Interim Results
Michael Page International PLC
14 August 2006
Half Year Results for the Period Ended 30 June 2006
Michael Page International plc ("Michael Page"), the specialist professional
recruitment company, announces its half year results for the period ended 30
June 2006.
Key Points
• Turnover up 24.6% to £312.0m (2005: £250.4m)
• Gross profit up 30.0% to £166.6m (2005: £128.2m)
• Operating profit up 47.4% to £45.1m (2005: £30.6m)
• £26.7m of cash generated from operations (2005: £20.1m)
• Gross profit from permanent placements up 33.6%
• Gross profit split between permanent and temporary placements was 75:25
(2005: 73:27)
• Basic earnings per share up 37.9% to 9.1p (2005: 6.6p). Diluted earnings per
share 8.8p (2005: 6.5p)
• 11.35m shares repurchased at a cost of £39.7m
• Interim dividend up by 20.0% to 1.8p per share (2005: 1.5p)
Commenting on the results, Steve Ingham, Chief Executive of Michael Page, said:
"This is a strong set of results, with good increases in gross profit, operating
profit and dividends. We experienced excellent growth in most geographies and
are particularly encouraged by our performances in Europe and the Americas.
"Our investment in developing existing staff, hiring new people, launching new
businesses and opening new offices and countries ensures we are well positioned
for continued growth. The outlook remains positive and we remain confident of
sustained progress into the second half of the year."
Enquiries:
Michael Page International plc
Steve Ingham, Chief Executive 01932 264144
Stephen Puckett, Finance Director 01932 264144
Financial Dynamics
Richard Mountain/Susanne Walker 020 7269 7121
CHAIRMAN'S STATEMENT
The Group produced a strong set of results for the first half of 2006. Good
growth was achieved, delivering significantly improved profits. We continued to
invest in the business and there remain numerous opportunities for further
expansion.
The Group's turnover for the six months ended 30 June 2006 increased by 24.6% to
£312.0m (2005: £250.4m) and gross profit increased 30.0% to £166.6m (2005:
£128.2m). The Group's business model with inherent high operational gearing,
combined with management's close attention to costs, has resulted in operating
profit increasing by 47.4% to £45.1m (2005: £30.6m). Profit before tax was
£45.2m (2005: £30.5m).
We continued to invest in our global office network and our own people. At 30
June 2006 our staff numbers had increased to 3,230 (2005: 2,747) operating from
122 offices in 19 countries. During the period we opened in Mexico and our
ongoing organic expansion programme will continue in the second half with
openings planned in South Africa, Republic of Ireland, United Arab Emirates and
Russia.
We generated significantly higher growth in gross profit from permanent
placements (+33.6%) than from temporary placements (+20.1%). In the first half
of 2006 the mix of the Group's turnover and gross profit between permanent and
temporary placements was 42:58 (2005: 39:61) and 75:25 (2005: 73:27)
respectively. The gross margin on temporary placements increased to 23.2%
(2005: 22.9%).
UNITED KINGDOM
Turnover of the UK operations increased by 19.7% to £153.1m (2005: £127.9m),
gross profit increased by 20.8% to £76.0m (2005: £62.9m) and operating profit
increased by 26.5% to £19.6m (2005: £15.5m). Excluding our Scottish operations,
which are managed separately from the rest of the UK, gross profit from Finance
and Accounting increased by 15%, Marketing, Sales and Retail increased by 14%
and the other disciplines increased by 42%. In Scotland we had a very successful
first half with gross profit increasing by 66%. During the first half staff
numbers increased by 70 to 1,387 at the end of June.
CONTINENTAL EUROPE
Turnover of the Continental European operations increased by 35.2% to £104.4m
(2005: £77.2m), gross profit increased by 45.6% to £59.3m (2005: £40.7m) and
operating profit increased 106.8% to £16.1m (2005: £7.8m). Our largest business
in this region is France, which currently contributes approximately 40% of the
region's gross profit and grew 25% in the first half of 2006. Elsewhere in the
region our businesses are all performing well growing gross profits by 64%. We
continue to invest in all countries in the region as we roll-out our
disciplines. Since the beginning of the year we have added 140 staff making the
region's headcount 1,181 at the end of June 2006.
ASIA PACIFIC
Turnover of the Asia Pacific operations increased by 9.9% to £41.0m (2005:
£37.3m). Gross profit increased by 14.6% to £21.6m (2005: £18.8m). Operating
profit increased by 18.3% to £7.8m (2005: £6.6m). At the end of June we had 390
staff in the region, an increase of 31 since the start of the year.
Our largest business in the region, Australia, produced a disappointing
performance in the first half with gross profit increasing by 4%. As a
consequence we have made a number of management and operational changes which
will be fully implemented by the end of the third quarter. While we believe
these changes will be successful, they are unlikely to have any significant
impact in the remainder of the current year.
Our offices in Hong Kong, Shanghai, Tokyo and Singapore all had a strong first
half, growing gross profits collectively by 35%.
THE AMERICAS
In the Americas, turnover increased by 69.0% to £13.5m (2005: £8.0m) and gross
profit increased by 70.4% to £9.7m (2005: £5.7m). Operating profit increased
117.0% to £1.6m (2005: £0.7m). While we have not opened a new office in the USA
and Canada during the first half, we have invested heavily in new staff into the
existing offices and begun the discipline roll-out starting with Human
Resources, Sales and Marketing. In Brazil we achieved strong growth benefiting
from further investment in new staff. In the region we now have 272 staff, an
increase of 64 since the start of the year.
TAXATION AND EARNINGS PER SHARE
The charge for taxation is based on the expected effective annual tax rate of
32.5% (2005: 26.0%) on profit before taxation. The effective rate was lower in
2005 due to the utilisation and recognition of prior years' tax losses.
Basic earnings per share for the six months ended 30 June 2006 was 9.1p (2005:
6.6p) and diluted earnings per share was 8.8p (2005: 6.5p).
CASH FLOW
The Group started the year with net cash of £13.1m. In the first half we
generated £26.7m from operations after funding a £23.9m increase in working
capital reflecting the increased activity. Tax paid was £10.5m, and net capital
expenditure was £3.0m. During the first half £39.7m was spent repurchasing
11.35m shares at an average price of 347.0p and dividends of £12.1m were paid.
20.4m share options were exercised during the first half generating £33.2m. At
30 June 2006, 18.4m share options are outstanding of which 6.7m have vested but
have not been exercised. The Group had net cash of £7.5m at 30 June 2006.
DIVIDENDS
As previously stated, it is the Board's intention to pay dividends at a level
which it believes is sustainable throughout economic cycles and to continue to
use share repurchases to return surplus cash to shareholders. The Board has
decided to increase the interim dividend by 20% to 1.8p (2005: 1.5p) per share.
The interim dividend will be paid on 13 October 2006 to shareholders on the
register at 15 September 2006.
CURRENT TRADING AND FUTURE PROSPECTS
The first half of the year produced record results for the Group with a number
of excellent performances around the world. We continued to invest in the
business and there remain numerous opportunities for further expansion. We will
issue our third quarter trading update on 5 October 2006.
Adrian Montague
Chairman
14 August 2006
Unaudited Condensed Consolidated Interim Income Statement for the six months
ended 30 June 2006
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
Note £'000 £'000 £'000
Turnover 3 312,017 250,415 523,810
Cost of sales (145,429) (122,247) (256,229)
Gross profit 3 166,588 128,168 267,581
Administrative expenses (121,511) (97,586) (201,062)
Operating profit 3 45,077 30,582 66,519
Financial income 376 193 393
Financial expenses (255) (231) (776)
Profit before tax 45,198 30,544 66,136
Income tax expense 4 (14,690) (7,942) (16,506)
Profit for the period 30,508 22,602 49,630
Attributable to:
Equity holders of the parent 30,508 22,602 49,630
Earnings per share
Basic earnings per share (pence) 7 9.1 6.6 14.8
Diluted earnings per share (pence) 7 8.8 6.5 14.4
The above results relate to continuing operations.
Unaudited Condensed Consolidated Interim Statement of Changes in Equity at 30
June 2006
Called -up Capital Currency
share Share redemption EBT Treasury translation Retained Total
capital premium reserve reserve shares reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2005 3,572 - 178 (9,871) (13,122) (188) 79,931 60,500
Currency translation - - - - - (203) - (203)
differences
Net expense recognised - - - - - (203) - (203)
directly in equity
Profit for the six months - - - - - - 22,602 22,602
ended 30 June 2005
Total recognised - - - - - (203) 22,602 22,399
(expense)/income for the
period
Purchase of own shares - - - - (24,920) - - (24,920)
Credit in respect of - - - - - - 1,360 1,360
share schemes
Dividends - - - - - - (9,444) (9,444)
- - - - (24,920) - (8,084) (33,004)
Balance at 30 June 2005 3,572 - 178 (9,871) (38,042) (391) 94,449 49,895
Balance at 1 July 2005 3,572 - 178 (9,871) (38,042) (391) 94,449 49,895
Currency translation - - - - - 695 - 695
differences
Net income recognised - - - - - 695 - 695
directly in equity
Profit for the six months - - - - - - 27,028 27,028
ended 31 December 2005
Total recognised income - - - - - 695 27,028 27,723
for the period
Purchase of our own - - - - (9,296) - - (9,296)
shares
Cancellation of treasury (246) - 246 - 47,338 - (47,338) -
shares
Credit in respect of - - - - - - 5,562 5,562
share scheme
Dividends - - - - - - (4,988) (4,988)
(246) - 246 - 38,042 - (46,764) (8,722)
Balance at 31 December 3,326 - 424 (9,871) - 304 74,713 68,896
2005
Balance at 1 January 2006 3,326 - 424 (9,871) - 304 74,713 68,896
Currency translation - - - - - (811) - (811)
differences
Net expense recognised - - - - - (811) - (811)
directly in equity
Profit for the six months - - - - - - 30,508 30,508
ended 30 June 2006
Total recognised - - - - - (811) 30,508 29,697
(expense)/income for the
period
Purchase of own shares (113) - 113 - - - (39,656) (39,656)
for cancellation
Issue of share capital 205 33,001 - - - - - 33,206
Transfer to EBT reserve - - - 970 - - (970) -
Credit in respect of - - - - - - 7,856 7,856
share schemes
Dividends - - - - - - (12,100) (12,100)
92 33,001 113 970 - - (44,870) (10,694)
Balance at 30 June 2006 3,418 33,001 537 (8,901) - (507) 60,351 87,899
Unaudited Condensed Consolidated Interim Balance Sheet at 30 June 2006
30 June 30 June 31 December
2006 2005 2005
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 19,649 18,352 19,666
Intangible assets - Goodwill 1,539 1,539 1,539
- Computer software 2,082 2,448 2,212
Deferred tax assets 7,289 6,891 9,255
Other receivables 1,907 1,756 1,106
32,466 30,986 33,778
Current assets
Trade and other receivables 131,758 102,399 104,935
Current tax receivable 27 623 336
Cash and cash equivalents 10 25,846 14,984 20,060
157,631 118,006 125,331
Total assets 3 190,097 148,992 159,109
Non-current liabilities
Other payables (599) (2,166) (662)
Provisions for liabilities and charges (96) (394) (192)
Deferred tax liabilities (230) (219) (147)
(925) (2,779) (1,001)
Current liabilities
Trade and other payables (76,511) (62,397) (71,624)
Bank overdrafts 10 (18,300) (21,035) (281)
Bank loans 10 - - (6,700)
Current tax payable (6,174) (12,406) (10,223)
Provisions for liabilities and charges (288) (480) (384)
(101,273) (96,318) (89,212)
Total liabilities 3 (102,198) (99,097) (90,213)
Net assets 87,899 49,895 68,896
Capital and reserves
Called-up share capital 3,418 3,572 3,326
Share premium 33,001 - -
Capital redemption reserve 537 178 424
EBT reserve (8,901) (9,871) (9,871)
Treasury shares - (38,042) -
Currency translation reserve (507) (391) 304
Retained earnings 60,351 94,449 74,713
Total equity 87,899 49,895 68,896
Unaudited Condensed Consolidated Interim Statement of Cash Flows for the six
months ended 30 June 2006
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
Note £'000 £'000 £'000
Cash generated from operations 9 26,660 20,063 65,432
Income tax paid (10,548) (1,216) (10,127)
Net cash from operating activities 16,112 18,847 55,305
Cash flows from investing activities
Purchases of property, plant and equipment (3,103) (3,187) (7,167)
Purchases of computer software (251) (611) (965)
Proceeds from the sale of property, plant and 311 921 1,354
equipment, and computer software
Proceeds from the sale of business - - 1,353
Interest received 376 193 393
Net cash used in investing activities (2,667) (2,684) (5,032)
Cash flows from financing activities
Dividends paid (12,100) (9,444) (14,432)
Interest paid (249) (216) (773)
Proceeds from bank loan - - 6,700
Repayment of bank loan (6,700) - -
Issue of own shares from the exercise of share 33,206 - -
options
Purchase of own shares (39,656) (24,920) (34,216)
Net cash used in financing activities (25,499) (34,580) (42,721)
Net (decrease)/increase in cash and cash equivalents (12,054) (18,417) 7,552
Cash and cash equivalents at the beginning of the 19,779 12,215 12,215
period
Exchange (losses)/gains on cash and cash equivalents (179) 151 12
Cash and cash equivalents at the end of the period 10 7,546 (6,051) 19,779
Notes to the unaudited condensed consolidated interim financial information
1. Corporate information
Michael Page International plc is a limited liability company incorporated and
domiciled within the United Kingdom whose shares are publicly traded. The
condensed consolidated interim financial statements of the Company as at and for
the six months ended 30 June 2006 comprise the Company and its subsidiaries
(together referred to as the "Group").
The condensed consolidated interim financial statements of the Group for the six
months ended 30 June 2006 were authorised for issue in accordance with a
resolution of the directors on 11 August 2006.
2. Basis of preparation and accounting policies
Basis of preparation
These condensed consolidated interim financial statements have been prepared in
accordance with the recognition and measurement criteria of IFRS and the
disclosure requirements of the Listing Rules. They do not include all the
information required for full annual financial statements, and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the year ended 31 December 2005. The condensed consolidated interim
financial statements are unaudited but have been reviewed by the auditors and
their report is included.
Nature of financial information
The financial information set out above does not constitute the Group's audited
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The financial information for the year ended 31 December 2005 has been extracted
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The report of the auditors on those accounts was
unqualified and did not contain a statement under Section 237 (2) or (3) of the
Companies Act 1985.
Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 31 December 2005.
3. Segment reporting
Business is the Group's primary segment. The consolidated entity operates in
one business segment being that of recruitment services. As a result, no
additional business segment information is required to be provided. The Group's
secondary segment is geography. The segment results by geography are shown
below:
a) Turnover and gross profit by geographic region
Turnover Gross Profit
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2006 2005 2005 2006 2005 2005
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 153,120 127,876 269,623 76,027 62,946 129,535
Continental Europe 104,392 77,228 159,157 59,301 40,719 86,138
Asia Pacific Australia 31,604 30,230 61,152 12,874 12,365 24,722
Other 9,378 7,077 15,565 8,677 6,440 14,315
Total 40,982 37,307 76,717 21,551 18,805 39,037
Americas 13,523 8,004 18,313 9,709 5,698 12,871
312,017 250,415 523,810 166,588 128,168 267,581
The above analysis by destination is not materially different to analysis by
origin.
The analysis below is of the carrying amount of segment assets, segment
liabilities and capital expenditure. 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 geographic segments exclude income tax
assets and liabilities. Capital expenditure comprises additions to property,
plant and equipment, motor vehicles and computer hardware/software.
b) Segment assets, segment liabilities and capital expenditure by geographic
region
Total Assets Total Liabilities
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2006 2005 2005 2006 2005 2005
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 76,267 60,981 66,379 52,344 51,634 39,159
Continental 79,858 59,533 64,932 34,535 27,695 31,648
Europe
Asia Pacific Australia 13,619 14,069 12,256 5,116 4,944 5,547
Other 9,215 7,230 6,877 1,712 1,170 1,694
Total 22,834 21,299 19,133 6,828 6,114 7,241
Americas 11,111 6,556 8,329 2,317 1,248 1,942
Segment assets/liabilities 190,070 148,369 158,773 96,024 86,691 79,990
Income tax assets/ 27 623 336 6,174 12,406 10,223
liabilities
190,097 148,992 159,109 102,198 99,097 90,213
Capital Expenditure
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
United Kingdom 947 1,821 3,117
Continental Europe 1,332 852 2,403
Asia Pacific Australia 229 176 773
Other 204 408 584
Total 433 584 1,357
Americas 642 541 1,255
Segment capital expenditure 3,354 3,798 8,132
c) Turnover and gross profit by discipline
Turnover Gross Profit
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2006 2005 2005 2006 2005 2005
£'000 £'000 £'000 £'000 £'000 £'000
Finance and accounting 197,083 160,551 336,207 97,361 76,248 159,463
Marketing, sales and 48,765 40,926 84,591 32,642 26,792 55,111
retail
Other 66,169 48,938 103,012 36,585 25,128 53,007
312,017 250,415 523,810 166,588 128,168 267,581
d) Turnover and gross profit generated from permanent and
temporary placements
Turnover Gross Profit
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2006 2005 2005 2006 2005 2005
£'000 £'000 £'000 £'000 £'000 £'000
Permanent 132,419 98,692 205,482 124,896 93,461 194,967
Temporary 179,598 151,723 318,328 41,692 34,707 72,614
312,017 250,415 523,810 166,588 128,168 267,581
e) Operating profit by geographic region
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
United Kingdom 19,568 15,464 31,939
Continental Europe 16,122 7,797 19,449
Asia Pacific Australia 4,018 4,268 8,509
Other 3,774 2,318 5,593
Total 7,792 6,586 14,102
Americas 1,595 735 1,029
Operating profit 45,077 30,582 66,519
The above analyses in notes (b) segment liabilities by geographic region, (c)
turnover and gross profit by discipline (being the professions of candidates
placed), (d) turnover and gross profit generated from permanent and temporary
placements and (e) by operating profit, have been included as additional
disclosure over and above the requirements of IAS 14 "Segment Reporting".
Note (d) turnover and gross profit generated from permanent and temporary
placements has been included for the first time this year for the purposes of
providing additional information.
4. Taxation
The Group's consolidated effective tax rate in respect of continuing operations
for the six months ended 30 June 2006 was 32.5% (30 June 2005: 26.0% , 31
December 2005: 25.0%)
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Tax charge
United Kingdom 8,102 5,497 9,191
Overseas 6,588 2,445 7,315
Income tax expense reported in the condensed 14,690 7,942 16,506
consolidated income statement
5. Dividends
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2005 of 3.5p per 12,100 9,444 9,444
ordinary share (2004: 2.75p)
Interim dividend for the period ended 30 June 2005 of 1.5p per - - 4,988
ordinary share
12,100 9,444 14,432
Amounts proposed as distributions to equity holders in the period:
Proposed interim dividend for the six months ended 30 June 2006 of
1.8p per ordinary share (2005: 1.5p) 6,092 4,988 -
The proposed interim dividend had not been approved by the Board at 30 June 2006
and therefore has not been included as a liability. The comparative interim
dividend at 30 June 2005 was also not recognised as a liability in the prior
period.
The proposed interim dividend of 1.8 pence (2005: 1.5 pence) per ordinary share
will be paid on 13 October 2006 to shareholders on the register at the close of
business on 15 September 2006.
6. Share-based payments
In accordance with IFRS 2 "Share-based Payment", a charge of £3.2m has been
recognised for share options including social charges (30 June 2005: £0.9m, 31
December 2005: £2.9m), and £2.0m has been recognised for other share-based
payment arrangements including social charges (30 June 2005: £0.6m, 31 December
2005: £1.5m).
7. 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
2006 2005 2005
Earnings
Earnings for basic earnings per share (£'000) 30,508 22,602 49,630
Number of shares
Weighted average number of shares used for basic earnings per share 336,276 341,591 336,283
('000)
Dilution effect of share plans ('000) 8,839 5,617 9,014
Diluted weighted average number of shares used for diluted earnings per 345,115 347,208 345,297
share ('000)
Basic earnings per share (pence) 9.1 6.6 14.8
Diluted earnings per share (pence) 8.8 6.5 14.4
The above results relate to continuing operations.
8. Property, plant and equipment
Acquisitions and disposals
During the six months ended 30 June 2006 the Group acquired property, plant and
equipment with a cost of £3.1m (30 June 2005: £3.2m, 31 December 2005: £7.2m).
Property, plant and equipment with a carrying amount of £0.3m were disposed of
during the six months ended 30 June 2006 (30 June 2005: £0.7m, 31 December 2005:
£1.1m), resulting in neither a gain nor a loss on disposal (30 June 2005: gain
of £0.2m, 31 December 2005: gain of £0.2m).
Capital commitments
The Group had contractual capital commitments of £1.3m as at 30 June 2006 (30
June 2005: £0.5m, 31 December 2005: £0.4m) relating to property, plant and
equipment.
9. Cash flows from operating activities
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Profit before tax 45,198 30,544 66,136
Depreciation and amortisation charges 3,041 3,080 6,162
Loss/(profit) on sale of property, plant and equipment, and 359 (150) (183)
computer software
Profit on the sale of business - - (622)
Share scheme charges 2,045 955 2,694
Net finance (income)/cost (121) 38 383
Operating cashflow before changes in working capital and 50,522 34,467 74,570
provisions
Increase in receivables (28,357) (17,096) (17,907)
Increase in payables 4,687 3,008 9,381
Decrease in provisions (192) (316) (612)
Cash generated from operations 26,660 20,063 65,432
10. Cash and cash equivalents
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Cash at bank and in hand 16,654 11,103 11,095
Short term deposits 9,192 3,881 8,965
Cash and cash equivalents 25,846 14,984 20,060
Bank overdrafts (18,300) (21,035) (281)
Cash and cash equivalents in the statement of cash flows 7,546 (6,051) 19,779
Bank loans - - (6,700)
Net funds/(debt) 7,546 (6,051) 13,079
INDEPENDENT REVIEW REPORT TO MICHAEL PAGE INTERNATIONAL PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprise the condensed consolidated
income statement, the condensed consolidated statement of changes in equity, the
condensed consolidated balance sheet, the condensed consolidated statement of
cash flows and related notes 1 to 10. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
Deloitte & Touche LLP
Chartered Accountants
London
14 August 2006
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