PageGroup PLC — Interim / Quarterly Report 2010

Jun 30, 2010

CREATING A WORLD-LEADING CONSULTANCY, OUR WAY.

Michael Page International didn't become a world-leading specialist recruitment consultancy overnight. We've grown, step-by-step, entirely organically, rather than by mergers or acquisitions, so that today we have over 3,800 people operating in 135 offi ces in 28 countries worldwide.

We specialise across a broad range of sectors, with dedicated divisions serving our clients and candidates within each sector. In fact, specialisation has been key to our success, with each division acting autonomously, focusing solely on its particular sector. Over the last 34 years, Michael Page has developed a clear brand strategy for the middle to senior management professional market. Today, we are a high profi le FTSE 250 brand, globally recognised and respected, attracting the best consultants, candidates and clients the world over.

STICKING TO A STRATEGY THAT WORKS.

We make long-term investment decisions to expand organically, growing existing and new teams, offi ces, disciplines and countries with a consistent team culture. Our management is almost entirely home-grown; people steeped in our culture and ready to spread their infl uence and expertise around the Michael Page world. As we continue to expand in the UK and abroad, we will always draw on the skills and experiences of proven Michael Page management and ensure we have the best, most experienced people in each key position.

VALUES THAT MEAN SO MUCH.

Putting values that work at the heart of our business is key to everything we do. These values help us all maximise our potential to achieve individual, team and company success. We have identifi ed fi ve values that we believe are at the heart of our success. These are not hollow words, but the essence of our brand, rooted in each and every employee of Michael Page:

Take Pride

To take pride in what we do, of who we are and what we stand for. We are proud of our brand, our colleagues and our achievements.

Be Passionate

It's our passion to provide the very best service for our clients and candidates that drives us to triumph over our competition.

Never give up

We welcome a challenge; we show strength of character and resilience in our approach, we see diffi culty as an opportunity to demonstrate ability.

Work as a Team

Working as a team makes us stronger, more effi cient and adds value to our business and brand.

Make it Fun

We recognise that fun is a key factor within our working environment; we're very sociable and enjoy celebrating our successes.

Revenue (£m)

393.5	2010
364.7	2009
500.0	2008
395.8	2007
312.0	2006

Profi t Before Tax (£m)

61.4†	2010
43.2†	2009
84.1	2008
69.2	2007
45.2	2006

Dividend Per Share (pence)

2.88	2010
2.88	2009
2.88	2008
2.40	2007
1.80	2006

at 2.88p † After non-recurring items (NRI)

* Constant exchange rates

Gross Profi t (£m)

209.6	2010
178.8	2009
292.7	2008
226.5	2007
166.6	2006

Basic Earnings Per Share (pence)

13.1	2010
8.8	2009
18.3	2008
14.3	2007
9.1	2006

Headcount At Period End

3,860	2010
3,702	2009
5,535	2008
4,323	2007
3,230	2006

• Strong fi rst half benefi ting from geographic and discipline diversifi cation
• Improved productivity and utilisation of spare capacity driving profi t recovery
• Asia Pacifi c, Latin America and newer developing countries growing at 43%* year-on-year
• All regions growing sequentially in fi rst half of 2010
• 71% of gross profi t generated from outside the UK
• 53% of gross profi t generated from non-Finance and Accounting disciplines
• Roll-out of Page Personnel continues with 5 new countries, now in 17 countries
• Gross profi t from permanent placements growing at 31% (28%*)
• Share repurchases of £61.8m during the fi rst half of 2010
• Strong balance sheet with net cash at 30 June 2010 of £65.7m (2009: £99.2m)
• Interim dividend maintained

Growth Rates Around The World

Gross Profit Growth Rates in Reported Currency H1 2010 vs H1 2009	Headcount
>40%	1,060
0% to 40%	2,540
<0%	260

Performance At A Glance in H1 2010

The Group's strategy is to expand and diversify the business by industry sectors, by professional disciplines, by geography and by level of focus be it Page Personnel, Michael Page or Michael Page Executive Search, with the objective of being the leading specialist recruitment consultancy in each of our chosen markets. As recruitment activity is dependent upon economic cycles, by being more diverse, the dependency on individual businesses or markets is reduced, making the overall Group more resilient. This strategy is pursued entirely through the organic growth of existing and new teams, offi ces, disciplines and countries with a consistent team and meritocratic culture. Over 70% of the Group's gross profi ts were generated outside the UK. New investments in the fi rst half of 2010 included the launch of Page Personnel in Hong Kong, Mexico, Russia, Singapore and the USA.

Latin America +50%* n Ameri North America +29%* N h A +2

EMEA (Continental Europe, Middle East and Africa – 44% of Group)

UNITED KINGDOM (29% of Group)

	32 Offi ces	11 Disciplines	1,218	Employees
7% + gross profit	£57.0m 2009		£6.1m	2009 2009
	£61.2m 2010		£9.6m	2010
	Gross Profi t		Operating Profi t

* Constant exchange rates

Responsibility Statement

THE DIRECTORS CONFIRM THAT TO THE BEST OF OUR KNOWLEDGE:

• a) the condensed set of fi nancial 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 fi rst 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

16 August 2010 16 August 2010

Steve Ingham Stephen Puckett Chief Executive Group Finance Director

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 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 which are signifi cant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

GROUP STRATEGY

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

Our organic growth is achieved by drawing upon the skills and experiences of proven Michael Page management, ensuring we have the best and most experienced, home-grown talent in each key role. When we invest in a new business, we do so only with a long-term objective and in the knowledge that at some point there will be periods when economic activity slows. While it is diffi cult to predict accurately when these slowdowns will occur and how severe they will be, it has been our practice in the past and our intention in the future to maintain our presence in our chosen markets, but with close control over our cost base.

Our team-based structure and profi t share business model is scalable. The small team size also means that we can rapidly increase our headcount to achieve growth. When market conditions tighten, these teams then reduce in size largely through natural attrition. Consequently, our cost base will be reduced in a slowdown, but having invested years in training and developing our highly capable management resources, our objective is to retain this expertise within the Group. By following this course of action, we typically gain market share during downturns and position our businesses for leading rates of growth when economic conditions improve.

Pursuing this approach does mean that in an economic downturn our profi tability declines as, in addition to the lower productivity levels that come with a slowdown, we also carry spare capacity. However, when market conditions improve, the Group's profi tability recovers quickly as spare capacity is utilised. Adopting this strategy of toughing-out economic slowdowns also drives our fi nancing strategy and balance sheet position. In slowdowns, the business continues to produce strong cash fl ows, as working capital requirements reduce. With uncertainty around the length and depth of economic slowdowns, a strong balance sheet is essential to support the businesses through tougher periods and, when conditions improve and the businesses start growing, to fund increased working capital requirements.

GROUP RESULTS

As economic conditions improved during the fi rst half of 2010, the Group produced a strong performance, growing revenue and substantially increasing profi tability. The Group's revenue for the six months ended 30 June 2010 increased by 7.9% to £393.5m (2009: £364.7m) and gross profi t increased by 17.2% to £209.6m (2009: £178.8m). At constant exchange rates, the Group's revenue increased by 6.3% and gross profi t by 15.1%. In the fi rst half, the mix of the Group's revenue and gross profi t between permanent and temporary placements was 43:57 (2009: 36:64) and 78:22 (2009: 70:30) respectively. As expected when economic conditions improve, permanent recruitment is recovering faster, with temporary recruitment only starting to grow sequentially in the second quarter of 2010. This movement in the mix towards permanent is compounded by our faster growing regions being predominantly permanent rather than temporary recruitment in the specialist sectors. The gross margin on temporary placements in the fi rst half of 2010 has decreased to 20.7% (2009: 23.2%), largely as a consequence of pressure on pricing, but as we started to see gross profi t stabilise in the fi rst half of 2010, we have also seen gross margin on temporary placements stabilise as well.

In reaction to the extremely diffi cult market conditions caused by the global fi nancial crisis, the Group lowered its cost base during both 2008 and 2009 by reducing headcount and, while ensuring we maintained our presence in all geographies, we also consolidated some of our smaller offi ces where we had more than one in a city. As market conditions in each of the geographic regions in which we operate stabilised and then started to improve, the increased activity levels were fi rst serviced by utilising spare capacity. As spare capacity, which is not easily moved between disciplines or locations is used up and new investments are made for future growth, an additional 311 staff were added in the fi rst half of 2010.

Headcount at 30 June 2010 was 3,860 operating from 135 offi ces in 28 countries.

New investments in the fi rst half of 2010 included the launch of Page Personnel in Hong Kong, Mexico, Russia, Singapore and the USA.

When the demand for recruitment services increases, the number of positions to be fi lled rises, candidate shortages begin to emerge, the time-to-hire period starts to reduce and there is less pressure on pricing. All of these factors trended positively in the fi rst half, creating an environment for increased productivity and the generation of more gross profi t per fee earner. The Group's strategy of only growing organically using home-grown talent, maintaining market presence and maintaining spare capacity means that the

Group is highly operationally geared. This was refl ected in the near six-fold increase in operating profi t, before non-recurring items, from £5.6m in the fi rst half of 2009 to £32.5m in the fi rst half of 2010 and the Group's conversion rate of operating profi t from gross profi t increasing to 15.5% (2009: 3.1%).

EUROPE, MIDDLE EAST AND AFRICA (EMEA)

Europe, Middle East and Africa (EMEA) is the Group's largest region, contributing 44% of Group gross profi t. Revenue in the region decreased by 2.3% to £161.3m (2009: £165.2m), but gross profi t increased by 6.4% to £91.3m (2009: £85.8m) due to increased activity, primarily in permanent placements. In constant currency, revenue was fl at on the fi rst half of 2009, but gross profi t increased by 8.6%. The increase in gross profi t, combined with a lower cost base, resulted in an operating profi t for the fi rst half of 2010 of £9.6m (2009: loss of £1.5m).

In all countries in the region, market conditions have gradually improved throughout the fi rst half apart from in the Netherlands, which appears to be one of the last economies to start to recover. Whilst headcount was reduced across the region in 2009, we maintained the platform of businesses and held spare capacity in the larger more established countries. As this spare capacity is utilised and the newer and smaller countries invest for growth, headcount has increased by 73 across the region in the fi rst half of 2010.

UNITED KINGDOM

In the UK, representing 29% of the Group's gross profi t, revenue increased by 3.6% to £142.8m (2009: £137.8m), gross profi t increased by 7.3% to £61.2m (2009: £57.0m) and operating profi t increased by 58.5% to £9.6m (2009: £6.1m).

In the UK, market conditions stabilised in the latter part of 2009 and there is growing evidence of a gradual recovery in the fi rst half of 2010. This recovery fi rst became evident in our Financial Services, Sales and Retail disciplines and now virtually all disciplines are showing an improving trend. Headcount across the UK has remained largely fl at over the last 12 months and stands at 1,218 at the end of June 2010 (1,220 at 30 June 2009), with the increased productivity from fee earners being the main driver of the increase in operating profi t.

ASIA PACIFIC

In Asia Pacifi c, now representing 15% of the Group's gross profi t, revenue increased by 48.4% to £53.5m (2009: £36.1m) and gross profi t increased by 62.5% to £31.2m (2009: £19.2m). In constant currency, revenue increased by 28.7%, gross profi t by 45.3% and operating profi t by 310.5%. Operating profi t rose to £9.5m (2009: £2.0m), with the high operational gearing and productivity increases driving the conversion rate to over 30% (2009: 11%).

In Australia, our largest business in the region, market conditions began to improve in the latter part of 2009, with quarterly gross profi ts growing sequentially from the fourth quarter of 2009 and for the fi rst half of 2010 increasing by 26% in constant currency. In Asia, where the business is almost entirely permanent placements, activity levels are recovering the fastest, with gross profi ts 73% higher in constant currency. At the end of June we had 501 staff in the region, an increase of 98 (24%) since the start of the year and assuming market conditions continue to strengthen, further headcount will be added during the second half of 2010.

THE AMERICAS

In the Americas, representing 12% of the Group's gross profi t, revenue increased by 39.9% to £35.8m (2009: £25.6m) and gross profi t increased by 54.5% to £25.9m (2009: £16.8m). In constant currency, revenue increased by 29.8% and gross profi t by 40.2%. The increased gross profi t, through utilisation of surplus capacity, produced an operating profi t of £3.8m (2009: loss of £1.0m).

In North America, while market conditions remained challenging, there is evidence of a steadily improving level of recruitment activity, with gross profi t growing in the fi rst half of 2010 by 29%. In Latin America, where gross profi ts grew in the fi rst half of 2010 by 50% in constant currency, the impact of the global slowdown was sudden, but the market is recovering quickly and we are again investing for further growth. In Brazil, a business that we established in 2000, we are the clear market leader, with the newer businesses in Mexico and Argentina also continuing to develop well. We now have 496 staff in the region, an increase of 101 (26%) since the start of the year.

NON-RECURRING ITEMS (NRI)

In 2003, the Group submitted an initial claim to Her Majesty's Revenue and Customs (HMRC) for overpaid VAT which was rejected. The Group appealed and subsequently fi led amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, the Group fi led amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

In June 2009, the Group received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.5m, net of fees, of statutory interest. As a result, the principal and interest amounts were recognised in the prior year June 2009 half year results, with the interest receivable being recorded within working capital in the cash fl ow statement.

On 25 September 2009, the Group received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.

A number of discussions and meetings with HMRC followed and on 5 March 2010, the Group announced that an agreement had been reached in principle, subject to legal contract, for the Group to retain £28.5m (net of fees). However, given the background to the initial receipt, the subsequent review and reversal of HMRC's position, together with the remaining uncertainty pending formal contractual agreement, the Group reversed out the amounts originally recorded in the 2009 half year results and as such did not recognise any amount in the income statement, nor any interest received in the cash fl ow statement, for the full year.

On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50m originally received from HMRC, the Group retained £38.1m and returned £11.9m in May 2010. Accordingly, after fees, the Group has recognised £28.5m as non-recurring income in its 2010 income statement, of which £17.1m is in respect of refunded VAT and is included in operating profi t and £11.4m is in respect of interest and is included in fi nancial income.

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT there have been no discussions or meetings with HMRC and the Group are continuing to pursue this further claim. None of this additional claim has been recognised.

TAXATION AND EARNINGS PER SHARE

The charge for taxation is based on the expected effective annual tax rate of 32.5% (2009: 34.5%) on profi t before taxation. The expected effective annual tax rate on profi t before tax and before NRI is 36.4% (2009: 73.2%).

After NRI, basic and diluted earnings per share for the six months ended 30 June 2010 were 13.1p (2009: 8.8p) and 12.8p (2009: 8.7p) respectively. Before NRI, basic and diluted earnings per share for the six months ended 30 June 2010 were 6.6p (2009: 0.5p) and 6.5p (2009: 0.5p) respectively.

CASH FLOW

The Group started the year with net cash of £137.2m. In the fi rst half, we generated £14.5m from operations after NRI, after an increase in working capital of £15.9m, refl ecting increased activity and cash outfl ows relating to the VAT claim of £12.6m. Tax paid was £5.3m and net capital expenditure was £4.5m, with net interest received of £0.5m. During the fi rst half, £61.8m was spent repurchasing shares into the employee benefi t trust to satisfy employee share schemes and dividends of £16.1m were paid. The Group had net cash of £65.7m at 30 June 2010.

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. Refl ecting the Group's fi rst half performance and the Board's confi dence in the longer-term prospects for the Group, it has decided to maintain the interim dividend at 2.88p per share. The interim dividend will be paid on 8 October 2010 to shareholders on the register at 10 September 2010.

In the fi rst half, the Group's employee benefi t trust purchased 15m shares for £61.8m to satisfy employee share plan awards.

KEY PERFORMANCE INDICATORS ("KPIS")

Financial and non-fi nancial 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	H1 2010	H1 2009	Defi nition, method of calculation and analysis
Gross margin	53.3%	49.0%	Gross profi t as a percentage of revenue. Gross margin has increased largely as a result of the mix of permanent and temporary placements. In improving trading conditions, there tends to be a swing to higher margin permanent placements.
			Source: Condensed consolidated income statement in the fi nancial statements.
Conversion before NRI	15.5%	3.1%	Operating profi t as a percentage of gross profi t 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 increased compared to last year refl ecting the improvement in productivity and the utilisation of a proportion of the spare capacity created during the downturn.
			Source: Condensed consolidated income statement in the fi nancial statements.
Productivity (gross profi t per fee earner)	£80.5k	£57.6k	Represents productivity of fee earners and is calculated by dividing the gross profi t 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 numbers and experience of fee earners, the impact of pricing and the general conditions of the recruitment market. The increase in productivity this period is as a result of the experienced consultants remaining in the business after the downturn and a general improvement in market conditions. Source: Internal data.
Fee-earner : support staff ratio	71:29	71:29	Represents the balance between operational and non-operational staff. The balance in the period refl ects the need to continue to provide the infrastructure to maintain market presence. Source: Internal data.
Debtor days (30 June)	47	51	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 refl ects a continued increased focus on cash collections and improvements in economic conditions. Source: Internal data.

The movements in KPIs are in line with expectations.

OPERATING PROFIT AND CONVERSION RATES

As a result of the Group's organic long-term growth strategy, tight control on costs and profi t-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 offi ces and launch new countries. Furthermore, signifi cant 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 impact on the conversion rates in any one reporting period.

Generally, in years when economic conditions are benign, revenue and gross profi t grow, with operating profi t growing 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 infrastructure to house and support them. When economic conditions weaken and recruitment activity slows, these factors work in reverse and are compounded by a shortening of earnings visibility.

The majority of our permanent placement activity is undertaken on a contingent basis, which means 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 and revenue can decline even faster 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, without incurring signifi cant restructuring charges. However, as greater reductions become necessary, such charges may be incurred, but these are treated as a component of our normal operating expenses.

As economic conditions begin to improve, confi dence levels of both candidates and clients also increases and the churn rate of people moving jobs starts to increase. This increase in activity is serviced from the spare capacity we maintained during the downturn and therefore profi ts can increase rapidly. The Group's conversion rate before NRI for the period is 15.5% (2009: 3.1%). The movement in the conversion rates of the four regions and the levels of conversion now being achieved refl ects the pace of recovery in those regions and the levels of spare capacity still available to be utilised.

TREASURY MANAGEMENT, BANK FACILITIES AND CURRENCY RISK

It is the Directors' intention to continue to fi nance the activities and development of the Group from retained earnings and to operate the Group's business while maintaining a strong balance sheet position. When there is a generally benign economic outlook, this equates to maintaining the Group's net cash/debt position within a relatively narrow band, with cash generated in excess of these requirements being used to buy back the Group's shares. In an economic downturn a more cautious funding position is 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 Euro-zone subsidiaries and the UK-based Group Treasury subsidiary. The structure facilitates interest and balance compensation of cash and bank overdrafts.

The Group has an undrawn £50m, three-year multi-currency, committed revolving credit facility with Deutsche Bank that expires in June 2012.

The main operational currencies of the Group are Sterling, Euro and Australian Dollar. 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 shortterm loans to and from other Group companies with different reporting currencies, it may use foreign exchange swap derivative fi nancial 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.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the Company's strategy are subject to a number of risks. The following section comprises a summary of what the Group believes are the main risks that could potentially impact the Group's operating and fi nancial 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 of staff, competitive pay structures linked to the Group's results and career progression.

Macro economic environment

Recruitment activity is largely driven by economic cycles and the levels of business confi dence. The Board looks to reduce the Group's cyclical risk by expanding geographically, by increasing the number of disciplines, by building partqualifi ed and clerical businesses and by continuing to build the temporary business.

A substantial portion of the Group's gross profi t arises from fees which 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 profi ts is generally quite short and tends to reduce 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 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 rapidly due to changes in legislation, increasing job mobility and the diffi culty internal resources face in sourcing suitably qualifi ed candidates and managing compliance.

If the Group does not continue to compete in its markets effectively, by hiring new staff, opening and expanding offi ces 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 Main 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 are 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 effi ciency 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. The Group has invested in a new generation of technology systems, which will begin to be implemented in our operating businesses from later this year. The systems implementation risks are being managed by staged roll-outs, generally increasing the size and complexity of the businesses transitioning to the new systems.

Legal

The Group operates in a large number of jurisdictions which have varying regulatory environments. As the employment laws are changed and harmonised in certain geographies, they bring with them new risks and opportunities. The temporary market is heavily regulated, and changes in legislation, which have the effect of increasing the cost or restricting the fl exibility of movement of temporary workers, could, other things being equal, have a detrimental effect on the Group's fi nancial performance. The Group takes its obligations and responsibilities seriously and ensures that its policies, systems and procedures are continually upgraded to refl ect best practice and to comply with the legal requirements in all of the markets in which it operates. In order to reduce the legal and compliance risks, fee earners and support staff receive regular training and updates of changes in legal and compliance requirements.

Financial

The Group has a risk management process to assess risks and places emphasis on maintaining adequate fi nancial 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 fi nancial crisis, with emphasis upon credit exposure, management of currency risk and business and operational continuity.

GOING CONCERN

The Board has undertaken a recent and thorough review of the Group's forecasts and associated risks and sensitivities. Despite the signifi cant 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 diversifi cation, 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.

CURRENT TRADING AND FUTURE PROSPECTS

We delivered a strong performance in the fi rst half of 2010, driven largely by greater permanent recruitment activity as confi dence levels improve, leading to higher rates of job churn. While we are now entering the seasonally quieter holiday period, we have seen a continuation of these trends in the Group's performance during July.

We are benefi ting from our investment in diversifying the Group internationally, with over 70% of our gross profi t now derived from areas outside of the UK and more than 50% of our gross profi t generated from non-Finance and Accounting disciplines. Over 40% of our fee-earners are located in developing recruitment markets, where prospects for longterm growth are strong. We have market-leading positions in specialist recruitment in Asia and Latin America and are particularly optimistic about the opportunities available to us in these regions, where we will continue to invest in additional headcount. In the UK, Continental Europe and North America, we have experienced improvements in job fl ow in virtually all markets.

It is the nature of our business that visibility is short and the general level of business confi dence and economic activity may be threatened by fi scal consolidation in the UK and Europe, however, we are quick to react to changing market conditions. Having maintained our presence in all our markets, the strength of our geographic discipline and industry sector diversifi cation, combined with our operational gearing, means that our profi tability is much improved over last year.

Page House The Bourne Business Park 1 Dashwood Lang Road Addlestone Weybridge Surrey KT15 2QW

By order of the Board,

Steve Ingham Stephen Puckett 16 August 2010 16 August 2010

Chief Executive Group Finance Director

Independent Review Report

TO MICHAEL PAGE INTERNATIONAL PLC

We have been engaged by the company to review the condensed set of fi nancial statements in the half-yearly fi nancial report for the six months ended 30 June 2010 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 fl ows and related notes 1 to 14. We have read the other information contained in the half-yearly fi nancial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of fi nancial statements.

This report is made solely to the company 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. 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 half-yearly fi nancial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly fi nancial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual fi nancial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of fi nancial statements included in this half-yearly fi nancial 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 fi nancial statements in the half-yearly fi nancial 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 fi nancial information consists of making inquiries, primarily of persons responsible for fi nancial 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 signifi cant matters that might be identifi ed 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 fi nancial statements in the half-yearly fi nancial report for the six months ended 30 June 2010 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.

Deloitte LLP Chartered Accountants and Statutory Auditors London, United Kingdom 16 August 2010

INDEX

	Condensed consolidated income statement 16
	Condensed consolidated statement of comprehensive income 16
	Condensed consolidated balance sheet 17
	Condensed consolidated statement of changes in equity 18
	Condensed consolidated statement of cash fl ows 19
	Notes to the Condensed set of Interim Financial Statements 20
1.	General information 20
2.	Accounting policies 20
3.	Segment reporting 21
4.	Non-recurring items (NRI) 24
5.	Finance income/expenses 24
6.	Taxation 24
7.	Dividends 25
8.	Share-based payments 25
9.	Earnings per ordinary share 25
10.	Property, plant and equipment 26
11.	Trade and other receivables 26
12.	Trade and other payables 26
13.	Cash fl ows from operating activities 27
14.	Cash and cash equivalents 27

Condensed Consolidated Income Statement

SIX MONTHS ENDED 30 JUNE 2010

			Six months ended	Year ended
		30 June	30 June	31 December
		2010	2009	2009
	Note	£'000	£'000	£'000
Revenue	3	393,515	364,688	716,722
Cost of sales		(183,961)	(185,877)	(365,028)
Gross profi t	3	209,554	178,811	351,694
Administrative expenses		(177,034)	(173,192)	(331,491)
Operating profi t before non-recurring items	3	32,520	5,619	20,203
Other income – non-recurring items	4	17,125	26,544	-
Operating profi t after non-recurring items	3	49,645	32,163	20,203
Financial income	5	744	1,383	2,027
Financial income – non-recurring items	5	11,335	10,516	-
Financial expenses	5	(290)	(846)	(1,162)
Profi t before tax		61,434	43,216	21,068
Income tax expense	6	(11,997)	(4,506)	(8,638)
Income tax expense – non-recurring items	4	(7,969)	(10,404)	-
Profi t for the period		41,468	28,306	12,430
Attributable to:
Owners of the parent		41,468	28,306	12,430
Earnings per share
Basic earnings per share (pence)	9	13.1	8.8	3.9
Diluted earnings per share (pence)	9	12.8	8.7	3.8

The above results all relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

SIX MONTHS ENDED 30 JUNE 2010

		Six months ended
	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
Profi t for the period	41,468	28,306	12,430
Other comprehensive income for the period
Currency translation differences	(747)	(14,788)	(11,978)
Total comprehensive income for the period	40,721	13,518	452
Attributed to:
Owners of the parent	40,721	13,518	452

Condensed Consolidated Balance Sheet

AT 30 JUNE 2010

			Six months ended	Year ended
		30 June	30 June	31 December
	Note	2010 £'000	2009 £'000	2009 £'000
Non-current assets
Property, plant and equipment	3	27,795	33,978	31,432
Intangible assets – Goodwill		1,539	1,539	1,539
– Computer software		21,125	14,739	18,512
Deferred tax assets		11,136	9,207	10,179
Other receivables	11	2,745	1,462	2,021
		64,340	60,925	63,683
Current assets
Trade and other receivables	11	152,301	150,482	133,402
Current tax receivable		14,143	3,234	14,174
Cash and cash equivalents	14	67,177	99,243	137,228
		233,621	252,959	284,804
Total assets	3	297,961	313,884	348,487
Current liabilities
Trade and other payables	12	(106,325)	(89,787)	(142,750)
Bank overdrafts	14	(1,503)	-	(43)
Current tax payable		(18,695)	(10,671)	(5,470)
		(126,523)	(100,458)	(148,263)
Net current assets		107,098	152,501	136,541
Non-current liabilities
Other payables	12	(2,267)	(2,284)	(2,881)
Deferred tax liabilities		(324)	(210)	(327)
		(2,591)	(2,494)	(3,208)
Total liabilities	3	(129,114)	(102,952)	(151,471)
Net assets		168,847	210,932	197,016
Capital and reserves
Called-up share capital		3,240	3,225	3,234
Share premium		52,986	49,709	51,589
Capital redemption reserve		838	838	838
Reserve for shares held in the employee benefi t trust		(75,952)	(19,437)	(19,409)
Currency translation reserve		32,654	30,591	33,401
Retained earnings		155,081	146,006	127,363
Total equity		168,847	210,932	197,016

Condensed Consolidated Statement of Changes in Equity

SIX MONTHS ENDED 30 JUNE 2010

	Called-up share capital £'000	Share premium £'000	Capital redemption reserve £'000	Reserve for shares held in the employee benefi t trust £'000	Currency translation reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2009	3,220	48,856	838	(21,078)	45,379	133,449	210,664
Currency translation differences	-	-	-	-	(14,788)	-	(14,788)
Net expense recognised directly in equity	-	-	-	-	(14,788)	-	(14,788)
Profi t for the six months ended 30 June 2009	-	-	-	-	-	28,306	28,306
Total comprehensive (loss)/income for the period	-	-	-	-	(14,788)	28,306	13,518
Purchase of shares held in the employee benefi t trust	-	-	-	(1,903)	-	-	(1,903)
Issue of share capital	5	853	-	-	-	-	858
Reserve transfer when shares held in the employee benefi t trust vest	-	-	-	3,544	-	(3,544)	-
Credit in respect of share schemes	-	-	-	-	-	4,282	4,282
Dividends	-	-	-	-	-	(16,487)	(16,487)
	5	853	-	1,641	-	(15,749)	(13,250)
Balance at 30 June 2009	3,225	49,709	838	(19,437)	30,591	146,006	210,932
Currency translation differences	-	-	-	-	2,810	-	2,810
Net income recognised directly in equity	-	-	-	-	2,810	-	2,810
Loss for the six months ended 31 December 2009	-	-	-	-	-	(15,876)	(15,876)
Total comprehensive income/(loss) for the period	-	-	-	-	2,810	(15,876)	(13,066)
Issue of share capital	9	1,880	-	-	-	-	1,889
Reserve transfer when shares held in the employee benefi t trust vest	-	-	-	28	-	(28)	-
Credit in respect of share schemes	-	-	-	-	-	4,209	4,209
Credit in respect of tax on share schemes	-	-	-	-	-	2,418	2,418
Dividends	-	-	-	-	-	(9,366)	(9,366)
	9	1,880	-	28	-	(2,767)	(850)
Balance at 31 December 2009 and 1 January 2010	3,234	51,589	838	(19,409)	33,401	127,363	197,016
Currency translation differences	-	-	-	-	(747)	-	(747)
Net expense recognised directly in equity	-	-	-	-	(747)	-	(747)
Profi t for the six months ended 30 June 2010	-	-	-	-	-	41,468	41,468
Total comprehensive (loss)/income for the period	-	-	-	-	(747)	41,468	40,721
Purchase of shares held in employee benefi t trust	-	-	-	(61,757)	-	-	(61,757)
Issue of share capital	6	1,397	-	-	-	-	1,403
Reserve transfer when shares held in the employee benefi t trust vest	-	-	-	5,214	-	(5,214)	-
Credit in respect of share schemes	-	-	-	-	-	5,216	5,216
Credit in respect of tax on share schemes	-	-	-	-	-	2,314	2,314
Dividends	-	-	-	-	-	(16,066)	(16,066)
	6	1,397	-	(56,543)	-	(13,750)	(68,890)
Balance at 30 June 2010	3,240	52,986	838	(75,952)	32,654	155,081	168,847

Condensed Consolidated Statement of Cash Flows

SIX MONTHS ENDED 30 JUNE 2010

		Six months ended		Year ended
	Note	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
Cash generated from underlying operations	13	27,073	28,737	73,759
Net cash (paid)/received in respect of VAT claim	4	(12,558)	26,544	41,018
Cash generated from operations	13	14,515	55,281	114,777
Income tax paid		(5,326)	(20,136)	(28,196)
Net cash from operating activities		9,189	35,145	86,581
Cash fl ows from investing activities
Purchases of property, plant and equipment		(2,556)	(3,292)	(5,757)
Purchases of computer software		(3,297)	(3,279)	(7,645)
Proceeds from the sale of property, plant and equipment, and computer software		1,338	700	2,061
Interest received		744	1,383	2,027
Net cash used in investing activities		(3,771)	(4,488)	(9,314)
Cash fl ows from fi nancing activities
Dividends paid		(16,066)	(16,487)	(25,853)
Interest paid		(290)	(846)	(1,160)
Issue of own shares for the exercise of options		1,403	858	2,747
Purchase of shares into the employee benefi t trust		(61,757)	(1,903)	(1,903)
Net cash used in fi nancing activities		(76,710)	(18,378)	(26,169)
Net (decrease)/increase in cash and cash equivalents		(71,292)	12,279	51,098
Cash and cash equivalents at the beginning of the period		137,185	94,283	94,283
Exchange loss on cash and cash equivalents		(219)	(7,319)	(8,196)
Cash and cash equivalents at the end of the period	14	65,674	99,243	137,185

Notes to the condensed set of interim fi nancial statements

SIX MONTHS ENDED 30 JUNE 2010

1. General information

The information for the year ended 31 December 2009 does not constitute statutory accounts as defi ned in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' reported on those accounts: their report was unqualifi ed, 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 annual fi nancial statements of Michael Page International plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of fi nancial statements included in this half-yearly fi nancial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', 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 fi nancial position, its cash fl ows and its borrowing facilities.

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

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

Changes in accounting policy

The same accounting policies, presentations and methods of computation are followed in the condensed set of fi nancial statements as applied in the Group's latest annual audited fi nancial statements, except as described below.

In the current fi nancial year, the Group has adopted International Financial Reporting Standard 3 'Business Combinations' (revised 2008) and International Accounting Standard 27 'Consolidated and Separate Financial Statements' (revised 2008). The adoption of these standards has not resulted in any signifi cant changes for the Group.

3. Segment reporting

All revenues disclosed are derived from external customers.

(a) Revenue, gross profi t and operating profi t by reportable segment

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment operating profi t represents the profi t earned by each segment without allocation of central administration costs including certain recharges. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.

			Revenue			Gross Profi t
			Six months ended	Year ended	Six months ended		Year ended
		30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
EMEA		161,343	165,221	311,070	91,314	85,829	163,729
United Kingdom		142,807	137,790	274,599	61,168	57,026	110,784
Asia Pacifi c	Australia and New Zealand	37,979	27,038	59,108	17,316	11,242	23,881
	Other	15,540	9,020	20,301	13,850	7,942	18,329
	Total	53,519	36,058	79,409	31,166	19,184	42,210
Americas		35,846	25,619	51,644	25,906	16,772	34,971
		393,515	364,688	716,722	209,554	178,811	351,694

			Operating Profi t
			Six months ended	Year ended
		30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
EMEA		9,628	(1,533)	1,055
United Kingdom		9,623	6,073	11,275
Asia Pacifi c	Australia and New Zealand	4,787	1,128	4,287
	Other	4,716	909	3,798
	Total	9,503	2,037	8,085
Americas		3,766	(958)	(212)
	Operating profi t before non-recurring items	32,520	5,619	20,203
Non-recurring items (note 4)		17,125	26,544	-
	Operating profi t after non-recurring items	49,645	32,163	20,203

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

The analysis opposite 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 and goodwill.

Non-recurring items (NRI) items relate wholly to the United Kingdom.

			Total Assets			Total Liabilities
			Six months ended	Year ended		Six months ended	Year ended
		30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
EMEA		125,655	121,891	117,863	52,016	51,306	49,504
United Kingdom		88,770	121,826	161,653	41,692	30,417	83,341
Asia Pacifi c	Australia and New Zealand	22,669	20,009	18,025	7,853	5,819	6,622
	Other	18,904	13,658	13,025	3,124	1,187	2,322
	Total	41,573	33,667	31,050	10,977	7,006	8,944
Americas		27,820	22,750	23,747	5,734	3,552	4,212
Segment assets/liabilities		283,818	300,134	334,313	110,419	92,281	146,001
Income tax		14,143	3,234	14,174	18,695	10,671	5,470
Non-recurring items (note 4 )		-	10,516	-	-	-	-
		297,961	313,884	348,487	129,114	102,952	151,471

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

			Property, Plant & Equipment			Intangible Assets
		Six months ended		Year ended		Six months ended	Year ended
		30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
EMEA		10,755	14,043	13,016	899	1,201	1,166
United Kingdom		8,919	11,166	9,985	20,791	14,132	17,933
Asia Pacifi c	Australia and New Zealand	2,042	2,496	2,411	204	313	258
	Other	622	850	708	346	191	310
	Total	2,664	3,346	3,119	550	504	568
Americas		5,457	5,423	5,312	424	441	384
		27,795	33,978	31,432	22,664	16,278	20,051

The below analysis in notes (c) revenue and gross profi t by discipline (being the professions of candidates placed) and (d) revenue and gross profi t generated from permanent and temporary placements, have been included as additional disclosure over and above the requirements of IFRS 8 'Operating Segments'.

(c) Revenue and gross profi t by discipline

	Revenue				Gross Profi t
	Six months ended		Year ended		Six months ended
	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
Finance and Accounting	214,440	210,218	408,951	99,167	90,529	175,743
Marketing, Sales and Retail	53,252	45,454	91,811	39,696	29,858	61,404
Legal, Technology, HR, Secretarial and Other	73,391	63,968	125,199	38,527	31,247	61,217
Engineering, Property & Construction, Procurement & Supply Chain	52,432	45,048	90,761	32,164	27,177	53,330
	393,515	364,688	716,722	209,554	178,811	351,694

(d) Revenue and gross profi t generated from permanent and temporary placements

	Revenue				Gross Profi t
	Six months ended		Year ended		Six months ended
	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000	30 June 2010 £'000	30 June 2009 £'000	31 December 2009 £'000
Permanent	169,127	130,283	260,161	163,006	124,374	249,387
Temporary	224,388	234,405	456,561	46,548	54,437	102,307
	393,515	364,688	716,722	209,554	178,811	351,694

4. Non-recurring items (NRI)

In 2003, the Group submitted an initial claim to Her Majesty's Revenue and Customs (HMRC) for overpaid VAT which was rejected. The Group appealed and subsequently fi led amended claims for £26.5m, net of fees, covering the period from 1980 to 2004. In March 2009, the Group fi led amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT covering the same period.

In June 2009, the Group received a payment from HMRC of £26.5m, net of fees, as part settlement of these claims and in July 2009 received £10.5m, net of fees, of statutory interest. As a result, the principal and interest amounts were recognised in the prior year June 2009 half year results, with the interest receivable being recorded within working capital in the cash fl ow statement.

On 25 September 2009, the Group received a letter from HMRC which stated that, 'HMRC have reviewed the recent payment and are now of the view that the claim in whole or in part should not have been paid'.

A number of discussions and meetings with HMRC followed and on 5 March 2010, the Group announced that an agreement had been reached in principle, subject to legal contract, for the Group to retain £28.5m (net of fees). However, given the background to the initial receipt, the subsequent review and reversal of HMRC's position, together with the remaining uncertainty pending formal contractual agreement, the Group reversed out the amounts originally recorded in the 2009 half year results and as such did not recognise any amount in the income statement, nor any interest received in the cash fl ow statement, for the full year.

On 30 April 2010, a formal agreement was signed with HMRC. As a result, of the £50.0m originally received from HMRC, the Group retained £38.1m and returned £11.9m in May 2010. Accordingly, after fees, the Group has recognised £28.5m as non-recurring income in its 2010 income statement, of which £17.1m is in respect of refunded VAT and is included in operating profi t and £11.4m is in respect of interest and is included in fi nancial income.

In respect of the amended claims for a further refund of an additional £80m, net of fees, of overpaid VAT there have been no discussions or meetings with HMRC and the Group are continuing to pursue this further claim. None of this additional claim has been recognised.

Taxation of £8.0m on non-recurring items, net of fees, has been provided representing an effective tax rate of 28.0%.

5. Finance income/expenses

		Six months ended	Year ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Finance income
Bank interest receivable	744	1,383	2,027
Interest on non-recurring items (note 4)	11,335	10,516	-
	12,079	11,899	2,027
Finance expenses
Bank interest payable	(290)	(846)	(1,162)

6. Taxation

Taxation for the six month period is charged at 32.5% (six months ended 30 June 2009: 34.5%; year ended 31 December 2009: 41.0%), 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
	30 June 30 June		31 December
	2010	2009	2009
	£'000	£'000	£'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2009 of 5.12p per ordinary share (2008: 5.12p)	16,066	16,487	16,487
Interim dividend for the period ended 30 June 2009 of 2.88p per ordinary share	-	-	9,366
	16,066	16,487	25,853
Amounts proposed as distributions to equity holders in the period:
Proposed interim dividend for the six months ended 30 June 2010 of 2.88p per ordinary share (2009: 2.88p)	8,900	9,274	-
Proposed fi nal dividend for the year ended 31 December 2009 of 5.12p per ordinary share	-	-	16,535

The proposed interim dividend had not been approved by the Board at 30 June 2010 and therefore has not been included as a liability. The comparative interim dividend at 30 June 2009 was also not recognised as a liability in the prior period.

The proposed interim dividend of 2.88 pence (2009: 2.88 pence) per ordinary share will be paid on 8 October 2010 to shareholders on the register at the close of business on 10 September 2010.

8. Share-based payments

In accordance with IFRS 2 'Share-based Payment', a charge of £2.0m has been recognised for share options (including social charges) (30 June 2009: £0.6m, 31 December 2009: £1.9m), and £3.3m has been recognised for other share-based payment arrangements (including social charges) (30 June 2009: £3.9m, 31 December 2009: £8.7m).

During the period, options over 11,467,500 shares were granted at an average exercise price of £3.82p and 665,826 share options were exercised, which has led to an increase in share capital of £6,000 and an increase in share premium of £1.4m.

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 2010	30 June 2009	31 December 2009
Earnings
Earnings for basic and diluted earnings per share (£'000)	41,468	28,306	12,430
Non-recurring items (NRI) (£'000) (note 4)	(20,491)	(26,656)	-
Earnings for basic and diluted earnings per share before NRI (£'000)	20,977	1,650	12,430
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	316,596	321,455	321,643
Dilution effect of share plans ('000)	7,490	3,974	7,412
Diluted weighted average number of shares used for diluted earnings per share ('000)	324,086	325,429	329,055
Basic earnings per share (pence)	13.1	8.8	3.9
Diluted earnings per share (pence)	12.8	8.7	3.8
Basic earnings per share before NRI (pence)	6.6	0.5	3.9
Diluted earnings per share before NRI (pence)	6.5	0.5	3.8

The above results all relate to continuing operations.

10. Property, plant and equipment

Acquisitions and disposals

During the six months ended 30 June 2010 the Group acquired property, plant and equipment with a cost of £2.6m (30 June 2009: £3.3m, 31 December 2009: £5.8m).

Property, plant and equipment with a carrying amount of £1.4m were disposed of during the six months ended 30 June 2010 (30 June 2009: £0.9m, 31 December 2009: £2.4m), resulting in a loss on disposal of £42k (30 June 2009: loss of £0.2m, 31 December 2009: loss of £0.4m).

11. Trade and other receivables

		Six months ended	Year ended
	30 June 2010	30 June 2009	31 December 2009
	£'000	£'000	£'000
Current
Trade receivables	122,737	111,042	100,197
Other receivables	3,552	16,877	13,102
Prepayments and accured income	26,012	22,563	20,103
	152,301	150,482	133,402
Non-current
Prepayments and accured income	2,745	1,462	2,021

12. Trade and other payables

		Six months ended	Year ended
	30 June	30 June	31 December
	2010 £'000	2009 £'000	2009 £'000
Current
Trade payables	3,505	5,864	7,304
Other tax and social security	32,670	28,056	75,262
Other payables	19,355	17,496	18,583
Accruals	49,476	38,152	40,223
Deferred income	1,319	219	1,378
	106,325	89,787	142,750
Non-current
Deferred income	1,972	2,131	2,334
Other tax and social security	295	153	547
	2,267	2,284	2,881

13. Cash fl ows from operating activities

		Six months ended	Year ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Profi t before tax	61,434	43,216	21,068
Non-recurring income	(17,125)	(26,544)	-
Profi t before tax and non-recurring income	44,309	16,672	21,068
Depreciation and amortisation charges	5,212	5,696	11,268
Loss on sale of property, plant and equipment, and computer software	42	160	383
Share scheme charges	5,216	4,085	8,491
Net fi nance income – including NRI	(11,787)	(11,052)	(865)
Operating cash fl ow before changes in working capital and NRI	42,992	15,561	40,345
(Increase)/decrease in receivables	(32,175)	51,087	70,911
Increase/(decrease) in payables	16,256	(37,911)	(37,497)
Cash generated from underlying operations	27,073	28,737	73,759
Decrease/(increase) in VAT related receivables	8,972	-	(8,972)
(Decrease)/increase in VAT related payables	(49,990)	-	49,990
Non-recurring income	28,460	26,544	-
Cash generated from operations	14,515	55,281	114,777

14. Cash and cash equivalents

	Six months ended		Year ended
	30 June 30 June		31 December
	2010	2009	2009
	£'000	£'000	£'000
Cash at bank and in hand	57,562	91,442	127,293
Short-term deposits	9,615	7,801	9,935
Cash and cash equivalents	67,177	99,243	137,228
Bank overdrafts	(1,503)	-	(43)
Cash and cash equivalents in the statement of cash fl ows	65,674	99,243	137,185

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