policies

Basis of preparation

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

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

Going concern

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

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

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

New accounting standards, interpretations and amendments adopted by the Group

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

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

3. Segment reporting

All revenues disclosed are derived from external customers.

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

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

		Revenue			Gross Profit
		Six months ended		Year ended	Six months ended		Year ended
		30 June	30 June	31 December	30 June	30 June	31 December
		2015	2014	2014	2015	2014	2014
		£'000	£'000	£'000	£'000	£'000	£'000

EMEA		213,453	210,623	419,667	109,120	107,453	212,042

United Kingdom		164,008	155,645	325,708	75,697	67,586	138,361

Asia Pacific	Australia and New Zealand	51,035	52,318	110,025	15,800	16,701	34,400
	Asia	46,989	40,768	83,454	40,199	34,601	71,139
	Total	98,024	93,086	193,479	55,999	51,302	105,539

Americas		54,889	52,868	108,033	40,128	37,335	76,875

		530,374	512,222	1,046,887	280,944	263,676	532,817

		Operating Profit
		Six months ended		Year ended
		30 June	30 June	31 December
		2015	2014	2014
		£'000	£'000	£'000

EMEA		15,641	14,707	30,120

United Kingdom		12,515	10,833	24,066

Asia Pacific	Australia and New Zealand	1,802	2,120	4,675
	Asia	8,071	6,369	15,301
	Total	9,873	8,489	19,976

Americas		2,011	1,630	4,299

Operating profit before exceptional items		40,040	35,659	78,461
Exceptional items - EMEA (note 4)		-	-	1,631
Operating profit after exceptional items		40,040	35,659	80,092
Financial expense after exceptional items		387	(95)	269
Profit before tax		40,427	35,564	80,361

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

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

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

		Total Assets			Total Liabilities
		30 June	30 June	31 December	30 June	30 June	31 December
		2015	2014	2014	2015	2014	2014
		£'000	£'000	£'000	£'000	£'000	£'000

EMEA		130,110	123,431	135,374	65,237	66,291	68,947

United Kingdom		136,372	102,120	118,042	35,290	46,288	40,608

Asia Pacific	Australia and New Zealand	25,994	27,499	27,265	9,901	10,921	9,079
	Asia	50,452	40,809	43,457	11,076	8,487	11,301
	Total	76,446	68,308	70,722	20,977	19,408	20,380

Americas		42,923	40,651	42,756	13,595	13,019	13,305
Segment assets/liabilities		385,851	334,510	366,894	135,099	145,006	143,240

Income tax		6,779	7,060	7,479	16,408	9,504	14,910

		392,630	341,570	374,373	151,507	154,510	158,150



		Property, Plant & Equipment			Intangible Assets
		30 June	30 June	31 December	30 June	30 June	31 December
		2015	2014	2014	2015	2014	2014
		£'000	£'000	£'000	£'000	£'000	£'000

EMEA		5,300	6,545	6,142	412	398	457

United Kingdom		7,060	7,078	7,175	35,412	40,005	37,134

Asia Pacific	Australia and New Zealand	1,376	1,916	1,643	102	55	134
	Asia	1,628	1,644	1,643	57	36	60
Total		3,004	3,560	3,286	159	91	194

Americas		4,983	5,886	5,205	541	545	761
		20,347	23,069	21,808	36,524	41,039	38,546

The below analyses in notes (c) revenue and gross profit by discipline (being the professions of candidates placed) and (d) revenue and gross profit generated from permanent and temporary placements have been included as additional disclosure over and above the requirements of IFRS 8 "Operating Segments".

	Revenue			Gross Profit
	Six months ended		Year ended	Six months ended		Year ended
	30 June	30 June	31 December	30 June	30 June		31 December
	2015	2014	2014	2015	2014		2014
	£'000	£'000	£'000	£'000	£'000		£'000

Finance and Accounting	229,039	228,275	465,250	110,599	104,109		211,366

Legal, Technology, HR, Secretarial and Other	127,429	117,264	240,105	58,834	53,467		107,210

Engineering, Property & Construction, Procurement & Supply Chain	96,143	95,715	193,922	54,995	53,612		107,729

Marketing, Sales and Retail	77,763	70,968	147,610	56,516	52,488		106,512

	530,374	512,222	1,046,887	280,944	263,676		532,817

(d) Revenue and gross profit generated from permanent and temporary placements

	Revenue			Gross Profit
	Six months ended		Year ended	Six months ended		Year ended
	30 June	30 June	31 December	30 June	30 June	31 December
	2015	2014	2014	2015	2014	2014
	£'000	£'000	£'000	£'000	£'000	£'000

Permanent	221,650	209,073	416,275	218,049	203,458	406,086

Temporary	308,724	303,149	630,612	62,895	60,218	126,731

	530,374	512,222	1,046,887	280,944	263,676	532,817

4. Exceptional items

In October 2013, Page Personnel France (PPF) received notice from the Competent Authorities of the UK and France of their decision regarding a transfer pricing case that had arisen as a result of a tax audit in March 2008. The decision, which was unexpected, increased the profit generated by PPF, which, as per the mandatory profit share or "participation aux résultats de l'entreprise" that is particular to France, drove a requirement to pay increased employee profit share, both to employees of PPF and also to the temporary workers placed by that company. As a result, the Group took in 2013 an exceptional charge of £2.5m relating to prior periods, and £0.6m that was included within operating profits from trading activities.

In December 2014, PPF received notice from the French tax authorities that they would not be seeking to make any further transfer pricing adjustments as a result of their audit of the tax years 2011 and 2012. In addition, as no assessment was raised within the statutory timeframe, there will be no adjustment for the 2010 tax year. Accordingly, in 2014, the Group recorded exceptional income of £1.6m relating to the reversal of amounts that were previously provided as an exceptional charge and a further £0.6m that was included within operating profit. There was also £0.3m of exceptional interest, being the reversal of the provision, in 2014 as well as £0.8m of income tax income relating to this exceptional item.

There are no exceptional items in the current period.

5. Financial income / (expenses)

	Six months ended		Year ended
	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000
Financial income
Bank interest receivable	625	276	488

Financial expenses
Bank interest payable	(238)	(371)	(517)
Exceptional interest (note 4)	-	-	298
	(238)	(371)	(219)

6. Taxation

Taxation for the six month period is charged at 30.0% (six months ended 30 June 2014: 34.0%; year ended 31 December 2014: 26.2%), 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

	Six months ended		Year ended
	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2014 of 7.58p per ordinary share (2013: 7.25p)	23,702	22,220	22,220
Interim dividend for the period ended 30 June 2014 of 3.42p per ordinary share	-	-	10,486
	23,702	22,220	32,706

Amounts proposed as distributions to equity holders in the period:
Proposed interim dividend for the period ended 30 June 2015 of 3.60p per ordinary share (2014: 3.42p)	11,254	10,481	-
Proposed special dividend for the year ended 31 December 2015 of 16.0p per ordinary share (2014: nil)	50,019	-	-
Proposed final dividend for the year ended 31 December 2014 of 7.58p per ordinary share	-	-	23,232

The proposed interim and special dividends had not been approved by the Board at 30 June 2015 and therefore have not been included as a liability. The comparative interim dividend at 30 June 2014 was also not recognised as a liability in the prior period.

The proposed interim dividend of 3.6 pence (2014: 3.42 pence) per ordinary share and proposed special dividend of 16.0 pence (2014: nil pence) per ordinary share will be paid on 2 October 2015 to shareholders on the register at the close of business on 4 September 2015.

8. Share-based payments

In accordance with IFRS 2 "Share-based Payment", a charge of £5.1m has been recognised for share options and other share-based payment arrangements (including social charges) (30 June 2014: £3.4m, 31 December 2014: £5.8m).

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
	30 June	30 June	31 December
Earnings	2015	2014	2014

Earnings for basic and diluted earnings per share (£'000)	28,287	23,472	59,331
Exceptional items (£'000) (note 4)	-	-	(2,762)
Earnings for basic and diluted earnings per share before exceptional items (£'000)	28,287	23,472	56,569

Number of shares
Weighted average number of shares used for basic earnings per share ('000)	309,827	309,595	308,020
Dilutive effect of share plans ('000)	2,988	3,012	2,303
Diluted weighted average number of shares used for diluted earnings per share ('000)	312,815	312,607	310,323

Basic earnings per share (pence)	9.1	7.6	19.3
Diluted earnings per share (pence)	9.0	7.5	19.1
Basic earnings per share before exceptional items (pence)	9.1	7.6	18.4
Diluted earnings per share before exceptional items (pence)	9.0	7.5	18.2

The above results all relate to continuing operations.

10. Trade and other receivables

	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000
Current
Net trade receivables	163,799	159,708	156,060
Other receivables	9,434	7,246	6,572
Prepayments and accrued income	43,040	40,149	40,410
	216,273	207,103	203,042
Non-current
Other Receivables	2,083	2,364	1,842

11. Trade and other payables

	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000
Current
Trade payables	6,146	4,333	10,007
Other tax and social security	41,791	43,262	42,183
Other payables	7,807	7,872	9,341
Accruals	73,984	73,131	73,666
Deferred income	1,365	1,163	691
	131,093	129,761	135,888
Non-current
Deferred income	3,190	4,350	4,456
Other tax and social security	260	233	287
	3,450	4,583	4,743

12. Cash flows from operating activities

	Six months ended		Year ended
	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000
Profit before tax	40,427	35,564	80,361
Exceptional items (note 4)	-	-	(1,929)
Profit before tax and exceptional items	40,427	35,564	78,432
Depreciation and amortisation charges	7,640	9,162	17,896
Loss on sale of property, plant and equipment, and computer software	17	181	294
Share scheme charges	3,896	3,637	7,120
Net finance (costs)/income	(387)	94	(269)
Operating cash flow before changes in working capital and exceptional items	51,593	48,638	103,473
Increase in receivables	(23,906)	(24,302)	(22,212)
Increase/(decrease) in payables	469	(1,644)	6,831
Cash generated from underlying operations	28,156	22,692	88,092

13. Cash and cash equivalents

	Six months ended		Year ended
	30 June	30 June	31 December
	2015	2014	2014
	£'000	£'000	£'000

Cash at bank and in hand	97,169	43,718	84,941
Short-term deposits	3,351	8,977	5,071
Cash and cash equivalents	100,520	52,695	90,012
Bank overdrafts	-	(9,771)	-
Cash and cash equivalents in the statement of cash flows	100,520	42,924	90,012
Net funds	100,520	42,924	90,012

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.

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