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Deep

Value
Investing
Appendix: Company Releases

Jeroen Bos
Finding bargain shares
with big potential
Welcome

W
ELCOME TO THE free Appendix to Jeroen Bos’s Deep Value Investing.
Here you’ll find every results statement used by Jeroen to devise his
investments as discussed at length in Deep Value Investing – including the
270% profit gained with Barratt Developments, the 182% gained with Spring
Group and the 196% with ArmorGroup.

You don’t need to read this Appendix to understand Deep Value Investing or
get the most out of it – but for anyone who wants to go deeper with a master
investor’s way of thinking, the resources are now to hand.

Harriman House, 2013

P.S. Haven’t got the book yet? Head over to our site for the best discount on the
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5/24/13

Spring Group PLC

Final Results
Spring Group PLC
28 February 2008

28 February 2008

Preliminary Announcement 2007

Spring continues strong growth in profit and net fee income

Glotel successfully integrated

Spring Group plc ('Spring'), the technology staffing and workforce management
company, announces its audited results for the year ended 31 December 2007.

FINANCIAL HIGHLIGHTS

• Revenues of £432.8 million (2006: £407.3 million)


• Net fee income (Gross profit) up 22.7% to £56.1 million (2006: £45.8
million)
• Gross margin percentage up 180 basis points to 13.0% from 11.2%
• Profit before taxation up 31.2% to £7.1 million (2006: £5.4 million)
• Basic earnings per share up 22.1% to 3.76 pence (2006: 3.08 pence)
• Final dividend of 0.2 pence (2006: 0.2 pence)
• Cash inflow from operating activities of £19.9 million (2006: cash
inflow of £14.0 million)
• Group net cash, total cash less bank loans, of £35.0 million after
acquisition cash outflow of £30.8 million (2006: £46.9 million)
• Total assets £158.3 million (2006: £139.5 million)

STRATEGIC AND OPERATIONAL HIGHLIGHTS

• 2007 goals realised - strategic plan ahead of schedule


• New management team appointed to run core businesses
• All divisions record increase in both revenues and profits
• Business successfully restructured into 3 divisions
• Significant growth in sales capability with over 250 net new sales
staff
• Geographic expansion with offices established in USA, Mainland Europe
and Asia Pacific
• Additional openings planned for Europe and Asia Pacific in 2008
• Glotel plc successfully integrated and trading ahead of expectations

Peter Searle, Chief Executive Officer, commented:

'During 2007 we achieved a robust financial performance whilst putting


in place both the strategy and management team required to deliver a sustainable
improvement in performance.

'With the Group increasingly diversified by both geography and market


segment and a strong business in temporary/contract staffing, we believe that
Spring is well placed with its healthy balance sheet and solid trading to enjoy
further growth both organically and by acquisition.

'2008 has started as 2007 finished, with continuing improvement in key


performance indicators for all of our businesses. With many of our new staff
still to reach full productivity and with our ambitious growth plans, we are
confident that we can continue to deliver sustainable, profitable growth.'

For further information:

Peter Searle, Chief Executive Officer, Spring Group plc 0207 356 0701

Peter Darraugh, Chief Financial Officer, Spring Group plc

Ben Atwell/Susan Quigley, Financial Dynamics 0207 831 3113

Adrian Hadden, Managing Director, Collins Stewart 0207 523 8353

Information on Spring can be found on www.spring.com

Chairman's Statement

I am pleased to report that 2007 saw a further improvement in the performance of


the Group. During the course of the year, the Group has restructured its core
operations; strengthened its management team with experienced senior staff to
run each of the key operating divisions; delivered further improvements to
efficiency of its support operations; and accelerated the growth strategy both
organically by increasing the number of sales consultants; and by acquisition

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through the purchase of the Glotel business.

The culture of the Company has changed. We have focussed our people on
delivering excellent service to our candidates and clients. We have endeavoured
to recruit the best people by providing an environment of high reward,
recognition and motivation. We believe we will retain and develop these staff to
put us in a position where we can outshine the competition. This policy has
created a workplace that whilst challenging and competitive is also a fun and
rewarding place to work. We believe our company provides opportunities for our
staff to fulfil their ambitions by providing a structured career in which they
can grow and develop their talents.

Our management team are highly motivated and ambitious to further grow our
organisation both organically and through selective acquisitions. The last
twelve months have laid down an extremely strong platform to enable these goals
to be realised.

Our results for 2007 reflect the successful execution of our plans and the
consequent continued improvement in the financial health of the Group. Revenues
increased 6.3% to £432.8 million, but the more relevant measure of volume in our
business, net fee income, improved by 22.7% to £56.1 million. Pre-tax profits
were £7.1 million, an improvement of 31.2% compared to the prior year, with
basic earnings per share of 3.76p, up 22.1% on 2006.

The Group's balance sheet remains healthy with total assets of £158.3
million, compared with £139.5 million at 31 December 2006. Closing net cash at
the year end was £35.0 million compared with £46.9 million last year, reflecting
the £30.8 million cash outflow for the Glotel business and continued strong cash
generation from the underlying business.

We announced the successful completion of the acquisition of Glotel plc in July


and the integration of the Glotel business was completed during the second half
of the year. Since acquisition, the Glotel business has been trading ahead of
our expectations and the Board expects this acquisition to be earnings enhancing
in 2008.

Whilst market commentators have mixed views on the prospects for the recruitment
sector in 2008, our business is, so far this year, trading in line with our
expectations. We will continue to review opportunities to grow our company by
looking at new markets and possible acquisitions, but we remain determined to
invest wisely in and continue to build the business for the benefit of our
shareholders. The Group is well placed to make further progress in 2008.

Spring Staff

The continued progress shown by the Group in 2007 is a function of the efforts
from all of the staff throughout the Group. I would like to extend the
appreciation of the Board and shareholders to the staff at Spring and to thank
them for their dedication to the Group and to all of our clients and candidates.

Annual General Meeting

Our AGM will be held on 8 May 2008 and I look forward to welcoming shareholders
there.

Amir Eilon
Chairman

27 February 2008

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

2007 saw the continuing successful implementation of the strategy that has
returned the Group to sustainable growth and profitability. We have seen
increases in revenue, net fee income and profitability driven by greater
productivity, higher margin business and significantly greater efficiencies and
automation in running our back office.

In July we successfully completed the acquisition of Glotel plc. This


accelerated our strategy and has significantly enhanced our geographic spread,
with businesses in Europe, eleven locations in North America and two in
Australia. During the second half of 2007 we completed the integration of the
businesses with the integration of the UK back office functions completed ahead
of schedule in early October.

Since the acquisition of Glotel all parts of the acquired business have made a
positive contribution to our results in the year and we anticipate further
progress in 2008 together with a full year's benefit from the
integration synergies arising from the combination of the two businesses.

Strategic Update

In line with our strategy the Group is now split into 3 clear business
divisions; Managed Solutions, Professional Staffing and General Staffing, which
also incorporates our engineering staffing business. These business units now
all have strong leadership teams in place on a global basis.

Our plans to increase our permanent business have proved relatively successful
with net fee income growing by £2 million to £12.3 million (2006: £10.3 million)
representing approximately 22% of the Group's total net fee income. However, we
are still predominantly a contract/temporary based organisation and this less

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volatile revenue stream puts us in good stead to withstand market turbulence
throughout the economic cycle.

Geographically our business has also expanded rapidly and this overseas
expansion into new markets, though requiring initial investment in 2007, is now
generating a positive return for the Group. Our new US and Asia Pacific
businesses which, with mainland Europe, now account for over 20% of our net fee
income on a run rate basis. We have 4 offices in mainland Europe, Germany,
Belgium and two in Italy with further overseas office openings planned in
Singapore, Hong Kong and Delhi during 2008. We will of course continue to
consider new office openings in existing territories where appropriate to
continue to drive growth and gain market share.

During the course of 2007 we also grew our sales capacity, increasing the
revenue generating headcount by more than 250 net staff. This was accomplished
through the acquisition of Glotel and organically through our central recruiting
and training functions. This central team will enable us to continue to invest
in and expand our sales capacity further through 2008.

Operating Review

The results for 2007 show a strong improvement in each of the primary financial
performance measures compared with 2006. The Group reversed the volume decline
experienced in earlier years and recorded sequential quarter on quarter growth
in revenue, net fee income and profit, throughout 2007. In the fourth quarter
of 2007 revenues increased by 34% to £126.9 million, net fee income increased by
45% to £17.1 million and profit before tax improved by 49% to £2.7 million over
the comparative fourth quarter of 2006.

Group Results

Revenue Operating profit


£million 2007 2006 2007 2006
Professional Staffing 227.4 226.5 6.0 5.6
Managed Solutions 153.1 140.2 3.3 2.7
General Staffing 54.6 49.6 0.6 (0.1)
Intercompany revenue (2.3) (9.0) - -
Central costs - - (4.0) (3.6)
Total 432.8 407.3 5.9 4.6

Professional Staffing

This division comprises the IT Contracting and Permanent Recruitment Services


businesses within the Group as well as the Glotel business acquired in the
second half of 2007.

The division reported a small increase in revenue from £226.5 million in 2006 to
£227.4 million in 2007 with the corresponding operating profit improving from
£5.6 million in 2006 to £6.0 million in 2007. The revenue movement is the net
effect of the Glotel acquisition, the switch to lower revenue, higher margin
accounts and investment in new brands, offset by the reduction in volumes as a
consequence of the Group's decision to exit a small number of high
volume but unprofitable accounts.

As with our other divisions, we have built a strong management team. A key focus
has been the drive to increase sales headcount, with this division absorbing the
majority of new sales hires as well as the business acquired from the Glotel
acquisition. In 2007 we established new sales teams in both the contract and
permanent recruitment divisions with each team specialising in a range of
technical disciplines, which should facilitate a greater focus on improving
further our gross margins.

During the year we have seen a significant increase in percentage margin and net
fee income due to improvements in the quality of business being secured. As new
sales staff recruited through 2007 become fully productive, coupled with
increases in productivity in our existing businesses we expect to see this trend
continue in 2008.

Managed Solutions

Our Managed Solutions division which consists of our Hyphen, RPO and IT
Solutions businesses has proven to be robust through 2007. As a result of
focusing on maximising revenues from those clients with whom we have some of our
strongest relationships we grew revenues by 9.2% from £140.2 million in 2006 to
£153.1 million in 2007. As the quality and terms of this business has improved
so has operating profit improving by 22.2% from £2.7 million in 2006 to £3.3
million in 2007.

Investment has been made throughout 2007 in new corporate sales staff and
account directors with the aim of improving service levels and winning new
clients. Our resourcing capabilities have also become more effective and
efficient with the creation of the central resourcing pool.

The long term customer contracts, and the predominance of contract staff should
result in robust performance from this division throughout the economic cycle
and we anticipate that growth levels should continue.

General Staffing

During 2007 we grew revenues in this business by 10.0% from £49.6 million in
2006 to £54.6 million in 2007 and turned a £0.1 million loss in 2006 into a £0.6
million profit in 2007, whilst making investments in new offices, people and
brands.

This division has seen the opening of several new offices in 2007 to give
greater market coverage in both the Spring Personnel and Elizabeth Hunt brands.
Aligned to this has been a corresponding increase in headcount. Spring Direct

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has moved into the Engineering market with marked success and we will be
investing further in this business throughout 2008.

I am confident that as offices and staff become fully productive that we will
see further increases in revenue, net fee income and profit from this business
in 2008.

Improved Business Efficiency

During the year we established centralised corporate sales and bid teams
together with central resourcing units. These support the growth of our
businesses and will allow us to maximise on sales opportunities and give
customers both a high level of support as well as provide a central basis for
efficient candidate supply.

In order to implement best practice and to get maximum economies of scale we


have now completed the creation of our centralised Finance, Administration and
IT functions. As well as the obvious symbiotic benefits this offers we have the
capacity to absorb further volume in these functions with minimal increase in
our operating costs. We have also centralised our HR and Marketing functions,
which allows us to quickly support new brands in a co-ordinated corporate manner
and also to integrate any acquired companies efficiently.

Through the course of 2007 we have used these efficiency savings in the support
functions to help fund the investment in our front office sales capacity. By a
combination of both organic growth and acquisition we will exit 2007 with a net
increase of in excess of 250 additional sales staff worldwide compared to
December 2006.

Outlook 2008

During 2007 we achieved a robust financial performance whilst putting in place


both the strategy and management team required to deliver a sustainable
improvement in performance.

With the Group increasingly diversified by both geography and market segment and
a strong business in temporary/contract staffing, we believe that Spring is well
placed with its healthy balance sheet and solid trading to enjoy further growth
both organically and by acquisition.

2008 has started as 2007 finished with continuing improvement in key performance
indicators for all of our businesses. With many of our new staff still to reach
full productivity and with our ambitious growth plans, we are confident that we
can continue to deliver sustainable, profitable growth.

Peter Searle
Chief Executive Officer

27 February 2008

Income Statement

Revenue

In 2007 the Group generated revenues from continuing operations of £432.8


million (2006: £407.3 million), of which £48.1 million were generated from the
acquisition of Glotel.

Gross Profit (Net Fee Income)

The gross margin of the business continued to improve to 13.0% (2006: 11.2%),
with net fee income from operations up by £10.3 million to £56.1 million (2006:
£45.8 million). The net fee income of Glotel for the 5 months since acquisition
amounted to £8.3 million with a gross margin of 17.3% for the period. The
underlying gross margin for the business has improved from 11.2% in 2006 to
12.4% in 2007.

Operating Profit

Overall, the Group generated an operating profit of £5.9 million from continuing
operations, a £1.3 million improvement against the prior year (2006: £4.6
million). The 2007 result includes £0.5 million of non-recurring costs
associated with the integration of Glotel, and hence excluding these costs the
operating profit would have increased by £1.8 million to £6.4 million.

The acquisition of Glotel has contributed £1.2 million to operating profit for
the 5 months since acquisition. However, the overall contribution to the Group
profit before tax is less marked when interest that would have been earned on
the cash deposits utilised to acquire Glotel is considered. The lost interest
would amount to approximately £0.6 million.

Net Interest

The Group continues to focus on the management and improvement of working


capital. Over the course of the last three years the Group has made efforts to
improve its intra-month net cash position with the consequence of moving from
incurring interest expense of £0.6 million in 2004 to generating net interest
income of £1.2 million in 2007 (2006: £0.8 million). Such has been the Group's
success in improving working capital management that sufficient free cash was
generated to enable the Group to fund the acquisition of Glotel without recourse
to debt finance. On 24 July 2007 there was a £30.8 million cash outflow
associated with the acquisition of Glotel, and as a consequence, interest income
in the second half of 2007 was reduced. Interest income will also be down
during 2008 whilst this cash outflow associated with the acquisition is
replenished.

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Non-recurring Items

As mentioned above, in the Group's operating profit includes £0.5 million of


non-recurring costs associated with the integration of the support functions of
Glotel into Spring. There are no exceptional charges or discontinued businesses
in the income statement in 2007.

Taxation

The taxation charge for the year is £1.1 million and the effective rate is
15.8%, (2006: £0.6 million, effective rate 10.4%) reflecting the continuing
availability of UK trading losses. Going forward the effective rate will
continue to rise as UK trading losses are utilised and an increasing proportion
of the Group's profits will arise in overseas territories with higher
marginal rates of tax.

Earnings per Share and Dividend

Basic and diluted earnings per share were 3.76p and 3.74p per share
respectively, (2006: basic and diluted 3.08p). The weighted average number of
shares in issue in the year was 162,250,076 (2006: 160,890,853).

A final dividend of 0.2p (2006: 0.2p) has been proposed, which together with the
interim dividend of 0.1p (2006: 0.1p) makes the total dividend for the year 0.3p
(2006: 0.3p). The final dividend, which is subject to shareholder approval,
will be paid on 30 May 2008 to those shareholders on the register at 9 May 2008.

Balance Sheet

The Group had net assets of £83.1 million at 31 December 2007 (2006: £74.7
million) of which £39.7 million (2006: £51.2 million) is represented by cash.
The acquisition of Glotel has had a significant impact on our net assets and
cash balances during the year. Despite the net cash outflow of £30.8 million
associated with the acquisition of Glotel our year on year cash balance only
decreased by £11.5m, highlighting the continuing positive cash generation in the
business. The increase in net assets relates principally to the Glotel
acquisition and the profit generated in the year. Capital expenditure, totalled
£1.8 million (2006: £2.2 million). The main driver for our capital expenditure
relates to investments in IT systems and in particular the renewal of front and
back-office systems with other capital expenditure relating to the continued
refurbishment of the office portfolio.

During the course of 2007, further revisions to the Group's front office
and financial systems were completed. These changes, coupled with the
re-organisation of the Group's support functions into one single location in
Birmingham, provide the UK business with a scaleable business support model

Cashflow

During the year the Group generated a cashflow from operating activities of
£19.9 million (2006: £14.0 million). After the £30.8 million cash outflow
associated with the acquisition of Glotel net cash balances were £35.0 million
at 31 December 2007 (2006: £46.9 million).

Peter Darraugh
Group Finance Director

27 February 2008

Income Statement

Year ended Year ended


31 December 31 December
2007 2006
Note £000 £000

Revenue 3 432,826 407,301


Cost of sales (376,687) (361,545)
_________ _________
Gross profit 56,139 45,756
Selling and distribution expenses (24,971) (19,633)
Administrative costs (25,258) (21,502)
_________ _________
Operating profit 5,910 4,621

Finance income 1,396 943


Finance charges (248) (186)
_________ _________
Profit before taxation 7,058 5,378
Taxation (1,113) (559)
_________ _________

Profit for the year 5,945 4,819


_________ _________

Earnings per share 5


Basic earnings per share from continuing operations 3.76p 3.08p
Diluted earnings per share from continuing operations 3.74p 3.08p

Balance Sheet

31 December 31 December
Note 2007 2006

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£000 £000
Non current assets
Property, plant and equipment 2,579 2,077
Goodwill and intangible assets 26,306 13,565
Deferred tax asset 6,009 5,205
_________ _________
34,894 20,847
Current assets
Trade and other receivables 83,685 67,491
Financial assets 4 4
Cash and short term deposits 39,726 51,195
_________ _________
123,415 118,690
_________ _________
Total assets 158,309 139,537
_________ _________

Current liabilities
Trade and other payables 66,612 57,434
Financial liabilities 5,350 5,062
Income tax payable 946 28
Provisions 318 700
_________ _________
73,226 63,224

Non current liabilities


Financial liabilities 4 657
Provisions 492 655
Deferred tax liability 1,523 296
_________ _________
2,019 1,608

Total liabilities 75,245 64,832


_________ _________

Equity
Called up share capital 16,418 16,122
Share premium 16,335 14,574
Other reserves 4,804 4,325
Retained earnings 45,507 39,684
_________ _________

Total equity attributable to equity holders of Spring Group plc 83,064 74,705
_________ _________

Total equity and liabilities 158,309 139,537


_________ _________

Cash Flow Statement


Year ended Year ended
31 December 31 December
2007 2006
Note £000 £000
Operating activities
Profit before taxation 7,058 5,378
Finance income (1,396) (943)
Finance expense 248 186
Loss/(profit) on sale of fixed assets 4 (4)
IFRS 2 share option charge 360 245
Depreciation, amortisation and impairment 2,098 1,427
Decrease in trade and other receivables 13,872 13,035
Decrease in trade and other liabilities (2,453) (4,375)
Decrease in provisions (580) (1,065)
_________ _________
Net cashflow from trading activities 19,211 13,884
Outflow relating to reorganisation and redundancy costs - (200)
Interest received 1,433 1,003
Interest paid (194) (89)
Tax paid (573) (570)
_________ _________
Net cash inflow from operating activities 19,877 14,028

Investing activities
Acquisition of a subsidiary including net overdraft acquired 4 (30,784) -
Purchases of property, plant and equipment (664) (785)
Purchases of intangible assets (1,117) (1,600)
Proceeds from sale of property, plant and equipment 2 28
_________ _________
Cash outflow from investing activities (32,563) (2,357)

Financing activities
Proceeds from issue of shares 2,057 181
New borrowings 4,695 4,315
Repayment of borrowings (4,940) (7,281)
Repayment of capital element of finance leases and hire purchase (31) (18)
contracts
Financing interest received 7 29
Financing interest paid (68) (93)
Equity dividends paid to shareholders (482) (469)
_________ _________
Cash inflow/(outflow) from financing activities 1,238 (3,336)

Exchange losses/(gains) on cash and cash equivalents (21) 7


_________ _________
Net (decrease)/increase in cash and cash equivalents (11,469) 8,342

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_________ _________
Cash and cash equivalents at beginning of year 51,195 42,853
Cash and cash equivalents at end of year 39,726 51,195
_________ _________

Notes to the accounts

Issued
capital Share premium
£000 £000
1 January 2006 16,068 14,447
Currency translation difference - -
Net loss on cash flow hedge - -
Net (expense) / income recognised directly in equity - -
Profit for the year - -
Total recognised (expense) / income for the year - -
Equity shares issued 54 127
Share based payments - -
Dividends paid - -

______ ______
31 December 2006 16,122 14,574
______ ______

1 January 2007 16,122 14,574


Currency translation difference - -
Net profit on cash flow hedge - -
Net income recognised directly in equity - -
Profit for the year - -
Total recognised income for the year - -
Equity shares issued 296 1,761
Share based payments - -
Dividends paid - -

______ ______
31 December 2007 16,418 16,335

(continued from table above)


Other reserves
Own shares held Net unrealised Foreign Merger reserve
in ESOP trust gains reserve currency
reserve
£000 £000 £000 £000
1 January 2006 (5,370) (8) (1) 9,765
Currency translation difference - - 19 -
Net loss on cash flow hedge - (80) - -
Net (expense) / income recognised directly in - (80) 19 -
equity
Profit for the year - - - -
Total recognised (expense) / income for the - (80) 19 -
year
Equity shares issued - - - -
Share based payments - - - -
Dividends paid - - - -
______ ______ ______ ______
31 December 2006 (5,370) (88) 18 9,765
______ ______ ______ ______

1 January 2007 (5,370) (88) 18 9,765


Currency translation difference - - 7 -
Net profit on cash flow hedge - 88 - -
Net income recognised directly in equity - 88 7 -
Profit for the year - - - -
Total recognised income for the year - 88 7 -
Equity shares issued - - - -
Share based payments - - - -
Dividends paid - - - -
______ ______ ______ ______
31 December 2007 (5,370) - 25 9,765
______ ______ ______ ______

(continued from table above)

Total other Retained Total


reserve earnings
£000 £000 £000
1 January 2006 4,386 35,089 69,990
Currency translation difference 19 19
Net loss on cash flow hedge (80) - (80)
Net (expense) / income recognised directly in equity (61) - (80)
Profit for the year - 4,819 4,819
Total recognised (expense) / income for the year (61) 4,819 4,758
Equity shares issued - - 181
Share based payments - 245 245
Dividends paid - (469) (469)

______ ______ ______


31 December 2006 4,325 39,684 74,705
______ ______ ______

1 January 2007 4,325 39,684 74,705


Currency translation difference 7 - 7
Net profit on cash flow hedge - - 88
Net income recognised directly in equity 95 - 95

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Profit for the year - 5,945 5,945
Total recognised income for the year 95 5,945 6,040
Equity shares issued - - 2,057
Share based payments - 360 360
Dividends paid - (482) (482)
______ ______ ______
31 December 2007 4,420 45,507 82,680
______ ______ ______

1) Corporate information

The principal activities of the Group are described in the Chairman's


Statement, Chief Executive Officer's review and the Group Finance Director's
report, contained within this announcement. The Group's financial statements of
Spring Group plc for the year ended 31 December 2007 were authorised for issue
by the board of directors on 27 February 2008 and the balance sheet was signed
on the board's behalf by Amir Eilon and Peter Darraugh. Spring Group plc is a
public limited company incorporated and domiciled in England & Wales. The
Company's ordinary shares are traded on the London Stock Exchange.

2) Basis of preparation

Spring Group plc prepares its financial statements on the basis of International
Financial Reporting Standards (IFRS) as adopted for use by the European Union
(EU). The financial information presented herein has been prepared in accordance
with the accounting policies used in preparing the financial statements for the
year ended 31 December 2007, which do not differ from those used for the
financial statements for the year ended 31 December 2006. The financial
information contained in this document does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information for
the year ended 31 December 2007 has been extracted from the financial statements
of Spring Group plc which will be delivered to the Registrar of Companies in due
course. The auditors have issued an unqualified opinion on the Group's financial
statements for the year ended 31 December 2006, which have been filed with the
Registrar of Companies.

3) Segmental information

a) Business segments

The Group considers there to be two business segments - Professional


Staffing and General Staffing. Professional Staffing is split into two
divisions, Professional Staffing and Managed Solutions. On the basis that
management also monitor additional sub-operations additional information has
been provided for the Professional Staffing sector in respect of revenue and
profit. The principal segment reporting is based on industry sectors and
secondarily on geography by destination of supply. An analysis by industry
sector and by geography is the best reflection of the Group's management
structure and reporting lines. The accounting policies of the operating segments
are the same as those described in the summary of significant accounting
policies. The Group evaluates performance based on sector contributions, which
is defined as the amount of profit or loss after allocation of certain corporate
expenses, before finance income and charges, any amortisation and impairment of
intangible assets and income tax expense.

Professional Staffing includes the provision of IT and Telecoms specialists to


large national and international organisations as well as to smaller regional
organisations, it also includes permanent placements and provision of teams to
undertake IT and Telecoms testing services. General Staffing largely consists
of clerical, industrial and light manual activities.

Revenue Operating profit


2007 2006 2007 2006
£000 £000 £000 £000
Professional staffing 227,372 226,528 6,005 5,568
Managed solutions 153,059 140,209 3,279 2,717
________ ________ ________ ________
Total professional staffing 380,431 366,737 9,284 8,285
General Staffing 54,554 49,576 606 (110)
Intercompany revenue(1) (2,159) (9,012) - -
Central costs - - (3,980) (3,554)
________ ________ ________ ________
432,826 407,301 5,910 4,621
________ ________ ________ ________

Net finance income 1,148 757


________ ________

Profit before taxation 7,058 5,378


Taxation (1,113) (559)
________ ________
Profit for the year from continuing operations 5,945 4,819
________ ________

Depreciation and Capital expenditure


impairment of tangible
and intangible fixed
assets Tangible Intangible
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
Total professional staffing 900 581 120 18 22 41
General staffing 414 382 285 105 8 21
Unallocated corporate expenses 784 464 297 446 1,086 1,538

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______ ______ ______ ______ ______ ______


2,098 1,427 702 569 1,116 1,600
______ ______ ______ ______ ______ ______

Investments in tangible
and intangible
Total assets Total liabilities fixed assets
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
Total professional staffing 124,852 89,640 67,239 54,138 23,183 10,559
General staffing 25,155 28,271 4,392 4,667 851 879
Unallocated corporate assets/ 8,302 21,626 3,614 6,027 4,851 4,204
liabilities
________ ________ ________ ________ ________ ________
158,309 139,537 75,245 64,832 28,885 15,642
________ ________ ________ ________ ________ ________

1) Intercompany revenue is predominantly priced at cost plus a small


administrative fee. During the year ended 31 December 2007 the Professional
staffing segment received income of £25,000 from the General Staffing segment
(2006: £17,000) and £281,000 (2006: £nil) from Spring Group plc. The General
Staffing segment received income of £1,740,000 (2006: £2,541,000) from the
Professional staffing segment and £35,000 (2006: £nil) from Spring Group plc. In
addition there was £78,000 (2006: £6,454,000) of intercompany revenue between
Professional staffing and managed solutions. Consequently, external revenue is
£380,047,000 (2006: £360,266,000) for the Professional staffing segment and
£52,779,000 (2006: £47,035,000) for the General Staffing segment.

b) Geographical segments
Revenue Total assets
2007 2006 2007 2006
£000 £000 £000 £000
United Kingdom 393,018 396,192 128,348 137,062
Rest of Europe 13,349 7,990 2,782 2,475
North America 19,290 - 26,341 -
Rest of World 7,169 3,119 838 -
________ ________ ________ ________
432,826 407,301 158,309 139,537
________ ________ ________ ________

(continued from table above)


Capital expenditure Investments in tangible and
intangible fixed assets
2007 2006 2007 2006
£000 £000 £000 £000
United Kingdom 1,736 2,169 16,051 15,642
Rest of Europe 3 - 5 -
North America 64 - 12,749 -
Rest of World 16 - 80 -
________ ________ ________ ________
1,819 2,169 28, 885 15,642
________ ________ ________ ________

4. Business combinations

Acquisition of Glotel plc

On 24 July 2007, the Group acquired 100% of the voting shares of Glotel plc, a
UK listed company specialising in recruitment in the telecoms sector.

The fair value of the identifiable assets and liabilities of Glotel plc as at
the date of acquisition and the corresponding carrying amounts immediately
before the acquisition were:

The total cost of the combination was £28,720,000 which was satisfied as
follows:
£000 £000
Fair value Previous carrying
recognised on value
acquisition

Property, plant and equipment 868 868


Intangible fixed assets 2,905 222
Deferred tax asset 1,394 1,394
Trade and other receivables 18,913 18,913
Prepayments 10,706 10,706
Cash and cash equivalents 2,183 2,183
______ ______
36,969 34,286
______ ______

Bank overdraft 4,261 4,261


Trade payables 451 451
Accruals and other payables 11,757 11,757
Deferred tax liability 1,128 -
______ ______
17,597 16,469
Net assets 19,372 17,817
Goodwill arising on acquisition 9,348
______
Total consideration 28,720
______

The total cost of the combination was £28,720,000 which was satisfied as
follows:

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Cost: £000

Cash 27,415
Costs associated with the acquisition 1,305
______
Total 28,720
______

Cash outflow on acquisition:

Net overdraft acquired with the subsidiary 2,064


Cash paid 28,720
______
Net cash outflow 30,784
______

From the date of acquisition, Glotel plc has contributed £1,072,000 to the net
profit of the Group. If the combination had taken place at the beginning of the
year, the profit after tax for the Group would have been reduced to £5,109,000
and revenue from continuing operations would have increased to £495,322,000.
The goodwill of £9,348,000 comprises the fair value of the assembled workforce
and expected synergies arising from the acquisition.

5. Earnings per share

2007 2007 2006 2006


Profit p per Profit p per
£000 share £000 share
Basic earnings per share from continuing operations 5,945 3.76 4,819 3.08
Diluted earnings per share from continuing operations 5,945 3.74 4,819 3.08
______ ______ ______ ______

No. of shares No. of shares

Weighted average ordinary shares in issue 162,250,076 160,890,853


Weighted average ordinary shares held as own shares in (4,329,205) (4,329,205)
ESOP trust
____________ ____________
Adjusted weighted average ordinary shares in issue 157,920,871 156,561,648

Dilutive share options 1,159,064 210,177


____________ ____________
Adjusted weighted average ordinary shares in issue and 159,079,935 156,771,825
dilutive options over shares
____________ ____________

The Company holds an investment in its own shares through an ESOP trust. These
shares are excluded from the calculation of the adjusted weighted average number
of shares in issue as rights to dividends have been waived.

6. Dividends

2007 2006
£000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2006: 0.2p (2005: 0.2p) 322 313
Interim dividend for 2007: 0.1p (2006: 0.1p) 160 156
______ ______
Dividends paid 482 469
______ ______
Proposed for approval by shareholders at the AGM:
Final dividend for 2007: 0.2p (2006: 0.2p) 328 322
______ ______

This information is provided by RNS


The company news service from the London Stock Exchange

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Spring Group PLC

Half Yearly Report


RNS Number : 2036X
Spring Group PLC
11 August 2009

Spring Group plc

Interim results for the six months to 30 June 2009

Spring Group plc ('Spring'), the technology staffing and workforce management company, announces its unaudited
results for the six months ended 30 June 2009.

FINANCIAL HIGHLIGHTS

Revenues down 10.5% to £224.3 million (2008: £250.5 million)


Net fee income (Gross profit) down 23% to £26.2 million (2008: £34.0 million)
Gross margin percentage down to 11.7% from 13.6%
Loss before taxation, interest, depreciation and amortisation of £0.2 million (2008: Profit £4.6 million)
Operating loss of £1.4 million (2008: Profit £3.3 million)
Loss per share of 0.89 pence (2008: profit 1.54 pence)
Interim dividend of 0.1 pence (2008: 0.1 pence)
Cash inflow from operating activities of £10.0 million (2008: cash outflow of £7.7 million)
Group net cash of £48.6 million (December 2008: £40.3 million, June 2008: £26.2 million)
Total assets £155.8 million (2008: £168.5 million)

STRATEGIC AND OPERATIONAL HIGHLIGHTS

Continued investment in overseas expansion


Further long term contract wins in Recruitment Process Outsourcing (RPO)
Additional cost re-alignment commensurate with current economic conditions

Peter Searle, Chief Executive Officer, commented:

'We continue to focus on maintaining a strong balance sheet and the period end net cash balance of over £48 million
will allow us to continue to maintain investment where appropriate to support our global strategy.

Despite the prevailing mark et conditions we are confident that we have a robust and efficient business with the
resources and strength in depth in the management team to tak e full advantage of medium to longer term growth
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opportunities'.

Chief Executive's review

Introduction

As previously announced, Spring has experienced a challenging first half to the year characterised by a much weaker
market for permanent staffing whilst contract staffing has proven to be more resilient.

Our revenues were down by 10.5% to £224.3 million (2008: £250.5 million) with net fee income dropping by 23% to
£26.2 million (2008: £34.0 million) as a result of the greater impact on permanent revenues and the resultant change
in mix in our business.

Our Temp and Contract business, which now accounts for approximately 85% of our Net Fee Income, experienced a
16% reduction compared with the first half of last year whilst our Permanent business experienced a more marked
decline of 49%. At the same time, we continue to manage our cost base prudently so that it is in line with current
market conditions. This has resulted in a broadly breakeven performance at the EBITDA level.

We continued to focus on maintaining a strong balance sheet and finished the period with £48.6 million net cash
(December 2008: £40.3 million), allowing us to maintain investment where appropriate and take advantage of longer
term growth.

The new offices we opened in 2008 in Italy, France and Asia Pacific, whilst still in investment phase, performed in
line with our expectations. We believe that these investments will put us in a strong position to support future growth
and international expansion is a key part of our strategy. We will continue to look to invest in other growth markets,
both geographic and new sectors, in the medium term.

We have continued to make good progress in our RPO business, with last year's successes being supplemented by
a number of new client wins. We have improved and expanded our sales capability to support this market opportunity
and believe the investment will deliver excellent returns.

The General staffing sector however, remains challenging, though a strong management team and a focus on cost
control should ensure that this business is well positioned to take advantage in an upturn.

Strategic Update

The Group strategy of targeting three market sectors, Managed Solutions, Professional Staffing and General Staffing
continues to be our core driver and expanding these services into new sectors and new geographies will enable the
group to emerge from the global downturn in a strong position.

The general staffing and permanent business have faced challenging market conditions however the global contract
business in particular IT contracting has remained robust and the RPO business has benefited from a number of
recent wins supported by longer term contracts.

The success of these business units will continue to allow us to maintain geographic growth and support the
international office network to enable us to continue developing as a global supplier of choice. Whilst we have
reduced headcount in sales and support in the UK and US we have maintained our investments in people in those
overseas markets where we see most opportunity such as Europe and Asia Pacific.

Operating Review

The table below sets out the results for the Group for the first half of 2009 with comparisons against the same period
in the prior year.

Group Results

Revenue Gross profit 'NFI' Operating (loss)/profit


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£million 2009 2008 2009 2008 2009 2008


Professional Staffing EMEA 84.9 111.5 11.3 11.7 0.3 2.5
Professional Staffing US 23.5 24.0 4.9 6.5 0.3 1.3
Professional Staffing APAC 5.9 6.5 0.8 2.5 (0.4) (0.1)
Managed Solutions 91.2 80.3 5.3 6.1 1.5 1.6
General Staffing 21.2 29.8 3.9 7.2 (1.7) (0.5)
Intercompany revenue (2.4) (1.6) - - - -
Central costs - - - - (1.4) (1.5)

Total 224.3 250.5 26.2 34.0 (1.4) 3.3

Managed Solutions

Our Managed Solutions division which consist of our Hyphen, RPO and Spring IT Solutions businesses has
experienced a mixed first half. Revenue has increased by 13.6% as a result of recent wins, though NFI has fallen by
13%, a margin of 5.8% (2008: 7.6%) due to the downsizing of our contract book in some of our more mature clients
and reduction in permanent volumes. The expansion of our client base on long term contracts bodes well for future
growth when markets recover.

We have through 2009 continued to invest in our Solutions products and staff and see this business as offering
significant potential for stable long term growth. This business has proven to be resilient throughout the economic
cycle and returns the group some of its highest conversion of NFI to operating profit.

Professional Staffing

This division comprises the IT contracting and permanent services businesses worldwide within the group including
the Glotel International telecoms business.

Revenues of £114 million were down 20% (H1 2008: £142 million) and NFI fell 18% to £17.0 million (H1 2008: £20.7
million).

Within the division the permanent business suffered a 40% decline in NFI, whilst the contract business was more
resilient with a reduction of 14%.

In our more mature operations in the UK and US, productivity per head has continued to improve despite the difficult
market conditions as a result of better sales training, strong sales management and commission schemes that
reward high margin business. Europe and Asia Pacific represent our primary investment areas, although loss making
at present we envisage these being key locations to our future growth strategy.

General Staffing

Throughout 2008 the group expanded its network and put in place a robust chain of offices that allowed us to gain
economies of scale and service a national client base.

However trading in this sector has been most affected by the downturn and our general staffing business which
traditionally operates on a 40/60% perm/temp mix has seen business fall by 48% and 17% respectively. We have
put in a new management team and structure and refocused the business on more robust markets which we believe
will position us better for the second half.

Group Overheads & Tax

The Group's central overhead reduced marginally year on year. The taxation charge for the period is £0.1 million
(2008: £1.0 million) reflecting the reduction in business activity, the movement in deferred tax and the effect of
withholding tax charges.

Earnings per share and Interim Dividend

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5/24/13

Basic loss per share was 0.89p, compared to earnings of 1.54p per share in the first half of 2008. An interim dividend
of 0.1p (2008: 0.1p) will be payable to shareholders on the register on 28th August 2009 and will be paid on
28th September 2009.

Balance sheet

Total assets decreased from £168.5 million at 31 December 2008 to £155.8 million at 30 June 2009, largely as a
result of retranslation of overseas assets following the strengthening of sterling during in the period. Net cash
balances (cash less short-term borrowings and overdrafts) increased from £40.3 million at 31 December 2008 to
£48.6 million at 30 June 2009. During the year a number of projects have been undertaken to improve working capital
and the progress in H1 on these initiatives resulted in cash inflow from operating activities of £10.0 million.

Principal risks and uncertainties


In keeping with the revised reporting standards for interim statements (IAS 34), we have detailed below the principal
risks and uncertainties related to the business.

Macro economic environment - The performance of the Group has a close relationship with the underlying growth of
the economies of the countries in which we operate. Our strategy continues to be one of international growth in order
to reduce the Group's exposure or dependence on any one specific economy.

Competitive environment - We operate in competitive markets, particularly in the United Kingdom where we are
exposed to high competitive risk. Competitors in our markets range from large multi-national organisations to small,
boutique, privately owned businesses. In all of our markets we are continually subject to both existing and new
competitors entering into the markets in which we operate, both by geographic region and specialist activity due to
the relatively low start up costs.

Commercial arrangements - The Group benefits from close commercial relationships with key clients, particularly in
the SMEs market, although the Group is not dependent on any single key client.

Technology systems - The Group is reliant on a number of technology systems in providing its services to clients.
These systems are housed in various locations and the business continues to review and enhance its ability to cope
with a significant data or other loss. The business is also reliant upon a number of important suppliers that provide
critical information technology infrastructure.

Regulatory environment - In common with many other sectors, the specialist recruitment industry is now governed by
an increased level of compliance; this varies from country to country and market to market. In addition, our clients
now require more complex levels of compliance in their contractual arrangements. The Group takes its
responsibilities seriously, is committed to meeting all of its regulatory responsibilities and continues to maintain its
internal controls and processes to ensure compliance with respect to legal and contractual obligations.

Treasury management and currency risk - The main functional currencies of the Group are Sterling and the US dollar.
The Group does not have material transactional currency exposures although it is exposed to translation differences
on the profits, assets and cash flows generated by its overseas operations.

Summary and Outlook

With our strong balance sheet and the healthy cash balance of over £48 million we will continue to maintain
investment where appropriate to support our global strategy.

Despite the prevailing market conditions we are confident that we have a robust and efficient business. With current
resources and a strong management team we are in a good position to take full advantage of medium to longer term
growth opportunities.

On 11 August 2009 the Company announced that it had received from Adecco UK Holdco Limited, a wholly owned
subsidiary of Adecco S.A,. a firm intention to make an offer for the entire issued and to be issued share capital of the
Company. Under the terms of the offer, the Company's shareholders will receive 62 pence in cash for each share in
the Company held by that shareholder. The offer is expected to be effected by way of a court-sanctioned scheme of
arrangement between the Company and its shareholders. Further details of the terms of the offer are set out in the
RNS announcement dated 11 August 2009.
4/14
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Peter Searle
Chief Executive Officer
11 August 2009

Directors' responsibilities

The condensed set of financial statements has been prepared in accordance with IAS 34;

The interim management report includes a fair review of the information required by DTR4.2.7R of the
'Disclosure and Transparency Rules', being an indication of important events that have occurred during
the six months of the financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining six months;

The interim management report includes a fair review of the information required by DTR4.2.8R of the
'Disclosure and Transparency Rules', being related party transactions that have taken place in the first
six months of the current financial year and have materially affected the financial position or
performance of the entity during the period; and any changes in the related party transactions
described in the last annual report that could do so.

On behalf of the Board


Peter Searle
Chief Executive Officer
11 August 2009

Report of the independent auditor - to the members of Spring Group plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly interim
report for the six months ended 30 June 2009 which comprise the Consolidated Income Statement, Consolidated
Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related
notes 1 to 12. We have read the other information contained in the half yearly interim 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 ISRE 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 interim report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly interim report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.

As disclosed in note 1, 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 interim report
has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.

Our Responsibility

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Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly interim 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 interim report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Registered auditor
London
11 August 2009

Consolidated income statement and statement of comprehensive income - for the six months ended 30
June 2009

Consolidated income statement


Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
30 June 30 June 31 December
Note 2009 2008 2008
£000 £000 £000

Revenue 2 224,247 250,464 516,541


Cost of sales (198,025) (216,442) (449,336)
Gross profit 26,222 34,022 67,205
Selling and distribution expenses (15,122) (18,162) (35,636)
Administrative costs (12,520) (12,555) (25,140)
Operating (loss)/profit 2 (1,420) 3,305 6,429

Finance income 152 674 386


Finance charges (166) (570) (307)

(Loss)/profit before taxation (1,434) 3,409 6,508


Taxation 5 (93) (953) (2,088)

(Loss)/profit for the period (1,527) 2,456 4,420

Earnings per share


(0.89)p 1.54p 2.77p
Basic (loss)/earnings per share from continuing 3
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5/24/13

operations
Diluted (loss)/earnings per share from 3 (0.88)p 1.52p 2.76p
continuing operations

Consolidated statement of comprehensive income

Unaudited Unaudited Audited


Six months Six months Year ended
ended ended
30 June 30 June 31 December
2009 2008 2008
£000 £000 £000

(Loss)/profit for the period (1,527) 2,456 4,420

Exchange difference on translation of foreign operations (3,878) (33) 7,732


Other comprehensive (loss)/income for the period, (3,878) (33) 7,732
net of tax

Total comprehensive (loss)/income for the period, net (5,405) 2,423 12,152
of tax

Consolidated balance sheet - for the six months ended 30 June 2009

Unaudited Unaudited Audited


30 June 30 June 31 December
2009 2008 2008
Note £000 £000 £000
Non current assets
Property, plant and equipment 7 1,989 2,596 2,500
Goodwill and intangible assets 27,176 25,888 29,647
Deferred tax asset 3,872 5,689 4,158
33,037 34,173 36,305
Current assets
Inventories 391 - 735
Trade and other receivables 67,735 93,940 87,340
Financial assets 4 4 4
Cash and short term deposits 9 54,664 31,277 44,078
122,794 125,221 132,157
Total assets 155,831 159,394 168,462

Current liabilities
Trade and other payables 57,831 64,167 66,024
Financial liabilities 8 6,111 5,693 3,821
Income tax payable 555 1,835 868
Provisions 448 364 827
64,945 72,059 71,540

Non current liabilities


Provisions 124 222 568
Deferred tax liability 1,049 1,489 1,204
1,173 1,711 1,772

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5/24/13

Total liabilities 66,118 73,770 73,312

Equity
Called up share capital 16,421 16,421 16,421
Share premium 16,347 16,347 16,347
Other reserves 8,658 4,771 12,536
Retained earnings 48,287 48,085 49,846

Total equity attributable to equity holders 89,713 85,624 95,150


of Spring Group plc

Total equity and liabilities 155,831 159,394 168,462

Consolidated cash flow sheet - for the six months ended 30 June 2009

Unaudited Unaudited Audited


Six months Six months Year ended
ended ended
30 June 30 June 31 December
Note 2009 2008 2008
£000 £000 £000
Operating activities
(Loss)/profit before taxation (1,434) 3,409 6,508
Finance income (152) (674) (386)
Finance expense 166 570 307
Profit on sale of fixed assets - (3) (3)
Share based payments 288 442 399
Depreciation, amortisation and impairment 1,263 1,312 2,721
Other non-cash items 53 - (1,588)
Decrease/(increase) in trade and other 18,368 (10,299) 1,463
receivables
Decrease in trade and other liabilities (7,455) (2,036) (2,691)
Decrease/(increase) in stock 296 - (603)
(Decrease)/increase in provisions (823) (224) 585
Net cash flow from trading activities 10,570 (7,503) 6,712
Interest received 169 669 352
Interest paid (167) (547) (256)
Tax paid (548) (313) (757)
Net cash inflow/(outflow) from operating 10,024 (7,694) 6,051
activities

Investing activities
Acquisition of a subsidiary including net - - 317
overdraft acquired
Purchases of property, plant and equipment (199) (597) (969)
Purchases of intangible assets (213) (195) (382)
Proceeds from sale of property, plant and - 3 -
equipment
Cash outflow from investing activities (412) (789) (1,034)

8/14
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Financing activities
Proceeds from issue of shares - 15 6
New borrowings - 23,470 23,470
Repayment of borrowings - (28,163) (28,795)
Repayment of capital element of finance leases (9) (14) (19)
Equity dividends paid to shareholders (320) (320) (480)
Cash outflow from financing activities (329) (5,012) (5,818)

Exchange (losses)/gains on cash and cash (996) (8) 1,341


equivalents
Net increase/(decrease) in cash and cash 8,287 (13,503) 540
equivalents

Cash and cash equivalents at beginning of 9 40,266 39,726 39,726


period

Cash and cash equivalents at end of period 9 48,553 26,223 40,266

Consolidated changes in equity - for the six months ended 30 June 2009

Other reserves
Issued Share Own Foreign Merger Total other Retained Total
capital premium shares currency reserve reserves earnings
held in reserve
ESOP trust
£000 £000 £000 £000 £000 £000 £000 £000
1 January 2008 16,418 16,335 (5,370) 409 9,765 4,804 45,507 83,064
Currency translation - - - (33) - (33) - (33)
difference
Profit for the period - - - - - - 2,456 2,456
Comprehensive - - - (33) - (33) 2,456 2,423
income/(loss)
Equity shares 3 12 15
issued
Share based - - - - - - 442 442
payments
Dividends paid - - - - - - (320) (320)
30 June 2008 16,421 16,347 (5,370) 376 9,765 4,771 48,085 85,624
(unaudited)

Currency translation - - - 7,765 - 7,765 - 7,765


difference
Profit for the period - - - - - - 1,964 1,964
Comprehensive - - - 7,765 - 7,765 1,964 9,729
income/(loss)
Equity shares - - - - - - -
issued
Share based - - - - - - (43) (43)
payments
Dividends paid - - - - - - (160) (160)
31 December 2008 16,421 16,347 (5,370) 8,141 9,765 12,536 49,846 95,150
(audited)

Currency translation difference - - - (3,878) - (3,878) - (3,878)

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5/24/13
Loss for the period - - - - - - (1,527) (1,527)
Comprehensive - - - (3,878) - (3,878) (1,527) (5,405)
income/(loss)
Share based - - - - - - 288 288
payments
Dividends paid - - - - - - (320) (320)
30 June 2009 16,421 16,347 (5,370) 4,263 9,765 8,658 48,287 89,713
(unaudited)

The shares issued in the year to 31 December 2008 where issued in lieu of salary.

Spring Group
Notes to the interim financial statements - 30 June 2009

1. Basis of preparation and accounting policies

Basis of preparation

These interim financial statements have been prepared in accordance with the accounting policies set out in the
Company's 2008 Annual Report and were approved by the board on 13 August 2009. The interim financial statements
for the six months ended 30 June 2009 have been prepared in accordance with IAS 34 'Interim Financial Reporting'.
The interim financial statements do not include all the information and disclosures in the annual financial statements
as at 31 December 2008.

The financial information in these interim financial statements does not constitute statutory financial statements as
defined in Section 240 of the Companies Act 2006. The Group's 2008 Annual Report has been filed with the Registrar
of Companies and the auditor's report on those financial statements was not qualified and did not contain statements
under section 237(2) or (3) of the Companies Act 2006.

Significant accounting policies

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 financial statements for the year ended 31
December 2008, except for the adoption of new Standards and Interpretations as of 1 January 2009, as noted below:

IFRS 8 Operating Segments


The standard requires disclosure of information about the Group's operating segments and replaces the requirements
to determine primary (business) and secondary (geographical) reporting segments of the Group. Adoption of this
standard did not have any effect on the financial position or performance of the Group.

IAS 1 Revised Presentation of Financial Statements


The revised Standard separates owner and non-owner owned changes in equity. The statement of changes in equity
includes only details of transactions with owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income: it presents all items of recognised income
and expense, either in one single statement, or in two linked statements. The Group has elected to present in two
statements.

Comparative information has been restated so that it is also in conformity with the revised standard. Since the
change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

The amendments to the following standards below did not have an impact on the accounting policies, financial
position or performance of the Group:

IAS 23 Borrowing Costs


IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments

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IFRIC 16 Hedges of Net Investments in a Foreign Operation


IAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in
accordance with IAS 39 Financial Instruments: Recognition and Measurement
IAS 16 Property, Plant and Equipment
IAS 38 Intangible Assets: Expenditure on advertising and Promotion activities
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 7 Financial Instruments: Disclosures
IAS 8 Accounting Policies, changes in Accounting Estimates and Error
IAS 10 Events after the Reporting Period
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investment in Associates
IAS 31 Interest in Joint Ventures
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 39 Financial Instruments: Recognition and Measurement

2. Segmental information

Business segments

Information disclosed regarding the Group's operating segments is in accordance with IFRS 8, which replaces IAS 14
from 1st January 2009. The information reported is that which the chief operating decision maker uses internally in
evaluating the performance of operating segments and allocating resources to those segments. Professional Staffing
and Managed Solutions includes the provision of IT and Telecoms specialists to large national and international
organisations as well as to smaller regional organisations; it also includes permanent placements and provision of
teams to undertake IT and Telecoms testing services. General Staffing largely consists of clerical, industrial and light
manual activities.

Revenue
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 June 30 June 31 December
2009 2008 2008
£000 £000 £000
Professional Staffing EMEA(1) 84,888 111,428 219,985

Professional Staffing US 23,451 24,041 53,957


Professional Staffing APAC 5,934 6,482 13,396
Managed Solutions 91,213 80,280 178,533
General Staffing 21,155 29,848 54,575
Intercompany revenue(2) (2,394) (1,615) (3,905)
224,247 250,464 516,541

Operating profit
Professional Staffing EMEA(1) 364 2,546 5,291
Professional Staffing US 328 1,296 2,985
Professional Staffing APAC (405) (99) (289)
Managed Solutions 1,452 1,647 3,331
General Staffing (1,729) (528) (2,557)
Central costs (1,430) (1,557) (2,332)
(1,420) 3,305 6,429
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Net finance income (14) 104 79


(Loss)/Profit before taxation (1,434) 3,409 6,508
Taxation (93) (953) (2,088)
(Loss)/Profit for the period from continuing operations (1,527) 2,456 4,420

(1) EMEA is largely UK based but includes Europe which is currently in the investment and build stage,

(2) Intercompany revenue is predominantly priced at cost plus a small administrative fee. During the six months ended 30
June 2009, the Professional Staffing UK segment received £346,000 from Managed Solutions. General Staffing received
£672,000, from Professional Staffing, £1,368,000 from Managed Solutions and £8,000 from Spring Group plc. Managed
solutions did not receive any intercompany income in the period. Consequently, external revenue is £83,485,000 for the
Professional Staffing UK segment and £19,107,000 for the General Staffing segment.

3. Earnings per share

Unaudited Unaudited Audited


Six months Six months Year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
Loss Pence per Profit Pence per Profit Pence per
share share share
£000 £000 £000
Basic (loss)/earnings per (1,527) (0.89) 2,456 1.54 4,420 2.77
share from continuing
operations
Diluted (loss)/earnings per (1,527) (0.88) 2,456 1.52 4,420 2.76
share from continuing
operations

No. of shares No. of shares No. of shares

Weighted average number 164,210,089 164,198,261 164,204,284


of ordinary shares in issue
Weighted average number (4,241,884) (4,329,205) (4,329,205)
of ordinary shares held as
own shares in ESOP trust
159,968,205 159,869,056 159,875,079
Dilutive share options 1,616,187 1,469,274 453,585
Adjusted weighted average 161,584,392 161,338,330 160,328,664
number of ordinary shares
in issue and dilutive options
over shares

4. Dividends

Unaudited Unaudited Audited


Six months Six months Year
Ended Ended ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2008 0.2p (2007: 0.2p) 320 320 320
Interim dividend for 2008: 0.1p (2007: 0.1p) - - 160
Dividends paid 320 320 480
Recommended interim dividend:

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Interim dividend for 2009: 0.1p (2008: 0.1p) 160 161 160

5. Taxation

The tax charge for the year has been calculated on the basis of the Directors' best estimate of the underlying annual
effective tax rate for the year of (6)% (2008: 28%). The lower tax rate in the prior year relates to the recognition of
deferred tax balances on losses that the Directors considered will be utilised in future periods.

6. Goodwill

Goodwill is tested for impairment annually (as at 31 December) and when circumstances indicate the carrying value
may be impaired. The Group's impairment test for goodwill and intangible assets with indefinite lives is based on
value in use calculations that use a discounted cash flow model. The key assumptions used to determine the
recoverable amount for the different cash generating units were discussed in the annual statements for the year
ended 31 December 2008.

The Group considers the relationship between its market capitalisation and its book value, among other factors, when
reviewing the indicators of impairment. The market capitalisation of the Group has increased since 31 December
2008 and although there has been an overall reduction in activity across the recruitment sector the Group considers
this to be temporary in nature and representative of the cyclical nature inherent within the sector.

7. Property, plant and equipment

Unaudited Unaudited Audited


Six months Six months Year
Ended Ended Ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Opening net book value 2,500 2,579 2, 579
Additions 103 636 1,123
Disposals (50) - (5)
Depreciation (518) (620) (1,283)
Reclassification - - (41)
Exchange adjustment (46) 1 127
Closing net book value 1,989 2,596 2,500

8. Financial liabilities

Unaudited Unaudited Audited


Six months Six months Year
Ended Ended Ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Current
Obligations under finance leases and hire - 14 9
purchase contracts
Bank overdrafts 6,111 5,054 3,812
Loan notes - 625 -
6,111 5,693 3,821

9. Cash and cash equivalents

Unaudited Unaudited Audited


Six months Six months Year
Ended Ended Ended
30 June 2009 30 June 2008 31 December 2008
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£000 £000 £000


Cash and cash equivalents include the following
for the purposes of the cash flow statement:
Cash in hand and in bank 54,664 31,277 44,078
Bank overdraft (6,111) (5,054) (3,812)
48,553 26,223 40,266

10. Capital commitments

At 30 June 2009, the Group had capital commitments of £nil (31 December 2008 £nil, 30 June 2008 £nil).

11. Share based payments

In April 2009, 6,330,700 share options were granted to senior executives under the Senior Executive Plan. The
exercise price of the options is £nil. The performance conditions attached to 50% of the award was based on Total
Shareholder Return ('TSR') performance measured against a bespoke group of comparator companies. The
performance conditions attached to the other 50% of the award was based on a range of cumulative pre-tax EPS
targets to be achieved over three financial years. In addition, for the EPS target, the share price on the date of vest
must be above the share price on the date of issue, this being 38.3 pence. If these performance conditions are not
met the options lapse. The fair value of the options granted is estimated at the date of grant using the binomial
pricing model, taking into account the terms and conditions upon which the options were granted. The contractual life
of the option is 3 years. The fair value of options granted during the six months ended 30 June 2009 was estimated
on the date of grant using the following assumptions:

Volatility 44.7% - 46.0%


Dividend yield (% p.a.) 0.78%
Expected term 3 years

12. Related party disclosures

The Group's significant related parties are disclosed in the Spring Group plc annual report for the year ended 31
December 2008. There were no material differences in related parties and no related party transactions in the period.

This information is provided by RNS


The company news service from the London Stock Exchange

END

IR ILFETTSIILIA

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Moss Bros Group


Proposed Disposal and Trading
RNS Number : 7535A
Moss Bros Group PLC
07 February 2011

FOR IMMEDIATE RELEASE


7 February 2011

Moss Bros Group PLC


("Moss Bros" or the "Company")

Proposed Disposal of the Hugo Boss Franchised Businesses


and
Trading Update

Moss Bros, the UK's number 1 branded suit specialist, today announces its
intention to dispose of its 15 Hugo Boss franchised stores to Hugo Boss UK
Limited (the "Purchaser"), for a cash consideration of £16.5 million. The
Purchaser will acquire the business and assets of these stores as a going
concern and completion of the Disposal ("Completion") will take place on 1 April
2011, subject to the approval of the Company's Shareholders.

Highlights

· Cash consideration of £16.5 million, £4.2 million of which will be payable


to Moss Bros in cash on Completion, with the remaining £12.3 million
being deferred and payable to Moss Bros in instalments upon the
transfer of the Leases of each of the Hugo Boss Franchised Stores,
expected to take place by the end of December 2011

· The transaction is integral to Moss Bros' recently developed strategy to


focus growth and resources on the Company's own brands

· The Disposal will enable Moss Bros to significantly accelerate this


strategy as the cash proceeds of the Disposal will provide funding for
the redevelopment of Moss branded stores, investment in the service
experience, piloting and an appropriate roll out of new initiatives such
as Moss Bespoke and the development of a customer relationship
management system to leverage the value of the hire business

· The Disposal will give the Company increased financial flexibility and
allow a much simpler business model to be developed

· The cash generated pursuant to the Disposal will provide the Company
with sufficient working capital such that it will not need to renew its
current banking facilities and will operate debt-free

· The strong relationship with the Purchaser will continue, as Moss Bros
will continue to sell Hugo Boss branded clothing through its Moss and
Cecil Gee fascias

· Completion of the Disposal is conditional upon Shareholder approval at


a General Meeting expected to be held by the end of February 2011

· Moss Bros confirms that it continued to trade well during the important
Christmas trading period, and total sales and margins continue with a
positive like-for-like trend. Like-for-like sales were up 7.0% for the 26
weeks to 29 January 2011, and up 9.1% for the 52 weeks to 29
January 2011. Gross margin also continues to perform well. The Board
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remains confident of the outturn for the full year

Commenting on the Disposal, Brian Brick, Chief Executive Officer of Moss Bros,
said:

"This is a transformational deal for Moss Bros and absolutely in line with
our recently developed strategy of focusing on growing our own
brands. Having restored the quality of the product offering of the core
Moss Bros business and established a strong momentum in positive
like-for-like sales, this transaction will give us the opportunity to focus
exclusively on investing and developing the brands which we own, from
a position of operational and financial strength. There is significant
untapped potential in our position as the UK's number 1 branded suit
specialist, with our unique offering of hire, strength in retail and
innovation in new areas such as Moss Bespoke.

"Although we are ever mindful of the fragile trading conditions in the


UK, we have a great product offering, a focused business model and,
following the Disposal, will have the financial flexibility to leverage the
attractive niche which we have as the UK's number 1 branded suit
specialist."

Commenting on the transaction, Claus-Dietrich Lahrs, CEO and Chairman of the


Managing Board at Hugo Boss AG, the parent company of the Purchaser, said:

"This transaction works well for both of our companies. The acquisition
is a central component of our global growth strategy and at the same
time allows Moss Bros to focus its investment on its own brands."

Enquiries:

Moss Bros Group PLC 020 7447 7200


Debbie Hewitt, Chairman
Brian Brick, Chief Executive Officer
Robin Piggott, Finance Director

Altium Capital Limited 020 7484 4040


Ben Thorne
Sam Fuller
Paul Chamberlain

Hawkpoint Partners Limited 020 7665 4500


Christopher Darlington
William Bain
Bryony Marshall

Buchanan Communications Limited 020 7466 5000


Charles Ryland
Christian Goodbody
Gabriella Clinkard

This summary should be read in conjunction with the full text of the following
announcement.

Altium Capital Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Moss Bros Group
PLC and for no one else in relation to the Disposal and is not advising any
other person and accordingly will not be responsible to anyone other than
Moss Bros Group PLC for providing the protections afforded to the customers of
Altium Capital Limited or for providing advice in relation to the Disposal or any
other matter referred to herein.

Hawkpoint Partners Limited, which is authorised and regulated in the United


Kingdom by the Financial Services Authority, is acting exclusively for Moss Bros
Group PLC and for no one else in relation to the Disposal and is not advising
any other person and accordingly will not be responsible to anyone other than
Moss Bros Group PLC for providing the protections afforded to the customers of
Hawkpoint Partners Limited or for providing advice in relation to the Disposal or
any other matter referred to herein.

Moss Bros Group PLC

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Proposed Disposal of the Hugo Boss Franchised Businesses

Introduction

Moss Bros, the UK's number 1 branded suit specialist, which retails and hires
men's clothing through 155 UK and Ireland based retail stores and online, has
entered into a conditional sale and purchase agreement with Hugo Boss UK
Limited relating to the proposed disposal of the Hugo Boss Franchised
Businesses, for a cash consideration of £16.5 million.

The Disposal is conditional upon approval by Moss Bros' Shareholders and a


circular containing a notice convening a General Meeting at which a resolution
to approve the Disposal will be proposed will be issued to Shareholders as
soon as practicable.

Background to and reasons for the Disposal

In recent months the Company has undertaken a strategic review, aimed at


developing a strategic plan to restore the Company's growth and profitability.
It has determined and is successfully pursuing a strategy which focuses on
building the Company's core Moss brand and which specifically leverages the
value inherent in the Company's Moss Bros hire activity. The development of
our product offering, the creation of a new store environment, the extension of
our online activity and innovation in areas such as Moss Bespoke all form a
core part of that strategy, as does a streamlining of the Company's activities to
simplify the business and reduce operating costs.

As part of the strategic review, the Company has been exploring its options
concerning its franchising activities, with a view to simplifying the business and
focusing in the future on the store fascias and product brands that the
Company owns.

The Company has operated a number of Hugo Boss franchised stores in the UK
under franchise agreements with Hugo Boss AG since 1995. During this period
the Company has operated the Hugo Boss Franchised Stores successfully and
continues to enjoy a strong relationship with the Purchaser. The Company
recently entered into discussions with the Purchaser to explore the possibility
of selling the Hugo Boss Franchised Businesses, such that they would come
under the Purchaser's direct ownership, and for the Company to receive a cash
consideration for these businesses, which the Company could use to invest in
its own brands.

The Directors unanimously believe that this transaction will allow the Company
to significantly accelerate its chosen strategy by focusing exclusively on the
rebuilding of the Moss brand, and that the cash proceeds of the Disposal will
provide funding for the redevelopment of Moss branded stores, the roll out of
new initiatives such as Moss Bespoke following rigorous piloting and the
development of a customer relationship management system, all from a debt-
free position. Furthermore, the Disposal will give the Company increased
financial flexibility and allow a much simpler business model to be developed.

For the reasons above, the Board considers the Disposal to be fundamental to
the strategic development of the Group.

The wholesale relationship with the Purchaser will continue, as Moss Bros will
continue to stock Hugo Boss branded clothing in selected Moss and Cecil Gee
stores.

Information on the Hugo Boss Franchised Businesses

The Hugo Boss Franchised Businesses comprise 15 Hugo Boss branded retail
stores in the UK, currently operated by the Company under Franchise
Agreements with Hugo Boss AG.

The Hugo Boss Franchised Businesses had operating profits of £0.7 million
(after exceptional impairment of £1.1 million) for the year ended 30 January
2010 and operating profits of £0.4 million for the six months ended 31 July
2010. As at 31 July 2010, the Hugo Boss Franchised Businesses had total
assets of £9.8 million. This information has been extracted from the
consolidation schedules which underlie the audited consolidated financial
statements of Moss Bros Group PLC for the year ended 30 January 2010 and
the unaudited half yearly financial report of Moss Bros Group PLC for the six
months ended 31 July 2010.

Principal Terms of the Disposal

The Purchaser will acquire the business and assets of the Hugo Boss

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Franchised Businesses as a going concern, including the leases, stock and
fixtures and fittings associated with the Hugo Boss Franchised Stores. In
addition, all the employees who currently work in the Hugo Boss Franchised
Stores and nine employees who currently work at the Company's head office
will be transferred to the Purchaser.

Completion of the Disposal will, subject to the passing of the Resolutions, take
place on 1 April 2011. From that date, the Purchaser will occupy the Hugo Boss
Franchised Stores and operate the Hugo Boss Franchised Businesses.
The consideration payable by the Purchaser to the Company is £16.5 million
(subject to subsequent adjustment to reflect the amount by which the
transferred stock is mo re or less than £4.2 million), payable in cash on
Completion (subject as set out below).
The 15 stores which comprise the Hugo Boss Franchised Businesses are held
by the Company under Leases, the transfer of which require (as is standard)
the consent of the superior landlords. Whilst the Company is confident that all
of these consents will be obtained they may not all have been obtained by 1
April 2011. Accordingly, the Sale and Purchase Agreement contains provisions
which provide for an amount of the consideration in respect of the stores the
subject of any such Leases (being a maximum aggregate amount of £12.3
million) to be put in escrow and deferred and paid in instalments, along with
interest, in the period from 1 April 2011 to the date of transfer of the Lease in
question. In addition, if landlord's consent to the transfer of any Lease has not
been obtained by 31 December 2011, the Sale and Purchase Agreement
provides that the Purchaser may vacate the store in question in which case its
operation (and the associated Franchise Agreement) will revert to the
Company and no further consideration will be payable to the Company in
respect of that store. In these circumstances the Company will be obliged to
pay £25,000 per store in respect of the Purchaser's costs of vacation. As these
payments could, in aggregate, exceed one per cent. of the Company's market
capitalisation, the Listing Rules require these payments to be approved by
Shareholders at the General Meeting.
Effect of the Disposal and use of Disposal proceeds

The Company currently has obligations under its Franchise Agreements with
Hugo Boss AG to meet certain minimum capital investment standards for the
Hugo Boss Franchised Stores in its estate and is also required to commit to
sales-related marketing spend in relation to these businesses. If the Disposal
does not complete or is significantly delayed, the Company will be required to
continue to fulfil its obligations to the Purchaser in relation to the Hugo Boss
Franchised Stores. Following the Disposal, the Board expects that the removal
of these commitments will provide greater flexibility and focus for the
Company's future investment programme on its wholly owned Moss branded
activities.

The Company's current £5 million revolving business loan agreement with


Lloyds TSB Bank plc expires on 31 May 2011. The cash generated pursuant to
the Disposal will provide the Company with sufficient working capital such that
it will not need to renew the current facilities and will operate debt-free.
However, if the Disposal does not complete or is significantly delayed, the
Directors expect that the Company will continue to require access to similar
banking facilities in the future. The Company does not currently anticipate
difficulties in renewing the existing facility or replacing it with similar facilities,
and has had preliminary discussions with regard to a possible extension or
renewal of its facilities on a similar basis to its current banking arrangements.

The Board intends that the net proceeds received from the Disposal will be
reinvested in the Company's core business and its estate of Moss Bros
branded retail stores. This proposed investment programme will allow the
Company to further invest in the look and product mix of its stores, an
appropriate roll out of Moss Bespoke after rigorous piloting and to invest in the
Company's online service offering and customer relationship management
capability. A portion of the net proceeds will also be made available to provide
improved flexibility for the Company's working capital and stock purchasing
requirements, including hire stock.

In addition to the investment of the net proceeds from the Disposal, the Board
expects that the Company will benefit from a renewed focus on its core Moss
Bros branded stores without the need to continue to dedicate management
time and other resources to the Hugo Boss Franchised Stores.

Under the existing Franchise Agreement in relation to certain Hugo Boss


Franchised Stores operated by the Company, the Franchise Agreement would
(in the absence of the Disposal) terminate prior to the expiry of the Leases for
those stores. Under the terms of the Disposal, these Leases will be transferred
or assigned to the Purchaser, therefore removing any potential onerous lease

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obligations on the Company. However, as is standard practice on the
assignment of commercial leases, the landlords may require the Company to
guarantee the performance by the Purchaser of the Lease covenants. The
Company will receive the benefit of an indemnity from the Purchaser against
liabilities arising under the assigned Leases and, in addition, Hugo Boss AG,
the ultimate parent company of the Purchaser, will if required give a guarantee
to the landlords against liabilities arising under the assigned Leases.

Following the transfer of the Hugo Boss Franchised Stores to the Purchaser,
the Continuing Group will no longer benefit from the revenues or profits of the
Hugo Boss Franchised Businesses, to the extent any are made.

Current Trading

In spite of the poor weather conditions which impacted high street retailers
leading up to and during the important Christmas trading period, Moss Bros
continued to trade well and total sales continue with a positive like-for-like
trend. Like-for-like sales were up 7.0% for the 26 weeks to 29 January 2011,
and up 9.1% for the 52 weeks to 29 January 2011. Gross margin also
continues to perform well and the business is starting to see the benefits of
the cost review actions taken in the third quarter coming through. The Board
remains confident of the outturn for the full year.

The Company expects to announce its preliminary results for the year ending
31 January 2011 on 30 March 2011.

General Meeting

Completion of the Disposal is conditional upon Shareholder approval at a


General Meeting expected to be held by the end of February 2011. A circular
containing a notice convening the General Meeting will be issued to
Shareholders as soon as practicable.

DEFINITIONS

The following definitions apply throughout this announcement unless the


context otherwise requires:

"Company" or "Moss Bros" Moss Bros Group PLC

"Completion" the completion of the Disposal in accordance


with the terms of the Sale and Purchase
Agreement

"Continuing Group" the Group following the disposal of the Hugo


Boss Franchised Businesses

"Directors" or "Board" the directors of the Company as at the date


of this announcement

"Disposal" the sale of the Hugo Boss Franchised


Businesses to the Purchaser on the terms of
the Sale and Purchase Agreement

"Financial Services the Financial Services Authority of the UK in


Authority" or "FSA" its capacity as the competent authority for
the purposes of Part VI of FSMA and in the
exercise of its functions in respect of
admission to the Official List otherwise than
in accordance with Part VI of FSMA

"Franchise Agreements" the franchise agreements entered into


between the Company and Hugo Boss AG
relating to the Hugo Boss Franchised
Businesses

"FSMA" the Financial Services and Markets Act 2000


of England and Wales, as amended

"General Meeting" the General Meeting of the Company to be


convened for the purpose of approving the
Disposal

"Group" the Company and its existing subsidiary


undertakings
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"Hugo Boss Franchised the business, assets, leases and employees


Businesses" of the Hugo Boss Franchised Stores, which
retail Hugo Boss branded menswear

"Hugo Boss Franchised the 15 branded retail stores in the UK,


Stores" currently operated by the Company under
the Franchise Agreements, forming part of
the Hugo Boss Franchised Businesses

"Lease" or "Leases" the leases entered into between the


Company and the landlords relating to the
leasehold properties relating to each Hugo
Boss Franchised Store and forming part of
the Hugo Boss Franchised Businesses

"Listing Rules" the listing rules made by the FSA under Part
VI of FSMA (as amended from time to time)

"Moss Bespoke" the brand under which the Company


provides customised menswear tailoring
services

"Official List" the Official List of the Financial Services


Authority

"Shares" ordinary shares of 5 pence each in the


capital of the Company

"Purchaser" Hugo Boss UK Limited

"Resolutions" the resolutions set out in the notice of the


General Meeting

"Sale and Purchase the conditional agreement between the


Agreement" Company and the Purchaser dated 4
February 2011 relating to the sale and
purchase of the Hugo Boss Franchised
Businesses

"Shareholder(s)" holder(s) of Shares

"UK" or "United Kingdom" the United Kingdom of Great Britain and


Northern Ireland

This information is provided by RNS


The company news service from the London Stock Exchange

END

DISUSSKRAKAURAR

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Moss Bros Group

Final Results
RNS Number : 8747D
Moss Bros Group PLC
30 March 2011

MOSS BROS GROUP PLC


Preliminary results for the 52 weeks ended 29 January 2011

Moss Bros Group PLC ("the Group"), the UK's No 1 Branded Suit Specialist, is today announcing its
Preliminary Results, covering the period from 31 January 2010 to 29 January 2011.

The Group's trading performance remains in line with the Board's expectations and is on course to
deliver the anticipated levels of continued growth.

HEADLINES

Financial

· Group like for like** VAT inclusive sales up 9.1% (2009/10: -0.4%)
- Retail sales - like for like ** sales up 8.9%
- Hire sales - like for like ** sales up 10.9%
· EBITDA * before exceptional items of £3.8m (2009/10: £3.2m)
· Pre-tax loss before exceptional items reduced to £(2.7)m (2009/10: £(3.9)m)
· Total loss before taxation and after exceptional items £(7.5)m (2009/10: £(6.6)m)
· Total gross margin up 0.3 percentage points to 55.4% (2009/10: 55.1%) against a fall of 0.5
percentage points in first half
· Total net inventory at £18.9m (2009/10: £16.9m), reflecting higher current season inventories and
improved sales
· Cash balance of £6.9m (2009/10: £6.3m). Net cash inflow £0.6m (2009/10: £1.8m outflow)
· Consistent with last year and in line with the Board's policy, no final dividend is being proposed

Operational

· All areas of the business have seen growth with the Hire business achieving its highest ever sales
· The appointment of the Group Finance Director successfully concludes the restructuring of the
Executive management team
· The fundamental review of how best to leverage the potential of all brands across the Group's
fascias has now been completed with the post year end disposal of Hugo Boss Franchise
Business for a consideration of £16.5m, approved by shareholders on 3 March 2011
· The cost review implemented in the second half has resulted in an annualised saving of £3.0m on
overheads
· The new Moss Bespoke concept has been piloted and the opportunity identified to take the core
Moss brand into new segments and a more premium position through a 'shop within a shop'
model in the larger Moss stores
· The planning phase to modernise the look and feel of the core Moss stores is nearing completion
and the first new concept store is planned to open in May 2011 at Canary Wharf

Current trading
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· In spite of tougher like for like ** comparators, trading continues to be encouraging. Like for like **
sales in the first eight weeks of the new financial year have continued to improve on 2010/11,
ahead 7.8%; with like for like ** gross profit ahead 8.4%

Commenting on the results and outlook, Brian Brick, Chief Executive Officer, said:

"We have made good progress on all of the operational priorities we set out at the beginning of the year
and this has had a very positive impact on trading, despite the difficult trading environment last year.
We continue to build clear strategic goals, an effective management team and a track record of
delivering. Current trading reflects strong like for like ** growth and our continued focus on the
operational priorities, with the support of our strong balance sheet, gives me great confidence that we
will fully achieve the potential for this business."

*EBITDA is earnings before interest, taxation, depreciation, amortisation and before exceptional items

52 weeks ended 52 weeks ended


29 January 30 January
2011 2010
£m £m
Loss before taxation (7.5) (6.6)
Net interest - -
Depreciation and amortisation of non-current assets 6.5 7.1
Exceptional items 4.8 2.7
EBITDA before exceptional items 3.8 3.2

**Like for like represents financial information for stores open throughout the current and prior financial
periods and compares 52 weeks against 52 weeks.

For further information please contact:


Moss Bros Group Plc: 0207 447 7200
Brian Brick, Chief Executive Officer
Robin Piggott, Finance Director and Company Secretary
Buchanan Communications: 0207 466 5000
Charles Ryland/Nicola Cronk/Gabriella Clinkard

CHAIRMAN'S STATEMENT

I am pleased to report that the Group achieved total revenue of £136.4m, a 6.0% increase on the prior
year. The financial result, as expected was a significantly reduced loss before taxation and exceptional
items of £(2.7)m compared with a loss of £(3.9)m in the previous year. The loss before taxation, after
exceptional items, was £(7.5)m against £(6.6)m in the prior year. Adjusted EBITDA (earnings before
interest, taxation, depreciation, amortisation and exceptional items) continued on a positive trend to
£3.8m, compared with £3.2m in the previous year. This strong performance was achieved in the
context of a tough trading environment, where many competitors struggled to grow.

There is no question that it has been a transformational year for the Group. In spite of the tough trading
environment, the Executive team has continued to make progress on the journey back to profitability,
through execution of a clear set of operational priorities. Their actions have led to a considerable
improvement in sales, growth in margins and a substantial reduction in the cost base of the business.

We have also laid the foundations for the next phase of the strategic plan, with the objective of
leveraging the value of the Moss brand and our position as 'the No.1 Branded Suit Specialist'. The
decision to dispose of our 15 Hugo Boss franchises to Hugo Boss for £16.5m approved by
shareholders on 3 March 2011, will release both people and financial resources to focus on the
development of the core Moss business. Furthermore, investment and innovation in new products like
Moss Bespoke have brought momentum to the rehabilitation of the Moss brand, with the associated
PR creating interest and footfall from a new segment of customers.

In parallel with these actions, the team has continued to show diligent cash and working capital
control and the business will enter this new financial year debt free, with a strong cash balance.

During the last 12 months, we progressed the restructuring of the Board with the welcomed
appointments of Robin Piggott in June as Group Finance Director, and Maurice Helfgott in October as
Senior Independent Non-Executive Director. They have collectively added a wealth of experience in
retail, property, e-commerce and brand management.

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Throughout the year, our people have continued to show a combination of hard work, passion and
commitment and on behalf of the Board I would like to thank them for their contribution.

In line with our stated policy the Board is not proposing a dividend this year, as in 2009/10. The Board
believes it is prudent to continue to conserve cash in the current economic environment, though we will
continue to review our position on this.

There is no doubt that the transformational changes in 2010/11 and subsequently have created the
resources to develop and deliver a clear and compelling strategy which leverages the full potential of
the Moss brand and our clear position as 'the No.1 Branded Suit Specialist'. Early signs of progress
are reflected in the strong start to this financial year and whilst economic conditions in the UK are
expected to remain challenging, we are well placed to continue the drive to profitability and to fully
leverage the potential of the Moss brand.

Debbie Hewitt
Chairman
30 March 2011

BUSINESS REVIEW
OVERVIEW

Moss Bros Group PLC ("the Group") retails and hires formal wear and fashion products for men,
predominantly in the UK. The Group retails menswear through the Moss fascia and hire of formal wear
under the Moss Bros Hire brand through its mainstream stores. The Group also trades through the
Savoy Taylors Guild, Hugo Boss and Cecil Gee fascias.

The Group has made significant progress this year, despite continued turbulent trading conditions. A
strong focus on product and range management, operational delivery and cost control have combined to
grow like for like ** sales and decrease significantly the level of trading losses.

RESULTS AND KEY ACTIVITIES

In the 52 weeks ended 29 January 2011, total like for like ** sales increased by 9.1% (2009/10: down by
0.4%), and gross margin improved to 55.4%, an increase of 0.3 percentage points. The increases in
sales and margin were driven by improvements in the average transaction value, units per transaction
and average selling price, together with more effective management of discounting. The loss before
taxation and before exceptional items of £(2.7)m, compared with a loss of £(3.9)m in the previous year.
Adjusted EBITDA before exceptional items improved to £3.8m (2009/10: £3.2m).

The second half of the year saw the completion of a radical cost review, and operating costs will reduce
by £3.0m on an annualised basis as a result. Inventory was also tightly controlled.

As at 29 January 2011, the Group had cash balances of £6.9 million (2009/10: £6.3 million).

In addition to a number of operational improvements, further progress was made on the strategic
agenda of leveraging the Moss brand. The sale of the Hugo Boss franchise is a critical development
which will release resources to invest in the core estate, as well as removing the potential liability of a
number of potentially onerous leases which did not run coterminously with the individual franchise
agreements.

We enter the new financial year debt-free and well positioned to invest in areas of the business that will
best sustain the momentum of our recovery to profit. The strong balance sheet gives us the flexibility to
develop key areas of the business such as e-commerce, which to date have not yet benefited from any
significant investment.

REVIEW OF OPERATIONS

MAINSTREAM RETAIL
There are 98 Moss and Savoy Taylors Guild branded stores (2009/10: 97) and 33 outlet stores (2009/10:
32), all of which trade Moss own brands of Ventuno, De Havilland, Blazer and Savoy Taylors Guild. The
Moss and Savoy Taylors Guild stores also stock selected third party guest brands including Hugo Boss,
Ted Baker and French Connection. The vast majority of the stores also have a Moss Bros Hire outlet

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within them.

We have continued to implement detailed operational and performance reviews of all stores. This has
resulted in a streamlining of the product range, a comprehensive programme of store profiling and
associated inventory control measures. These actions impacted positively on the like for like ** sales for
Mainstream Retail, which were up by 10.7% on 2009/10, on improved gross margins. The margin
performance was enhanced by consolidation into fewer suppliers and focus on key guest brands which
included Ted Baker and French Connection.

The number of loss making stores significantly reduced during the year and we have taken a provision
against 13 stores which are expected to remain loss making for the remainder of the lease term, the
average term of which is 2.6 years. We also took advantage of the opportunity created by a key competitor
going into administration and moved quickly to acquire eight stores on a temporary basis just prior to the
Christmas trading period, all of which made a positive contribution. Subject to successfully concluding
negotiations with landlords it is hoped a number of these will continue to trade on an ongoing basis.

In parallel with operational improvements, we have researched the perception and value of the Moss
brand, its positioning with current and potential customers and the overall perceived value of the offering.
It is clear that the brand has tremendous heritage, but that there is significant opportunity to promote it to
both younger and to more affluent customers, who are looking for choice, value for money and confidence
in their choice of style. We are uniquely placed to provide this and have a clear aspiration to further build
on our position as 'the UK's No. 1 branded suit specialist' on the high street. Our sales promotion
activities increasingly reflect this aspiration, with a premium product positioning and the use of visual
merchandising to simplify the process of buying a suit and also encourage the purchase of accessories
such as shirts, ties and shoes.

Innovation in our product offering has also taken the brand into new segments and a more premium
position. The new Moss Bespoke concept is a good example of leveraging our core capability in suits into
a new and growing segment of high quality, affordable, bespoke suits for a more mass market. The pilot
has successfully demonstrated that this and similar offerings are important to the rehabilitation and
development of the Moss brand. Not only does it add 'theatre' to the Moss offering, it also enhances our
reputation for quality and value for money and provides an opportunity to improve the footfall and sales
densities in our larger stores. The flagship Moss Bespoke store in Blomfield Street, London, is in an ideal
position in the City to showcase and pilot the development of this and other suit offerings and as a result
of lessons learnt, we intend to open a further six 'store within store' Moss Bespoke outlets in other core
Moss Retail Stores during 2011/12, standing alongside our retail and hire offering.

As well as improving the brand positioning and the product offering, the team is well underway with the
planning phase of a project to modernise the look and feel of the core Moss stores and our first 'new look'
store will open in Canary Wharf in late May 2011. There will be extensive piloting of this store layout, to
ensure the look and fit can be adapted to meet the various store profiles which exist across the Group.
Any wider implementation programme will be prioritised and phased to reflect an acceptable level of
payback. Because of the extent of the under investment of some of the core estate, some of which has
not had basic maintenance and improvements for a number of years, we will carefully balance the new
refit with a care and maintenance programme to bring all of the estate up to at least a basic minimum
level of presentation.

We have already seen recognition for some of this care and maintenance spend with the award of a West
End Association 'Glammy' for best Menswear store in Oxford Street in 2010.

HIRE

Moss Bros Hire is the market leader in the UK hire market and the number one recognised name for hire.
We have 125 Moss Bros Hire outlets (2009/10: 124), all contained within core Moss Retail, Savoy Taylors
Guild and Cecil Gee Stores.

Market share increased in 2010/11, in spite of the fact that the hire market in general continued to contract
due to the material drop in the corporate hire market for both black tie and morning suit events. Like for
like ** sales recorded an increase of 10.9%. The demise of a major competitor reinforced the
considerable strength of our nationwide offering and the quality of our service.

Our new Hire supply chain infrastructure is now very successfully embedded into the business and we
are seeing improvements in the accuracy and speed of allocation and the distribution of orders.

Looking forward, there are further opportunities to leverage pricing and to grow our market share through
the consideration of new opportunities such as the School Prom hire market, new distribution channels
and the introduction of a new interactive internet site, with the ultimate aim of order and re-order on-line.

Moss Bros Hire also offers one of the most significant opportunities to develop our retail offering by
leveraging the rich source of customer data that comes from its customers, many of whom are unaware
of, or do not consider the Moss Retail offer.

FASHION
Cecil Gee
We operate 9 Cecil Gee branded stores, (2009/10: 10), which concentrate on a number of key brands
including Hugo Boss, Ralph Lauren and Diesel, with other high fashion brands relevant to each store's
size and location. As the independent sector finds it increasingly hard to survive in a highly competitive

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market place, the Cecil Gee performance in 2010/11 proved resilient with a like for like ** sales increase
of 6.4%.

Going forward we will focus our activity in Cecil Gee on the key brands where we can leverage the value
of our scale.

Hugo Boss
The Group operated 15 Hugo Boss stores in the UK (2009/10: 16). In line with our franchise agreements,
we opened a new store in Bond Street and relocated our Manchester store during the year. Like for like **
sales increased by 6.1%.

In February 2011, we announced our intention to dispose of our Hugo Boss stores to Hugo Boss for a
potential consideration of £16.5m. The transaction was approved by the Group's shareholders on 3 March
2011 and will complete on 1 April 2011. The transaction will release both people and financial resources
to focus on the development of the core Moss business, though we will continue to sell the Hugo Boss
product through our Moss Retail, Cecil Gee and Savoy Taylors Guild stores.

INTERNET SHOPPING
Moss.co.uk progressed well in the year, with sales sharply up on the previous year, albeit from a low
base. There is significant opportunity to grow this channel and we will focus our effort in the future on
the improving the functionality of the site and in developing a truly multi-channel business.

In the longer term, the bigger opportunity is the introduction of a more comprehensive and fully integrated
CRM programme, specifically in linking the Moss Bros Hire customer to the Moss Retail offering.

COSTS
With the recovery in sales established, a comprehensive review of the cost base was undertaken in the
second half of the year, with the project delivering an annualised reduction in costs of £3.0m. Not only has
this reduced costs, it has also allowed us to simplify the business.

SUPPLY CHAIN
The buying team is continually assessing supplier performance, to ensure the most commercially
beneficial results for the Group. Over the last few years, we have shifted the emphasis of our product
supply from mainland Europe into China and achieved a better buying margin as a result, whilst also
improving the quality of our products. The timely ordering of inventory has allowed for much greater scope
for tactical promotions.

We continue to monitor the impact of the increase in VAT to 20% on retail prices, as well as inflation in the
price of cotton. We anticipate that retail prices will increase in 2011/12.

DISTRIBUTION CENTRE
The efficiency of the Group's distribution centre has freed up further capacity to allow for greater volumes.
This has enabled the business to consider taking on third party product on an outsourcing basis to
leverage off the existing cost base. With the loss of the Hugo Boss volumes in the coming year, the
business will continue to explore the best options to meet this change in volume, whilst ensuring we
continue to service the growth in our core Moss business and our customers.

PEOPLE
With the need for talented and committed people across all areas of the Group, this means a continuing
focus on effective recruitment, induction, performance management and training.

The addition of a new Store Operations Director, a Head of HR and a Property expert during the year has
added to the talent pool of the Company. In addition, the Board has been further strengthened by the
appointment of Robin Piggott as Group Finance Director and Maurice Helfgott as Senior Independent
Director, the latter of which means we now satisfy the Corporate Governance requirement for
independent Non-Executive Directors.

PRINCIPAL RISKS AND UNCERTAINTIES

Cash and Funding


Cash balances are managed and monitored on a daily basis; the peaks and troughs in the cash cycle are
well known through experience and appropriate cash management takes place to limit the use of existing
banking facilities. The additional cash created by the sale of the Hugo Boss franchises to Hugo Boss has
created the potential for the business to dispense with the need for a debt facility and we enter 2011/12
debt free.

Inventory and Continuity of Supply


Demand forecasting, inventory ordering and inventory intake are aligned to maximising sales and the
cash management focus discussed above. The placing of all orders is subject to product demand
forecasting models and ongoing rates of sale of all product lines.

The consolidation of product buying into fewer suppliers creates sufficient scale to mitigate the risk of

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the suppliers going out of business in the short to medium term. Negotiations take place regularly with
key suppliers regarding rate and payment terms. Proactive dialogue is maintained with supplier credit
insurers to good effect to ensure they have the relevant and most current information on which to base
their insurance levels.

The recent increase in cotton prices could be considered a risk factor for the Group. Management have
mitigated this risk as a significant proportion of inventory prices have been agreed with the suppliers
for the 2011/12 financial year.

Property
The business operates from a portfolio of high street, shopping centre and factory outlet stores all held
under operating leases. Each store is evaluated annually to assess its ongoing commercial viability.
There are a number of locations in the UK and Southern Ireland which would suit one of the businesses'
fascias and the Group has recently increased its in-house resource in this area in order that
opportunities for the development of its store portfolio are maximised. All potential sites are rigorously
evaluated both operationally and financially before new lease acquisitions are made.

Staff Hiring and Retention


Attracting and retaining high calibre staff is a priority and a central focus in striving for excellent customer
service across the Group's business channels. Staff development is to be improved so that the Group
can take full advantage of the recovery in its performance.

FINANCIAL REVIEW

2010/11 2009/10
TRADING RESULTS
Revenue v last year (like for like **) +9.1% -0.4%
% Gross margin 55.4% 55.1%

% Gross margin v last year +0.3% +1.8%

EBITDA before exceptional items £3.8m £3.2m

Underlying loss before taxation and exceptional items £(2.7)m £(3.9)m

Loss before taxation £(7.5)m £(6.6)m

**Like f or like represents f inancial inf ormation f or stores open throughout the current and prior f inancial periods and compares 52 weeks
against 52 weeks.

The improvement across the business that started in the second half of 2009/10 gained momentum in
2010/11 with strong like for like ** sales growth and continued margin improvement. Gross margins
improved despite the increase in VAT rates in January 2010 and 2011.

REVENUE

As stated in note 1 to the accounts, the Consolidated Group Statement of Comprehensive Income for the
52 weeks ended 30 January 2010 and the Consolidated Statements of Financial Position as at 30 January
2010 and 31 January 2009 have been restated to recognise deferred revenue in respect of Hire sales.

The deferred revenue relates to deposits received from customers prior to the year end but where the
related hire suits were not collected for use until after the year end. Previously, the deposits were
recorded as revenue when received from the customers and not when the hire was made, which was
inconsistent with the Company's stated policy. The adjustments represent a net increase in revenue and
profit before taxation in the year ended 30 January 2010 of £0.01m. Deferred revenue in respect of hire
deposits, held on the balance sheet at 29 January 2011 was £1.6m (30 January 2010: £1.5m).

The operational improvements increased the overall results for the period; however these were expected
to be better but were impacted by the snow in early December. The core Moss Retail and Hire businesses
including Outlets were the strongest performers with like for like ** sales up 10.7% and 10.9%
respectively, with fashion fascias up a creditable 6.2%.

GROSS MARGIN

Gross margin has increased 0.3 percentage points, building on increases achieved in 2009/10,
despite the increases in VAT from 15%, to 17.5% and to 20%. This was despite considerable
promotional pressure from our competitors who sacrificed gross margin to attract sales. The ongoing
exercise to consolidate volume into a smaller number of suppliers and attain a better unit purchase

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price has enabled tactical promotions to attract new and retain existing customers.
The seasonal mix of inventory held across the year has also resulted in the need for less discounting
which in turn has lifted the overall gross margin achieved and the business has used its strong
average daily cash balance to pay suppliers earlier than normal to attract lower unit costs.
PRE EXCEPTIONAL OPERATING COSTS

A renewed focus on cost control in the business mitigated cost increases in the second half of the
year. Administrative expenses, shops' selling and marketing costs ("operating costs") increased by
7.4% in the first half but by only 1.7% in the second half, giving an increase for the period of 4.5%.
The comprehensive review of the business announced in September 2010 has been completed and
like for like ** operating costs are planned to reduce by £3.0m per year in the 2011/12 financial year.
The cost reductions have been derived from efficiencies at head office, the distribution centre and in
stores and will assist in the process of simplifying the business.

EXCEPTIONAL ITEMS

A provision for onerous property lease contracts has been made under IAS 37 'Provisions, Contingent
Liabilities and Contingent Assets' of £3.0m in respect of certain loss making stores. Having traded
these for a further year, even with the benefit of the significant positive operational changes which have
improved the underlying performance of the business, these particular stores are ones that we
recognise are now unlikely to achieve a positive return during the remaining life of their leases. The
provision represents the net present value of projected losses for each store, until the end of lease, as
the directors believe there is no realistic prospect of achieving lease surrender for an amount less than
that provided.

An impairment review of assets under IAS 36 'Impairment of Assets' has resulted in a write down in the
fixed asset values of certain stores amounting to £0.9m.
Other exceptional adjustments were made up of £0.5m relating to reorganisation costs in connection
with the review of the cost base of the business, and £0.4m in respect of non contingent fees incurred
in relation to the disposal of the Hugo Boss Franchise Business.
A tax credit of £1.0m is applied to the exceptional items resulting in a total exceptional charge after
taxation of £3.8m.

LOSS PER SHARE


Loss per share was (5.94) pence compared to (6.10) pence per share last year.

DIVIDEND
In line with our stated policy the Board is not proposing a dividend this year, as in 2009/10. The Board
believes it is prudent to continue to conserve cash in the current economic environment, though we will
continue to proactively review our position on this, as the year progresses.

INVESTMENT
Total capital expenditure in the year was £4.9m (2009/10: £3.5m) and depreciation was £6.5m
(2009/10: £7.1m). This included the opening of two new stores and the refitting or re-branding of four
stores across all fascias. The total capital expenditure included further investment in new Moss Bros
Hire inventory of £0.7m (2009/10: £0.7m), whilst depreciation on hire inventory was £1.3m (2009/10:
£1.5m).

CASH
The year end cash balance was £6.9m compared to £6.3m last year.

INVENTORY

The mix of inventory in the business has been re-geared to ensure sufficient inventory is available to
support sales across the business. This has led to an increase in current season inventory compared to
the prior year.

TRADE AND OTHER PAYABLES


The terms and conditions with our suppliers are reviewed and adjusted so as to maximise the
average cash balance whilst improving the product gross margin.

OUTLOOK
In spite of tough trading conditions, the business has made progress on all of the operational
priorities set out at the beginning of the year and this has had a very positive impact on trading.
Furthermore, we have made good progress on developing and executing our strategic goals and the
sale of our Hugo Boss Franchise Business has given us the financial and people resources to bring
momentum to this. I am confident that we will maximise the potential of the Moss brand and create
substantial shareholder value in the process.

Brian Brick

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Chief Executive Officer
30 March 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


FOR THE 52 WEEKS ENDED 29 JANUARY 2011

52 weeks to 29 January 2011 52 weeks to 30 January 2010 *


Exceptional Exceptional
items items
Underlying (note 3) Total Underlying (note 3) Total
Notes £'000 £'000 £'000 £'000 £'000 £'000

Revenue 136,438 - 136,438 128,747 - 128,747


Cost of sales (60,813) - (60,813) (57,747) - (57,747)

Gross profit 75,625 - 75,625 71,000 - 71,000


Administrative expenses (6,095) (800) (6,895) (5,136) (178) (5,314)
Shops' selling and
marketing
costs (72,200) (3,988) (76,188) (69,778) (2,553) (72,331)

Operating loss (2,670) (4,788) (7,458) (3,914) (2,731) (6,645)


Investment revenues 1 - 1 24 - 24
Financial costs (47) - (47) (24) - (24)

Loss before taxation (2,716) (4,788) (7,504) (3,914) (2,731) (6,645)


Taxation 913 973 1,886 749 134 883

Loss after taxation and


total comprehensive
loss for the period
(1,803) (3,815) (5,618) (3,165) (2,597) (5,762)

Basic loss per share 4 (5.94)p (6.10)p

Diluted loss per share 4 (5.94)p (6.10)p

*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period ended 30
January 2010.

All revenue and profits relate to the continuing operations of the Group and includes the Hugo Boss
Franchise business the disposal of which is to be completed on 1 April 2011.
There are no other items of comprehensive income in the period other than the loss for the period.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


FOR THE 52 WEEKS ENDED 29 JANUARY 2011

Share
Share premium Retained Total equity
capital account earnings * *
£'000 £'000 £'000 £'000

52 weeks ended 30 January 2010

Balance at 1 February 2009 as originally stated 4,727 8,673 25,985 39,385


Effect of restatement * - - (1,521) (1,521)

Balance at 1 February 2009 as restated 4,727 8,673 24,464 37,864


Loss for the period - - (5,762) (5,762)
Credit to equity for equity settled share-based payments - - 110 110

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Balance at 30 January 2010 4,727 8,673 18,812 32,212

Share
Share premium Retained Total
capital account earnings equity
£'000 £'000 £'000 £'000

52 weeks ended 29 January 2011

Balance at 31 January 2010 4,727 8,673 18,812 32,212


Loss for the period - - (5,618) (5,618)
Credit to equity for equity settled share-based
payments - - 277 277

Balance at 29 January 2011 4,727 8,673 13,471 26,871

*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period ended 30
January 2010 and the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January 2009.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION


AS AT 29 JANUARY 2011

29 January 30 January 31 January


2011 2010 * 2009 *
£'000 £'000 £'000

ASSETS
Intangible assets 1,276 1,609 1,849
Property, plant and equipment 17,809 21,810 27,069
Lease improvements 2,231 1,700 2,542

TOTAL NON-CURRENT ASSETS 21,316 25,119 31,460

Inventories 18,928 16,925 15,394


Trade and other receivables 5,907 5,782 6,411
Cash and cash equivalents 6,936 6,279 8,107
Current tax asset - - 44

TOTAL CURRENT ASSETS 31,771 28,986 29,956

TOTAL ASSETS 53,087 54,105 61,416

LIABILITIES
Trade and other payables 19,667 16,635 17,193
Provisions 1,205 - 200
Current tax liability 10 22 -
TOTAL CURRENT LIABILITIES 20,882 16,657 17,393

Other payables 2,732 2,579 2,504


Provisions 1,802 - -
Deferred tax liabilities 800 2,657 3,655
TOTAL NON-CURRENT LIABILITIES 5,334 5,236 6,159

TOTAL LIABILITIES 26,216 21,893 23,552

NET ASSETS 26,871 32,212 37,864

EQUITY
Issued capital 4,727 4,727 4,727
Share premium account 8,673 8,673 8,673
Retained earnings 13,471 18,812 24,464
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF PARENT 26,871 32,212 37,864

*See note 1 f or details of restatement applied to the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January
2009.

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CONSOLIDATED CASH FLOW STATEMENT

FOR THE 52 WEEKS ENDED 29 JANUARY 2011


52 weeks to 52 weeks to
29 January 30 January
2011 2010 *
£'000 £'000

Cash flows from operating activities


Operating loss before taxation (7,458) (6,645)
Adjustments for:
Amortisation of intangible assets 506 647
Impairment of property, plant and equipment 901 2,251
Depreciation of property, plant and equipment 6,666 6,464
Loss on sale of property, plant and equipment 633 35
Increase in inventories (2,003) (1,531)
(Increase) / decrease in receivables (125) 629
Increase / (decrease) in payables 3,185 (732)
Increase in provisions 3,007 -
Share based payments charge 277 110
Taxation received 17 -

Net cash from operating activities 5,606 1,228

Cash flows used in investing activities


Finance income (net) (46) -
Purchase of intangible assets (173) (407)
Purchase of property, plant and equipment (4,776) (3,082)
Proceeds on disposal of property, plant and equipment 46 433

Net cash used in investing activities (4,949) (3,056)

Cash flows from financing activities


Dividends paid - -
Proceeds from the issue of shares - -

Net cash used in financing activities - -

Cash and cash equivalents at beginning of period 6,279 8,107


Increase/(decrease) in cash and cash equivalents 657 (1,828)

Cash and cash equivalents at end of period 6,936 6,279

*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period ended 30
January 2010 and the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January 2009.

1. Basis of preparation

The financial information set out above is based on the Company's financial statements which are
prepared in accordance with International Financial Reporting Standards as adopted for use in the
EU.

From the Group's perspective, there are no applicable differences between IFRS adopted for use in
the European Union and IFRS as issued by the International Accounting Standards Board.

The accounting policies adopted by the Group for the 52 weeks ended 29 January 2011 in these
consolidated preliminary results are consistent with those adopted by the Group in its consolidated
financial statements for the 52 weeks ended 30 January 2010.

These consolidated preliminary results have been prepared in accordance with the recognition
and measurement criteria of IFRS. 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 period ended 29 January 2011.

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The financial information set out above does not constitute the Company's statutory accounts for
the years ended 29 January 2011 or 30 January 2010, but is derived from those accounts. Statutory
accounts for 2009/10 have been delivered to the Registrar of Companies and those for 2010/11
will be delivered following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent
preceding legislation.

Prior year restatement

The Consolidated Group Statement of Comprehensive Income for the 52 weeks ended 30 January
2010 and the Consolidated Statements of Financial Position as at 30 January 2010 and 31
January 2009 have been restated to recognise deferred revenue in respect of hire sales at the
point of the service is provided to the customer. The deferred revenue relates to deposits received
from customers prior to the year end but where the related hire suits were not collected for use until
after the year end. Previously, the deposits were recorded as revenue when received from the
customers and not when the hire was made, which was inconsistent with the Company's stated
policy.

In accordance with the policy for hire sales, the prior period Group Statement of Comprehensive
Income and Consolidated Statement of Financial Position have been restated in accordance with
IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'. Also, in accordance with
IAS 1 (revised) 'Presentation of Financial Statements', a Consolidated Statement of Financial
Position as at 31 January 2009 is presented together with related notes.

Impact on comparative consolidated statement of comprehensive income


52 weeks to
30 January 2010
£'000

Increase in revenue 10
Decrease in loss before taxation 10

Decrease in basic loss per share 0.01 pence


Decrease in diluted loss per share 0.01 pence

Impact on comparative consolidated statement of financial position

30 January 31 January
2010 2009
£'000 £'000

Increase in deferred revenue 1,511 1,521

2. 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 Chairman's Statement and the Chief Executive's
Business Review. The latter describes the financial position of the Group, its cash flows and
funding, together with the Group's objectives, key risks and uncertainties.

The Group meets its day to day working capital requirements through surplus cash balances and
when needed through a £5.0m Revolving Business Loan Agreement with Lloyds TSB Bank plc
which expires on 31 May 2011. The cash generated pursuant to the disposal of the Hugo Boss
Franchised Business to Hugo Boss UK Limited, details of which are set in the Chief Executive
Business Review, will provide sufficient working capital such that the Company will not need to
renew the current facilities and will operate debt free. At the EGM of Moss Bros Group PLC
shareholders held on 3 March 2011, all resolutions as set out in the Notice of Meeting contained in
the Circular to shareholders dated 11 February 2011 were passed. All resolutions were put to the
meeting and approved on a poll. However, if the disposal does not complete or is significantly
delayed it is likely the Group will continue to require access to similar banking facilities in the
future. The Company does not anticipate difficulties in renewing the existing facility or replacing it
with similar facilities in the unlikely event that this should prove necessary.

The Board of Directors has undertaken a recent thorough review of the Group's budgets and
forecasts and has produced detailed cash flow projections which take account of reasonably
possible changes in trading performance. These cash flow projections show that the Group
should be able to operate within the level of its current and expected future facilities.

After making enquiries, the Directors have a reasonable expectation that the Group and Company
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have adequate resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and
Accounts for the 52 weeks ended 29 January 2011.

3. Exceptional items

2010/11 2009/10
£'000 £'000

Administrative expenses:
Costs arising from management restructuring - redundancy 388 178
Non contingent fees arising from the disposal of the Hugo Boss
Franchise Business 412 -

Total exceptional administrative expenses 800 178

Shop selling and marketing costs:


Costs arising from management restructuring - redundancy 80 -
Other property related losses
- impairment of property, plant and equipment 901 2,251
- provision for onerous property lease contracts 3,007 -
Other - 302

Total exceptional shop selling and marketing costs 3,988 2,553

Tax credit related to exceptional items (973) (134)

4. Earnings per share

Basic loss per ordinary share is based on the weighted average of 94,530,752 (2009/10:
94,530,752) ordinary shares in issue during the period and are calculated by reference to the loss
attributable to shareholders of £5,618,000 (2009/10 *: loss of £5,762,000).
Diluted loss per ordinary share is based upon the weighted average of 94,530,752 (2009/10:
94,530,752) ordinary shares which excludes the effects of share options and shares under the
LTIP, 7,282,728 (2009/10: 6,393,020) that were anti-dilutive for the periods presented but could
dilute earnings per share in the future and are calculated by reference to the loss attributable to
shareholders as stated above. In the current and prior period the weighted average number of
ordinary shares was not diluted, as per IAS 33 'Earnings per Share', as this would decrease the
basic loss per share.

*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period
ended 30 January 2010.

5. Revenue and operating segments

Revenue
Revenue comprises sales to third parties (excluding VAT) and is derived from the retail sale and
hire of clothing and ancillary goods. Revenue is recognised on exchange of goods; for the hire of
clothing, the exchange of goods occurs when the hire clothing and ancillary goods are collected for
use by the customer. At this point it is deemed that all risks and rewards have been transferred.
Hire deposits paid in advance are held on the balance sheet until the date of hire.
Operating Segments
The majority of the Company's turnover arose in the United Kingdom, with the exception of one
store in Ireland.
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief Executive to allocate
resources to the segments and to assess their performance.
Information reported to the Group's Chief Executive for the purposes of resource allocation and
assessment of segment performance is focused on the split between retail and hire.
Information regarding the Group's operating segments is reported below.

The following is an analysis of the Group's revenue and gross profit in the current and prior years:

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52 weeks to 52 weeks to
29 January 30 January *
2011 2010
Key financials £'000 £'000

Revenue
Retail 120,958 114,550
Hire 15,480 14,197

Total revenue 136,438 128,747

Gross profit
Retail 64,936 61,098
Hire 10,689 9,902

Total gross profit 75,625 71,000

Administrative expenses (6,895) (5,314)


Shops' selling and marketing costs (76,188) (72,331)

Operating loss (7,458) (6,645)

Investment revenues 1 24
Financial costs (47) (24)

Loss before taxation (7,504) (6,645)

*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period
ended 30 January 2010.

The accounting policies for the reportable segments are the same as the Group's accounting
policies.
Only revenue and gross profit have been reported for the Group's business segments, Retail and
Hire, as the main operating costs, being property, related overheads and staff, cannot be separately
identifiable as they both use the same stores and hence operating profit is not reported to the Chief
Executive by Retail and Hire. Revenue and gross profit are the measures reported to the Chief
Executive for the purpose of resource allocation and assessment of segmental performance.
On the same basis, assets cannot be allocated between Retail and Hire, and are not reported to
the Chief Executive.

6. Events after the balance sheet date


Disposal of the Hugo Boss Franchise Business
Moss Bros Group PLC announced on 7 February 2011 that it had entered into a conditional sale
and purchase agreement with Hugo Boss UK Limited, relating to the disposal of the Hugo Boss
Franchised Business, for a cash consideration of £16.5m. The disposal constitutes a Class 1
transaction pursuant to Chapter 10 of the Listing Rules and was subsequently approved on 3
March 2011 by the shareholders of the Company at an Extraordinary General Meeting. The transfer
of the business to Hugo Boss UK Limited will take place on 1 April 2011 with £4.2m to be received
on that date, and the balance in instalments as each lease is assigned to the purchaser.
The proceeds from the disposal will provide the Company funding to eliminate debt and invest in
the core business.
The agreed sale and purchase agreement will dispose of the 15 Hugo Boss branded retail stores
in the UK, currently operated by the Company under the Franchise Agreement with Hugo Boss AG.
Hugo Boss UK Limited will acquire the business and assets of the Hugo Boss Franchised
Business as a going concern, including all the leases, inventory and property, plant & equipment
associated with the 15 Hugo Boss franchised stores. In addition all the employees who currently
work in the Hugo Boss franchised stores and those in the Head Office working directly on Hugo
Boss Franchised Business, will be transferred across. The cash consideration of £16.5m is
subject to subsequent adjustment to reflect the amount of transferred inventory and consent of the
superior landlords. The Company is confident that all these consents will be obtained.
The 15 Hugo Boss franchised stores had sales of £33.0m (2009/10: £33.0m) and operating profit
of £3.4m (after exceptional items of £nil) for the 52 weeks ended 29 January 2011 (2009/10: £0.7m
after exceptional impairment of £1.1m). As at the same date, the 15 Hugo Boss franchised stores
had net assets of £10.8m and total assets of £11.2m. The estimated pre tax profit on disposal as
at 1 April 2011 is £6.8m.

13/14
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This information is provided by RNS


The company news service from the London Stock Exchange

END

FR PGURWWUPGPGB

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Moss Bros Group

Half Yearly Report


RNS Number : 9656O
Moss Bros Group PLC
27 September 2011

MOSS BROS GROUP PLC


HALF YEARLY FINANCIAL REPORT
For the six months to 30 July 2011

Moss Bros Group PLC ("the Group"), the UK's No 1 Branded Suit Specialist, is today publishing its Half
Yearly Financial Report, covering the period from 30 January 2011 to 30 July 2011.

The Group's trading performance is currently ahead of the Board's expectations and although mindful
of the fragile economy, the business is on course to deliver better than anticipated levels of growth by
the year end.

HIGHLIGHTS

Financial

· Like for like* sales, including vat, up 15.4%.

· Continuing operations pre-tax profit ahead of expectations, at £2.2m, (2010: loss of £2.8m). This is
after crediting £0.7m (2010: £0.7m) in respect of deferred income held on hire deposits in the
period.

· Continuing operations EBITDA** of £4.2m, (2010: negative £0.2m), due to improving sales and
reduced Head Office costs.

· Gross margin from continuing operations up 2.7 percentage points to 62.6%, compared with the
same period last year.

· Total net stock at £11.6m (2010: £9.4m (excluding Hugo Boss and Cecil Gee)) increased in line with
sales and reflected the correction of stock shortages experienced last year. Residual Spring stocks
have been successfully cleared.

· Strong cash balance of £15.4m (2010: £4.5m), reflecting receipt of proceeds relating to the
successful disposal of the non-core 15 Hugo Boss franchised stores and 8 Cecil Gee stores.

Operational
· Record sales for Moss Bros Hire in the period, which reaped the benefits of the new Hire
distribution system that was fully implemented last year, and continued investment in stock.

· Successful disposal of the Hugo Boss and Cecil Gee businesses, creating a simpler operating
model, with management focus on the core Moss brand. This means the profitability of the
business will, in future, be weighted towards the first half of the financial year, being the period
during which the Hire business generates two thirds of its annual sales.

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· Successful pilot of the new look Moss store at Canary Wharf, where for the first time, the core
Hire, Retail and Bespoke fascias are presented together in one store. The pilot was delivered on
time, on budget and has so far traded well and achieved anticipated sales targets.

· Planning phase to develop and refine the key design principles of the Canary Wharf pilot store, to
modernise the wider Moss store portfolio continues.

· Project commenced to develop our multi-channel strategy, including a fully integrated e-


commerce offering for Moss Hire, Retail and Bespoke.

Current Trading
· Trading in the 8 weeks to 24 September has continued to be encouraging. Like for like* sales
continue to be strong, although the gross margin has been affected by rising raw material
prices. Like for like cash gross profit in the 8 weeks to 24 September is 10% ahead of last year.
· With the continued strong trading performance to date, the Board, although mindful of the
fragile external trading environment, nonetheless anticipates that the outturn for the full year
will be ahead of previous management expectations.

Commenting on the results and outlook, Brian Brick, Chief Executive Officer, said:

"Whilst the economy has not materially picked up, the Group has traded well ahead of last year across
both hire and retail in the first six months of the year. This trend has continued into the second half,
albeit at a lower level than the first half due to strengthening comparatives.

We continue to make good progress on our strategic priorities of focusing investment on the look and
product mix of the core Moss stores, planning our integrated e-commerce offering and exploring ways
of leveraging our customer data, whilst at the same time applying careful management of our costs, to
ensure we have resilience in the event that there is a further downturn in consumer spending.

The early response to the Autumn/Winter range is positive, with like for like* sales continuing to
improve year on year although gross margins are being impacted by increasing raw material prices.
Despite challenging economic conditions and increasingly tough comparatives in the balance of the
year, we remain confident in our strategy and ability to drive profitable growth. We will continue to
invest to consolidate our position as the UK's number 1 branded suit specialist."

*Like for like represents financial information for stores open during the current and prior financial
periods and compares 26 weeks against 26 weeks.
** EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional items on
continuing activities, and excludes the profit on disposal of discontinued operations.

For further information please contact:

Moss Bros Group PLC: 0207 447 7200


Brian Brick, Chief Executive Officer

Robin Piggott, Finance Director

Buchanan Communications: 0207 466 5000

Charles Ryland/Nicola Cronk

INTERIM MANAGEMENT REPORT 2011

FOR THE SIX MONTHS TO 30 JULY 2011


To the shareholders of Moss Bros Group PLC
CAUTIONARY STATEMENT

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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. This
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 IMR but
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 significant to Moss Bros Group PLC and its subsidiary undertakings when viewed as a
whole.

OVERVIEW
Moss Bros Group PLC ("the Group") retails and hires formal wear and fashion products for men,
predominantly in the UK. The Group retails menswear through the Moss fascia and hires formal wear
under the Moss Bros Hire brand through its mainstream stores.

The Group's vision is to be the UK's No.1 suit specialist for hire, buy and bespoke.

REVIEW OF THE FIRST HALF


The profit before tax and exceptional items for the first half of £2.2m (2010: loss of £2.8m) includes a
credit of £0.7m (2010: £0.7m) arising from the seasonal fluctuation in the value of hire deposits held
during the period, and a credit of £0.3m in respect of the release of onerous lease provisions in the
period. It is expected that the timing difference relating to hire deposits will unwind by the January
2012 year end, leaving a minimal impact on the full year results.

The operating profit in the six months to 30 July 2011 was £2.2m, £5.0m higher than the comparative
period in 2010.
As previously announced, we disposed of the non-core Hugo Boss (15 stores) and Cecil Gee (8 stores)
businesses in the first half for a combined cash consideration of £19.8m, generating a profit on sale of
£8.0m. The Hugo Boss disposal completed on 31 March 2011 and the Cecil Gee disposal on 18 June
2011. Of the £18.2m Boss consideration, £12.3m was deferred, dependent on successful assignment of
leases. As at 24 September, £8.0m of the £12.3m had been received with the balance expected to be
received by 31 October 2011. The Cecil Gee consideration was received in full on the completion date.
All Hugo Boss and Cecil Gee leases disposed are guaranteed by the purchasers' parent company.

A consequence of the disposals of Hugo Boss and Cecil Gee, for which Christmas is an important peak
trading period, is that the profitability of the core Moss business will, in future, be weighted towards
the first half of the financial year, being the period during which the high margin Hire business
generates two thirds of its annual sales.

Trading performance
The Group traded strongly in the first half with sales and gross margins comfortably ahead of last year.
Total continuing revenue excluding VAT has increased by 17.3% in the six months to 29 July 2011
compared with the comparative period in 2010. Like for like* retail sales performed well, increasing by
16.3%. Moss Bros Hire maintains its position as the leading brand name in formal hire and recorded a
like for like* sales increase of 12.4%. Overall like for like* sales were up 15.4% in the first half.

Gross margin increased by 2.7% in the first six months. An improved product mix meant faster sell
through rates and lower end of season mark downs, whilst greater breadth of brands led to higher
average transaction values.
Cost control remained an important factor with all expenditure carefully planned and monitored. An
additional charge of £0.8m was made in the half to reflect the anticipated earlier vesting of the 2009
LTIP award, and the triggering of performance related staff bonuses. The total charge over the life of
the LTIP is unchanged. New store operating costs amounted to £1.1m in the half. The rate of cost
savings in the second half are expected to diminish as savings made last year annualise and raw
material price increases impact.
The new store in Canary Wharf has traded well since opening in May 2011 and has provided useful
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feedback for the future development of the store fit. New openings in the second half in Bluewater,
Liffey Valley and Meadowhall will incorporate further improvements. A number of existing stores
have been identified for refit in the next six months so that the new concept can be adapted for ease
of rollout, and the commercial benefits of the refit fully assessed.
An 18 month project has commenced to implement our multi-channel strategy, including a fully
integrated e-commerce offering for Moss Hire, Retail and Bespoke, incorporating "click and collect"
capability. This will allow pro-active marketing across existing hire, buy and bespoke customer groups,
and will be centred on a fully integrated stock and customer data base. It is anticipated that the project
will take 18 months to complete and will involve a capital investment in systems of £1.2m during that
period. Internet sales currently account for only 1% of total sales and we believe there is significant
scope to grow sales and profits in this area.

*Like for like represents sales including VAT for stores open throughout the current and prior financial
periods and compares 26 weeks against 26 weeks.

FINANCIAL SUMMARY
A summary of the key financial results is set out in the table below.

Key financials 26 weeks to 26 weeks to 52 weeks to


CONTINUING OPERATIONS 30 July 2011 31 July 2010** 29 January 2011
Re-presented* Re-presented*
£'000 £'000 £'000
Revenue
Retail 40,855 34,162 72,304
Hire 10,978 10,022 15,479
Total revenue 51,833 44,184 87,783
Gross profit
Retail 23,493 18,937 40,865
Hire 8,932 7,497 10,688
Total gross profit 32,425 26,434 51,553

Administrative expenses (1) (3,429) (2,885) (6,483)


(1) (26,840) (26,363) (53,957)
Shops' selling and marketing costs
Operating profit / (loss) 2,156 (2,814) (8,887)

Investment revenues 17 1 1
Financial costs (17) (3) (47)
Profit / (loss) before taxation 2,156 (2,816) (8,933)

EBITDA (2) 4,183 (182) 36

(1) Admi ni s tra ti ve expens es a nd s hops ' s el l i ng a nd ma rketi ng cos ts a re not a na l ys ed between Reta i l a nd Hi re.
(2) EBITDA i s ea rni ngs before i nteres t, ta x, depreci a ti on, a morti s a ti on a nd excepti ona l i tems on conti nui ng
a cti vi ti es , a nd excl udes the profi t on di s pos a l of di s conti nued opera ti ons .
* See note 2 for deta i l s of re-pres enta ti on.
** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve
Income for the 26 week peri od ended 31 Jul y 2010.

DIVIDEND AND DIVIDEND POLICY

The Board, in line with its policy, is recommending that no interim dividend is paid (2010: £nil) in order
to conserve cash and maintain a strong balance sheet. It is the Board's intention to review the
dividend position in March 2012 in light of the trading and financial performance of the business over
the remainder of the financial year.
FINANCIAL POSITION

Net assets have increased by 30.6% to £35.1m (29 January 2011: £26.9m).

The daily management of cash remains a focus. The underlying cash position at 30 July 2011 was
£15.4m, £10.8m higher than at the same time in 2010 (29 January 2011: £6.9m) reflecting receipt of
proceeds relating to the successful disposal of the 15 Hugo Boss franchised stores and 8 Cecil Gee
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stores.

The Group continues to meet its day to day working capital requirements through surplus cash
balances. Current economic conditions will create uncertainty, particularly over the level of demand
for the Group's products. However, despite this uncertainty, the Board has concluded, in light of
detailed cash flow projections, taking account of reasonably possible changes in trading performance,
in addition to the level of cash in the business that the Group has adequate resources to continue in
operational existence for the foreseeable future.

Total net stock (excluding Hugo Boss and Cecil Gee) at £11.6m (2010: £9.4m) increased in line with sales
and reflecting the stock shortages experienced last year. Residual Spring stocks have been successfully
cleared.

CASH FLOW
Net cash inflow for the six months ended 30 July 2011 was £8.4m, £10.2m better than the comparative
period in 2010. The disposal of the Hugo Boss and Cecil Gee businesses and improved trading was
partially offset by increased investment in stock. No dividends being paid during the period (2010:
£nil).

BOARD CHANGES
Mark Bernstein and Tony Bogod stood down from the Board at the company's Annual general Meeting
in May 2011. Bryan Portman joined the Board on 1 July 2011 and chairs the Audit Committee and serves
on the Remuneration and Nomination Committees.
RELATED PARTY TRANSACTIONS

Berwin & Berwin Limited, a key supplier, is considered a related party of the Group because a Non
Executive Director of Moss Bros Group PLC, Simon Berwin, is the Chief Executive and a significant
shareholder of Berwin & Berwin Limited. All transactions have been carried out at arm's length as
disclosed in note 9 to the condensed set of interim financial statements.
On 22 December 2010, Moss Bros Group PLC entered into a short term lease with Berkeley Burke
Trustee Company Limited, a pension fund and the superior landlord, for a store in Hounslow. Berkeley
Burke Trustee Company Limited is considered a related party of the Group because Brian Brick is a
beneficiary of the pension fund. The company intends to take a long term lease in financial year 28
January 2012 on arm's length terms.

RISKS AND UNCERTAINTIES

There are a number of potential risks and uncertainties which could have a material impact on the
Group's performance over the remaining six months of the financial year and could cause actual results
to differ materially from expected and historical results. With the exception of cash and funding, the
Directors do not consider that the principal risks and uncertainties have changed since the publication
of the annual report for the year ended 29 January 2011, which are summarised below:
CASH AND FUNDING
With the improvement in trading and the receipt of the proceeds of the Hugo Boss and Cecil Gee
disposals the Group has developed a strong balance sheet and is well placed to invest in the business
without the need for bank funding.

INVENTORY AND PROPERTY


Demand forecasting, inventory ordering and inventory intake are aligned with the cash management
focus discussed above. The placing of all orders is subject to diligent product demand forecasting
models and ongoing rates of sale of all product lines. Autumn/Winter product has been phased to
arrive earlier compared with the prior year and this is underpinning continued positive like for like*
sales growth.

The business operates from a portfolio of high street, shopping centre and factory outlet stores all held
under operating leases. Each store is evaluated annually to assess its ongoing commercial viability. In
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the current macro environment, even more stringent and enhanced financial hurdles are required to
be met before any consideration is given to new stores.

STAFF HIRING AND RETENTION

The Group has a reputation of attracting some of the best talent in menswear and tries to ensure that it
not only maintains this attraction but also retains this talent. There is a strong capability, passion and
drive at all levels in the business to ensure that the Group will come out of the current tough economic
conditions ideally placed to take full advantage of a recovery in the economy.
OUTLOOK
Trading in the first eight weeks of the second half has been encouraging, with like for like* sales
growth and achieved gross profit ahead of the prior year.

Moss Bros Group PLC


8 St. John's Hill
London
SW11 1SA

By Order of the Board,

Brian Brick Robin Piggott

Chief Executive Officer Finance Director and Company Secretary

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


FOR THE SIX MONTHS TO 30 JULY 2011
26 weeks to 30 July 2011 26 weeks 52 weeks to 29 Ja nua ry 2011
to
31 Jul y
2010
Underlying Exceptional Total Tota l ** Underl yi ng Excepti ona l Tota l
items i tems
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Re-presented* Re-presented* Re-presented* Re-presented*
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
CONTINUING OPERATIONS Note 10
Revenue 51,833 - 51,833 44,184 87,783 - 87,783

Cos t of s a l es (19,408) - (19,408) (17,750) (36,230) - (36,230)


Gross profit 32,425 - 32,425 26,434 51,553 - 51,553

Admi ni s tra ti ve expens es (3,429) - (3,429) (2,885) (6,095) (388) (6,483)


Shops ' s el l i ng a nd ma rketi ng (26,840) - (26,840) (26,363) (51,229) (2,728) (53,957)
cos ts
Operating profit / (loss) 2,156 - 2,156 (2,814) (5,771) (3,116) (8,887)

Inves tment revenues 17 - 17 1 1 - 1


Fi na nci a l cos ts (17) - (17) (3) (47) - (47)
Profit / (loss) on ordinary 2,156 - 2,156 (2,816) (5,817) (3,116) (8,933)
activities before taxation

Ta xa ti on - - - - 1,781 682 2,463


Profit / (loss) from continuing
operations after taxation 2,156 - 2,156 (2,816) (4,036) (2,434) (6,470)

DISONTINUED
OPERATIONS
Profi t / (l os s ) a fter ta x from
di s conti nued opera ti ons 5 5,930 5,935 172 2,233 (1,381) 852

Profit / (loss) after taxation 6/16


5/24/13
attributable to equity holders of 2,161 5,930 8,091 (2,644) (1,803) (3,815) (5,618)
the parent

Earnings / (loss) per share


(pence)
Ba s i c - tota l 8.56p (2.80)p (5.94)p
Di l uted - tota l 7.96p (2.80)p (5.94)p
Ba s i c - conti nui ng 2.28p (2.98)p (6.84)p
Di l uted - conti nui ng 2.12p (2.98)p (6.84)p

Underlying earnings / (loss) per


share (pence)
Ba s i c - conti nui ng 2.28p (2.98)p (4.27)p
opera ti ons
Di l uted - conti nui ng 2.12p (2.98)p (4.27)p
opera ti ons

There are no other items of comprehensive income in either period other than the profit / (loss) for
the period.
*See note 2 for deta i l s of re-pres enta ti on.

**In the pri or yea r 26 week peri od ended 31 Jul y 2010, there were no excepti ona l i tems . See note 8 for deta i l s of
res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve Income for 26 week peri od ended
31 Jul y 2010.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


FOR THE SIX MONTHS TO 30 JULY 2011

26 Weeks ended 30 July 2011 Share Share Share Own Retained Total
(Unaudited) capital premium based shares earnings equity
account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 January 2011 4,727 8,673 387 (218) 13,302 26,871
Profit for the period - - - - 8,091 8,091
Credit to equity for share
based payments - - 547 - - 547
Own shares purchased - - (415) - (415)
Balance at 30 July 2011 4,727 8,673 934 (633) 21,393 35,094

26 Weeks ended 31 July 2010 Share Share Share Own Retained Total
(Unaudited) capital premium based shares earnings** equity**
account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 February 2010 as
originally stated 4,727 8,673 110 (218) 20,431 33,723
Effect of restatement - - - - (1,511) (1,511)
Balance at 1 February 2010 4,727 8,673 110 (218) 18,920 32,212
Loss for the period - - - - (2,644) (2,644)
Credit to equity for share
based payments - - 191 - - 191
Balance at 31 July 2010 4,727 8,673 301 (218) 16,276 29,759

52 Weeks ended 29 January Share Share Share Own Retained Total


2011 capital premium based shares earnings equity
(Audited) account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 February 2010 4,727 8,673 110 (218) 18,920 32,212
Loss for the year - - - - (5,618) (5,618)
Credit to equity for share
based payments - - 277 - - 277
Balance at 29 January 2011 4,727 8,673 387 (218) 13,302 26,871

7/16
5/24/13
** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve
Income for 26 week peri od ended 31 Jul y 2010 a nd the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JULY 2011

As at As at As at
30 July 2011 31 July 2010 ** 29 January 2011
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Assets
Intangible assets 1,078 1,459 1,276
Property, plant and equipment 13,028 20,137 17,809
Lease improvements 923 2,776 2,231
Total non-current assets 15,029 24,372 21,316

Inventories 11,640 17,098 18,928


Trade and other receivables 4,522 5,250 5,907
Deferred consideration on disposals 9,789 - -
Cash and cash equivalents 15,374 4,536 6,936
Total current assets 41,325 26,884 31,771
Total assets 56,354 51,256 53,087

Liabilities
Trade and other payables 14,933 15,924 19,667
Current tax liability 10 21 10
Provisions 631 - 1,205
Total current liabilities 15,574 15,945 20,882

Other payables 1,427 2,895 2,732


Deferred tax liabilities 2,865 2,657 800
Provisions 1,394 - 1,802
Total non-current liabilities 5,686 5,552 5,334
Total liabilities 21,260 21,497 26,216
Net assets 35,094 29,759 26,871

Equity
Issued capital 4,727 4,727 4,727
Share premium account 8,673 8,673 8,673
Share based payments 934 301 387
Own shares held (633) (218) (218)
Retained earnings 21,393 16,276 13,302
Equity attributable to equity holders
of parent 35,094 29,759 26,871

** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


FOR THE SIX MONTHS TO 30 JULY 2011

26 weeks to 26 weeks to 52 weeks to


30 July 2011 31 July 2010 ** 29 January 2011
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Cash flows from operating activities
8,091 (2,644) (5,618)
Profit / (loss) after taxation 8/16
5/24/13
Adjustments for:
Taxation charge / (credit) 2,065 - (1,886)
Net finance costs - 2 46
Amortisation of intangible assets 296 334 506
Depreciation of property, plant and equipment 1,731 3,136 6,666
Impairment of property, plant and equipment - - 901
Loss on disposal of property, plant and equipment 14 4 633
Gain on disposal of discontinued operations (7,995) - -
Increase in inventories (550) (173) (2,003)
Decrease / (increase) in receivables 1,385 (170) (125)
(Decrease) / increase in payables (4,558) 306 3,185
(Decrease) / increase in provisions (346) - 3,007
Share-based payments expense 547 191 277
Taxation received - - 17
Net cash from operating activities 680 986 5,606

Cash flows from investing activities


Net finance costs - (2) (46)
Purchase of intangible assets (114) (184) (173)
Purchase of property, plant and equipment (1,195) (2,545) (4,776)
Proceeds on disposal of property, plant and
equipment 25 2 46
Net proceeds on disposal of discontinued 9,456 -
operations -
Net cash used in investing activities 8,172 (2,729) (4,949)

Cash flows from financing activities


Dividends paid - - -
Proceeds from the issue of share capital - - -
Purchase of own shares (414) - -
Net cash from financing activities (414) - -

Cash and cash equivalents at beginning of period 6,936 6,279 6,279


Net increase / (decrease) in cash and cash
equivalents 8,438 (1,743) 657
Cash and cash equivalents at end of period 15,374 4,536 6,936

** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve
Income for 26 week peri od ended 31 Jul y 2010 a nd the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS

FOR THE SIX MONTHS TO 30 JULY 2011

1. GENERAL INFORMATION
The information for the year ended 29 January 2011 does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor 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.
The results for the 26 weeks ended 30 July 2011 and 31 July 2010 are neither audited nor reviewed by
the Group's auditor.

2. ACCOUNTING POLICIES
BASIS OF PREPARATION

The annual financial statements of Moss Bros Group PLC are prepared in accordance with IFRSs as

adopted by the European Union. The condensed set of financial statements included in this half-yearly 9/16
5/24/13
financial report has been prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted by the European Union.

The comparative information has been re-presented to reflect the discontinued Hugo Boss and Cecil
Gee operations as described in note 11.

GOING CONCERN
The Directors are satisfied that the Group and Company have sufficient resources to continue in
operation 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 condensed
financial statements.
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 and anticipated cash resources.

CHANGES IN ACCOUNTING POLICY


The same accounting policies, presentation and methods of computation are followed in the
condensed set of financial statements as applied in the Group's latest annual audited financial
statements for the year ended 29 January 2011.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

3. BUSINESS SEGMENTS

The majority of the Company's turnover arose in the United Kingdom, with the exception of one store
in Ireland.
IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief Executive to allocate
resources to the segments and to assess their performance.

Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and
assessment of segment performance is focused on the split of Retail and Hire.

Information regarding the Group's continuing operating segments is reported below.


The following is an analysis of the Group's revenue and gross profit for the Retail and Hire business in
the 26 weeks ended 30 July 2011:

Key financials 26 weeks to 26 weeks to 52 weeks to


CONTINUING OPERATIONS 30 July 2011 31 July 2010 29 January 2011
Re- Re-presented*
£'000 presented* £'000
£'000
Revenue
Retail 40,855 34,162 72,304
Hire 10,978 10,022 15,479
Total revenue 51,833 44,184 87,783
Gross profit
Retail 23,493 18,937 40,865
Hire 8,932 7,497 10,688
Total gross profit 32,425 26,434 51,553

Administrative expenses (3,429) (2,885) (6,483)


Shops' selling and marketing costs (26,840) (26,363) (53,957)
Operating profit / (loss) 2,156 (2,814) (8,887)

Investment revenues 17 1 1
Financial costs (17) (3) (47)
Profit / (loss) before taxation 2,156 (2,816) (8,933)

10/16
5/24/13
*See note 2 for deta i l s of re-pres enta ti on.

Only revenue and gross profit have been reported for the Group's business segments; Retail and Hire,
as the main operating costs, being property, related overheads and staff, cannot be separately
identifiable as they both use the same stores and hence operating profit is not reported to the Chief
Executive Officer by Retail and Hire. Revenue and gross profit are the measures reported to the Chief
Executive for the purpose of resource allocation and assessment of segmental performance.

On the same basis, assets cannot be allocated between Retail and Hire, and are not reported to the
Chief Executive.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

4. TAX

Tax on continuing operations for the 26 week period is charged at 0.0% (six months ended 31 July 2010:
0.0%; year ended 29 January 2011: 27.6%), representing the expected of the average annual effective
tax rate for the full year, applied to the pre-tax income of the six month period.

Tax on discontinued operations for the six month period is charged at 25.8% (six months ended 31 July
2010: 0.0%; year ended 29 January 2011: 40.4%), representing the estimated tax liability arising on pre-
tax income in respect of discontinued operations.
5. EARNINGS PER SHARE

Basic earnings / (loss) per ordinary share is based on the weighted average of 94,530,752 (31 July 2010:
94,530,752; 29 January 2011: 94,530,752) ordinary shares in issue during the period and is calculated by
reference to the profit / (loss) attributable to shareholders of £8,091,000 (31 July 2010: (£2,644,000); 29
January 2011: (£5,618,000)).
Diluted earnings per ordinary share is based upon the weighted average of 101,665,061 ordinary shares
(94,530,752), share options and shares under the LTIP (6,493,100), and own shares held (641,209).
In the 26 weeks to 31 July 2010, the diluted loss per ordinary share is based upon the weighted average
of 94,530,752 ordinary shares (29 January 2011: 94,530,752), which excludes the effects of share options
and shares under the LTIP 9,623,497 (29 January 2011: 7,282,728) and own shares held 300,000 (29
January 2011: 300,000) that were anti-dilutive for the period presented but could dilute earnings per
share in the future and are calculated by reference to the loss attributable to shareholders as stated
above. In the prior periods the weighted average number of ordinary shares was not diluted, as per
IAS 33 'Earnings per Share', as this would decrease the basic loss per share.
Basic earnings / (loss) per share 26 weeks to 26 weeks to 52 weeks to
30 July 2011 31 Jul y 2010 29 Ja nua ry 2011
Re-pres ented* Re-pres ented*
pence pence pence
Tota l (conti nui ng a nd di s conti nued opera ti ons ) 8.56 (2.80) (5.94)
Di s conti nued opera ti ons (6.28) (0.18) (0.90)
Conti nui ng opera ti ons 2.28 (2.98) (6.84)
Excepti ona l s (net of ta x) - - 2.57
Underlying basic earnings / (loss) per share 2.28 (2.98) (4.27)

Diluted earnings / (loss) per share 26 weeks to 26 weeks to 52 weeks to


30 July 2011 31 Jul y 2010 29 Ja nua ry 2011
Re-pres ented* Re-pres ented*
Pence pence pence
Tota l (conti nui ng a nd di s conti nued opera ti ons ) 7.96 (2.80) (5.94)
Di s conti nued opera ti ons (5.84) (0.18) (0.90)
Conti nui ng opera ti ons 2.12 (2.98) (6.84)
Excepti ona l s (net of ta x) - - 2.57
Underlying diluted earnings / (loss) per share 2.12 (2.98) (4.27)
*See note 2 for deta i l s of re-pres enta ti on.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

6. BANK OVERDRAFTS AND LOANS

11/16
5/24/13
On 1 June 2010, the Group secured a £5.0m committed loan facility for the following 12 month period
to 31 May 2011. In the current period, this loan facility was not renewed; as the consideration from
Hugo Boss and Cecil Gee disposals gives the company a strong cash balance to self fund its working
capital and investment requirements, without any external debt.

7. DIVIDENDS

The Directors have not declared an interim or final dividend in the current half year or the prior year.

8. PRIOR YEAR RESTATEMENT

The Consolidated Group Statement of Comprehensive Income for the 52 weeks ended 30 January 2010
and the Consolidated Statements of Financial Position as at 30 January 2010 and 31 January 2009 were
previously restated in the Annual Report and Accounts 2010/11, to recognise deferred revenue in
respect of hire sales at the point of the service is provided to the customer. The deferred revenue
relates to deposits received from customers prior to the year end but where the related hire suits
were not collected for use until after the year end. Previous to the Annual Report and Accounts
2010/11, the deposits were recorded as revenue when received from the customers and not when the
hire was made, which was inconsistent with the Company's stated policy.

The adjustment for hire sales deposits is a timing difference which will unwind before the year end.

In accordance with the policy for hire sales, the results for the 26 week period ended 31 July 2010 have
been restated in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors'.

Impact on comparative condensed consolidated statement of comprehensive income


26 weeks to
31 July 2010
£'000
Increase in revenue 703
Decrease in loss before taxation 703

26 weeks to
31 July 2010

Decrease in basic loss per share 0.74 pence


Decrease in diluted loss per share 0.74 pence

Impact on comparative consolidated statement of financial position


26 weeks to
31 July 2010
£'000
Increase in deferred revenue 808

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

9. RELATED PARTY TRANSACTIONS


The Group had no material related party transactions other than on an arm's length basis, which might
reasonably be expected to influence decisions made by other users of these financial statements.

TRADING TRANSACTIONS

During the period, the Group entered into the following transactions with related parties who are not
members of the Group:

Berwin & Berwin Limited 26 weeks to 26 weeks to 52 weeks to


30 July 2011 31 July 2010 29 January 2011
£'000 £'000 £'000
Total inventory purchases (excluding VAT) 4,428 3,188 6,679

Berwin & Berwin Limited, a key supplier, is considered a related party of the Group because a Non 12/16
5/24/13
Executive Director (appointed 29 May 2009) of Moss Bros Group PLC, Simon Berwin, is the Chief
Executive and a significant shareholder of Berwin & Berwin Limited. At 30 July 2011 the balance owed
to Berwin & Berwin Limited was £594,000 (31 July 2010: £339,000, 29 January 2011: £606,000).
Purchases of goods from related parties were made on an arm's length basis, consistent with the
previous terms.

On 13 September 2009 an agreement was made with Berwin Retail Limited, to supply hire to Berwin
Retail Limited to be sold through their House of Fraser concessions. This agreement was terminated in
the prior year by mutual accord with all stores closed by 29 January 2011. Berwin Retail Limited is
considered a related party of the Group because Simon Berwin is a Non Executive Director of Moss Bros
Group PLC, and is also the Managing Director and a significant shareholder of Berwin Retail Limited.
There were no sales in the current period (31 July 2010: £154,000, 29 January 2011: £248,000). There was
no outstanding liability with Berwin Retail Limited at 30 July 2011 (31 July 2010: asset £9,000, 29 January
2011: £nil).

During the current period, the Group purchased £6,000 (31 July 2010: £nil, 29 January 2011: £237,000) of
inventory from Baumler AG. Baumler AG is considered a related party of the Group because on 2
December 2009, Berwin & Berwin Limited acquired Baumler AG under a joint venture. There was no
outstanding liability with Baumler at 30 July 2011 (31 July 2010: £nil, 29 January 2011 £nil).
On 22 December 2010, Moss Bros Group PLC entered into a short term lease with Berkeley Burke
Trustee Company Limited, a pension fund and the superior landlord, for a store in Hounslow. Berkeley
Burke Trustee Company Limited is considered a related party of the Group because Brian Brick is a
beneficiary of the pension fund. The company intends to take a long term lease in financial year
ending 28 January 2012 on arm's length terms.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)


10. EXCEPTIONAL ITEMS

26 weeks to 26 weeks to 52 weeks to


30 July 2011 31 July 2010 29 January
2011
£'000 £'000 £'000
Administrative expenses
CONTINUING OPERATIONS
Costs arising from management restructuring - - - (388)
redundancy
- - (388)
DISCONTINUED OPERATIONS
Non contingent fees arising from the disposal of the
Hugo Boss Franchise Business - - (412)
- - (412)

Shop selling and marketing costs


CONTINUING OPERATIONS
Costs arising from management restructuring -
redundancy - - (80)
Other property related losses
-impairment of property, plant and equipment - - (679)
-provision for onerous property lease contracts - - (1,969)
- - (2,728)
DISCONTINUED OPERATIONS
Other property related losses
-impairment of property, plant and equipment - - (222)
-provision for onerous property lease contracts - - (1,038)
- - (1,260)

Other gains and losses 13/16


5/24/13
CONTINUING OPERATIONS
Profit on disposal of discontinued operations 7,995 - -
7,995 - -

TOTAL EXCEPTIONAL ITEMS 7,995 - (4,788)

Taxation (charge) / credit on exceptional items (2,065) - 973

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)


11. DISCONTINUED OPERATIONS

Hugo Boss
Moss Bros Group PLC announced on 7 February 2011 that it had entered into a conditional sale and
purchase agreement with Hugo Boss UK Limited, relating to the disposal of the Hugo Boss Franchised
Business, for a cash consideration of £18.2m. The disposal constitutes a Class 1 transaction pursuant to
Chapter 10 of the Listing Rules and was subsequently approved on 3 March 2011 by the shareholders of
the Company at an Extraordinary General Meeting. The transfer of the business to Hugo Boss UK
Limited took place on 31 March 2011. Up to 30 July 2011, £8.4m had been received from Hugo Boss UK
Limited. A further £5.5m was received to the period 24 September 2011, leaving a balance outstanding
o f £4.3m which is expected to be received in the second half of the year.
The proceeds from the disposal will provide the Company with funding to eliminate debt and invest in
the core business.

The agreed sale and purchase agreement disposed of the 15 Hugo Boss branded retail stores in the UK,
previously operated by the Company under the Franchise Agreement with Hugo Boss AG. Hugo Boss
UK Limited acquired the business and assets of the Hugo Boss Franchised Business as a going concern,
including all the leases, inventory and property, plant & equipment associated with the 15 Hugo Boss
franchised stores. In addition all the employees who previously worked in the Hugo Boss franchised
stores and those in the Head Office working directly on Hugo Boss Franchised Business, transferred
across. The cash consideration of £16.5m was subject to subsequent adjustment upwards to £18.2m to
reflect the amount of transferred inventory.
A profit of £8.4m arose on the disposal of the Hugo Boss Franchise Business, being the proceeds £18.2m
less the carrying amount of the net assets attributable £9.4m and £0.4m associated legal and
professional fees.
Cecil Gee

Moss Bros Group PLC announced on 20 June 2011, that, in line with its stated strategy of focusing on the
core Moss business, it has disposed of 8 Cecil Gee stores to JD Sports Fashion plc, for a cash
consideration of £1.7m which has now been fully paid. JD Sports Fashion plc acquired the business and
assets of the 8 stores as a going concern and completion of the disposal took place on 18 June 2011.
The Cecil Gee business comprised 9 menswear retail stores and the remaining store, Glasgow, will
convert to a new format Moss store.

A loss of £0.38m arose on the disposal of the Cecil Gee business, being the proceeds £1.65m less the
carrying amount of the net assets attributable £1.94m and £0.09m associated legal and professional
fees.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

11. DISCONTINUED OPERATIONS (CONTINUED)

The results of the discontinued operations of the Hugo Boss Franchise Business and Cecil Gee Business,
which have been included in the consolidated income statement, were as follows:
26 weeks to 30 July 2011 26 weeks to 31 Jul y 2010 52 weeks To 29 Ja nua ry
2011

14/16
5/24/13

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000


UNDERLYING Hugo Cecil Total Hugo Ceci l Tota l Hugo Ceci l Tota l
Boss Gee Bos s Gee Bos s Gee
Revenue 4,283 3,240 7,523 16,464 5,647 22,111 36,831 11,822 48,653

Cos t of s a l es (2,011) (1,752) (3,763) (8,226) (3,227) (11,453) (18,069) (6,513) (24,582)
Gross profit 2,272 1,488 3,760 8,238 2,420 10,658 18,762 5,309 24,071

Shops ' s el l i ng a nd
ma rketi ng cos ts (2,083) (1,672) (3,755) (7,498) (2,988) (10,486) (15,001) (5,969) (20,970)
Operating profit / (loss) 189 (184) 5 740 (568) 172 3,761 (660) 3,101

Inves tment revenues - - - - - - - - -


Fi na nci a l cos ts - - - - - - - - -
Profit / (loss) before 189 (184) 5 740 (568) 172 3,761 (660) 3,101
taxation
Ta xa ti on on underl yi ng - - - - - - (1,051) 183 (868)
Underlying profit / (loss) 189 (184) 5 740 (568) 172 2,710 (477) 2,233
after taxation

EXCEPTIONALS
Profi t on di s pos a l of
di s conti nued 8,373 (378) 7,995 - - - - - -
opera ti ons
Ta xa ti on on profi t on
di s pos a l of (2,065) - (2,065) - - - - - -
di s conti nued
opera ti ons
Other excepti ona l s - - - - - - (412) (1,260) (1,672)
Ta xa ti on on - - - - - - - 291 291
excepti ona l s
Exceptionals profit / (loss) 6,308 (378) 5,930 - - - (412) (969) (1,381)
after taxation

TOTAL PROFIT / (LOSS) 6,497 (562) 5,935 740 (568) 172 2,298 (1,446) 852
AFTER TAXATION

12. SHARE BASED PAYMENTS


On 7 November 2009 a new Long Term Incentive Plan (LTIP) was approved and 6,681,160 shares were
awarded to Directors and senior employees. Under the same 2009 LTIP, 497,660 shares were awarded
to senior employees on 23 April 2010 and 453,207 shares were awarded to a Director on 8 October 2010.
During the prior year ended 29 January 2011, 831,560 options lapsed as a Director and senior employees
left the Group. There were no additional grants awarded or lapsed options in the 26 week period
ended 30 July 2011.

NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)

12. SHARE BASED PAYMENTS (CONTINUED)

In accordance with this plan, the shares are exercisable at nil cost, subject to the satisfaction of
performance conditions and the requirement for the continued employment during the vesting
period. The fair value at grant is measured at grant date and recognised over the vesting period. The
grants are accounted for in accordance with IFRS 2 'Share Based Payments'. The charge in the period to
29 July 2011 was £547,000 (31 July 2010: £191,000; 29 January 2011: £277,000). In the 26 weeks to 30 July
2011, the charge significantly increased to reflect the anticipated earlier vesting of the LTIP awards as
management revised the estimated EBITDA forecast for 52 weeks to 28 January 2012.
The Group used inputs as previously published to measure the fair value of the share options.

13. HALF-YEARLY FINANCIAL REPORT

This half-yearly financial report is available on application from the Company Secretary, Moss Bros
Group PLC, 8 St. John's Hill, London SW11 1SA (and on the Company's website www.mossbros.co.uk).

15/16
5/24/13
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:

a: the condensed set of financial statements has been prepared in accordance the applicable set
of accounting standards, gives a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group, or the undertakings included in the consolidation as required
by DTR 4.2.4R;
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 the DTR
4.2.8R (disclosure of related parties' transactions and changes therein).

By Order of the Board,

Chief Executive Officer Finance Director and Company Secretary


Brian Brick Robin Piggott

26 September 2011 26 September 2011

This information is provided by RNS


The company news service from the London Stock Exchange

END

IR SEDFAMFFSEEU

16/16
5/24/13

ArmorGroup Intl plc

Interim Results
ArmorGroup International plc
19 September 2007

ArmorGroup International plc

Good revenue growth outside of Iraq; strong pipeline of opportunities

ArmorGroup International plc, the leading provider of defensive protective


security services, today announces its unaudited interim results for the six
months ended 30 June 2007.

Key points

• Revenues up to $137.0 million (2006: $134.4 million), with non-Iraq


revenue rising 26% to $80.5 million

• Operating profit of $3.5 million (2006: $4.3 million)

• Profit before tax of $2.5 million (2006: $3.7 million)

• Basic earnings per share of 3.5 cents (2006: 4.9 cents)

• Strong cash flow from operations of $8.6 million (2006: $12.4 million)

• Net debt of $7.6 million at the period end, compared to $3.6 million at
31 December 2006

• Unchanged interim dividend declared of 1.25 pence

All figures quoted in this statement are in US$, with the exception of the
dividend.

David Seaton, Chief Executive Officer, commenting on the results announcement


said:

'We have achieved modest revenue growth in the first half with the Group's
operations in Afghanistan and Nigeria contributing to an overall revenue growth
of 26% outside Iraq. We have also seen revenue growth from both our training
and mine action divisions, in line with our strategy of diversifying revenues
away from protective security services. Market consolidation is gathering pace,
giving rise to an increasing number of acquisition opportunities on which the
Group is well positioned to capitalise and leverage its operational gearing.

Consistent with prior years, the full year outcome will be heavily weighted
towards the second half of the year as significant new contracts won in the
first half, and those we continue to win in the second, mobilise as expected.
The Group continues to have a strong pipeline of identified opportunities going
forward with tenders awaiting award of $227 million (2006: $142 million) and the
Board remains confident in the Group's prospects for the full year.'

For further enquiries please contact:

ArmorGroup International plc

David Seaton, Chief Executive Officer Tel: + 44 (0) 20 7808 5800

Matthew Brabin, Chief Financial Officer

Patrick Toyne Sewell, Director of Communications Tel: +44 (0) 7767 498 195

Citigate Dewe Rogerson

Ged Brumby Tel: + 44 (0) 20 7638 9571

1/9
5/24/13

This press release and analyst presentation will be available to download from
the Investor Relations section of the ArmorGroup website at www.armorgroup.com
today at 7.00 am and 9.30 am respectively. A presentation to analysts will take
place at 9:30am this morning at the offices of Citigate Dewe Rogerson, 3 London
Wall Buildings, London Wall EC2M 5SY.

Notes to Editors

For over 25 years ArmorGroup has been recognised as a leading provider of


defensive, protective security services to national governments, multinational
corporations and international peace and security agencies operating in hostile
environments. ArmorGroup provides protective security services, security
consultancy, security training and mine action services. It has 9,500 highly
trained and experienced employees and operations in 38 countries. Over the past
two years it has supported its clients in over 100 countries across the Middle
East, Africa, North and South America, the CIS and central Asia.

ArmorGroup International plc is headquartered in London and listed on the London


Stock Exchange. It complies with the US Foreign and Corrupt Practices Act, 1997
and the UK's Anti-Terrorism, Crime and Security Act, 2001 and has also been
certified to ISO 9001:2000 and to ISO/IEC 27001:2005. For more information
please visit www.armorgroup.com.

Business and Operating review

Overview

Overall revenue for the six months to 30 June grew to $137.0 million (2006:
$134.4 million) with the Group's operations in Afghanistan and Nigeria
contributing to revenue growth of 26% outside Iraq. The Group's operations in
Iraq now represent 41% (2006: 52%) of total Group revenues. Gross profits
increased 7% to $30.5 million.

Administrative expenses for the Group increased 11% to $27.1 million (2006:
$24.3 million), driven by expansion in Afghanistan and Nigeria. Central costs
remained stable at $5.4 million (2006: $5.3 million).

Operating profit reduced to $3.5 million (2006: $4.3 million), primarily due to
the effect of the higher costs outlined above combined with a reduction in
Afghanistan profits following the re-award of the UK Government contract at
significantly lower margins. Operating profit was also impacted by: a $0.4
million loss caused by the weakness of the US$, the Group's primary operating
currency, over the period (2006: loss of $0.2 million); and $0.4 million in
redundancy costs following the refocusing of the Group's Ugandan business.

Profit before tax was $2.5 million (2006: $3.7 million) as net interest charges
increased to $0.9 million (2006: $0.6 million) due to the significant increase
in working capital required to mobilise the US Embassy contract in Afghanistan,
which started operations on July 1, and the effect of higher interest rates.
Basic earnings per share for the period was 3.5 cents (2006: 4.9 cents).

The Group's effective taxation rate reduced slightly to 27% (2006: 30%) due to
further utilisation of overseas tax losses.

The Group's net debt at 30 June had increased to $7.6 million, compared to $3.6
million at 31 December 2006, with $8.7 million of cash balances offset by bank
borrowings of $16.4 million. The Group continues to achieve strong cash
conversion with cash flows from operations of $8.6 million (2006: $12.4
million).

Net assets at 30 June were $84.3 million (2006: $78.0 million).

The Group will pay an unchanged interim dividend for the period of 1.25 pence to
be paid on 9 November 2007 to shareholders on the register on 28 September 2007.

Divisional overview

Protective Security Division

The Protective Security Division generated revenue of $118.6 million (2006:


$124.4 million), marginally lower than the same period last year which included
a number of major guarding contracts in Iraq that wound down as expected during

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the second half of 2006. The division now accounts for 87% of Group revenues,
down from 93% for the same period last year.

Operating profits before head office costs fell to $8.5 million (2006: $9.8
million). However, the Group expects a significantly stronger performance from
this division in the second half as contracts signed later in the first half and
early in the second continue to mobilise.

In Iraq the Group carried out over 2,250 convoy escort missions over the period,
representing around 35% of all registered convoy missions in Iraq, with its
vehicles driving almost 900,000 kilometres. The security situation in the
country continues to be unstable with the rate of hostile incidents similar to
the second half of 2006. In order to protect its employees as highly as
possible, the Group invested a further $1.8 million on higher specification
armoured vehicles over the period.

To improve its access to the growing convoy escort market, created by the
increasing trend for the US Government to outsource its logistics in Iraq, the
Group signed a teaming agreement with American United Logistics ('AUL') in July
and became its exclusive protective security provider in Iraq. At that time,
ArmorGroup stated that it believed AUL was in an excellent position to be a
major supplier of logistic services to the US Government, which would lead to an
increase in convoy activity. This confidence has proven to be well founded with
the Group now providing AUL with a growing number of convoy escort teams.
ArmorGroup is working closely with AUL and other logistics companies to ensure
it is strongly positioned to capitalise on a number of major identified
opportunities in this market.

Elsewhere in the Middle East, Bahrain performed well while the US Embassy
contract in Jordan, which was awarded in January, mobilised as expected.

Revenues in Afghanistan rose strongly to $19.5 million (2006: $15.7 million)


although at lower margins due to competitive pressures during the rebidding
process for the Group's strategically important and prestigious contract in the
country, with the UK's Foreign and Commonwealth Office. The US Embassy contract
mobilised more slowly than expected as the administrative and human resources
support requirement has proved particularly onerous. The contract is now
running as expected but is unlikely to achieved planned profitability in the
current financial year. The Group has continued to win other contracts in
Afghanistan and expects the benefits of these to strengthen its second half
performance.

African revenues improved over 30% to $17.7 million (2006: $13.4 million)
reflecting the increasing threat levels in the Niger Delta region of Nigeria and
the Democratic Republic of Congo. The US embassy contract in Nigeria, announced
in May, has not yet mobilised due to a number of administrative and contractual
issues on which we are working closely with US Government representatives to
resolve. The Board is reviewing the Group's operations in certain African
countries, particularly where its services have become commoditised as result of
saturation by local competitors. As part of this review the Group has refocused
its manned guarding business in Uganda on significantly fewer, albeit higher
margin contracts, resulting in $0.4 million of redundancy costs during the half.

South American revenues improved to $10.3 million (2006: $10.1 million) although
profitability in the first half was affected by the nationalisation of a major
client's operations in Venezuela and the loss of a long term contract in
Colombia due to the Group's decision not to re-bid it at unacceptably low
margins. However, the Group continues to win business across the region and was
recently awarded a major technical security contract in Colombia, in partnership
with Siemens, which will mobilise towards the end of the year.

Eurasian revenues fell 17% to $5.6 million (2006: $6.8 million) as a number of
larger contracts completed at the end of 2006. The market has become more
difficult as international clients are now taking a more conservative approach
to making new investments in the region. Despite this ArmorGroup was recently
awarded a significant new contract on Sakhalin Island which will contribute in
the second half.

The Group's North American revenues fell to $3.8 million (2006: $4.5 million)
and the Washington office continues to provide key administrative support for
major US Government contracts overseas and coordinate initiatives on the US
mainland.

The Group's abduction, kidnap for ransom and extortion (K&R/E) consultancy, Neil
Young International, which was acquired in January, has been integrated
successfully and has made an excellent contribution. Neil Young, its Managing
Director, has now been tasked to drive forward the Group's new specialist Risk
Management Division. The Division will incorporate K&R/E capabilities as well
as a new consulting business, which will focus on helping organisations' senior
decision makers plan for and deliver effective risk management solutions
throughout the life cycles of major projects.

Security Training Division

Overall training revenues rose to $9.4 million (2006: $7.2 million) while
operating losses before head office costs increased to $0.8 million (2006: $0.6
million). Despite more efficient management of the Group's Ghassan training
facility in Iraq there was a weaker performance at the US facilities as a result
of course postponements due to clients' operational commitments. The division
now accounts for around 7% of Group revenues, up from 5% for the same period
last year. A reorganisation of the Pershore facility in the UK at the beginning
of the second half will improve its profitability going forward.

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Weapons Reduction and Mine Clearance Division

The Weapons Reduction and Mine Clearance division had an excellent first half,
generating $9.0 million in revenues (2006: $2.7 million) and achieving $1.2
million in operating profit before head office costs (2006: $0.3 million). The
division now accounts for around 7% of Group revenues, up from 2% in the same
period last year. This strong performance was driven by the major contracts in
Lebanon and Sudan which the division won in the second half of 2006. The Mine
Action (MA) team have continued this momentum into the current year with new
contracts or contract extensions won with humanitarian agencies in Cyprus, Nepal
and Sudan. It is also one of only five registered MA teams in Afghanistan and,
as such, is starting to secure an increasing number of contracts. The MA market
continues to grow with the increasing realisation by the major humanitarian
organisations and international donors of the operational and financial benefits
derived from using commercial MA organisations, combined with the continued
growth in government outsourcing of this type of technical service.

Competitive landscape

The competitive landscape continues to polarise as the larger and more complex
government contracts, particularly in Afghanistan and Iraq, are won by the major
international security companies which have proven resources and reputations.
Although some of ArmorGroup's larger competitors have been prepared to work on
major contracts at extremely low margins, the Group is committed to improving
its operating margins and so will continue to decline to bid on those contracts
where the margins required to win the work are not acceptable.

The consolidation of the market is gathering pace giving rise to a number of


interesting acquisition opportunities. Combined with the inability of the
larger Iraq-born companies to diversify successfully, this means that ArmorGroup
is increasingly well positioned for future growth. The Board believes the
Group's prospects are strong due to its competitive advantages of: an
unrivalled, long term reputation; a comprehensive global infrastructure; an
increasingly diversified service line; high quality employees; and a broadening
blue-chip client base.

Current trading and prospects

Consistent with prior years, the full year outcome will be heavily weighted
towards the second half of the year as significant new contracts won in the
first half, and those it continues to win in the second, mobilise as expected.
As at 19 September 2007, the Group had $280 million of full year 2007 revenues
already under contract (102% of total 2006 revenues), some $38 million ahead of
the same point the previous year. The Group continues to have a strong pipeline
of identified opportunities going forward with tenders awaiting award of $227
million (2006: $142 million) and the Board remains confident in the Group's
prospects for the full year.'

ArmorGroup International plc

Consolidated income statement (unaudited)

For the six months ended 30 June 2007

Six months Six months


ended ended Year ended
30 June 30 June 31 December
Note 2007 2006 2006
US$'000 US$'000 US$'000

Revenue 2 137,021 134,374 273,453


Cost of sales (106,491) (105,799) (213,784)
Gross profit 30,530 28,575 59,669
Administrative expenses (27,072) (24,310) (49,062)
Operating profit 3,458 4,265 10,607
Interest receivable and similar 100 101 157
income
Interest payable and similar (1,045) (666) (1,209)
charges
Profit before income tax 2,513 3,700 9,555
Income tax expense (666) (1,101) (2,460)
Profit for the period 1,847 2,599 7,095

Profit attributable to:


Equity holders of the Company 1,847 2,599 7,095
1,847 2,599 7,095

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5/24/13

Earnings per share expressed per 1


pence share (US cents)

- basic 6 3.47 4.90 13.35


- diluted 6 3.36 4.79 13.05

All amounts included above are derived from continuing operations.

Dividends

A dividend of 1.25 pence per share (2006: 1.25 pence per share) amounting to
$1,337,000 (2006: $1,263,000) has been proposed for the interim period ending 30
June 2007.

ArmorGroup International plc


Consolidated balance sheet (unaudited)
As at 30 June 2007

30 June 30 June 31 December

Note 2007 2006 2006


US$'000 US$'000 US$'000
Non-current assets
Goodwill 22,844 20,775 21,317
Other intangible assets 2,761 812 810
Property, plant and equipment 30,251 27,153 30,870
Deferred tax assets 3,682 3,498 3,845
59,538 52,238 56,842
Current assets
Inventories 2,351 1,508 1,530
Trade and other receivables 62,661 56,397 54,033
Cash and cash equivalents 5 8,718 8,708 14,646
73,730 66,613 70,209

Total assets 133,268 118,851 127,051

Current liabilities
Borrowings (14,848) (9,366) (14,614)
Trade and other payables (28,391) (20,316) (21,157)
Current income tax liabilities (2,213) (2,482) (2,102)
Provisions and other liabilities (201) (120) (134)
(45,653) (32,284) (38,007)

Net current assets 28,077 34,329 32,202


Total assets less current 87,615 86,567 89,044
liabilities

Non-current liabilities
Borrowings (1,517) (6,810) (3,592)
Provisions and other liabilities (132) (117) (131)
Deferred tax liabilities (1,638) (1,594) (2,434)
(3,287) (8,521) (6,157)
Net assets 84,328 78,046 82,887

Capital and reserves


Called up share capital 1,049 1,047 1,049
Share premium account 56,990 56,920 56,952
Capital redemption reserve 96 96 96
Merger reserve 1,273 1,273 1,273
Cumulative translation reserve 1,626 (55) 961
Retained earnings 23,294 18,765 22,556
Total equity shareholders' funds 84,328 78,046 82,887

ArmorGroup International plc

Consolidated cash flow statement (unaudited)

For the six months ended 30 June 2007

Six months Six months Year ended


ended ended 31 December
30 June 30 June 2006

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Note 2007 2006
US$'000 US$'000 US$'000

Cash flows from operating activities


Cash inflow from operations 4 8,603 12,393 30,650
Interest received 100 101 157
Interest paid (992) (719) (1,271)
Income tax paid (1,188) (1,068) (2,418)
Net cash inflow from operating activities 6,523 10,707 27,118

Cash flows from investing activities


Purchase of businesses (net of cash (1,353)
acquired)
(52) (52)
Purchase of property, plant and equipment (7,331) (6,914) (18,105)
Purchase of other intangible assets (1,914) (294) (524)
Proceeds from sale of property, plant and 255
equipment
7 122
Net cash outflow from investing activities (10,343) (7,253) (18,559)

Cash flows from financing activities


Net proceeds from issue of Ordinary Share 38
capital
9 43
Equity dividends paid to shareholders (360) (1,491) (2,754)
New bank borrowings 329 3,460 3,460
Finance lease principle payments (42) (13) (43)
Repayment of borrowings (2,156) (9,175) (6,986)
Net cash outflow from financing activities (2,191) (7,210) (6,280)
Net (decrease)/ increase in cash and cash (6,011)
equivalents
(3,756) 2,279
Cash and cash equivalents at beginning of 14,594
period
12,279 12,279
Exchange gains/ (losses) on cash and bank 63
overdrafts
(10) 36
Cash and cash equivalents at end of period 8,646

5 8,513 14,594

ArmorGroup International plc

Consolidated statement of changes in shareholders' equity (unaudited)

For the six months ended 30 June 2007


Capital Cumulative Retained
redemption translation earnings
Share Share reserve Merger reserve
capital premium reserve
Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

At 1 January 2007 1,049 56,952 96 1,273 961 22,556 82,887

Shares issued - 38 - - - - 38
Cost of share - - - - - 490 490
options
Currency - - - - 665 - 665
translation
adjustments
Profit for the - - - - - 1,847 1,847
period
Dividends paid to - - - - - (1,599) (1,599)
equity shareholders

At 30 June 2007 1,049 56,990 96 1,273 1,626 23,294 84,328

Capital Cumulative
redemption translation
Share Share reserve Merger reserve Retained
capital premium earnings
reserve Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

At 1 January 2006 1,046 56,912 96 1,273 (178) 17,334 76,483

Shares issued 1 8 - - - - 9
Cost of share - - - - -
options
323 323
Currency - - - -
translation
adjustments 123 - 123
Profit for the - - - - - 2,599 2,599
period
Dividends paid to
equity shareholders

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- - - - - (1,491) (1,491)
At 30 June 2006 1,047 56,920 96 1,273 (55) 18,765 78,046

Shares issued 2 32 - - - - 34
Cost of share
options
- - - - - 558 558
Currency
translation
adjustments - - - - 1,016 - 1,016
Profit for the - - - - - 4,496 4,496
period
Dividends paid to
equity shareholders
- - - - - (1,263) (1,263)
At 31 December 2006

1,049 56,952 96 1,273 961 22,556 82,887

Notes to the interim statement

1 Basis of preparation

The unaudited interim financial information of ArmorGroup International plc is


for the six months ended 30 June 2007 and has been prepared on the basis of the
accounting policies set out in the Annual report and accounts for the year ended
31 December 2006. The Group's accounts for the year ended 31 December 2006 were
prepared in accordance with International Financial Reporting Standards (IFRS),
International Accounting Standards (IAS) and related interpretations, as adopted
for use in the European Union and were prepared under the historical cost
convention.

The unaudited interim financial information contained within this report


complies with the disclosures required by the Listing Rules of the Financial
Services Authority but does not comply with all the disclosures required by IAS
34 'Interim Financial Reporting' which is non-mandatory and is therefore not in
full compliance with IFRS as adopted by the European Union.

The information contained within this interim report does not constitute
statutory accounts for the purposes of section 240 of the Companies Act 1985.
The comparative financial information for the year ended 31 December 2006 has
been extracted from the Group's statutory accounts for the year ended 31
December 2006 which contained an unqualified auditors' report and have been
delivered to the Registrar of Companies.

2 Segmental reporting

Six months Six months


ended ended Year ended
30 June 30 June 31 December
2007 2006 2006

Revenue US$'000 US$'000 US$'000

Protective security services 118,620 124,415 244,510


Security training 9,436 7,228 18,329
Weapons reduction and mine clearance 8,965 2,731 10,614

Revenue 137,021 134,374 273,453

Revenue in respect of protective security services includes recharges to third


party customers at cost or cost plus a handling fee of certain contract
expenses, including insurance, equipment, travel and out of pocket expenses of
$148,000 for the six months ended 30 June 2007 (six months ended 30 June 2006:
$2,404,000; year ended 31 December 2006: $3,476,000).

Six months Six months


ended ended Year ended
30 June 30 June 31 December
2007 2006 2006

Profit before tax US$'000 US$'000 US$'000

Protective security services before head 8,467 20,345


office costs
9,830
Security training before head office costs (773) (569) (803)

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5/24/13
Weapons reduction and mine clearance 1,205 835
before head office costs
276
Head office costs (5,441) (5,272) (9,770)

Protective security services including 3,761 11,610


head office costs
4,949
Security training including head office (1,152) (1,458)
costs
(852)
Weapons reduction and mine clearance 849 455
including head office costs
168

Operating profit 3,458 4,265 10,607

Interest receivable and similar income 100 101 157


Interest payable and similar charges (1,045) (666) (1,209)

Profit before tax 2,513 3,700 9,555

Income tax expense (666) (1,101) (2,460)

Profit after tax 1,847 2,599 7,095

3 Items relating to the IPO

Prior to the IPO share options were issued to certain Directors and members of
management. There are no performance conditions and the options vest annually
in equal tranches over a 3 year period beginning on 31 December 2004 or 31 March
2005.

The charge for these pre-IPO options, which is recognised over the vesting
period and included in administrative expenses, was $10,000 for the six months
ended 30 June 2007 (six months ended 30 June 2006: $192,000; year ended 31
December 2006: $976,000, including related national insurance costs.

4 Cash inflow from operations

Six months Six months


ended ended Year ended
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000

Profit after tax 1,847 2,599 7,095


Adjustments for:
Interest receivable (100) (101) (157)
Interest payable 1,045 666 1,209
Taxation 666 1,101 2,460
Depreciation 8,030 7,815 14,871
(Profit)/ loss on disposal of property, (160)
plant and equipment
620 1,141
Amortisation of other intangible assets 254 212 440
Compensation charge in respect of share 490
based payments
323 881
12,072 13,235 27,940
Changes in working capital (excluding
effects of acquisition and disposal of
subsidiaries)
Increase in inventories (821) (338) (360)
Increase in trade and other receivables (8,277) (3,480) (768)
Increase in payables 5,563 2,952 3,786
Increase in provisions 66 24 52
Cash inflow from operations 8,603 12,393 30,650

5 Analysis of cash and cash equivalents

Cash and cash equivalents for the purposes of the cash flow statement are
analysed as follows:

30 June 30 June 31 December


2007 2006 2006
US$'000 US$'000 US$'000

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5/24/13

Cash at bank and in hand 8,718 8,708 14,646


Bank overdrafts (72) (195) (52)

Cash and cash equivalents 8,646 8,513 14,594

6 Earnings per share

Basic

Basic earnings per share is calculated by dividing the earnings attributable to


equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.

Six months Six months


ended ended Year ended
30 June 30 June 31 December
2007 2006 2006

Profit attributable to equity holders of 1,847 2,599 7,095


the Company (US$'000)
Weighted average number of ordinary shares 53,280,961 53,087,392 53,145,172
Basic earnings per share (US cents) 3.47 4.90 13.35

Diluted

Diluted earnings per share is calculated adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares.

Six months Six months


ended ended Year ended
30 June 30 June 31 December
2007 2006 2006

Profit attributable to equity holders of 1,847 2,599 7,095


the Company (US$'000)
Weighted average number of ordinary shares 53,280,961 53,087,392 53,145,172
Adjustment for dilutive potential of 1,609,430 1,156,485 1,202,826
ordinary shares
Weighted average number of ordinary shares 54,890,391 54,243,877 54,347,998
for diluted earnings per share
Diluted earnings per share (US cents) 3.36 4.79 13.05

7 Post balance sheet events

An interim dividend of 1.25 pence per share was declared after the balance sheet
date and will be paid on 9 November 2007 to shareholders on the register on 28
September 2007.

This information is provided by RNS


The company news service from the London Stock Exchange

9/9
5/24/13

ArmorGroup Intl plc

Preliminary Results
ArmorGroup International plc
20 March 2008

ArmorGroup International plc


Preliminary results

ArmorGroup International plc, the leading provider of defensive protective


security services, today announces its unaudited preliminary results for the
twelve months ended 31 December 2007. The Group can also announce that the
Board has reached agreement on the terms of a recommended cash offer for
ArmorGroup by G4S (March 2008) Limited (a wholly-owned subsidiary of G4S plc).

Summary of the results

• Revenues up 8.0% to $295.3 million, with non-Iraq revenue rising 33%

• Operating profit of $9.2 million, before $2.9 million of exceptional


aborted acquisition and severance costs, and $6.3m after exceptional items
(2006: $10.6 million).

• Profit before tax, before the exceptional costs, of $7.1 million and
$4.2million after exceptional items (2006: $9.6 million)

• Basic earnings per share of 5.5 cents (2006: 13.4 cents)

• Strong operating cash flow of $25.3 million (2005: $30.7 million)

• Recommended final dividend of 1.5 pence, giving a total of 2.75


pence for the year (2006: 2.75p)

• Recommended cash offer by G4S (March 2008) Limited, a wholly-owned


subsidiary of G4S plc, at a price of 80 pence per share in cash announced this
morning (see separate announcement for full details). The final dividend is
included in offer price and so will not be paid if offer becomes or is declared
wholly unconditional.

All figures quoted in this statement are in US$, with the exception of the
dividend and the Offer price.

Sir Malcolm Rifkind, Chairman, commenting on the results and the Offer said:

'2007 was a challenging year for the Group with continued growth in the market
and in the Group's revenues undermined by lower margins and delays on some of
its largest contracts. The management and organisational changes the Board made
towards the end of the year and at the start of 2008 have given the Group the
operational strength and commercial focus essential for improving its
profitability.

'The offer by G4S announced today gives ArmorGroup shareholders the prospect of
a cash exit at an attractive price when considered against the potential of the
ArmorGroup as a standalone business. The Board believes that G4S's offer is
full and fair and, accordingly, the Board is pleased to recommend it to
shareholders.'

Enquiries:

ArmorGroup International plc

David Barrass, Chief Executive Officer Tel: +44 (0) 20 7808 5800
Matthew Brabin, Chief Financial Officer
Patrick Toyne Sewell, Director of Communications Mob: +44 (0) 7767 498 195

1/13
5/24/13

This press release will be available to download from the ArmorGroup website at
www.armorgroup.com today after 7.00 am.

Notes to Editors

ArmorGroup International plc

For over 25 years ArmorGroup has been recognised as a leading provider of


defensive and protective security services to national governments,
multinational corporations and international peace and security agencies
operating in hazardous environments. It has approximately 8,500 employees and
38 offices in 27 countries. Over the past two years ArmorGroup has supported
its clients in over 50 countries across the Middle East, Africa, North and South
America, the CIS and central Asia.

ArmorGroup International plc is headquartered in London and listed on the London


Stock Exchange. It complies with the US Foreign and Corrupt Practices Act, 1997
and the UK's Anti-Terrorism, Crime and Security Act, 2001 and has also been
certified to ISO 9001:2000 and to ISO/IEC 27001:2005. For more information
please visit www.armorgroup.com.

Preliminary results

Summary

Overall revenue for the twelve months to 31 December grew to $295.3 million
(2006: $273.5 million) with the Group's operations in Afghanistan and Nigeria
contributing to growth of 33% outside Iraq. The Group's operations in Iraq now
represent 37% (2006: 49%) of total Group revenues.

Gross profits increased 9.9% to $65.6 million although operating profits


declined to $9.2 million, before $2.9 million of one off costs relating to the
aborted acquisition and settlement costs with the previous CEO, and to $6.3m
after the one-off costs (2006: US$10.6 million). The Group achieved good profit
growth in Iraq and from the Weapons Reduction & Mine Clearance (WR&MC) division
which was offset by widespread margin reduction, particularly in Afghanistan,
combined with contract delays.

The Group continued to achieve strong cash conversion through good working
capital management. Net debt was US$9.5 million at the year end (2006: US$3.6
million). Basic earnings per share fell to 5.5 cents (2006: 13.4 cents). The
Board is recommending a final dividend for the year of 1.5 pence to be paid on 4
July 2008 to shareholders on the register on 2 June 2008.

Moving forward

As a result of the Group's underperformance, as reported in the Group's trading


update in November, the Board carried out an immediate and full review of the
Group's organisational structure. David Barrass was appointed interim Chief
Executive Officer in December following the resignation of David Seaton in
November.

The Board's review of the Group was completed in early January and its
recommendations on the Group's structure were implemented immediately. The
changes already made to the cost base since the beginning of 2008 are expected
to result in annual savings of $3.5 million. The focus on cost reduction is
expected to lead to further savings in 2008.

The Group's new structure will make it a more commercially-focused organisation,


with a level of overhead appropriate for the current level of business. The
drive for expansion will continue although it will be tempered by greater
prudence in expenditure.

2/13
5/24/13

Outlook

The Board believes the Group's competitive advantages, the continued growth in
its markets and the changes it is making will allow the business to continue to
develop in 2008 and beyond.

The market

The major market driver continues to be the increase in government outsourcing


of security services to the private sector. The US Government has used private
contractors to support its military and diplomatic activities for many years but
there is a growing understanding and acceptance of the benefits that reputable
companies, such as ArmorGroup, can bring to the over-stretched public sector.
This change in attitude has accelerated over the last year, albeit with
set-backs resulting from the ill-judged actions of other less reputable
companies. As a result the Group has been closely involved in briefing a number
of sovereign governments and major international organisations on the
development and management of procedures and controls for wider use of private
security companies to bolster capacity.

Market growth, driven by greater use of the private security market by


governments and international peace and security organisations (NGOs), is
matched by the ongoing dependence of the oil, gas and extractive industries on
security services as they develop operations in the world's more hostile
environments. The Group continues to support its existing clients as their
operations extend into new hazardous areas while providing services to new
clients, as more international organisations accept that their duty of care
towards their employees needs the proactive security services provided by highly
regarded, international providers rather than the commoditised services offered
by local suppliers.

The Group's competitive advantages: its proven global capability; the highest
quality employees; prestigious client base; unrivalled ethical and regulatory
standards; and access to the resources required to invest in its clients'
protection, will continue to position ArmorGroup strongly.

Operational review

The Group provided its services to over 95 separate government, commercial and
NGO clients in over 45 countries during 2007. The Group's Protective Services
division had a mixed year winning and retaining a number of major strategic
contracts, yet being impacted by delays in the mobilisation and execution of
those contracts and increased margin pressure. The WR&MC division had an
excellent year, carrying out a number of major programmes won in the second half
of 2006, which resulted in a strong growth in revenues and operating profits.
The Training division undertook a cost reduction exercise at Pershore in the
second half of the year and achieved a strong performance at Longworth Hall.
However, the division continues to be undermined by the short notice
cancellation of courses in the US. The recently formed risk management business
performed creditably and continues to provide the Group with specialist skills
it could not previously offer its clients.

Protective Security Division

The Division's revenues increased by 5.6% to $258.3 million, driven by the award
of major new contracts in Afghanistan and Nigeria. Operating profits before
head office costs fell to $16.8 million (2006: $20.3 million) primarily due to
significantly lower margins on the new UK Government contract in Afghanistan,
the losses on the US Embassy contract in Kabul and weak performances from
several of the Group's African and Latin American operations.

Middle East

The Group's Middle East revenues fell to $119.7 million (2006: $138.9 million)
as the Iraq business completed its transition to the lower volume but higher
margin convoy escort contracts and away from the high volume, but lower margin,
guarding contracts of the previous year.

ArmorGroup is the largest commercial provider of convoy escort services in Iraq


and conducted a total of 2,387 convoy escort missions in support of
reconstruction efforts throughout Iraq in 2007. The security situation in Iraq
has improved since the US military's 'surge' was launched in the spring of 2007

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with around 150 hostile actions directed at ArmorGroup personnel in the second
half of the year, compared to 365 in the first half. The Group has invested a
further $6.5 million in 2007 to provide enhanced protective equipment and
vehicles for its employees.

The involvement of a number of private security companies (PSCs) in the shooting


of Iraqi civilians during September 2007 led to widespread political debate over
the use, coordination and regulation of PSCs in Iraq. This debate led to a
significant slowing in the award and mobilisation of a number of major contracts
in the country over the last quarter of the year as clients attempted to
mitigate the perceived risk to their operations and reputations. ArmorGroup,
although temporarily impacted by this slow down, continues to be a recognised
global leader in the regulatory, ethical and reputational advancement of the
industry. Performance was also impacted in the final quarter by a major
contract which did not achieve the rapid increase in convoy escort teams
originally projected by the client. This increase eventually happened in
January 2008 and the contract is now running in line with expectations.

Elsewhere the Group continued to benefit from its regional network with non-Iraq
revenues rising significantly on the back of successfully winning a number of
contracts to support US Government programmes in Bahrain, the United Arab
Emirates and Jordan. The Group's restructuring of its central overhead in the
region is expected to lead to improvements in the region's profitability in
2008.

Asia

The division's revenues in Asia grew strongly during the period to $59.5 million
(2006: $35.9 million), primarily through the securing of two strategically
important and long-term projects in Afghanistan: the US Embassy contract in
Kabul; and the extension of the Group's contract to protect UK Government
personnel and property across the country. However, operating profits for the
region fell, impacted by lower margins on the extended FCO contract due to
increased competition at the time of the rebid in late 2006 and the extensive
mobilisation costs and ongoing operational commitments associated with the US
Embassy project. The Group restructured the project management team in October
2007 and has worked closely with the client to overcome many of the outstanding
issues to ensure this project achieves profitability in 2008.

The Group has continued to win an increasing number of commercial contracts in


Afghanistan and believes that the international commitment to the reconstruction
of the country will present further opportunities in 2008.

The Tokyo sales and marketing office continues to source a good stream of
opportunities from Japanese companies operating across the world and the Group
remains committed to those efforts.

Africa

African revenues improved 26% to $37.2 million (2006: $29.6 million) with strong
performances from the Group's operations in Algeria, Nigeria and the Democratic
Republic of Congo. However, the Group's African businesses continue to be
impacted by the increasing commoditisation of its services, driven by local
competition and the tendency of some clients to award contracts based on price
rather than quality.

The Group is in the process of realigning its businesses across the continent
through the consolidation of living and office accommodation, reductions in
local head office staff and a focus on operational and accounting procedures.
At the same time the Group is implementing a training and quality assurance
programme across the region to ensure performance standards and Duty of Care
responsibilities are maintained. The Group expects the benefits of these
programmes to become evident over the first half of 2008.

The Group continues to pursue additional opportunities across the region,


building on its growing consultancy and training track record, and has more
recently supported clients' bids for opportunities in Libya and Sudan as well as
providing a wide range of emergency services for organisations affected by the
recent troubles in Kenya.

North America

ArmorGroup North America's revenues increased to $7.4 million (2006: $6.6

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million), primarily due to a continuation of its reconstruction support
activities in Louisiana. The Washington office continues to provide the hub for
the Group's bidding for and management of major US Government contracts overseas
while coordinating the Group's relationships with the larger US defence
integrators on potential opportunities. There was some reorganisation of the US
cost-base at the beginning of 2008 to reduce its costs in line with its current
revenue base.

South America

South American revenues decreased marginally to $20.5 million (2006: $21.0


million) with a good performance in Venezuela offset by a very poor one in
Colombia and a slow decline in Ecuador. A reorganisation of the South American
business has been undertaken with the region now being managed out of Venezuela,
a new commercial manager appointed to run the Colombian business and the closure
of the loss-making Brazil office.

The Group's businesses in the region will continue to be impacted by growing


government intervention and increasing commoditisation of services by local
competition. However, the new management team, a rebalanced cost base and an
increasing number of multinational clients is expected to deliver better returns
in 2008.

Eurasia

Revenues in Eurasia fell 7% to $12.3 million (2006: $13.3 million) primarily due
to the loss of the US Embassy Moscow contract in mid-year and a number of major
commercial contracts coming to an end in the third quarter of the year.
However, the business was awarded contracts in the final quarter of the year
which will replace a substantial portion of the lost revenue in 2008. The
business has also established partnership arrangements with reputable local
security providers in a number of key Siberian cities and former Soviet
republics, including Kyrgyzia and Azerbaijan.

Risk management

The risk management business was formed in the autumn and was built around Neil
Young International, the Group's specialist abduction, kidnap for ransom and
extortion consultancy which was acquired in January 2007. The business has
made a satisfactory start with a modest but expanding number of consulting
projects for major international companies in the Middle East and Africa.
However, the business is also generating an increasing number of opportunities
for other Group services and we expect to benefit further from this
cross-selling programme in 2008.

Security Training Division

Training revenues grew by 1% to $18.5 million (2006: $18.3 million) and reported
a comparable operating loss, before charging its share of head office costs, of
$0.8 million for the year (2006: loss of $0.8 million).

The Group's training business in the US continued to be impacted by the


cancellation of client courses at short notice with the delays in the Congress
approval for the US Defense budget leading to further cut backs in the fourth
quarter as clients were left without sufficient training budgets. The ongoing
commitment to the training of the US Embassy Kabul guard force continues to tax
resources and the ability to offer commercial courses at the Group's Texas
facility. Some of this commitment shifted to the Group's Virginia facility, in
order to share the burden of this important effort and resulted in the Texas
facility performing well towards the end of the year. The Defense budget was
passed in January 2008, which has enabled US Government clients to book new
courses and reschedule cancelled ones. In February 2008, the business was
awarded its first long-term contract, worth a maximum of $7.5 million over five
years, to provide training for the US Department of Homeland Security.

The cost reduction exercise at the Pershore training facility in July


significantly reduced its previous losses. Due to the continued lack of
sustained interest by UK companies in providing programmed pre-deployment
training to employees, its costs were further reduced in January 2008 and its
instructors refocused on providing internal training as a Group-wide resource.

Our specialist courses continue to develop and the Group anticipates those
courses will run for an extended period. The Group has now suspended its low

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margin, close protection training courses to ensure management focus on these
courses.

Weapons Reduction & Mine Clearance Division

The division had an excellent year, achieving $18.5 million in revenues (2006:
$10.6 million) and achieving $3.3 million in operating profit before head office
costs (2006: $0.8 million). The division now accounts for around 6% of Group
revenues, up from 4% in the same period last year. The majority of this revenue
was generated by two major contracts which mobilised in the second half of 2006:
a mine survey and clearance programme in Southern Sudan; and a battle area
clearance programme in South Lebanon. The former contract was substantially
re-awarded to the Group in September although the latter programme was completed
in December, which will impact the division's revenues in the first half of
2008.

The division continued to win new contracts and contract extensions throughout
the year, supporting humanitarian programmes in Cyprus, Nepal and Sudan as well
as pursuing further commercial projects in Afghanistan and Mozambique. The team
also won a number of smaller projects in Albania, Azerbaijan and Montenegro as
part of the US Government's Weapons Reduction and Abatement Services programme.

The division has continued to extend its commercial footprint in Afghanistan,


which is becoming one of the more important growth markets for mine action, and
ArmorGroup is one of only five registered mine action companies in the country.
The division has now supported both commercial and humanitarian clients across
Afghanistan and as reconstruction activity continues is well-placed to benefit
from further growth.

Financial Review

Overall revenue for the twelve months to 31 December grew to $295.3 million
(2006: $273.5 million). Gross margins were maintained at 22% for the year as
whole, despite a number of major contracts which were re-awarded at
significantly lower margins.

Gross profits increased 9.9% to $65.6 million. Administrative expenses,


excluding exceptional items, increased 14.9% year on year to $56.4 million
(2006: $49.1 million), evenly split over the two halves of the year, with the
increase primarily due to: $2.4 million in legal, consultancy and insurance
costs; $0.9 million of Mine Action establishment costs in relation to new
contracts in Afghanistan, Sudan and Nepal; and $1.9 million increased cost base
in Nigeria, partially related to the introduction of a consultancy and training
capability in that country.

Profits were expected to be adversely affected by the weakness over the year of
the US$, the Group's primary operating currency, which had an impact of $0.4
million in the first half. However, due to the strengthening of the US$ in the
last two months of the year the impact was reduced to $0.1 million over the year
as a whole (2006: loss of $0.6 million). The Group continues to review how best
to reduce this exposure going forward, although the strengthening of the US$
since the beginning of 2008 has reduced the effects of this issue.

The Group incurred two one-off costs during the year:

• the Board reported in December that the Group had been unable to
progress a strategic acquisition that had been the subject of extensive
discussions for some months, primarily due to the reduced availability of
acquisition finance following the collapse of global credit markets in the
second half of the year. Consequently the Group wrote off $2.1 million of
professional fees incurred on the due diligence and contract negotiations in
2007.

• the Group also charged $0.7 million of severance costs related to


former CEO David Seaton, following his departure from the Group in November
2007.

A review of the Group's overhead structure was undertaken over the year end with
a significant reorganisation of the Group's operations in January 2008. The
reorganisation is expected to cost $0.9 million in 2008 and will produce annual
savings of $3.5 million. The focus on cost reduction is expected to lead to
further savings in the near future.

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Operating profit, before the $2.9 million of exceptional costs, was down to $9.2
million (2006: $10.6 million) with good growth in Iraq and from the WR&MC
division offset by widespread margin reduction, particularly in Afghanistan in
the first half of the year, combined with contract delays.

Net interest charges increased to $2.1 million, compared to $1.1million in 2006.


The charge reflects the interest costs associated with the $23.7 million (2006:
$18.7 million) capital investment in the business over the year including: $10.8
million on the acquisition of over 175 vehicles; $3.6 million on a Group-wide IT
system, which is now substantially complete and already bringing significant
benefits; and $3.4 million on equipment for a major contract in Colombia.
Capital expenditure will continue to be aligned to the operational equipment
required for new contract awards. Profit before tax, taking into account the
$2.9 million of exceptional charges, was reduced to $4.2 million (2006: $9.6
million).

The Group's effective tax rate during the period increased to 30% (2006: 26%)
which reflects the mix of jurisdictions where profits have been generated, the
release of provisions and the Group's ability to utilise tax losses in the US,
Nigeria and Kenya. Profit after tax fell by 58.4 % to $3.0 million (2006: $7.1
million) and basic earnings per share to 5.5 cents (2006: 13.4 cents).

The Group achieved a good cash conversion rate of 275% (2006: 289%), before
exceptional items, with cash inflow from operations of $25.3million (2006: $30.7
million) as a result of a strong management focus on improving working capital.
Net debt at 31 December 2007 had increased to $9.5 million at the year end
(2006: $3.6 million). The Group still has a strong balance sheet comprising
US$18.2 million (2006: $14.6 million) of positive cash balances offset by bank
borrowings of US$27.7 million (2006: $18.2 million). Net assets at 31 December
2007 were $84.1 million (2006: $82.9 million).

The Board will be recommending the payment of a final dividend of 1.5 pence on 4
July 2008 to shareholders on the register on 2 June 2008. Combined with the
interim dividend of 1.25 pence, which was paid in November 2007, this will
result in a dividend for the year of 2.75 pence (2006: 2.75 pence).

ArmorGroup International plc


Consolidated income statement for the year ended 31 December 2007
Unaudited

Year ended Year ended


31 December 31 December
Note 2007 2006
US$'000 US$'000

Revenue 3 295,275 273,453


Cost of sales (229,695) (213,784)

Gross profit 65,580 59,669

Administrative expenses before exceptional items (56,387) (49,062)


Exceptional administrative expenses 4 (2,856) -

Operating profit before exceptional items 9,193 10,607


Exceptional administrative expenses 4 (2,856) -
Operating profit 6,337 10,607

Finance income 5 136 157


Finance costs 5 (2,246) (1,209)

Profit before tax 4,227 9,555

Income tax expense 7 (1,275) (2,460)

Profit for the year 2,952 7,095

Profit attributable to:


Equity shareholders 2,952 7,095

Earnings per share expressed in US cents per 1 pence share


- basic 9 5.53 13.35
- diluted 9 5.35 13.05

ArmorGroup International plc


Consolidated balance sheet as at 31 December 2007
Unaudited

31 December 31 December

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2007 2006
US$'000 US$'000
Non-current assets
Goodwill 22,850 21,317
Other intangible assets 4,268 810
Property, plant and equipment 33,697 30,870
Deferred tax assets 5,858 3,845
66,673 56,842
Current assets
Inventories 1,874 1,530
Trade and other receivables 58,060 54,033
Cash and cash equivalents 18,158 14,646
78,092 70,209

Total assets 144,765 127,051

Current liabilities
Borrowings (21,474) (14,614)
Trade and other payables (28,919) (21,157)
Current income tax liabilities (1,723) (2,102)
Provisions and other liabilities (33) (134)
(52,149) (38,007)

Non-current liabilities
Borrowings (6,185) (3,592)
Provisions and other liabilities (37) (131)
Deferred tax liabilities (2,327) (2,434)
(8,549) (6,157)

Total liabilities (60,698) (44,164)

Net assets 84,067 82,887

Capital and reserves attributable to equity holders of the


Company
Called up share capital 1,052 1,049
Share premium account 56,993 56,952
Capital redemption reserve 96 96
Merger reserve 1,273 1,273
Cumulative translation reserve 1,403 961
Retained earnings 23,250 22,556

Total equity 84,067 82,887

ArmorGroup International plc


Consolidated cash flow statement for the year ended 31 December 2007
Unaudited

Year ended Year ended


31 December 31 December
Note 2007 2006
US$'000 US$'000
Cash flows from operating activities
Cash generated from operations 10 25,274 30,650
Interest received 136 157
Interest paid (1,546) (1,271)
Income tax paid (3,774) (2,418)
Net cash generated from operating activities 20,090 27,118

Cash flows from investing activities


Purchase of businesses (net of cash acquired) (884) (52)
Purchase of property, plant and equipment (19,231) (18,105)
Purchase of intangible assets (3,567) (524)
Proceeds from sale of property, plant and equipment 1,035 122
Net cash used in investing activities (22,647) (18,559)

Cash flows from financing activities


Net proceeds from issue of ordinary share capital 44 43
Equity dividends paid to shareholders (2,976) (2,754)
New bank borrowings 14,189 3,460
Finance lease principal payments (53) (43)
Repayment of borrowings (5,226) (6,986)
Net cash generated from / (used in) financing activities 5,978 (6,280)

Net increase in cash and cash equivalents 3,421 2,279

Cash and cash equivalents at beginning of year 14,594 12,279


Exchange gains on cash and bank overdrafts 143 36
Cash and cash equivalents at end of year 18,158 14,594

10

ArmorGroup International plc


Consolidated statement of changes in shareholders' equity for the year ended

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31 December 2007
Unaudited

Share Share Capital Merger Cumulative Retained


capital premium redemption translation earnings
Share reserve reserve reserve
Note account Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

At 1 January 2006 1,046 56,912 96 1,273 (178) 17,334 76,483

Share options
- Proceeds from shares issued 3 40 - - - - 43
- Cost - - - - - 881 881
Currency translation - - - - 1,139 - 1,139
adjustments
Profit for the year - - - - - 7,095 7,095
Dividends paid to equity 8 - - - - - (2,754) (2,754)
shareholders

At 31 December 2006 1,049 56,952 96 1,273 961 22,556 82,887

Share options
- Proceeds from shares issued 3 41 - - - - 44
- Cost - - - - - 718 718
Currency translation - - - - 442 - 442
adjustments
Profit for the year - - - - - 2,952 2,952
Dividends paid to equity 8 - - - - - (2,976) (2,976)
shareholders

At 31 December 2007 1,052 56,993 96 1,273 1,403 23,250 84,067

ArmorGroup International plc


Notes to financial information

1. Preliminary announcement

The preliminary financial information in this statement, which was approved by


the Board on 19 March 2008, is not audited and does not constitute statutory
accounts for the years ended 31 December 2007 or 31 December 2006 within the
meaning of Section 240 of the Companies Act 1985 (as amended). Financial
statements for ArmorGroup International plc for the year ended 31 December 2006
presented under IFRS have been delivered to the Registrar of Companies. The
auditors reported on those accounts: their report was unqualified and did not
contain a statement under either Section 237 (2) or Section 237 (3) of the
Companies Act 1985.

As at the date of this announcement the auditors have not reported on the
Group's financial statements for the year ended 31 December 2007, nor have such
financial statements been delivered to the Registrar of Companies. The
financial statements for the year ended 31 December 2007 will be distributed to
shareholders prior to, and filed with the Registrar of Companies following, the
Annual General Meeting.

2. Basis of preparation

The preliminary financial information has been prepared in accordance with the
Listing Rules of the Financial Services Authority and uses EU adopted
International Financial Reporting Standards (IFRS) accounting policies
consistent with those described in the Annual Report and Financial Statements
2006. During the year ended 31 December 2007, the Company has defined its
accounting policy for exceptional items. Exceptional items are material
non-recurring items of income and expense separately disclosed by virtue of
their size or significance to enable a full understanding of the group's
financial performance.

The directors consider United States Dollars (US$) to be the Group's functional
currency. Accordingly, this financial information is presented in US$. At 31
December 2007 the closing exchange rate to sterling was £1/US$1.997 (31 December
2006: £1/US$1.958) and the average exchange rate to sterling for the year ended
31 December 2007 was £1/US$2.001 (31 December 2006: £1/US$1.8398).

The preparation of financial information in conformity with generally accepted


accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial

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statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.

3. Segmental reporting

a. Primary reporting format - business segment analysis

2007 2006
Revenue US$'000 US$'000

Protective security services 258,282 244,510


Security training 18,490 18,329
Weapons reduction and mine clearance 18,503 10,614

Revenue 295,275 273,453

Revenue in respect of protective security services includes recharges to third


party customers at cost or cost plus a handling fee of certain contract
expenses, including insurance, equipment, travel and out of pocket expenses of
US$1,848,000 for the year ended 31 December 2007 (2006: US$3,476,000).

2007 2006
Profit for the year from continuing operations US$'000 US$'000

Protective security services before head office costs 16,847 20,345


Security training before head office costs (826) (803)
Weapons reduction and mine clearance before head office costs 3,348 835
Head office costs (10,176) (9,770)

Segment result
Protective security services including head office costs 7,946 11,610
Security training including head office costs (1,463) (1,458)
Weapons reduction and mine clearance including head office costs 2,710 455

Operating profit before exceptional items 9,193 10,607

Exceptional items (2,856) -

Operating profit 6,337 10,607

b. Secondary format - geographical segment analysis

The group manages its business segments on a global basis.

Revenue
2007 2006
US$'000 US$'000

Western Europe 10,496 10,174


Eastern Europe 13,876 13,939
South America 20,522 20,959
North America 16,844 14,914
Asia 62,888 36,636
Africa 45,617 35,413
Middle East 125,032 141,418

295,275 273,453

Geographical analysis is based on the region in which the services are


performed.

3. Exceptional items

Exceptional items include $2,124,000 of costs incurred as a result of the


decision taken not to progress with a strategic acquisition. The costs relate
to professional fees incurred on the due diligence and contract negotiations.

In addition, $732,000 included in exceptional items relates to the redundancy


package for the former CEO Dave Seaton.

4. Net finance costs

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2007 2006
US$'000 US$'000

Finance costs on bank overdrafts and loans 2,244 1,201


Finance costs on finance leases 2 8

Total finance costs 2,246 1,209


Finance income (136) (157)

Net finance costs 2,110 1,052

5. Acquisitions and Disposals

Acquisitions

On 10 January 2007 the Group purchased 100% of the ordinary share capital of
Neil Young Associates for a consideration of £250,000 in cash and a further
£375,000 of deferred consideration to be paid in three annual tranches,
dependent on the annual profits of Neil Young Associates. Neil Young Associates
provides kidnap and extortion prevention, training and response services. The
acquisition was satisfied by £321,500 in cash (inclusive of £71,500 acquisition
costs) and £375,000 cash in deferred consideration, resulting in provisional
goodwill of £696,500. Goodwill arising on the acquisition was US$1,385,000 and
was attributed to the anticipated profitability of the acquired business and the
synergies expected to arise. The fair value of the net assets acquired on the
acquisition of Neil Young Associates was £100, being the nominal value of the
share capital.

From the date of acquisition to 31 December 2007 Neil Young Associates


contributed US$1,798,000 to revenue, increased profit before interest by
US$593,000 and increased profit before taxation by US$592,000. Neil Young
Associates contributed US$4,000 to the Group's net operating cash inflows, paid
US$ nil in respect of interest, US$ nil in respect of taxation and utilised
US$2,000 for capital expenditure.

There were no acquisitions or disposals during the year ended 31 December 2006.

6. Income tax expense

Analysis of expense for the year 2007 2006


US$'000 US$'000
UK current tax
Corporation tax charge at 30% (2006: 30%) 2,105 1,792
Adjustment in respect of prior periods 1,032 (16)
3,137 1,776
Foreign current tax
Corporation tax charge 1,325 670
Adjustment in respect of prior periods (1,094) (455)
231 215
Total current tax expense 3,368 1,991

UK deferred tax
Deferred tax charge 695 597
Adjustment in respect of prior periods (662) 62
Impact of change in UK tax rate 55 -
88 659
Foreign deferred tax
Deferred tax credit (2,084) (115)
Adjustments in respect of prior periods (97) (75)
(2,181) (190)
Total deferred tax (credit) / expense (2,093) 469

Income tax expense 1,275 2,460

The total income tax expense for the year is higher (2006: lower) than the
standard rate of corporation tax in the UK (30%). The differences are explained
below:

2007 2006
US$'000 US$'000

Profit before income tax 4,227 9,555

Profit multiplied by standard rate of corporation tax in the 1,268 2,867


UK of 30% (2006:30%)
Effects of:
Adjustments to tax in respect of prior periods (821) (484)
Adjustments in respect of foreign tax rates (1,530) (1,946)

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Expenses not deductible for tax purposes 537 266
Depreciation in excess of capital allowances 49 13
Other timing differences 72 (27)
Utilisation of losses (74) (257)
Unrelieved foreign tax credits 441 343
Unrelieved losses carried forward 356 262
Deferred tax on undistributed earnings 922 1,423
Remeasurement of deferred tax - change in UK tax rate 55 -

Income tax expense 1,275 2,460

7. Dividends

A dividend of 1.5 pence per share will be recommended by the Board after the balance sheet date and will be paid on 4
July 2008 to shareholders on the register on 2 June 2008.

An interim dividend for 2007 of 1.25p per share, amounting to US$1,377,000, was
paid on 9 November 2007 to shareholders on the register on 28 September 2007.

A second interim dividend for 2006 of 1.50 pence per share, amounting to US$1,599,000, was paid on 2 July 2007 to
shareholders on the register on 1 July 2007.

An interim dividend for 2006 of 1.25 pence a share, amounting to US$1,263,000,


was paid on 10 November 2006 to shareholders on the register at 29 September
2006.

8. Earnings per share

Basic

Basic earnings per share is calculated by dividing the earnings attributable to


equity holders of the Company by the weighted average number of ordinary shares
in issue during the year.

2007 2006

Profit attributable to equity holders of the Company (US$'000) 2,952 7,095


Weighted average number of ordinary shares 53,355,360 53,145,172
Basic earnings per share (US cents) 5.53 13.35

Diluted

Diluted earnings per share is calculated by adjusting the weighted average


number of ordinary shares outstanding to assume allotment of all dilutive
potential ordinary shares. The Group has one class of dilutive potential
ordinary shares: those share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the year.

2007 2006

Profit attributable to equity holders of the Company (US$'000) 2,952 7,095


Weighted average number of ordinary shares 53,355,360 53,145,172
Adjustment for dilutive potential of ordinary shares 1,832,582 1,202,826
Weighted average number of ordinary shares for diluted 55,187,942 54,347,998
earnings per share
Diluted earnings per share (US cents) 5.35 13.05

9. Reconciliation of profit after tax to net cash generated from operating


activities

2007 2006
US$'000 US$'000

Profit after tax 2,952 7,095


Adjustments for:
Finance income (136) (157)
Finance costs 2,246 1,209
Taxation 1,275 2,460
Depreciation 14,610 14,871
Loss on disposal of property, plant and equipment 953 1,141
Amortisation of intangible assets 818 440
Compensation charge in respect of share based payments 718 881

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23,436 27,940
Changes in working capital (excluding effects of acquisition
of subsidiaries)
Increase in inventories (344) (360)
Increase in trade and other receivables (4,035) (768)
Increase in payables 6,412 3,786
(Decrease)/increase in provisions (195) 52
Cash generated from operations 25,274 30,650

Cash and cash equivalents include the following for the purposes of the cash
flow statement:

2007 2006
US$'000 US$'000

Cash and cash equivalents 18,158 14,646


Bank overdrafts - (52)

18,158 14,594

10. Reconciliation of net cash flow to movement in net debt

2007 2006
US$'000 US$'000

Increase in cash in the year 3,421 2,279


(Increase)/decrease in other borrowings (8,910) 3,569

Changes in net debt resulting from cash flows (5,489) 5,848


Other non-cash movements (595) -
Foreign exchange translation adjustments 143 24

Movement in net debt in the year (5,941) 5,872


Net debt at the beginning of the year (3,560) (9,432)

Net debt at the end of the year (9,501) (3,560)

11. Reconciliation of movements in net debt

Group At 1 Cash flow At 31


January Non-cash Exchange December
2007 movements movement 2007
US$'000 US$'000 US$'000 US$'000 US$'000

Cash at bank and in hand 14,646 3,369 - 143 18,158


Overdrafts (52) 52 - - -
14,594 3,421 - 143 18,158

Bank and other borrowings due (14,509) (3,056) (3,887) - (21,452)


within one year
Bank and other borrowings due in (3,588) (5,907) 3,358 - (6,137)
more than one year
Finance leases (57) 53 (66) - (70)

(3,560) (5,489) (595) 143 (9,501)

This information is provided by RNS


The company news service from the London Stock Exchange

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Morson Group PLC

Preliminary Results
RNS Number : 4331A
Morson Group PLC
30 March 2012

Morson Group PLC


("Morson" or "the Group")

Audited preliminary results for the year ended 31 December 2011

Morson (AIM: MRN.L) the UK's leading provider of technical contracting personnel to the aerospace
and defence, nuclear and power, rail and other technical industries, is pleased to announce its
preliminary results for the year ended 31 December 2011.

Financial Highlights

Solid trading performance in a competitive market place aided by the breadth of our offering:

· Group revenues exceed £0.5 billion, up 11.0% to £507.9 million (2010: £457.6 million)
· Group net fee income (gross profit) up 10.9% to £38.9 million (2010: £35.1 million)
· Adjusted profit before tax* down 12.4% to £7.1 million (2010: £8.1 million)
· Profit before tax down 38.9% to £5.7 million (2010: £9.4 million)
· Adjusted basic earnings per share* down 12.7% to 12.27 pence (2010: 14.06 pence)
· Basic earnings per share down 36.2% to 10.01 pence (2010: 15.69 pence)
· Net debt at year end up 43.7% to £33.3 million (2010: £23.2 million)

Business Highlights

· Average contractor numbers engaged up 700 to 10,900


· Strength in core markets
· Excellent client retention rate
· Continued expansion and investment for the future:
o Aberdeen recruitment office and Bristol design centre opened
o Growing niche areas of IT, Oil & Gas and Telecommunications

* Before amortisation of £866,000 (2010: £620,000), exceptional gain on acquisition of businesses £nil (2010: £1,249,000), exceptional
restructuring costs £110,000 (2010: £404,000) and fair value loss regarding the derivative financial instruments £391,000 (2010: gain
£1,063,000).

Commenting on the outlook Gerry Mason, Non Executive Chairman, said:

"The Board's view is that the current year will again be challenging. We expect our core markets to
remain solid but margin pressures to continue. We have several key contract renewals and
extensions that fall due in 2012 and will be focussed on achieving these, developing service
capabilities and expertise and planning for the longer term growth of the business.

Aerospace, particularly on the civil side, is performing well and remains the largest business sector
for us. Rail has recently seen government support for further future rail improvement programmes. We
expect nuclear power to become a key contributor to the UK's energy needs and that there will be an
increasing resource requirement in the near future entailing not just new nuclear stations but also the
site support facility, control environment and the upgrading work needed on the UK power
transmission grid and infrastructure."
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For further information please contact:

Morson Group plc 0161 707 1516


Ged Mason, Chief Executive Officer
Paul Gilmour, Group Financial Director

WH Ireland Ltd.
Adrian Hadden, Nick Field 0207 220 1666

Buchanan 020 7466 5000


Diane Stewart, James Strong, Carrie Clement

CHAIRMAN'S STATEMENT

INTRODUCTION
In a challenging year, it is pleasing to be able to report further growth in revenues and Net Fee
Income, albeit there has been considerable pressure on operating margins and hence profits are at a
lower level. Compared with 2010, Revenue exceeded £0.5 billion, increasing by 11.0% to £507.9
million and Net Fee Income increased 10.9% to £38.9 million. Adjusted profit before tax (see
derivation in table in Business Review below) decreased by 12.4% to £7.1 million, reflecting
continued pricing pressure, ongoing investments in new areas and a reduced contribution from
Morson Projects, our engineering consultancy division. Profit before tax decreased by 38.9% to £5.7
million.

At an operational level, our core markets have held up well, particularly in aerospace, marine and
defence. All material contracts which were up for renewal during the year were won and the Group
continued to grow the numbers of contractors placed and to expand our offering both in the UK and
overseas.

The year 2011 has been one in which much of the business community has experienced continuing
challenges with financial constraint and economic uncertainty and we have seen this impact
business confidence, strategy, investment and performance in some areas of our client base. As a
leading provider of talent and services, across sectors, to many of the UK's largest engineering
businesses the Group is in a strong position but this inevitably impacted our performance with some
areas of our business being affected more than others.

Morson has had to be cognizant of the impact of the trading environment in each of our areas of
activity and has planned and managed the business in 2011 to deal with market conditions. During
the year, we concentrated on delivering increased market share whilst investing in niche areas that
should deliver returns in the future.

The Group has also faced notable challenges during the year and addressed a need for change and
investment within our engineering consultancy division Morson Projects including welcoming a new
Managing Director and Finance Director. This is a key aspect of developing the Group's future
relationships and capabilities.

The Group balance sheet remains strong. The increased levels of revenues and expansion into new
markets have increased the working capital requirements of the business during the year. This and
the £4.0 million acquisition of the non-controlling minority stake in Morson Wynnwith have contributed
to increased net debt levels to £33.3 million (2010: £23.2 million) at 31 December 2011. This remains
well within facility limits.

RESULTS
Key financial and business highlights include:

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Financial Highlights

Solid trading performance in a competitive market place aided by the breadth of our offering:

· Group revenues exceed £0.5 billion, up 11.0% to £507.9 million (2010: £457.6 million)
· Group net fee income (gross profit) up 10.9% to £38.9 million (2010: £35.1 million)
· Adjusted profit before tax* down 12.4% to £7.1 million (2010: £8.1 million)
· Profit before tax down 38.9% to £5.7 million (2010: £9.4 million)
· Adjusted basic earnings per share* down 12.7% to 12.27 pence (2010: 14.06 pence)
· Basic earnings per share down 36.2% to 10.01 pence (2010: 15.69 pence)
· Net debt at year end up 43.7% to £33.3 million (2010: £23.2 million)

Business Highlights

· Average contractor numbers engaged up 700 to 10,900


· Strength in core markets
· Excellent client retention rate:
· Continued expansion and investment for the future:
o Aberdeen recruitment office and Bristol design centre opened
o Growing niche areas of IT, Oil & Gas and Telecommunications

* Before amortisation of £866,000 (2010: £620,000), exceptional gain on acquisition of businesses £nil (2010: £1,249,000), exceptional
restructuring costs £110,000 (2010: £404,000) and fair value loss regarding the derivative financial instruments £391,000 (2010: gain
£1,063,000).

STRATEGY
The markets in which we operate are competitive. We differentiate our service on the basis of quality,
excelling at what we do and providing efficient, cost saving solutions for our clients. We are not
complacent and constantly innovate and develop our services to retain these long standing
relationships.

Within recruitment many of our sectors are mature and with high volumes generate low margin
returns, but run efficiently. The Group has sought to maintain these core strengths and position
Morson for organic growth as market conditions improve. This has included ongoing investment in our
business systems, operations and sales development teams.

Contemporaneously the Group has also invested in chosen developing markets that offer increased
opportunities for return and growth. This includes activity with clients in overseas locations both
through subsidiary operations and via our established UK offices. It has also included seeking to
increase our permanent recruitment activity and whilst this area has developed at a slower pace than
anticipated, in 2012 we will refocus resource to niche skillsets where we feel demand is higher.
Whilst these developing initiatives will require investment in terms of cost and working capital the
Board believe they will form an increasingly important part of Group activities in the years to come.

Whilst 2011 was a difficult year for Morson Projects, in recent years it has delivered good revenues
and grown our capability and skillsets across several exciting emerging engineering markets. It is
also, of course, an internal Group client for our recruitment activity. We have high quality clients, both
in the UK and overseas, involved in cutting-edge, innovative engineering projects and have a wealth of
design skills to call on. We wish to increase the returns we achieve on this business and have
initiated review, change and internal goals and aspirations to achieve this.

EMPLOYEES
Our staff continue to work hard and display great loyalty and commitment to what we do at Morson.
As we enter our 43rd year in business and see many staff with 10 and 20 years of service, and even
second generations joining us, it is a great testament to them and the business culture and
environment in which we all work. I am pleased on behalf of the Board to pass on our appreciation
and sincere gratitude to them all.

DIVIDEND
In December 2011 the Board took the decision that a final dividend for the year ended 31 December
2011 would not be proposed. As we set out at that time, investments in the business and
maintenance of core business and client relationships is key and we are mindful of the need to
manage cash resources appropriately. As we have previously announced, the Board will not be
reviewing its decision to suspend dividend payments until the time of the publication of the interim
2012 results, which is expected to be in September 2012. However, shareholders should be aware
that, for the reasons we have set out, there can be no guarantee that any dividend will be paid in
respect of the current financial year.

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OUTLOOK
The Board firmly believes that engineering talent will be in demand in the global economy in the years
to come and that the UK has a role to play in that market. Our highly qualified engineers, designers
and technical staff are respected throughout the world market and Morson intends to play a pivotal
role in supplying this talent, expanding our footprint overseas and constantly improving our delivery
and expertise. Clearly as we have several large key contract renewals and extensions that fall due in
2012 this will also be a major focus.

We expect our core markets to remain solid in the coming year. Aerospace, particularly on the civil
side, is performing well and remains the largest business sector for us. Rail has recently seen
government support for further future rail improvement programmes. We expect nuclear power to
become a key contributor to the UK's energy needs and that there will be an increasing resource
requirement in the near future entailing not just new nuclear stations but also the site support facility,
control environment and the upgrading work needed on the UK power transmission grid and
infrastructure.

Importantly, all of Morson's core areas have underlying maintenance requirements that have a very
long term future engineering need. Coupled with this, our investments into new areas and improving
our returns on design consultancy should enhance our performance.

Your Board's view is that the current year will again be challenging. We will plan for the longer term
growth and development of Morson to maintain our reputation, standards and market share and to
continue to deliver expert and flexible solutions and services to our clients.

GERRY MASON
NON EXECUTIVE CHAIRMAN

BUSINESS REVIEW

OVERVIEW: PERFORMANCE, MARKETS AND POSITION


The 2011 financial year has been a challenging one. The markets in which we operate have seen
intense competition and through the year the varying levels of confidence, due to wider economic
uncertainty, within our client base have affected demand. Our market position and framework
agreements are core strengths that have maintained solid and sustained business streams over
many years and these have enabled the Group to deliver growth in difficult markets.

During the year, we balanced the need to cut costs with a controlled and proportionate programme of
investment and change within the business. This aims to develop new lines of activity, raise
operational expertise and change and enhance systems and structure. We feel this will deliver
opportunities and returns in the future. A series of key performance indicators are presented later in
this review. For 2011 we returned adjusted pre-tax profits of £7.1 million (2010: £8.1 million)
maintaining significant profit levels in difficult trading conditions.

Our core focus is the provision of temporary staffing solutions to the UK recruitment market with
market leading positions in key sectors. This accounts for 91% of Group revenues. We are seeking
to expand our offering into overseas markets, permanent recruitment, other related engineering and
technical recruitment sectors and of course design consultancy.

Within Morson Projects, we have achieved revenue of £45.2 million, an increase of 20.7% over 2010.
However, here we have also experienced the most difficult trading with segment operating profit down
72.3% to £0.5 million (2010: £1.7 million). There have been several technically demanding projects
that have seen some cost overruns and scope change negotiation. However, these are not expected
to impact the coming year to the same extent and represent increases in technical knowledge and
capability gained by working through change and challenge with our clients on new concept design
work and structural materials. This has been complemented with other investment in this business.
We have improved our technical software offerings and reviewed and instigated a change in our office
network with an opening of a design centre in Bristol. Again we feel this will deliver opportunities and
returns in the future.

Activity with overseas clients is an area the Group is seeking to grow, both through an overseas
network of offices and contracting directly from our UK base. This applies both to recruitment and

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design consultancy. Across the Group revenues generated from non-UK activity amounted to £39.4
million (2010: £24.0 million). Whilst the development of overseas operations requires cost and
working capital input, the Board believes it to be a key part of achieving future earnings growth.

We feel it is important to remain known as a specialist engineering and technical service provider.
Our brand is well known, both to clients and the engineering and skilled technical professional
community. Sectors within which the Group operates include Rail, Power, Aerospace, Defence,
Nuclear, Telecommunication ("Telecoms"), Marine, Oil & Gas and Automotive. We work in 40
locations across the UK (being 27 stand alone branches and 13 offices co-located at client sites),
and internationally through a strategic network of 7 overseas offices in Italy, Germany, South Africa,
Serbia, Brazil, Colombia and Australia. Changes this year are new additions of Aberdeen,
Johannesburg and a new Bristol combined site.

SECTOR REVIEW

RECRUITMENT SERVICES
Temporary and permanent recruitment activity contributes 91.1% (2010: 91.8%) of Group sales and
84.7% (2010: 81.1%) of NFI. This represents a 10.1% growth in net revenue (revenue to third parties)
to £462.7 million (2010: £420.2 million) and a gross margin increase to 7.1% (2010: 6.8%) delivering
gross profits of £32.9 million (2010: £28.5 million) (segment gross margins are based on net revenue).
Adjusted operating profit for this segment was up 2.7% to £9.1 million (2010: £8.9 million).

Aerospace, Marine and Defence


This remains our largest sector, accounting for approximately 42% of Group revenue. It has again
delivered a good performance, benefiting from core substantial agreements with Xchanging (re BAE
Systems), Airbus/EADS, Thales, Babcock, GKN, Bombardier, QuEST Global and Finmeccanica
Group. Importantly Morson's strength in this sector is its capability which spans both military and
civil aircraft programme development.

As we had indicated prior to and through 2011, the Government's defence spending review in late
October 2010 had an immediate impact on activity at several BAE Systems' military aircraft sites.
Accordingly our activity through this contract was reduced. However, we have done well in other
defence areas including marine and maintenance and service of fixed wing and helicopter fleets to
offset such losses. Our presence in this area is still very substantial and our clients' core ongoing
requirements all require manpower support. Activity in Marine, a target area for the Group, has grown
and our market share increased through teams working at Rosyth, Barrow, Glasgow, Bristol,
Portsmouth and Plymouth. Contractors are engaged on ongoing fleet maintenance, new design and
build of Queen Elizabeth class of aircraft carriers and the Successor submarine programme.

The civil aerospace market continues to focus on new "green" technologies to deliver savings on fuel
via weight reduction. Improvements in design are key and working with new materials creates change
which drives design need. Often this activity is as investment in engineering research and
development, to deliver new variant planes and structures in a very competitive field. Morson
understands client requirements and has extensive experience of providing these often scarce skills
for the enhancement and modification of existing and conceptual aircraft and engine programmes.
Key areas of growth in this sector have been in both passenger and executive jet development
including Bombardier Learjet and C Series, Airbus A350, Airbus A320 NEO (New Engine Option).
Airbus Military products have also seen growth including A400M & Tanker projects.

Several new opportunities have also been identified including increasing our support to existing
customers in overseas locations, for example EADS in Europe, Finmeccanica in Italy and
Bombardier in Canada.

Nuclear Energy and Process


This sector has broadly had a steady year following the termination of the Magnox contract in June
2010. Since then all core clients have been maintained, with some new accounts won. During the
year we added URENCO as a key new client and anticipate growing this account in 2012. We and
our clients look forward to new-build and then decommissioning programmes. We remain involved in
the Magnox sites de-commissioning programmes via our preferred supplier list ("PSL") status with a
number of appointed contractor consortiums.

Whilst the UK nuclear new build programme has moved forward, progress has been slower than
might have been anticipated. Contracts have now been let for the first site infrastructure and
preparation works and this is yet another indicator that this activity could commence in earnest in the
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coming few years. Morson was heavily involved with the last station to be built within the UK and is
looking forward to these projects gathering momentum. We have good relationships with client
organisations who will be involved with these projects and are well placed to aim for preferred supplier
status with these as they develop, for example EDF.

Morson supports many businesses in this area and has the capacity and knowledge to contract
across the supply chain for a site, i.e. to the "tier one/two/three" suppliers, as demand shifts,
supplying the wide-ranging skills needed through different stages of a project from "cradle to grave".
Morson has been established within the power and nuclear community for over 30 years and remains
geographically very well placed, with our branch network in close proximity to all "new build" planned
sites, to take advantage of the emerging energy markets.

We believe UK energy demand will impel investments to be made in power infrastructure and believe
as a country we should be pushing forward with this to enhance energy security for our future. This
would create demand for our business and the expertise we have. We feel the ancillary site services
and connections to the electricity distribution grid of all the emerging new energy sources will place
significant skills resourcing pressure, rising demand for highly trained personnel and also a need for
the engineering consultancy services we can provide through Morson Projects. The timescales for
implementation of these projects remains in the hands of the government and regulatory bodies,
though we feel this must be accelerated soon.

On an ongoing basis Morson is involved with asset care and maintenance of existing power stations
and their current output. After new power sources come online there will be both decommissioning
work and of course the maintenance of those new power sources. Morson can play a significant role
in the resourcing and delivery of engineering talent through all these lifecycles which are very long
term engineering projects central to "UK PLC".

Rail and Transport


Morson has a long term involvement in this sector having first provided expertise some 20 years ago
to both the London Underground and the national overground networks. The Group now has a variety
of clients in this area and supplies a wide range of skillsets and resource solutions. These attributes
have helped our activity to remain broadly steady in 2011.

We did experience restraint in spending during the year with some existing framework contracts
delivering lower volume than in prior periods. We feel this is a reflection of reorganisation and
government spending policy within both Network Rail ("NWR") and Transport for London ("TfL").

TfL remains a core client for us and white collar engineering skills are predominant and are generally
longer term assignments. Within the underground network these are complemented by our ability to
supply flexible, specialist hands on skills of track workforces, safety critical resource and other track
maintenance and renewal skills. We anticipate trading in this area to remain steady and Cross Rail
programmes to support activity levels. We also add a note of caution that the Olympics and
Paralympic Games might well cause a hiatus of activity over several summer months which could
decrease revenues during that time.

With regard to the overground network, spending at NWR has been at relatively low levels. However,
the ongoing Cross Rail project is providing an opportunity for us to supply contractors to businesses
assisting TfL and NWR. The recent UK Government announcement in respect of the new high speed
rail links ("HS2") is a promising and welcome development. This £33 billion project has an initial
phase from London to Birmingham that is set to be operational by 2026. There is then a further "Y-
shaped" phase with extention arms to Manchester and Leeds that is subject to a consultation in
2014.

Other recruitment markets


As well as these core sectors and service offerings the Group has notable presence in several other
market sectors. These include:
· Oil and Gas, largely UK and servicing downstream (non-exploration/extraction) clients;
· IT systems and software, complementary services to existing clients;
· Increased presence within selected permanent disciplines; and
· Telecommunications activity, both in the UK and overseas.
Our overseas office in South Africa has commenced trading during the year and aims to move into
profit in the coming year. In Brazil we have moved to a minority ownership of that operation, with a
known and knowledgeable partner in order to seek expansion of the client base and wider
opportunities in the South and Central American region.

Technical engineering expertise touches on very many areas of business and we will continue to
monitor and evaluate existing and new target markets to provide diverse future income streams and
margin enhancing business.

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PROVISION OF ENGINEERING DESIGN CONSULTANCY AND


MANAGEMENT
Morson Projects shares many of the clients of the Recruitment business within the Aerospace and
Power sectors. In 2011 it contributed 8.9% (2010: 8.2%) of Group revenue and 15.3% (2010: 18.9%)
of Net Fee Income. The past year has been a challenging one for the company and whilst we have
seen a pleasing 20.7% growth in net revenue to £45.2 million (2010: £37.5 million) difficult trading and
some technically demanding projects have meant gross margin has reduced to 13.2% (2010: 17.7%)
delivering NFI of £6.0 million (2010: £6.6 million). This has flowed down to contributions at operating
profit levels of £0.5 million (2010: £1.7 million).

Within Morson Projects, Aerospace is the major sector which accounts for approximately 60% of
activity and it is within this division that the larger projects are undertaken. These have proved very
challenging on a commercial and technical level and margin and profitability has been affected.

The two main contracts in 2011 were work on the Bombardier Learjet 85 and also for GE Aviation in
connection with the Airbus A350 and work in these areas continues into 2012.

The work for Bombardier involved significant design using new composite materials and has moved
forward the knowledge base and capabilities of the company in this area. The main design contract
has now been delivered and additional contracts for work have been won. The work on the A350
involves trailing edge wing design, with a weight reduction focus, to improve fuel efficiency in new
variant planes. The contract here remains in progress and we anticipate this will be largely complete
by the time the Group reports interim results for 2012.

Also within Aerospace design, the company has looked at its delivery and geographic presence and
during the year invested in a new design centre at Filton near Bristol and the Birmingham presence
will be scaled down. Work in other areas continues with contracts being undertaken for several "first
tier" clients who support the major manufacturers.

Morson Projects Industrial and Nuclear Division has had a better year. Here we have seen steady
flow of work and increasing activity. We have engineering expertise that can be applied across
various power delivery markets and in linking the energy generated to the UK national delivery grid.
We feel we are well placed to benefit from what we believe will be a necessary government-led drive
and long term strategic investment programme to support the anticipated future UK energy demand.
Within industrial markets we can provide expert and flexible design resource as companies look to
drive efficiency in process and keep apace with the latest global advances in engineering. We believe
there will be a strong market for this consultative supporting engineering expertise as clients
outsource non-core tasks. Our customers here include, amongst others, framework agreements and
contracts with Sellafield, Alstom, Areva, Siemens and Pilkingtons.

OUTLOOK
The challenges faced throughout 2011 look set to continue into the coming year. Government
procurement and spending plans, together with wider economic uncertainty clearly flow through client
demand to Morson. We are conscious of these issues and have sought to position the Group,
maintaining market share and with increased capability, both to take advantage of an upturn and to
be resilient in times of recession.

Within recruitment, several key contracts, amounting to approximately one third of Group revenues
are due for renewal or extension in the coming months. These are normal course of business events
and we are currently confident of our position. Across our recruitment business we are taking steps
to protect our margins and maintain or expand our service offering and sector coverage. With regard
to design consultancy, project completion and delivery coupled with improvements in margin are key
targets to deliver improved profitability.

There are significant medium to longer term opportunities for the Group with HS2 and other major rail
infrastructure improvement works, Aircraft carriers, weight-driven civil Aerospace projects and of
course nuclear and energy delivery amongst many other projects. Engineers are a sought after global
resource and we look forward to, and are proud to be part of, the delivery of the future infrastructure
and technology programmes that will ensue. We have experienced management, have attracted
additional staff to support our goals and approach the future and meeting these challenges with
confidence.

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FINANCIAL REVIEW

Some Key Performance Indicators are displayed in the table set out below.

KEY PERFORMANCE INDICATORS 2011 2010 Variance Variance


£'000 £'000 £'000 %
Revenue 507,904 457,639 50,265 +11.0
Net Fee Income 38,910 35,095 3,815 +10.9
Adjusted operating profit (see below) 8,033 9,215 (1,182) -12.8
Adjusted profit before tax (see below) 7,107 8,113 (1,006) -12.4
Conversion ratio (adjusted operating
profit to NFI) 20.6% 26.3% (5.7%) -21.4
Adjusted operating profit margin 1.6% 2.0% (0.4%) -21.5
Interest cover being ratio of adjusted
operating profit (see below) to other
finance costs 8.7 8.4 0.3 +3.3
Dividend cover measured against
adjusted basic earnings per share (see
note 10) 6.1 2.3 3.8 +161.7
Net debt 33,344 23,196 10,148 +43.7
Average net debt during the year 30,921 22,796 8,125 +35.6
Number Number Number %
Average contractor numbers (not in '000) 10,900 10,200 700 +6.9

DERIVATION OF KEY PERFORMANCE


INDICATORS FROM CONSOLIDATED
INCOME STATEMENT 2011 2010
£'000 £'000
Operating profit 7,057 9,440
Add: amortisation of intangible assets 866 620
Less: exceptional net gain on
acquisition of business - (1,249)
Add: exceptional restructuring costs 110 404
ADJUSTED OPERATING PROFIT 8,033 9,215
Profit before tax 5,740 9,401
Add/(less): fair value loss/(gain) on
financial instrument 391 (1,063)
Add: amortisation of intangible assets 866 620
Less: exceptional net gain on
acquisition of business - (1,249)
Add: exceptional restructuring costs 110 404
ADJUSTED PROFIT BEFORE TAX 7,107 8,113

DERIVATION OF KEY PERFORMANCE


INDICATORS FROM NOTES TO THE
CONSOLIDATED INCOME STATEMENT 2011 2010 Variance Variance
REGARDING SEGMENTAL REPORTING £'000 £'000 £'000 %
Morson International/ Morson Wynnwith:
temporary and permanent recruitment
services
Operating profit 8,141 9,101 (960) -10.5
Add: amortisation of intangible assets 866 620 246 +39.7
Less: exceptional net gain on
acquisition of businesses - (1,249) 1,249 -100.0
Add: exceptional restructuring costs 110 404 (294) -72.8
ADJUSTED SEGMENTAL OPERATING
PROFIT 9,117 8,876 241 +2.7
Morson Projects: engineering design
consultancy and management
SEGMENTAL OPERATING PROFIT 472 1,707 (1,235) -72.3

FINANCIAL OVERVIEW
The context of these results is within a difficult core UK market. Resilience in continuity and volumes
of activity is good. UK recruitment on the temporary side has been very solid but higher margin
permanent recruitment and design activity has been more challenging. Adjusted profit before tax of
£7.1 million has decreased compared to 2010 but remains substantial. Throughout this period we
have sought to improve market share which carries forward as opportunity for the future. Competition

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is fierce, as is client emphasis on cost control and unsurprisingly margins have been difficult to
maintain in all areas, so overall to maintain margins is an achievement. The overheads and cost
structure of the Group have increased notably with the acquisitions in 2010 and with additional
provisions for doubtful debt of £0.6 million, as well as investments in staff for permanent recruitment
and new and emerging offices. This remains in close focus and the organic investments in this area
continued into 2012, closely monitored for effectiveness.

REVENUE AND NET FEE INCOME ("NFI")


Group revenue increased by 11.0% to £507.9 million (2010: £457.6 million). This was achieved
across a sector and key client base broadly similar to the prior year. Recruitment activity saw
revenues rise by 10.1% from £420.2 million to £462.7 million and Engineering design consultancy
saw a substantial rise of 20.7% from £37.5 million to £45.2 million.

Group NFI (gross profit) generated from these revenues was up 10.9% to £38.9 million (2010: £35.1
million). The split of NFI across temporary and permanent recruitment and engineering design
consultancy was £31.6 million, £1.3 million and £6.0 million respectively (2010: £27.4 million, £1.1
million and £6.6 million).

Turning to percentage gross margin at Group level this was steady at 7.7% (2010: 7.7%) and across
operating segments there was an improved margin in temporary and permanent recruitment of 7.1%
(2010: 6.8%) and a reduced position for engineering design consultancy and management of 13.2%
(2010: 17.7%). Whilst the margin achieved by design consultancy was disappointing, the resilience
of the recruitment segment flows from the stability of the core framework agreements assisted by
increased newer business streams.

OPERATING PROFIT AND NFI CONVERSION


Group adjusted operating profit decreased by £1.2 million to £8.0 million (2010: £9.2 million).
Importantly, looking at business segments, within recruitment activity it rose from £8.9 million to £9.1
million, however within engineering design consultancy and management Morson Projects saw a fall
from £1.7 million to £0.5 million. Group shared costs in 2011 were £1.6 million (2010: £1.4 million).
Operating profit decreased by £2.4 million to £7.1 million.

Translation of the NFI earned to operating profit is a measure of the efficiency of operation and
overhead base of the Group. This can be expressed as a "Conversion Ratio", measured as the ratio
of adjusted operating profit before amortisation and exceptional items to NFI (as shown in the table
above). At Group level this year this is 20.6% (2010: 26.3%) reflecting the challenging year. Morson
aims to increase this as our markets improve. Looking at conversion ratios at segmental performance
level design consultancy saw a reduction from 25.8% to 7.9% and recruitment activity from 31.2% to
27.7%. Conversion ratio is also of course affected by the ongoing controlled investments into newer
niche areas that might bring higher returns in the future.

EXCEPTIONAL ITEMS
In 2011 there is an exceptional charge of £0.1 million recognised for the final restructuring steps
within the Morson Wynnwith business following its acquisition in 2010. There were two exceptional
items identified in 2010. Firstly there was an exceptional gain of £1.2 million realised on assessment
of the fair value of the acquisitions. Secondly £0.4 million was charged in respect of the acquisition
and integration of the Acetech and Wynnwith businesses.

FINANCE COSTS
Finance costs incurred in the consolidated income statement include two key elements.

Firstly a finance charge of £0.9 million (2010: £1.1 million), being the costs incurred on borrowings
through a function of both bank base rates and the financial instrument (as described below)
connected to these. With average net debt during 2011 of £30.9 million (2010: £22.8 million) this
gives a blended cost of finance of 3.0% (2010: 4.8%).

The Group's core confidential invoice discounting facility and revolving credit facility are calculated
respectively on bank base rates and LIBOR plus an agreed margin and there is also an overdraft
facility. These flexible facilities allow the Group to borrow only what it needs and thus the Group's
interest cost is commensurate with the working capital needs of the business.

Secondly, there is a charge of £0.4 million (2010: gain of £1.1 million) recognised in the consolidated
income statement relating to the fair value movement of the derivative financial instruments entered
into to protect the Group against high interest rates. The credit to the 2010 (and 2009) accounts
reflected the movement in the fair value of the derivative financial instrument in operation at that time
over those years following a large negative fair value of that instrument having been recognised in the
2008 Report caused due to the drop in base rates over that time. Interest payable under the

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instruments is paid quarterly in arrears dependent on the actual base rate during that period. Thus
the charge in 2011 reflected actual determined interest (included in the recognised finance cost
above) together with the non-cash fair value movement as the term of the instruments unwound.

At 31 December 2011 two interest base rate swap instruments existed, each for £5.0 million and for
a period of three years commencing on 1 April 2011. One is at a rate of 2.03% and one at 1.94%.
This is an area that is kept under review by the Board. At 31 December 2010 no financial instruments
to protect against base interest rate movements were in place.

Interest cover, being the ratio of adjusted operating profit to other finance costs, increased to 8.7
times (2010: 8.4 times).

PROFIT BEFORE TAX


Adjusted profit before tax has fallen by 12.4% to £7.1 million (2010: £8.1 million). The adjusting items
are set out in the table above. The Board consider that the measure of adjusted profit before tax gives
a meaningful and informative comparator against the prior year's performance. Actual profit before tax
after these matters was £5.7 million (2010: £9.4 million). The tables above provide a reconciliation of
the adjusted operating profit and adjusted profit before tax back to the statutory figures per the
consolidated income statement.

TAX
The Group's effective rate of tax for the year was 20.6% (2010: 19.9%), lower than the standard rate
of tax of 26.5% (2010: lower than standard rate of 28%). The key factors impacting this underlying
charge for the Group which tends to decrease the tax rate are certain costs that qualify as research
and development expenditure eligible for tax relief. However, offsetting this somewhat is the absence
of tax relief on certain amortisation costs, withholding tax adjustments on some overseas contracts
and certain disallowable business expenses that tend to increase the tax rate for the Group.

EARNINGS PER SHARE


Basic earnings per share decreased to 10.01 pence (2010: 15.69 pence), a fall of 36.2%. Adjusted
earnings per share (before amortisation of intangible assets, exceptional items and fair value
movement of the derivative financial instrument) as calculated in note 10 was down by 12.7% to 12.27
pence (2010: 14.06 pence).

Share options have been granted during the year.

DIVIDEND
The Board has not recommended that any final dividend be paid (2010: 4.0 pence). An interim
dividend of 2.0 pence per share (2010: 2.0 pence) was paid on 28 October 2011, making a total
dividend of 2.0 pence per share (2010: 6.0 pence) for the year. The total dividend is covered 5.1 times
(2010: 2.8 times) by current year earnings.

CASH FLOW AND FINANCING


Working capital needs of the Group are most affected by temporary recruitment segment activity due
to its nature, where payments to contractors are usually weekly and cash receipts from clients are
per commercial terms that can range from 14 to 90 days. As a result of these factors, all else being
equal, growth necessarily causes the absorption of cash. The converse may also be said to be true,
thus the slowing of growth experienced by this business would benefit the working capital position.
All these areas need careful management and may very well be impacted by changes in material key
client contract terms.

This impacts total borrowings net of cash and cash equivalents ("Net Debt") but other factors also
apply such as acquisitions, investments in organic growth areas, taxation, dividends and capital
expenditure.

During 2011 we have seen a rise in average Net Debt levels with average borrowings over 2011 of
£30.9 million (2010: £22.8 million) and the final month of the year i.e. December 2011 having average
borrowing levels of £37.1 million (December 2010: £32.1 million). We feel looking at average levels
gives a better measure of true borrowings as fluctuations day to day can be material. Some key
impacting factors include:
· the consideration paid of £4.0 million for the non-controlling minority interest in Morson
Wynnwith;
· increased activity on overseas business, particularly within telecommunications, that has
typically much longer credit terms;
· increased revenues generally across the Group;
· some changes in client credit terms on new or renewed agreements; and
· investments made to support organic growth within the business, for example new
offices in Aberdeen and Bristol and a larger permanent recruitment team.

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Through 2011, working capital increased by £7.8 million (2010: increased by £4.6 million), reflecting
these factors. Cash collection patterns through the year were broadly consistent with prior periods for
UK recruitment, though extended for overseas activity and design consultancy. Overall an indicative
calculation counting revenue plus closing rate VAT back into trade and other receivables gives debt
turn at the year end of 56 days (2010: 57 days)

Tax paid during the year was £2.0 million (2010: £1.9 million) reflecting reduced adjusted profit before
tax, adjustment for prior periods, allowable research and development expenditure and increased
taxes on overseas income. Capital expenditure was down by £1.0 million to £1.3 million (2010: £2.3
million gross of grant income received of £0.5 million and £0.4 million of opening accruals for Head
Office property improvements and fixtures and fittings valued but not billed at 31 December 2009).

Our financing facilities have remained unchanged throughout the year.

The core facility is an invoice discounting facility that can grow with the business as it expands and
is secured on our largely blue chip debtor book. The Directors believe this type of facility is entirely
consistent with that used by companies providing similar services and is one that suits the Group's
business model very well. Costs are on a bank base rate plus margin basis and the facility has been
extended to 31 March 2014. The current capacity of the facility is £50 million and affords the Group
significant headroom. The Group also has a revolving credit facility of £5 million, extended and in
place until 31 October 2013 and at year end this was not utilised (2010: not utilised). Finally the
Group also has a £1 million overdraft facility. Consideration of the going concern basis is provided in
note 1 to the financial statements.

On 11 February 2011 the Group completed the acquisition of all of the 49% non-controlling interest in
Morson Wynnwith making it a 100% owned subsidiary. The consideration was £4.0 million and this
was financed via the revolving credit facility and repaid from operating cashflow.

BALANCE SHEET
Group net assets at 31 December 2011 were £60.1 million (2010: £62.0 million). This decrease
principally reflects the drop of £4.0 million due to the acquisition of the non-controlling minority
interest described above plus the collective £2.1 million addition through retained profits after
dividends and share based payment movements. Net Debt at the 2011 year end was £33.3 million
(2010: £23.2 million).

CONSOLIDATED INCOME STATEMENT


Year ended 31 Decem ber 2011

2011 2010
Note £'000 £'000

CONTINUING OPERATIONS
Revenue 2 507,904 457,639
Cost of sales (468,994) (422,544)
GROSS PROFIT 38,910 35,095
Administrative expenses:
- amortisation of intangible fixed assets (866) (620)
-exceptional items:
- net gain on acquisition of businesses - 1,249
- restructuring costs 3 (110) (404)
- other administrative expenses (30,877) (25,880)
OPERATING PROFIT 2 7,057 9,440

Finance costs:
- fair value movements on derivative financial instruments (391) 1,063
- other finance costs 4 (926) (1,102)
PROFIT BEFORE TAXATION 5,740 9,401
Taxation 5 (1,185) (1,870)
NET PROFIT FOR THE YEAR 3 4,555 7,531
Attributable to:
Equity holders of the parent 4,450 6,985
Non-controlling interests 105 546
4,555 7,531

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EARNINGS PER SHARE


From continuing operations
Basic (pence) 10 10.01 15.69
Diluted (pence) 10 9.80 15.42
All activity has arisen from continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


Year ended 31 Decem ber 2011

2011 2010

£'000 £'000

PROFIT FOR THE YEAR 4,555 7,531

Other comprehensive income:


- exchange differences on translation of foreign operations 5 28

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,560 7,559

Attributable to:

Equity holders of the parent 4,455 7,013

Non-controlling interests 105 546

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,560 7,559

CONSOLIDATED BALANCE SHEET


At 31 Decem ber 2011

2011 2010
Note £'000 £'000

NON-CURRENT ASSETS
Goodwill 33,513 33,513
Other intangible assets 1,784 2,650
Property, plant and equipment 4,092 3,753
Deferred tax asset 246 -
39,635 39,916
CURRENT ASSETS
Trade and other receivables 93,448 85,939
Cash and cash equivalents 7 2,636 1,701
96,084 87,640
TOTAL ASSETS 135,719 127,556
CURRENT LIABILITIES
Trade and other payables (38,985) (39,648)
Current tax liabilities (258) (602)
Obligations under finance leases (57) (37)
Bank overdrafts 8 (35,923) (24,897)
Derivative financial instruments (391) -
(75,614) (65,184)
NET CURRENT ASSETS 20,470 22,456
NON-CURRENT LIABILITIES
Deferred tax liabilities - (333)
- (333)
TOTAL LIABILITIES (75,614) (65,517)
NET ASSETS 60,105 62,039

EQUITY
Issued capital 9 2,267 2,267
Share premium account 9 37,607 37,607
Retained earnings 9 20,912 22,443

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Other reserves 9 (914) (928)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 59,872 61,389
Non-controlling interest 233 650
TOTAL EQUITY 60,105 62,039

CONSOLIDATED CASH FLOW STATEMENT


Year ended 31 Decem ber 2011

2011 2010
Note £'000 £'000

NET CASH (OUTFLOW)/ INFLOW FROM OPERATING 13 (1,440) 2,541


ACTIVITIES
INVESTING ACTIVITIES
Grant income received - 479
Proceeds on disposal of property, plant and equipment 38 68
Purchases of property, plant and equipment (1,260) (2,307)
Acquisition of businesses - (10,104)
Acquisition of a non-controlling interest 11 (4,025) -
Disposal of a subsidiary undertaking including cash 12 (716) -
balances
NET CASH USED IN INVESTING ACTIVITIES (5,963) (11,864)
FINANCING ACTIVITIES
Dividends paid (2,668) (2,671)
Purchase of own shares - (262)
Repayments of obligations under finance leases (26) (24)
NET CASH USED IN FINANCING ACTIVITIES (2,694) (2,957)
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,097) (12,280)
Effects of foreign exchange rate changes 6 18
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7 (23,196) (10,934)
CASH AND CASH EQUIVALENTS AT END OF YEAR 7 (33,287) (23,196)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Year ended 31 Decem ber 2011

Share Share Retained Translation Ow n Non- Total


premium controlling
capital account earnings reserve shares Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

At 1 January 2,267 37,607 18,087 - (694) 57,267 104 57,371


2010
Profit for the - - 6,985 - - 6,985 546 7,531
year
Dividends - - (2,671) - - (2,671) - (2,671)
paid
Share-based - - 42 - - 42 - 42
payments
Purchase of - - - - (262) (262) - (262)
own shares
Exchange
differences on

13/21
5/24/13
translating the
net assets of - - - 28 - 28 - 28
foreign
operations
At 1 January 2,267 37,607 22,443 28 (956) 61,389 650 62,039
2011
Profit for the - - 4,450 - - 4,450 105 4,555
year
Dividends - - (2,668) - - (2,668) - (2,668)
paid
Share- - - 199 - - 199 - 199
based
payments
Exercise of - - (37) - 37 - - -
share options
Acquisition of a - - (3,503) - - (3,503) (522) (4,025)
non-controlling
interest
Disposal of a - - 28 (28) - - - -
subsidiary
undertaking
Exchange - - - 5 - 5 - 5
differences on
translating the
net assets of
foreign
operations
AT 31 2,267 37,607 20,912 5 (919) 59,872 233 60,105
DECEMBER
2011

1) GENERAL INFORMATION

Morson Group PLC is a company incorporated in the United Kingdom under the Companies Act. The
address of the registered office is Adamson House, Centenary Way, Salford, Manchester M50 1RD.
The nature of the Group's operations and its principal activities are set out in note 2 and in the
Business Review.

This preliminary announcement is presented in Pounds Sterling because that is the currency of the
primary economic environment in which the Group operates.

The financial information has been based on the Company's financial statements which are prepared
in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU.
Whilst the
financial information contained in this preliminary announcement has been prepared in accordance
with the recognition and measurement criteria of International Financial Reporting Standards (IFRS),
this announcement
does not itself contain sufficient information to comply with IFRS. The Company expects to publish
full financial statements that comply with IFRS in April 2012. The financial information has been
prepared under the same accounting policies as the 2010 financial statements..

The financial information for the year ended 31 December 2010 is derived from the statutory accounts
for that year which have 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 s498(2) or (3) of the Companies Act 2006.

BASIS OF ACCOUNTING
The financial statements will be prepared in accordance with IFRS as adopted by the European
Union.

The financial statements will be prepared on the historical cost basis, except for the revaluation of
certain financial instruments. The financial statements will be prepared in accordance with accounting
policies previously published in the Company's 2010 annual report and accounts.

GOING CONCERN
The Directors are required to satisfy themselves as to whether the financial statements of the Group
should be prepared on a going concern basis. As part of the ongoing duties and activities of the
Board there is continual assessment of the Group's financial and commercial performance. This
review considers business risks and uncertainties that exist and takes account of how wider
14/21
5/24/13
economic circumstances can impact these, including due consideration and assessment of
potentially adverse and testing situations. The Board looks forward and appropriate forecasts of
financial performance and assessment of future business opportunities and challenges are regularly
made. The Directors have also considered the financial support required for these anticipated income
streams and note that the Group's current financing arrangements run until 31 March 2014 for its
invoice discounting facility and until 31 October 2013 for its revolving credit facility.
Having properly considered the matter the Directors conclude that they are satisfied that this
preliminary announcement should be prepared on a going concern basis.

2) BUSINESS AND GEOGRAPHICAL SEGMENTS

BUSINESS SEGMENTS
The two reported operating segments in this note are reported as the provision of temporary and
permanent recruitment services and the provision of engineering design consultancy and
management. These operating segments are consistent with the reporting regularly provided to the
Board of Directors. It is these reports which the Directors use to review the Group's operating results,
assess performance and make decisions about resource allocation.
The Group's business is described in sectors for the purposes of the Business Review. This is to
enable readers of the Annual Report and Accounts to gain a better understanding of the breadth of
our service offering as well as allowing an informed and helpful comparison to other organisations
also operating in our markets. The database of candidates held by the Group to supply to these
sectors is a combined one, encompassing a wide diversity of skills and talent, and whilst it has some
sector specific requirements, is in essence provided in the same manner across all sectors.
Performance and analysis of activity by these sectors is not a key management measure, nor is it
reported regularly to the Board of Directors and the business is not managed or divided internally by
these sectors. The key information used to manage the business is by activity type, i.e. the provision
of temporary and permanent recruitment services and the provision of engineering design consultancy
and management.

Provision of temporary Provision of


engineering
and permanent design consultancy
recruitment services and management Total

2011 2010 2011 2010 2011 2010


£'000 £'000 £'000 £'000 £'000 £'000

Gross revenue 480,739 434,142 46,392 37,599 527,131 471,741


Inter-segment sales (18,061) (13,969) (1,166) (133) (19,227) (14,102)
Revenue to third parties 462,678 420,173 45,226 37,466 507,904 457,639

Segmental gross profit 32,942 28,468 5,968 6,627 38,910 35,095


Administrative expenses:
- amortisation of intangible
assets (866) (620) - - (866) (620)
- exceptional items:
- net gain on
acquisition of - 1,249 - - - 1,249
businesses
- restructuring costs (110) (404) - - (110) (404)
- other administrative (23,825) (19,592) (5,496) (4,920) (29,321) (24,512)
expenses
- shared costs (1,556) (1,368)
SEGMENT RESULT 8,141 9,101 472 1,707 7,057 9,440
Finance charge (net) (792) (1,086) (63) (21) (855) (1,107)
Shared finance (charge)/ - - - - (462) 1,068
income (net of shared finance
costs)
SEGMENT RESULT AFTER 7,349 8,015 409 1,686 5,740 9,401
FINANCE CHARGES
Taxation (1,185) (1,870)
PROFIT AFTER TAXATION 4,555 7,531

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5/24/13
Capital additions 429 695 831 704 1,260 1,399
Depreciation and amortisation 1,337 1,072 418 377 1,755 1,449
NET ASSETS
Segment assets excluding amounts
due from other Group companies 109,770 106,260 24,865 20,372 134,635 126,632
Unallocated corporate assets 1,084 924
Consolidated total assets 135,719 127,556
Segment liabilities excluding
amounts
due to other Group companies (63,978) (58,227) (10,332) (6,548) (74,310) (64,775)
Unallocated corporate (1,304) (742)
liabilities
Consolidated total liabilities (75,614) (65,517)
Consolidated net assets 60,105 62,039

The centre of operations for all services delivered to clients is the UK. The Directors consider that the
Group does not generate material profits from overseas operations and therefore no geographical
segmental information is presented.
Inter-segment sales are charged at prevailing market prices. Within the engineering design
consultancy and management segment there exists some provision of temporary recruitment
services, however this is entirely related to the provision of engineering design consultancy and
management.
Segment profit is measured as those income streams and costs which are directly attributable to the
segment in question. Segment assets and liabilities are those held within the segment in question
with the exception of goodwill, which is allocated to business segments.
Unallocated corporate assets and liabilities consist of receivables and payables in Morson Holdings
Limited and Morson Group PLC.
Included in revenues arising from the provision of temporary and permanent recruitment services are
revenues of £65,389,000 (2010: £63,155,000) which arose from sales to the Group's largest
customer.

3) PROFIT FOR THE YEAR

2011 2010
£'000 £'000

Profit for the year has been arrived at after charging/(crediting):


Depreciation of property, plant and equipment 889 829
Foreign exchange losses/ (gains) 321 (264)
(Profit)/ loss on disposal of fixed assets (10) 31
Amortisation of intangible assets 866 620
Staff costs 48,211 34,556
Exceptional items:
- (1,249)
- net gain on acquisition of businesses
- restructuring costs 110 404
Movement in allowance for doubtful debts 562 1,135
During the year ended 31 December 2011 restructuring costs of £110,000 have been incurred
following the further integration of the Wynnwith business. These redundancy costs were over and
above those provided at 31 December 2010 and were not committed at that date.
During the year ended 31 December 2010 restructuring costs of £404,000 were incurred following the
acquisition and integration of the Wynnwith and Acetech businesses. This included a liability
recognised for redundancy costs committed to at the balance sheet date.
During the year ended 31 December 2010 a net gain of £1,249,000 was recognised following the
acquisition of the Wynnwith and Acetech businesses.

4) FINANCE COSTS

Fair value movements on the derivative financial instrument have been disclosed on the face of the 16/21
5/24/13 consolidated income statement.

2011 2010
£'000 £'000

Interest on bank overdrafts and loans 804 296


Interest paid in respect of the derivative financial instrument 114 780
Other financing charges payable 6 22
Interest on obligations under finance leases 2 4
Total other finance costs 926 1,102

No gains or losses have been recognised on financial liabilities measured at amortised cost.

5) TAXATION
2011 2010
£'000 £'000

Current tax - current year 1,509 1,501


- adjustments in respect of prior years 255 (45)
Deferred tax - current year (153) 343
- prior year (426) 71
1,185 1,870

Corporation tax is calculated at 26.5% (2010: 28.0%) of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rate prevailing in the respective jurisdiction.
The charge for the year can be reconciled to the profit as per the income statement as follows:

2011 2010
£'000 £'000

Profit before taxation 5,740 9,401


Tax at the UK corporation tax rate of 26.5% (2010: 28.0%) 1,521 2,632
Expenses not deductible for tax purposes 288 9
Income not taxable (90) (230)
Tax effect of higher rates of tax on overseas income 550 123
Effect of research and development tax credits (892) (615)
Utilisation of losses (25) (65)
Adjustments to tax charge in respect of prior periods (171) 26
Other 4 (10)
Tax expense for the year 1,185 1,870

6) DIVIDENDS
2011 2010
£'000 £'000

Amounts recognised as distributions to equity holders in the


year:
Final dividend for the year ended 31 December 2010 of 4.0 1,779 1,783
pence per ordinary share (year ended 31 December 2009: 4.0
pence)
Interim dividend for the year ended 31 December 2011 of 2.0 889 888
pence per ordinary share (year ended 31 December 2010: 2.0
pence)
2,668 2,671
No final dividend is proposed for the year ended 31 December - 1,779
2011 (2010: 4.0 pence per ordinary share)

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7) CASH AND CASH EQUIVALENTS


2011 2010
£'000 £'000

Cash and cash equivalents 2,636 1,701


Bank overdrafts (35,923) (24,897)
Cash and cash equivalents in the cash flow statement (33,287) (23,196)

8) BORROWINGS
2011 2010
£'000 £'000

SECURED BORROWING AT AMORTISED COST


Bank overdrafts 35,923 24,897
The borrowings are repayable as follows:
- on demand or within one year 35,923 24,897

2011 2010
% %

The weighted average interest rates paid were as follows:


- bank overdrafts 2.38 1.50
- bank loans 2.86 1.79

All borrowings are in Pounds Sterling and are arranged at floating rates, thus exposing the Group to
cash flow interest rate risk.
The Directors consider that the carrying value of borrowings approximates to their fair value.
The other principal features of the Group's borrowings are as follows:
(i) bank overdrafts are repayable on demand. Overdrafts of £35,923,000 (2010: £24,897,000) have
been secured on the trade debtors of the Group. The average effective interest rate
on bank overdrafts approximates 2.38% (2010: 1.50%) per annum; and
(ii) bank loans represent a revolving credit facility whereby the Group may borrow up to £5 million
subject to satisfaction of the requirements of the facility. The interest rate of the loan is set at
1.25% above LIBOR lending rate. Subject to the conditions of the facility the loan may be used
for both working capital and acquisitions. The period of the loan is set by interest periods at the
end of which the Group may repay all, part of or borrow more up to the ceiling. The loan has been
utilised in the current year but there were no borrowings at the balance sheet date.
At 31 December 2011, the Group had available £14,952,000 (2010: £22,694,000) of undrawn
committed borrowing facilities in respect of which all conditions precedent had been met.

9) ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


Share
Share premium Retained Translation Ow n
capital account earnings reserve shares Total
£'000 £'000 £'000 £'000 £'000 £'000

At 1 January 2010 2,267 37,607 18,087 - (694) 57,267


Profit for the year - - 6,985 - - 6,985
Dividends paid - - (2,671) - - (2,671)
Share-based payments - - 42 - - 42
Purchase of own shares - - - - (262) (262)
Exchange differences on - - - 28 - 28
translating the net assets
of foreign operations
At 1 January 2011 2,267 37,607 22,443 28 (956) 61,389
Profit for the year - - 4,450 - - 4,450

18/21
5/24/13
Dividends paid - - (2,668) - - (2,668)
Share-based payments - - 199 - - 199
Exercise of share options - - (37) - 37 -
Acquisition of a non- - - (3,503) - - (3,503)
controlling interest
Disposal of a subsidiary - - 28 (28) - -
undertaking
Exchange differences on - - - 5 - 5
translating the net assets
of foreign operations
AT 31 DECEMBER 2011 2,267 37,607 20,912 5 (919) 59,872

10) EARNINGS PER SHARE


The calculation of EPS is based on the following data and numbers of shares:
2011 2010
£'000 £'000

Profit for the year used for the calculation of basic earnings 4,450 6,985
per share
Amortisation of intangible assets 866 569
Exceptional Items:
- net gain on acquisition of businesses* - (625)
- restructuring costs* 110 244

Fair value movements on derivative financial instruments 391 (1,063)


Tax effect of adjustments* (362) 149
Earnings for the purposes of adjusted earnings per share 5,455 6,259
2011 2010
Num ber Number

Weighted average number of ordinary shares for the 44,468,969 44,520,191


purposes of basic earnings per share
Effect of potentially dilutive ordinary shares:
- share options 918,696 794,207
Weighted average number of ordinary shares for the 45,387,665 45,314,398
purposes of diluted earnings per share
Earnings per share: Pence Pence
- basic 10.01 15.69
- diluted 9.80 15.42
Adjusted earnings per share:
- basic 12.27 14.06
- diluted 12.02 13.81

*These exceptional items have taken account of the share due to non-controlling interests.
The adjusted earnings per share has been calculated on the basis of continuing operations before
amortisation of intangible assets, the exceptional items and the fair value movement of the derivative
financial instrument, net of tax. The Directors consider that the adjusted earnings per share
calculation gives a better understanding of the Group's earnings per share.

11) ACQUISITION OF A NON-CONTROLLING INTEREST


On 11 February 2011 Morson Group PLC acquired the remaining issued shares in Morson Wynnwith
Limited for a cash consideration of £4,005,000 and stamp duty of £20,000, taking its shareholding to
100%. The difference between the fair value of the consideration and the carrying amount of the non-
controlling interests is shown as a negative movement in the equity of Morson Group PLC.

12) DISPOSAL OF A SUBSIDIARY


On 31 October 2011 Morson Group PLC disposed of its interest in Morson do Brasil Ltda to CPIM

Europe Limited, a newly incorporated entity in which Morson Group PLC holds a 19% stake and
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5/24/13 which is accounted for as an associate.

The Directors have assessed the criteria for considering Morson do Brasil Ltda a discontinued
operation as defined in IFRS 5, and have concluded that this does not represent a separate major line
of business and is therefore not a discontinued operation.

The loss recognised within other administrative expenses as a result of this disposal is £160,000.

The net assets of Morson do Brasil Ltda at the 31 October 2011 were as follows:

2011
£'000

Property, plant and equipment 4


Financial assets 3,039
Cash and cash equivalents 716
Current tax liabilities (114)
Financial liabilities (3,469)
176
Loss on disposal (160)
Total consideration 16
Satisfied by:
Deferred consideration 16
16

13) NOTES TO THE CASH FLOW STATEMENT


RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATIONS
2011 2010
£'000 £'000

Operating profit 7,057 9,440


Adjustments for:
Exceptional net gain on acquisition of businesses - (1,249)
Exceptional restructuring costs 110 404
Loss on disposal of a subsidiary (see note 12) 160 -
Depreciation of property, plant and equipment 889 829
Amortisation of intangible assets 866 620
Share-based payment expense 199 42
(Gain)/ loss on disposal of property, plant and equipment (10) 31
Operating cash flows before movements in working capital 9,271 10,117
Decrease/ (increase) in inventories 119 (1,830)
Increase in receivables (8,402) (4,930)
Increase in payables 492 2,187
Cash generated by operations 1,480 5,544
Income taxes paid (1,994) (1,901)
Interest paid (926) (1,102)
Net cash (used in)/ generated from operating activities (1,440) 2,541

14) COPIES OF THE ANNUAL REPORT AND ACCOUNTS


The Group's report and accounts for the year ended 31 December 2011 are expected to be posted to
shareholders on 17 April 2012 and will also be available from the Company's head office at Adamson
House, Centenary Way, Salford, M50 1RD and will be available for download from its website at:
www.morson.com

This information is provided by RNS


The company news service from the London Stock Exchange

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5/24/13

END

FR EBLBXLXFZBBZ

21/21
5/24/13

MMGG Acquisition Ltd

Offer for Morson Group plc


RNS Number : 0863E
MMGG Acquisition Limited
25 May 2012

EMBARGOED 09.00AM 25 MAY 2012

25 May 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF THAT JURISDICTION

RECOMMENDED CASH OFFER BY MMGG ACQUISITION PLC


("MMGG") FOR MORSON GROUP PLC ("MORSON")

Summary

· The board of MMGG and the Independent Director are pleased to


announce that they have reached agreement on the terms of a
recommended cash offer, with a loan note alternative to be made by
MMGG, for the whole of the issued and to be issued share capital of
Morson;

· The offer for the entire issued and to be issued share capital of Morson
will be 50 pence in cash for each Morson Share, valuing the existing
issued share capital of Morson at approximately £23 million;

• MMGG has decided to offer a loan note alternative to the Cash Offer in
the form of the Offer Loan Notes. Morson Shareholders must elect to
accept either the Cash Offer or the Loan Note Alternative for their
entire shareholding;

· In aggregate, MMGG has received irrevocable undertakings to accept


or procure acceptance of the Offer in respect of a total of 26,014,380
Morson Shares, representing 57.37 per cent. of the existing issued
share capital of Morson;

· The Independent Director, who has received advice from W H Ireland


Limited, considers the terms of the Offer to be fair and reasonable.
However, the Independent Director does not express any view on the
terms of the Loan Note Alternative. In providing such advice to the
Independent Director, W H Ireland Limited has relied upon the
Independent Director's commercial assessments.

· The Offer Price represents a premium of 20.5 per cent. to the Closing
Price of 41.5 pence per Morson Share on 24 May 2012, being the last
Business Day prior to the Offer being announced;

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5/24/13
· MMGG was incorporated in England and Wales on 5 March 2012 for the
purpose of making the Offer. The shares in MMGG are owned by the
Management Team namely Gerrard Godfrey Mason (Chairman), Gerard
Anthony Mason (Group Chief Executive), Paul John Gilmour (Group
Finance Director) and Kevin Patrick Gorton (Group Managing Director).
The Management Team has irrevocably undertaken to accept the Loan
Note Alternative in respect of all the Morson Shares in which they are
interested, namely 21,209,630 Morson Shares representing 46.78 per
cent of the existing issued share capital of Morson.

PRESS ENQUIRIES

For further information contact:

MMGG
Ged Mason 0161 707 1516

Paul Gilmour 0161 707 1516

Morson
Ian Knight 07775 941804

SPARK Advisory Partners Limited (financial adviser to MMGG)


Matt Davis, Partner 020 3368 3552

Mark Brady, Partner 020 3368 3551

W H Ireland Limited (financial adviser to Morson)


Adrian Hadden, Managing Director 020 7220 1751

Nick Field, Corporate Finance Executive 020 7220 1658

This summary should be read in conjunction with the full text of the attached
announcement.

Apart from the responsibilities, if any, which may be imposed on SPARK Advisory
Partners Limited by the Financial Services and Markets Act 2000, the European
Communities (Markets in Financial Instruments) Regulations 2007 (as amended)
or the regulatory regimes established thereunder or the Code, SPARK Advisory
Partners Limited does not accept any responsibility whatsoever for the
contents of this announcement or for any statements made or purported to be
made by it or on its behalf in connection with the Offer. SPARK Advisory
Partners Limited accordingly disclaims all and any liability whether arising in tort,
contract or otherwise (save as referred to above) which it might otherwise
have in respect of this announcement or any such statement.

Apart from the responsibilities, if any, which may be imposed on W H Ireland


Limited by the Financial Services and Markets Act 2000, the European
Communities (Markets in Financial Instruments) Regulations 2007 (as amended)
or the regulatory regimes established thereunder or the Code, W H Ireland
Limited does not accept any responsibility whatsoever for the contents of this
announcement or for any statements made or purported to be made by it or on
its behalf in connection with the Offer. W H Ireland Limited accordingly
disclaims all and any liability whether arising in tort, contract or otherwise (save
as referred to above) which it might otherwise have in respect of this
announcement or any such statement. SPARK Advisory Partners Limited, which

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5/24/13
is authorised and regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for MMGG and no-one else in connection with
the Offer and will not be responsible to any person other than MMGG for
providing the protections afforded to customers of SPARK Advisory Partners
Limited or for providing advice in relation to the Offer or any other matter
referred to in this announcement.

SPARK Advisory Partners Limited has given and not withdrawn its written
consent to the release of this announcement with the inclusion of the
reference to its name in the form in which it is included.

W H Ireland Limited, which is authorised and regulated in the United Kingdom by


the Financial Services Authority, is acting exclusively for Morson in connection
with the Offer and will not be responsible to any person other than Morson for
providing the protections afforded to clients of W H Ireland Limited or for
providing advice in relation to the Offer or any other matter referred to in this
announcement.

W H Ireland Limited has given and not withdrawn its written consent to the
release of this announcement with the inclusion of the reference to its name in
the form in which it is included.

This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information contained or referred
to in the Offer Document which MMGG intends to despatch shortly to Morson
Shareholders and, for information only, to holders of options under the Morson
Share Schemes.

The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document. Unless
otherwise determined by MMGG and permitted by applicable law and regulation,
subject to certain exceptions, the Offer is not being made and will not be
made, directly or indirectly, in or into, and the Offer will not be capable of
acceptance from a Restricted Jurisdiction. Accordingly, unless otherwise
determined by MMGG, copies of this announcement, the Offer Document, the
Form of Acceptance and any other related document are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent
in or into or from a Restricted Jurisdiction and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing so
may be a breach of applicable law and regulation in that jurisdiction and may
make invalid any purported acceptance of the Offer by persons in any such
jurisdiction. This announcement does not constitute an offer in a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or otherwise from or within a Restricted
Jurisdiction. Accordingly this announcement is not being, and should not be,
mailed, transmitted or otherwise distributed, in whole or in part, in or into or
from a Restricted Jurisdiction.

Morson Shareholders (including, without limitation, nominees, trustees


or custodians) must not forward this announcement to a Restricted
Jurisdiction

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This document contains certain forward-looking statements with respect to the


financial condition, results of operations and business of the Morson Group and
certain plans and objectives of the boards of directors of Morson and MMGG.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements often
use words such as "anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments made
by the Management Team and MMGG in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate.

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5/24/13
Forward-looking statements also include statements about MMGG's beliefs and
expectations related to the Offer being declared wholly unconditional, benefits
that would be afforded to customers, and benefits to MMGG that are expected
to be obtained as a result of the Offer being declared wholly unconditional.
There can be no assurance that the Offer will be declared wholly unconditional.
By their nature, forward-looking statements involve risk and uncertainty, and
the factors described in the context of such forward-looking statements in this
announcement could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking statements.

Should one or more of these risks or uncertainties materialise, or should


underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement.

The statements contained in this announcement are made as at the date of


this announcement, unless some other time is specified in relation to them, and
service of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such
date. Nothing contained in this document shall be deemed to be a forecast,
projection or estimate of the future financial performance of Morson or MMGG
except where expressly stated.

All subsequent oral or written forward looking statements attributable to MMGG


or Morson or any of their respective members, directors, officers or employees
or any persons acting on their behalf are expressly qualified in their entirety by
the cautionary statement above. All forward looking statements included in this
announcement are based on information available to MMGG and Morson on the
date hereof and are made only as of the date of this announcement. Undue
reliance should not be placed on such forward looking statements.

Subject to compliance with the Code, neither Morson nor MMGG intends, or
undertakes any obligation, to update any information contained in this
announcement.

DEALING DISCLOSURE REQUIREMENTS

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any paper offeror
(being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period
and, if later, following the announcement in which any paper offeror is first
identified.

An Opening Position Disclosure must contain details of the person's interests


and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by
no later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10th business day following the announcement in which
any paper offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in
1% or more of any class of relevant securities of the offeree company or of any
paper offeror must make a Dealing Disclosure if the person deals in any relevant
securities of the offeree company or of any paper offeror. A Dealing Disclosure
must contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any paper offeror, save to the extent that
these details have previously been disclosed under Rule 8. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later than 3.30
pm (London time) on the business day following the date of the relevant
dealing.

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5/24/13
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an interest in
relevant securities of an offeree company or a paper offeror, they will be
deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect
of whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on the Takeover
Panel's website at www.thetakeoverpanel.org.uk, including details of the
number of relevant securities in issue, when the offer period commenced and
when any offeror was first identified. If you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

You should note that, for the purposes of the above summary of Rule 8 of the
Code, MMGG is not treated as a paper offeror and therefore there is no
requirement to disclose interests or dealings in the shares of MMGG under Rule
8 of the Code.

Publication on website

A copy of this announcement will be available free of charge, subject to


certain restrictions relating to persons in Restricted Jurisdictions, on MMGG's
website at www.MMGG.co.uk and on Morson's website at www.Morson.com by
no later than 12.00 p.m. (London time) on 28 May 2012.

Neither the content of the websites referred to in this announcement nor the
content of any website accessible from hyperlinks on MMGG's website and/or
Morson's website (or any other website) is incorporated into, or forms part of,
this announcement.

EMBARGOED 09.00AM 25 MAY 2012

25 May 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF THAT JURISDICTION

RECOMMENDED CASH OFFER BY MMGG ACQUISITION PLC


("MMGG") FOR MORSON GROUP PLC ("MORSON")

1. Introduction

The board of MMGG and the Independent Director are pleased to announce that
they have reached agreement on the terms of a recommended cash offer, with
a loan note alternative (further details of which are given in paragraph 4
below), to be made by MMGG for the whole of the issued and to be issued
share capital of Morson.

The Offer values each Morson Share at 50 pence and Morson's existing issued
share capital at approximately £23 million.

The Offer Price represents a premium of 20.5 per cent. to the Closing Price of
41.5 pence per Morson Share on 24 May 2012, being the last Business Day prior
to the Offer being announced. In aggregate, MMGG has received irrevocable
undertakings to accept or procure acceptance of the Offer in respect of a total
of 26,014,380 Morson Shares, representing 57.37 per cent. of the existing
issued share capital of Morson.

5/42
5/24/13
2. Recommendation

The Independent Director, who has been so advised by W H Ireland Limited,


considers the terms of the Offer to be fair and reasonable. However, the
Independent Director does not express any view on the terms of the Loan Note
Alternative. In providing its advice to the Independent Director, W H Ireland
Limited has taken into account the commercial assessments of the Independent
Director. WH Ireland is acting as the independent financial adviser to Morson for
the purposes of providing independent financial advice to the Independent
Director on the Offer under Rule 3.1 of the Code.

Accordingly, the Independent Director recommends that Morson Shareholders


accept the Cash Offer as he has irrevocably undertaken to do in respect of his
own beneficial shareholding of 20,000 Morson Shares (representing
approximately 0.04 per cent. of the existing issued share capital of Morson).

The Independent Director, who has been so advised by WH Ireland Limited,


considers that whilst the nominal value at completion of the Loan Note
Alternative may be the same as that of the Cash Offer, additional risk attaches
to the Loan Note Alternative, arising from inter alia, the possibility that the
Company will in due course become a private limited company, the significant
increase in the indebtedness of the Company that will arise should the Offer
proceed and the claims of other creditors (including Barclays) ranking ahead of
the Loan Note Alternative and therefore gives no recommendation to Morson
Shareholders in relation to the Loan Note Alternative.

3. The Offer

The Offer, which will be on the terms and subject to the conditions set out
below and in Appendix I, and to be set out in full in the Offer Document and, in
relation to certificated shareholders, the Form of Acceptance, will be made on
the following basis:

For each Morson Share 50 pence in cash

Morson Shares will be acquired by MMGG pursuant to the Offer fully paid and
free from all liens, equities, charges, equitable interests, encumbrances, rights
of pre-emption and other third party rights and/or interests of any nature
whatsoever and together with all rights attaching to them, now or in the
future, including the right to receive and retain all dividends, interest and other
distributions declared, paid or made in the future.

As an alternative to the cash consideration which they would otherwise be


entitled to receive, Morson Shareholders will be able to elect to receive Offer
Loan Notes, which will be issued on the basis of 50 pence in nominal value of
Offer Loan Notes for each Morson Share.

Morson Shareholders must elect to receive either cash or Offer Loan Notes for
their entire holding of Morson Shares. There is no option for Morson
Shareholders to accept the Offer and elect to receive partly cash and partly
Offer Loan Notes.

4. The Loan Note Alternative

MMGG has decided to offer a loan note alternative to the Cash Offer in the form
of the Offer Loan Notes.

The Offer Loan Notes will be created by a resolution of the Board of MMGG (or
a duly authorised committee thereof) and will be constituted by the Offer Loan
Note Instrument executed as a deed by MMGG.

The issue of the Offer Loan Notes will be conditional on the Offer being
declared wholly unconditional.

The Offer Loan Notes will not be transferable.

No application will be made for the Offer Loan Notes to be listed or dealt in on
any stock exchange.

The Offer Loan Notes will not be qualifying corporate bonds for United Kingdom

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5/24/13
taxation purposes for Morson Shareholders who are individuals.

The Offer Loan Notes will bear interest at 4% per annum but this interest will
be accrued and only paid when the Offer Loan Notes are redeemed. The Offer
Loan Notes are, on the face of the Offer Loan Note Instrument, redeemable on
1 January 2018. However, payments under the Offer Loan Notes are subject to
the terms of the Intercreditor Agreement and it cannot be guaranteed that
redemption will occur on that date. Morson Shareholders who elect to receive
Offer Loan Notes must accede to the terms of the Intercreditor Agreement on
such terms as Barclays may require. A summary of the terms of the
Intercreditor Agreement is set out in Part B of Appendix II.

MMGG may (subject to the terms of the Intercreditor Agreement), at any time,
elect to redeem all or any part of the Offer Loan Notes (or any Offer Loan
Notes or part of any Offer Loan Notes held by certain of the Offer Loan
Noteholders as the board of MMGG may elect).

Morson Shareholders should consider carefully, in light of their own investment


objectives and tax position, whether they wish to elect for the Offer Loan
Notes under the Loan Note Alternative and are strongly advised to seek their
own independent financial advice before making any such election.

Further information on the Offer Loan Notes is given in Part A of Appendix II.

5. Background to and Reasons for the Offer

Background to the Offer

In Morson's admission document dated 27 March 2006, by which the Morson


Shares were admitted to trading on AIM at a price of 160 pence per Morson
Share, it was stated that:

"Admission will give the Group access to a new source of funds and tradeable
shares to facilitate the Group's future growth, both organically and by
acquisition. The Directors believe that a quotation on AIM will raise the status
and market profile of the Group, promoting further awareness of Morson and
that this increased awareness will strengthen the Group's ability to attract
new business and take advantage of growth opportunities.

In addition, the Directors believe that Admission will provide liquidity and a
value for the Company's equity which, in conjunction with the EMI scheme, will
help the Group to continue to attract, motivate and retain staff of an
appropriate calibre to achieve the growth opportunities."

Mindful of the factors below, set alongside the statement from the AIM
admission document, the Management Team have been evaluating the
continued appropriateness of the Company's admission to trading on AIM.

Share price volatility

Since its admission to trading on AIM in 2006, Morson's share price has been
extremely volatile, rising to a high of approximately 258 pence per Morson Share
in June 2007 and falling to a low of approximately 39 pence per Morson Share in
February of this year and as recently as 10 April this year.

During this time, the Group has continued to report profits above those
recorded at the time of its admission to trading on AIM and yet its share price
has, since 29 May 2008, remained below the price at which admission occurred,
namely 160p. This has defeated one of the core reasons for the original
admission, namely to attract, motivate and retain staff of an appropriate calibre
to achieve the growth opportunities which the Company intended to achieve
through share options and share ownership. The volatility in the share price
has resulted in options being granted with exercise prices, ranging from 89.5 -
245 pence per Morson Share, which are now substantially above the current
share price and those that subscribed for shares at admission are now sitting
on substantial losses, despite the Group delivering continued profitability in
difficult UK economic conditions.

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Management believes that it will have a greater chance of attracting, retaining
and incentivising key personnel with bonus and/or share option arrangements,
which may not comply with corporate governance guidelines for an AIM
company and therefore may not be acceptable to institutional investors and
the broader market if the Company were to remain admitted to trading on AIM.

Furthermore, the Management Team believes that concern about the


Company's share price performance may result in a loss of confidence when
approaching contract renewals. The Management Team also believes that the
relative decline in the Company's share price may be utilised by competitors in
an effort to imply financial distress despite the Company's performance in
difficult UK economic conditions. The Management Team had believed that the
Company's admission to AIM would strengthen its ability to gain and retain
business. It is their current opinion that, as a result of share price volatility and
the Company's depressed market capitalisation, being AIM listed now weakens
Morson's competitive positioning.

Business Transition

Despite the current UK economic climate, the Group has been able to maintain
a substantial level of profit. This has been achieved despite the loss in recent
years of a number of significant contracts and reduced volumes on others;
including the cessation of the Nimrod aircraft programme contributing to the
closure of the BAe site at Woodford, the supply of workers to Magnox, and the
loss of the "Trackforce" contract with Metronet. The Group has won new work
and renewed some existing contracts. However, new contracts are
predominantly obtained by a competitive tender process and renewals are
typically negotiated with pressure for margin reductions but with enhancement
of quality of service. The Morson Board believes that the economic outlook
remains challenging in the UK, with Government expenditure under pressure and
whilst there is commitment to long term projects such as HS2 and Crossrail, the
material benefits that could accrue to the Group are uncertain and a number of
years away.

The Morson Board has commenced the process of transitioning the business
from one that is predominantly UK-centric to one that is able to take
advantage of overseas opportunities. In addition, the Morson Board has
invested in new offices in the UK, in permanent staff and Morson Projects. This
strategy of investment for growth is one that, in the short to medium term,
may impact on future cashflow and profits. The Management Team believes
that this strategy will, over time, prove to enhance the security and
sustainability of revenues, but acknowledges that the risk profile of the
business may, for the foreseeable future, be higher than Morson Shareholders
currently envisage. The Management Team believes this may impact on the
Company's share price. Accordingly, Management believes that the transition
of the business would be best achieved in the more flexible private company
environment.

Current Trading and future prospects

As the Morson Board has stated in the preliminary results for the year ended 31
December 2011, released on 30 March 2012, the 2011 financial year was a
challenging one. The markets in which the Group operates are competitive and
varying levels of confidence amongst the Group's client base, due to wider
economic uncertainty, has affected demand.

Whilst the Group has been successful in maintaining key client relationships in
its core business, this has been achieved with downward pressure on margins
and/or payment terms. Furthermore, five of the contracts under which the
Group derives significant turnover are due for renewal or extension in 2012. If
the recent trend of margin erosion and extension of credit terms were applied
to all these contracts it would put further pressure on cash flow. Such
pressure would hamper the Group's plans for overseas expansion and further
reduce the likelihood of a return to dividend payments. In such circumstances,
the Morson Board may be forced into action to preserve cash flow at the
expense of revenue and profit. The Management Team believe that such

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action, whilst necessary, could have a detrimental impact on Morson's share
price.

As a result of margin erosion and increased costs, the Morson Directors believe
the Group has to work harder to stand still in terms of profits.

Morson Projects

The trading of Morson Projects has deteriorated over the past two years as it
is achieving lower gross profit margins and incurring increased overhead costs.
Morson Projects has a different business model to core recruitment operations
requiring longer term investment in often fixed price contracts which the
Morson Directors believe to be inherently more risky than core recruitment. To
demonstrate this further on 7 May 2012, Morson Projects received an
unquantified claim from a client regarding a specific piece of work. In the
limited time since the claim was received Morson Projects has not received full
details of the claim, the circumstances surrounding the claim and quantification
of the claim. Accordingly the merits of the claim have not been fully assessed,
but this claim may lead to litigation in due course. The Management Team
believes Morson Projects has strong defences to any such claim and, in any
event, carries professional indemnity insurance which should mitigate the
position and, to the extent there is any merit in the claim, Morson Projects may
also have claims against third parties regarding the work involved. Whilst the
Management Team are confident about the outcome of this claim and are
proceeding with the Offer as previously envisaged, the Bank have concluded
that there is a risk of a cash loss and have put further clauses into their facility
agreement which relate specifically to this claim, as set out in paragraph 8.
Morson Projects also requires more working capital and fixed asset expenditure.
The Management Team believes that this activity is not well understood by the
stock market and that the value of Morson Projects is not truly reflected in
Morson's market capitalisation. As a result, it is the Management Team's belief
that this business unit would sit better as part of a private company.

These factors, taken together, have reduced the visibility previously enjoyed
by the Morson Board when forecasting profitability, increasing the risk that the
Group will perform below market expectations. Mindful of the share price impact
that arises from the publication of negative news, the Management Team
believes that shareholder value could be considerably eroded if future market
expectations fail to be met.

Cash flow and dividends

In its trading statements issued in December 2011 and February 2012, the
Morson Board highlighted that the Group's cash position had been negatively
impacted by the lengthening of some trading cycles and the investment in
development of overseas opportunities which has led to a substantial increase
in net debt. These factors contributed to the decision to suspend dividend
payments by the Company. In light of the current trading environment and the
business transition referred to above, the Company can offer no guarantee that
dividend payments will be recommenced when the position is next reviewed as
part of the interim results process in September 2012. The Management Team
believe that a number of shareholders invested in the Company to take
advantage of dividend income. As a result, the Management Team believes
that, in light of the change of circumstances, it is appropriate to put forward
the Offer so that such Morson Shareholders can receive value for their
shareholding in Morson at a premium to the pre-announcement share price.

The Offer Price

The Offer is to be funded through the Management Team's own resources, bank
leverage and the Offer Loan Notes. The valuation of Morson at the Offer Price
is principally a function of the leverage made available by Barclays to make the
Offer. The Offer values Morson at a level at which the Management Team
believe future debt service can be achieved without putting at risk the
continuing stakeholders' investment and employment prospects of the staff
employed in the Group.

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6. Background to the Recommendation

The Independent Director has considered the terms of the Cash Offer and
recommends, having been so advised by WH Ireland Limited, that all Morson
Shareholders should accept the Cash Offer for their Morson Shares at a price of
50 pence per Morson Share.

The Independent Director believes that, for reasons set out below, in the
absence of an offer for the Company, there can be no guarantee that Morson
Shareholders (especially those with significant shareholdings) will be able to sell
their entire shareholding in Morson in the market, should they wish to do so, at
a price of 50 pence or better, in the short to medium term.

In addition, given the receipt of irrevocable undertakings amounting to 57.37


per cent. of Morson's issued share capital, there is a likelihood that if the Offer
proceeds Morson will be delisted, and that shareholders choosing not to accept
the Offer would be unable easily to realise value for their shareholdings and
experience the elevated risks attached to investment in an unquoted company.

The Independent Director therefore advises that each Morson Shareholder


should consider carefully the information set out below in making a decision as
to whether to accept the Offer.

In deciding to recommend the Cash Offer, the Independent Director has taken
into account the factors set out below. This is not intended to be an
exhaustive list of relevant factors and Morson Shareholders should consider
their individual circumstances carefully before deciding whether to accept the
Offer.

The economic and trading environment

- Macroeconomic weakness in the Company's principal geographic markets,


accompanied by a general fiscal tightening that has significantly, negatively
impacted a number of the Group's larger customers who rely on defence and
other spending by governments for substantial amounts of their revenues;

- Industry overcapacity, in the Morson Projects business in particular, which


has resulted from falling demand, leading to significantly increased competition
for contracts, and accompanying reduction in profit margins and deterioration in
other terms;

- Risks associated with the business plan being pursued by the Management
Team. It is probable that underperforming operations such as the UK projects
and permanent recruitment businesses will require further restructuring and that
development of the overseas businesses will continue to require substantial
investment; and

- Demands on the Company's cash flow from impending contract renewals, the
need to renew existing banking facilities during 2013 and 2014, continued
efforts to develop underperforming areas of the Group and the need to reduce
indebtedness which are likely to impact the ability of the Company to reinstate
dividend payments.

Incentivisation of directors and key staff

- The Independent Director would draw Morson Shareholders' attention to the


likely negative impact on the business and motivation and morale of key senior
managers if the current process does not conclude with the successful
completion of the Offer.

The market in Morson Shares

- The Company is exposed to the infrastructure and capital goods markets,


which are highly cyclical and can in periods of recession therefore fall out of
favour with investors;

- Over recent years the Company's share price has declined from over £2.50 to
around 80p in the second half of 2011, and fallen further to around 40p
following announcement of the dividend suspension in December 2011. This

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decline indicates negative market sentiment, arising from concerns around the
sector and the underlying trading performance of the Company, as well as the
suspension of the dividend. It appears unlikely that catalysts for a significant
improvement in the market perception of the Company will arise in the short to
medium term, particularly given the challenges posed to a return to dividends
by the Company's indebtedness and other demands on cashflow;

- The lack of trading liquidity in Morson Shares, arising in part from the large
shareholding of the Management Team, has made it challenging for potential
new investors to become Morson Shareholders and is believed to be likely to
have deterred others. The average daily trading volume in Morson Shares for
the 12 month period ended 24 May 2012 was 53,984 Morson Shares being 0.1
per cent. of Morson's existing issued share capital;

- The shareholding of the Management Team (46.78 per cent.) is likely to deter
others from making a competing offer for the Company; and

- The level of irrevocable acceptances secured for the Offer is such that as the
Offer proceeds the probability that the Company will be delisted is significant
and in this situation the liquidity of shareholders would be substantially
curtailed, restricting further their ability to realise value for their Morson
Shareholdings .

Accordingly, the Independent Director believes that the Cash Offer represents
an appropriate way for Morson Shareholders to realise value for their
investment at a premium to the prevailing share price.

It should be noted however that the Independent Director's recommendation


only applies to the Cash Offer and does not apply to the Loan Note Alternative,
as he considers that whilst the nominal value at completion of the Loan Note
Alternative may be the same as that of the Cash Offer, additional risk attaches
to the Loan Note Alternative, arising from inter alia, the possibility that the
Company will in due course become a private limited company, the significant
increase in the indebtedness of the Company that will arise should the Offer
proceed and the claims of other creditors (including Barclays) ranking ahead of
the Loan Note Alternative.

7. Irrevocable Undertakings to Accept the Offer

In aggregate, MMGG has received irrevocable undertakings to accept or procure


acceptance of the Offer in respect of a total of 26,014,380 Morson Shares,
representing 57.37 per cent. of the existing issued share capital of Morson.

Details of these undertakings are set out in Appendix IV. Morson Shareholders
should be aware that the Management Team has irrevocably undertaken to
accept the Loan Note Alternative in respect of their entire combined interests
of 21,209,630 Morson Shares amounting to approximately 46.78 per cent. of
the existing issued share capital of Morson.

8. Financing of the Offer

Full acceptance of the Offer (other than in respect of the interests of the
Management Team), in cash, will result in the payment by MMGG of
approximately £12.067 million in cash to Morson Shareholders. The cash
consideration provided by MMGG in support of the Cash Offer is being financed
by debt financing being provided by Gerard Anthony Mason and Barclays.

MMGG has entered into a facilities agreement with Barclays whereby Barclays
will provide certain facilities to assist in financing the consideration under the
Offer and any squeeze out of shares following the Offer, the costs of the Offer
and refinancing certain existing financial indebtedness of the Morson Group. The
facilities, which amount to up to £14 million, comprise a term loan of up to £12
million which is repayable in quarterly instalments over a four year period from
the date on which the Offer is declared unconditional and a term loan of up to
£2million which is repayable on the date which falls four years from the date on
which the Offer is declared unconditional. In certain circumstances, the
facilities may be repayable earlier, including in circumstances where the claim
against Morson Projects referred to in paragraph 5 above involves Morson
Projects incurring an aggregate liability equal to or in excess of £1 million taking
into account any relevant net insurance recovery (after taking into account

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5/24/13
any excess payable in respect of such insurance recovery).

MMGG has entered into a facility agreement with Gerard Anthony Mason
whereby he will provide £2,500,000 of loans to assist in financing the
consideration under, and the costs of, the Offer. Repayment of this facility is
due on 30 June 2017. In certain circumstances, these facilities may be
repayable earlier. In any event, repayment of this facility issubject to the terms
of the Intercreditor Agreement.

SPARK Advisory Partners Limited is satisfied that sufficient resources are


available to MMGG to satisfy in full the cash consideration payable pursuant to
the Offer.

9. Information on MMGG

MMGG was incorporated in England and Wales on 5 March 2012 for the purpose
of making the Offer. All of the issued ordinary shares in MMGG are owned by
the Management Team comprising Gerrard Godfrey Mason (Chairman), Gerard
Anthony Mason (Group Chief Executive), Paul John Gilmour (Group Finance
Director) and Kevin Patrick Gorton (Group Managing Director).

To date, MMGG has neither traded nor engaged in any activities, other than
those in relation to its incorporation, re-registration as a public limited
company, the issuing of shares to the Management Team and the making of the
Offer.

10. Information on Morson

Morson operates through three main subsidiaries, Morson Human Resources


Limited, which trades as Morson International, and Morson Wynnwith Limited,
both of which provide specialist engineering and technical personnel and Morson
Projects Limited, which provides outsourced engineering and project
management design services.

Nuclear, aerospace, rail and power are the core markets in which Morson
operates. However, a wide range of ancillary engineering and design markets
also draw on the Group's engineering talent. The Morson Board believes that
other areas, including telecommunications, oil and gas, marine and automotive
provide opportunities for growth. Morson seeks to work in partnership with its
customers in order to seek to establish common goals for efficiency, innovation
and technical expertise. This approach provides Morson with knowledge of the
needs and aims of clients, enabling Morson to make changes and improvements
to its service. The Morson Board believes that success in its markets can be
achieved by securing and maintaining long-term relationships with customers.

Morson released its preliminary final results on 30 March 2012 and published its
annual report and accounts for the year ended 31 December 2011 on 17 April
2012. The annual report is available on Morson's website.

11. Current trading and future prospects of MMGG

To date, MMGG has neither traded nor engaged in any activities, other than
those in relation to its incorporation, its re-registration as a public limited
company, the issuing of shares to the Management Team and the making of the
Offer.

MMGG currently has in issue 50,000 ordinary shares of £1 each which are fully
paid and which are held by the Management Team as follows:

MMGG Shareholder Number of ordinary shares in MMGG held

Gerrard Godfrey Mason 23,600

Gerard Anthony Mason 23,600

Paul John Gilmour 1,400

Kevin Patrick Gorton 1,400

12. Management and Employees

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5/24/13
The MMGG Board attaches great importance to the skills and experience of the
management and employees of Morson. The MMGG Board has provided
assurances to the Independent Director that, upon the Offer becoming or being
declared unconditional in all respects, the existing employment rights of all
employees of Morson will be fully safeguarded.

No change is expected to the current locations of the Group's places of


business.

In addition, following the Offer becoming unconditional in all respects, key


members of the Management Team will remain in their current roles with no
changes to their current terms and conditions of employment.

The Independent Director of Morson has agreed to resign subject to and with
effect from the Offer being declared unconditional in all respects. Particulars of
the payments to the Independent Director in respect of termination of his
appointment as a director (and in accordance with the terms of his letter of
appointment) will be set out in full in the Offer Document).

13. Morson Share Option Schemes

The Offer extends to any Morson Shares which are unconditionally allotted or
issued whilst the Offer remains open for acceptance (or by such earlier time
and/or date as MMGG may, subject to the Code and/or with the consent of the
Panel, determine, but not being earlier than the date on which the Offer
becomes or is declared unconditional as to acceptances) as a result of the
exercise of options or other awards granted under the Morson Share
Schemes. Participants in the Morson Share Schemes will be contacted
separately regarding the effect of the Offer on their options and MMGG and
Morson will make appropriate proposals to the holders of any in-the-money
options. However, as has been outlined in paragraph 5 above, at the Offer
Price, none of the options granted under the Morson Share Option Schemes
would be in-the-money options.

14. Disclosure of Interests in Morson

Other than pursuant to the irrevocable undertakings referred to in paragraph 7


above, MMGG confirms that it does not currently hold any interest in Morson
Shares.

MMGG is, however, acting in concert with the Management Team which has the
interests in Morson Shares set out below:

Name Number of Morson Percentage


Shares holding

G G Mason1 9,984,215 22.02

G A Mason2 10,906,090 24.05

P J Gilmour 630,000 1.39

K P Gorton 611,200 1.35

Note

1. Of these Morson Shares included in G G Mason's holding, 921,875 are held by the trustees of a
discretionary trust of which G G Mason is a trustee.

2. Of these Morson Shares included in G A Mason's holding, 921,875 are held by the trustees of a
discretionary trust of which G G Mason is a trustee. T hese shares are included in G A Mason's holding by
reason of the inclusion of G A Mason's children as beneficiaries. G A Mason has no beneficial interest in
these shares.

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5/24/13

15. Securities in Issue

As at the close of business on, 24 May, 2012, there were 45,343,750 Morson
Shares in issue.

16. Cancellation of Trading, Re-registration and compulsory


acquisition

If MMGG acquires or agrees to acquire, by virtue of its shareholding and


acceptances of the Offer, issued share capital carrying 75 per cent. or more of
the voting rights of Morson, MMGG intends to procure that Morson applies for
cancellation of the trading in Morson Shares on AIM not less than 20 Business
Days following MMGG first having acquired or agreed to acquire such issued
share capital and thereafter to procure that the Company is re-registered as a
private limited company. However, even though the Company would no longer
be a public company, it would still remain subject to the provisions of the City
Code for a period of 10 years from its re-registration as a private limited
company.

If sufficient valid acceptances of the Offer are received and/or sufficient


Morson Shares are otherwise acquired, MMGG intends to apply the provisions of
sections 979 to 982 (inclusive) of the Companies Act to acquire compulsorily
any outstanding Morson Shares to which the Offer relates.

17. General

The Offer Document will be posted to Morson Shareholders as soon as


practicable and, in any event (save with the consent of the Panel), within 28
days of the date of this announcement.

The Offer will be made solely by the Offer Document and the Form of
Acceptance, which will contain the full terms and conditions of the Offer,
including details of how the Offer may be accepted.

Appendix V contains definitions of the terms used in this announcement.

18 Offer-related arrangements

MMGG and Morson entered into an agreement on 14 March 2012 (the


"Confidentiality Agreement") pursuant to which, amongst other things, MMGG
has undertaken to (i) keep confidential certain non-public information it
receives relating to the Morson Group, (ii) use such information solely for the
purpose of evaluating a possible offer for Morson and (iii) not to disclose such
information to third parties (other than certain permitted disclosees) unless
required by law, regulation, a court of competent jurisdiction or any
governmental or competent regulatory authority.

MMGG has further undertaken that subject to certain limited exclusions, during
the period of two years from the date negotiations cease it will not directly or
indirectly solicit, endeavour to entice away or offer to employ or to enter into
any contract for services with any person who is (i) in a managerial,
supervisory, technical or sales capacity of any member of the Morson Group or
(ii) is a consultant to any member of the Morson Group where the person in
question has confidential information or would be in a position to exploit any
member of the Morson Group's trade connections.

MMGG has entered into a facility agreement with Gerard Anthony Mason,
further details of which are set out in paragraph 8 above.

19 Documents on display

Copies of the following documents will, subject to certain restrictions relating to


persons in Restricted Jurisdictions, be made available free of charge on MMGG's
and Morson's websites at www.MMGG.co.uk and www.Morson.com respectively
by no later than 12:00 p.m. (London time) on the Business Day following this
announcement until the end of the Offer Period:

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5/24/13
- this announcement;

- the irrevocable undertakings referred to in paragraph 7 above and described


in Appendix IV to this announcement;

- the facilities agreement and the facility agreement referred to in paragraph 8


above;

- the Intercreditor Agreement referred to in paragraphs 4 and 8 above; and

- the Confidentiality Agreement referred to in paragraph 18 above.

Neither the content of the websites referred to in this announcement nor the
content of any website accessible from hyperlinks on MMGG's website and/or
Morson's website (or any other website) is incorporated into, or forms part of,
this announcement.

PRESS ENQUIRIES

For further information contact:

MMGG
Ged Mason 0161 707 1516

Paul Gilmour 0161 707 1516

Morson
Ian Knight 07775 941804

SPARK Advisory Partners Limited (financial adviser to MMGG)


Matt Davis, Partner 020 3368 3552

Mark Brady, Partner 020 3368 3551

W H Ireland Limited (financial adviser to Morson)


Adrian Hadden, Managing Director 020 7220 1751

Nick Field, Corporate Finance Executive 020 7220 1658

Apart from the responsibilities, if any, which may be imposed on SPARK Advisory
Partners Limited by the Financial Services and Markets Act 2000, the European
Communities (Markets in Financial Instruments) Regulations 2007 (as amended)
or the regulatory regimes established thereunder or the Code, SPARK Advisory
Partners Limited does not accept any responsibility whatsoever for the
contents of this announcement or for any statements made or purported to be
made by it or on its behalf in connection with the Offer. SPARK Advisory
Partners Limited accordingly disclaims all and any liability whether arising in tort,
contract or otherwise (save as referred to above) which it might otherwise
have in respect of this announcement or any such statement.

Apart from the responsibilities, if any, which may be imposed on W H Ireland


Limited by the Financial Services and Markets Act 2000, the European
Communities (Markets in Financial Instruments) Regulations 2007 (as amended)
or the regulatory regimes established thereunder or the Code, W H Ireland
Limited does not accept any responsibility whatsoever for the contents of this
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5/24/13
announcement or for any statements made or purported to be made by it or on
its behalf in connection with the Offer. W H Ireland Limited accordingly
disclaims all and any liability whether arising in tort, contract or otherwise (save
as referred to above) which it might otherwise have in respect of this
announcement or any such statement.

SPARK Advisory Partners Limited, which is authorised and regulated in the


United Kingdom by the Financial Services Authority, is acting exclusively for
MMGG and no-one else in connection with the Offer and will not be responsible
to any person other than MMGG for providing the protections afforded to
customers of SPARK Advisory Partners Limited or for providing advice in relation
to the Offer or any other matter referred to in this announcement.

SPARK Advisory Partners Limited has given and not withdrawn its written
consent to the release of this announcement with the inclusion of the
reference to its name in the form in which it is included.

W H Ireland Limited, which is authorised and regulated in the United Kingdom by


the Financial Services Authority, is acting exclusively for Morson in connection
with the Offer and will not be responsible to any person other than Morson for
providing the protections afforded to clients of W H Ireland Limited or for
providing advice in relation to the Offer or any other matter referred to in this
announcement.

W H Ireland Limited has given and not withdrawn its written consent to the
release of this announcement with the inclusion of the reference to its name in
the form in which it is included.

This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information contained or referred
to in the Offer Document which MMGG intends to despatch shortly to Morson
Shareholders and, for information only, to holders of options under the Morson
Share Schemes.

The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document.

The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document. Unless
otherwise determined by MMGG and permitted by applicable law and regulation,
subject to certain exceptions, the Offer is not being made and will not be
made, directly or indirectly, in or into, and the Offer will not be capable of
acceptance from a Restricted Jurisdiction. Accordingly, unless otherwise
determined by MMGG, copies of this announcement, the Offer Document, the
Form of Acceptance and any other related document are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent
in or into or from a Restricted Jurisdiction and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing so
may be a breach of applicable law and regulation in that jurisdiction and may
make invalid any purported acceptance of the Offer by persons in any such
jurisdiction. This announcement does not constitute an offer in a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or otherwise from or within any Restricted
Jurisdiction. Accordingly this announcement is not being, and should not be,
mailed, transmitted or otherwise distributed, in whole or in part, in or into or
from any Restricted Jurisdiction.

Morson Shareholders (including, without limitation, nominees, trustees


or custodians) must not forward this announcement to any Restricted
Jurisdiction.

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5/24/13
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This document contains certain forward-looking statements with respect to the


financial condition, results of operations and business of the Morson Group and
certain plans and objectives of the boards of directors of Morson and MMGG.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements often
use words such as "anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments made
by the Management Team and MMGG in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate.

Forward-looking statements also include statements about MMGG's beliefs and


expectations related to the Offer being declared wholly unconditional, benefits
that would be afforded to customers, and benefits to MMGG that are expected
to be obtained as a result of the Offer being declared wholly unconditional.
There can be no assurance that the Offer will be declared wholly
unconditional. By their nature, forward-looking statements involve risk and
uncertainty, and the factors described in the context of such forward-looking
statements in this announcement could cause actual results and developments
to differ materially from those expressed in or implied by such forward-looking
statements.

Should one or more of these risks or uncertainties materialise, or should


underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement.

The statements contained in this announcement are made as at the date of


this announcement, unless some other time is specified in relation to them, and
service of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such
date. Nothing contained in this document shall be deemed to be a forecast,
projection or estimate of the future financial performance of Morson or MMGG
except where expressly stated.

All subsequent oral or written forward looking statements attributable to MMGG


or Morson or any of their respective members, directors, officers or employees
or any persons acting on their behalf are expressly qualified in their entirety by
the cautionary statement above. All forward looking statements included in this
announcement are based on information available to MMGG and Morson on the
date hereof and are made only as of the date of this announcement. Undue
reliance should not be placed on such forward looking statements.

Subject to compliance with the Code, neither Morson nor MMGG intends, or
undertakes any obligation, to update any information contained in this
announcement.

APPENDIX I

Conditions and Certain Further Terms of the Offer

A. Conditions of the Offer

The Offer will be subject to the following conditions:

(a) valid acceptances of the Offer being received (and not, where permitted,
withdrawn) by 1.00 p.m. on the first closing date (or such later time(s) and/or
date(s) as MMGG may, subject to the rules of the Code or with the consent of
the Panel, decide) in respect of not less than 90 per cent. (or such lesser
percentage as MMGG may decide) in nominal value of the Morson Shares to

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5/24/13
which the Offer relates, and not less than 90 per cent. (or such lesser
percentage as MMGG may decide) of the voting rights carried by the Morson
Shares to which the Offer relates, provided that this condition will not be
satisfied unless MMGG shall have acquired or agreed to acquire, whether
pursuant to the Offer or otherwise, Morson Shares carrying in aggregate more
than 50 per cent. of the voting rights then exercisable at a general meeting of
Morson including, to the extent (if any) required by the Panel, any voting rights
attaching to any Morson Shares which are unconditionally allotted before the
Offer becomes or is declared unconditional as to acceptances pursuant to the
exercise of any outstanding conversion or subscription rights or otherwise. For
the purposes of this condition:

(i) Morson Shares which have been unconditionally allotted but not
issued before the Offer becomes or is declared unconditional as
to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise, shall
be deemed to carry the voting rights which they will carry upon
issue; and

(ii) the expressions "Morson Shares to which the Offer relates"


and "associates" shall be construed in accordance with sections
974 to 991 of the Companies Act 2006;

(b) each clearance or consent of, filing with, or notice to, any Third Party (as
defined below) that is reasonably considered by MMGG to be necessary or
appropriate in connection with the Offer or its implementation, including the
acquisition of any share or securities in, or control of, any member of the Wider
Morson Group, in any country, territory or jurisdiction in which a member of the
Wider MMGG Group or the Wider Morson Group is established or conducts
business, having been granted, filed or delivered (as appropriate), in each case
in terms satisfactory to MMGG;

(c) no antitrust regulator, central bank, government or governmental, quasi-


governmental, supranational, statutory, regulatory or investigative body,
authority, court, trade agency, association or institution or professional or
environmental body or any other similar person or body whatsoever in any
relevant jurisdiction (each a "Third Party") having, without the consent of
MMGG, decided to take, institute, implement or threaten any action,
proceedings, suit, investigation, enquiry or reference or having required any
action to be taken or information to be provided or otherwise having done
anything or having made, proposed or enacted any statute, regulation, order or
decision or having done anything which would or might reasonably be expected
to:

(i) make the Offer or its implementation, or the acquisition or the


proposed acquisition by MMGG of any shares or other securities
in, or control or management of, Morson or the Wider Morson
Group void, unlawful, illegal or unenforceable in any jurisdiction,
or otherwise directly or indirectly restrain, prohibit, restrict,
prevent or delay the same or impose additional conditions or
financial or other obligations with respect thereto, or otherwise
challenge or interfere therewith, or require adverse amendment
to the Offer or the acquisition of any shares or other securities
in, or control or management of, Morson by MMGG;

(ii) require, prevent or materially delay the divestiture or alter the


terms envisaged for any proposed divestiture by MMGG or any
member of the Wider MMGG Group of any Morson Shares or of
any shares in a member of the Wider Morson Group;

(iii) require, prevent or materially delay the divestiture or alter the


terms envisaged for any proposed divestiture by any member of
the Wider MMGG Group or by any member of the Wider Morson
Group of all or any material portion of their respective businesses,
assets or property, or (to an extent which is material in the
context of the Offer or the Wider Morson Group concerned taken
as a whole) impose any limit on the ability of any of them to
conduct their respective businesses (or any of them) or to own
or control any of their respective assets or properties or any part

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5/24/13 thereof;

(iv) impose any material limitation on, or result in any material delay
in, the ability of any member of the Wider MMGG Group or any
member of the Wider Morson Group to acquire, hold or exercise
effectively, directly or indirectly, all or any rights of ownership of
Morson Shares or any shares or securities convertible into Morson
Shares or to exercise voting or management control over any
member of the Wider Morson Group or any member of the Wider
MMGG Group in any such case which is material in the context of
the Wider Morson Group;

(v) except pursuant to Chapter 3 of Part 28 of the Companies Act


require any member of the Wider MMGG Group and/or of the
Wider Morson Group to acquire or offer to acquire any shares or
other securities (or the equivalent) in and/or indebtedness of any
member of the Wider Morson Group owned by or owed to any
Third Party in circumstances which would impose on any member
of the MMGG Group or any member of the Morson Group a liability
which is material in the context of the Wider MMGG Group or the
Wider Morson Group as the case may be;

(vi) impose any material limitation on the ability of any member of the
Wider MMGG Group and/or of the Wider Morson Group to
integrate or co-ordinate its business, or any material part of it,
with the business of any member of the Wider Morson Group or of
the Wider MMGG Group respectively; or

(vii) otherwise adversely affect any or all of the businesses, assets,


prospects, profits or financial or trading position of any member
of the Wider Morson Group or any member of the Wider MMGG
Group to an extent which is material in the context of the Offer
or any such group taken as a whole,

and all applicable waiting and other time periods during which any Third Party
could institute, implement or threaten any such actions, proceedings, suit,
investigation, enquiry or reference under the laws of any relevant
jurisdiction, having expired, lapsed or been terminated;

(d) all necessary filings and applications having been made and all necessary
waiting and other time periods (including any extensions thereof) under any
applicable legislation or regulations of any relevant jurisdiction having
expired, lapsed or been terminated and all statutory or regulatory obligations
in any relevant jurisdiction having been complied with in each case as may
be necessary in connection with the Offer and its implementation or the
acquisition or proposed acquisition by MMGG or any member of the Wider
MMGG Group of any shares or other securities in, or control of, Morson or
any member of the Wider Morson Group and all authorisations, orders,
recognitions, grants, consents, clearances, confirmations, licences,
certificates, permissions and approvals ("Authorisations") which are
material and necessary or appropriate for or in respect of the Offer or the
acquisition or proposed acquisition by MMGG of any shares or other
securities in, or control of, Morson or the carrying on by any member of the
Wider Morson Group of its business or in relation to the affairs of any
member of the Wider Morson Group having been obtained in terms and in a
form reasonably satisfactory to MMGG from all appropriate Third Parties and
all such Authorisations remaining in full force and effect and all filings
necessary for such purpose having been made and there being no notice or
intimation of any intention to revoke, suspend, restrict or amend or not
renew the same at the time at which the Offer becomes or is declared
wholly unconditional in each case where the absence of such Authorisation
would have a material adverse effect on the Wider Morson Group or on the
Wider MMGG Group taken as a whole;

(e) except as publicly announced by Morson prior to 25 May 2012 through a


Regulatory Information Service (an "RIS") or disclosed in writing to MMGG
prior to 25 May 2012, there being no provision of any arrangement,
agreement, licence or other instrument to which any member of the Wider
Morson Group is a party or by or to which any such member or any of its
respective assets is or are or may be bound, entitled or subject or any
circumstance which, in consequence of the making or implementation of the
Offer or the proposed acquisition of any shares or other securities in, or
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5/24/13
control of, Morson by MMGG or because of a change in the control or
management of Morson or otherwise, could reasonably be expected to result
in (to an extent which is material in the context of the Wider Morson Group
taken as a whole):

(i) any indebtedness or liabilities actual or contingent of, or any


grant available to, any member of the Wider Morson Group being
or becoming repayable or capable of being declared repayable
immediately or prior to its stated maturity or the ability of any
such member to borrow monies or incur any indebtedness being
withdrawn or inhibited or capable of being withdrawn or inhibited;

(ii) the creation or enforcement of any mortgage, charge or other


security interest over the whole or any material part of the
business, property, assets or interests of any member of the
Wider Morson Group or any such security (whenever created,
arising or having arisen) being enforced or becoming enforceable;

(iii) any such arrangement, agreement, licence or instrument or the


rights, liabilities, obligations, or interests of any member of the
Wider Morson Group under any such arrangement, agreement,
licence or instrument (or any arrangement, agreement, licence or
instrument relating to any such right, liability, obligation, interest
or business) or the interests or business of any such member in
or with any other person, firm, company or body being or
becoming capable of being terminated or adversely modified or
adversely affected or any adverse action being taken or any
onerous obligation or liability arising thereunder;

(iv) any asset or interest of any member of the Wider Morson Group
being or failing to be disposed of or charged (otherwise than in
the ordinary course of business) or ceasing to be available to any
member of the Wider Morson Group or any right arising under
which any such asset or interest could be required to be
disposed of or charged or could cease to be available to any
member of the Wider Morson Group;

(v) any member of the Wider Morson Group ceasing to be able to


carry on business under any name under which it presently does
so;

(vi) any member of the Wider MMGG Group and/or of the Wider
Morson Group being required to acquire or repay any shares in
and/or indebtedness of any member of the Wider Morson Group
owned by any Third Party;

(vii) any change in or effect on the ownership or use of any


intellectual property rights owned or used by any member of the
Wider Morson Group;

(viii) the value or financial or trading position of any member of the


Wider Morson Group being prejudiced or adversely affected in a
manner which would be material in the context of the Wider
Morson Group taken as a whole; or

(ix) the creation of any material liability, actual or contingent, by any


member of the Wider Morson Group (other than in the ordinary
course of business),

and no event having occurred which, under any provision of any such
arrangement, agreement, licence or other instrument, might reasonably be
expected to result in any of the events referred to in this condition (e) to an
extent which would be material in the context of the Wider Morson Group
taken as a whole;

(f) since 31 December 2011 and except as disclosed in Morson's annual report
and accounts for the year ended 31 December 2011 or as disclosed by or on
behalf of Morson to MMGG or its advisers in writing prior to 25 May 2012 or
as otherwise publicly announced by Morson on or prior to 25 May 2012
through a RIS, no member of the Wider Morson Group having:

(i) issued or agreed to issue or authorised or proposed the issue of

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5/24/13
additional shares or securities of any class, or securities
convertible into or exchangeable for shares, or rights, warrants or
options to subscribe for or acquire any such shares, securities or
convertible securities (save for issues between Morson and any
of its wholly-owned subsidiaries or between such wholly-owned
subsidiaries and save for options as disclosed to MMGG granted
under the Morson Share Option Schemes before 25 May 2012 or
the issue of any Morson Shares allotted upon the exercise of
options granted before 25 May 2012 under the Morson Share
Schemes) or redeemed, purchased, repaid or reduced or
proposed the redemption, purchase, repayment or reduction of
any part of its share capital or any other securities;

(ii) recommended, declared, made or paid or proposed to


recommend, declare, make or pay any bonus, dividend or other
distribution whether payable in cash or otherwise other than any
distribution by any wholly-owned subsidiary within the Morson
Group;

(iii) save as between Morson and its wholly-owned subsidiaries,


effected, authorised, proposed or announced its intention to
propose any change in its share or loan capital which in each
case would be material in the context of the Wider Morson Group
taken as a whole;

(iv) save as between Morson and its wholly-owned subsidiaries,


effected, authorised, proposed or announced its intention to
propose any merger, demerger, reconstruction, arrangement,
amalgamation, commitment or scheme or any material acquisition
or disposal or transfer of assets or shares (other than in the
ordinary course of business) or any right, title or interest in any
assets or shares or other transaction or arrangement in respect
of itself or another member of the Wider Morson Group which in
each case would be material in the context of the Wider Morson
Group taken as a whole;

(v) acquired or disposed of or transferred (other than in the ordinary


course of business) or mortgaged, charged or encumbered any
assets or shares or any right, title or interest in any assets or
shares (other than in the ordinary course of business) or
authorised the same or entered into, varied or terminated or
authorised, proposed or announced its intention to enter into,
vary, terminate or authorise any agreement, arrangement,
contract, transaction or commitment (other than in the ordinary
course of business and whether in respect of capital expenditure
or otherwise) which is of a loss-making, long-term or unusual or
onerous nature or magnitude, or which involves or could involve
an obligation of such a nature or magnitude, in each case which
is material in the context of the Wider Morson Group taken as a
whole;

(vi) entered into any agreement, contract, transaction, arrangement


or commitment (other than in the ordinary course of business)
which is material in the context of the Wider Morson Group taken
as a whole;

(vii) entered into any contract, transaction or arrangement which


would be restrictive on the business of any member of the Wider
Morson Group or the Wider MMGG Group or which is or could
involve obligations which would or might reasonably be expected
to be so restrictive;

(viii) issued, authorised or proposed the issue of or made any change


in or to any debentures, or (other than in the ordinary course of
business) incurred or increased any indebtedness or liability,
actual or contingent, which is material in the context of the
Wider Morson Group taken as a whole;

(ix) been unable or admitted that it is unable to pay its debts or


having stopped or suspended (or threatened to stop or suspend)

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5/24/13
payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business or proposed or
entered into any composition or voluntary arrangement with its
creditors (or any class of them) or the filing at court of
documentation in order to obtain a moratorium prior to a
voluntary arrangement or, by reason of actual or anticipated
financial difficulties, commenced negotiations with one or more of
its creditors with a view to rescheduling any of its indebtedness;

(x) made, or announced any proposal to make, any change or


addition which is material in the context of the Wider Morson
Group as a whole to any retirement, death or disability benefit or
any other employment-related benefit of or in respect of any of
its directors, employees, former directors or former employees;

(xi) save as between Morson and its wholly-owned subsidiaries,


granted any lease or third party rights in respect of any of the
leasehold or freehold property owned or occupied by it or
transferred or otherwise disposed of any such property, in each
case which is material in the context of the Wider Morson Group
as a whole;

(xii) entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any service
agreement with any director or senior executive of Morson or any
director or senior executive of the Wider Morson Group;

(xiii) taken or proposed any corporate action or had any legal


proceedings started or threatened against it for its winding-up
(voluntary or otherwise), dissolution, striking-off or reorganisation
or for the appointment of a receiver, administrator (including the
filing of any administration application, notice of intention to
appoint an administrator or notice of appointment of an
administrator), administrative receiver, trustee or similar officer of
all or any material part of its assets or revenues or for any
analogous proceedings or steps in any jurisdiction or for the
appointment of any analogous person in any jurisdiction;

(xiv) made any amendment to its memorandum or articles of


association;

(xv) waived or compromised any claim or authorised any such waiver


or compromise, save in the ordinary course of business, which is
material in the context of the Wider Morson Group taken as a
whole;

(xvi) taken, entered into or had started or threatened against it in a


jurisdiction outside England and Wales any form of insolvency
proceeding or event similar or analogous to any of the events
referred to in conditions (i)(ix) and (xiii) above; or

(xvii) agreed to enter into or entered into an agreement or


arrangement or commitment or passed any resolution or
announced any intention with respect to any of the transactions,
matters or events referred to in this condition (f);

(g) except as publicly announced by Morson prior to 25 May 2012 through a RIS
or disclosed in writing to MMGG prior to 25 May 2012 and save as disclosed
in the annual report and accounts of Morson for the financial year ended 31
December 2011, since 31 December 2011:

(i) there having been no material adverse change or deterioration in


the business, assets, financial or trading position or profits or
prospects of the Wider Morson Group taken as a whole;

(ii) no material litigation, arbitration proceedings, prosecution or


other legal proceedings to which any member of the Wider
Morson Group is or may become a party (whether as claimant or
defendant or otherwise), and no material enquiry or investigation
by or complaint or reference to any Third Party, against or in

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5/24/13
respect of any member of the Wider Morson Group, having been
threatened, announced or instituted or remaining outstanding by,
against or in respect of any member of the Wider Morson Group in
any way which is material in the context of the Wider Morson
Group taken as a whole; and

(iii) no contingent or other liability having arisen or become apparent


or increased which might be reasonably likely in either case to
have a material adverse effect on the Wider Morson Group taken
as a whole;

(h) save as disclosed by or on behalf of Morson to MMGG or its advisers in


writing prior to 25 May 2012 MMGG not having discovered:

(i) that any financial, business or other information concerning


Morson or the Wider Morson Group which is contained in the
information publicly disclosed at any time by or on behalf of any
member of the Wider Morson Group either publicly or in the
context of the Offer contains a misrepresentation of fact which
has not, prior to 25 May 2012, been corrected by public
announcement through an RIS or omits to state a fact necessary
to make the information contained therein not misleading;

(ii) any information which affects the import of any such information
as is mentioned in condition (h)(i); or

(iii) that any member of the Wider Morson Group is subject to any
liability, contingent or otherwise, which is not disclosed in the
annual report and accounts of Morson for the financial year
ended 31 December 2011

in each case which has or may reasonably have a material adverse effect in
the context of the Wider Morson Group taken as a whole;

(i) save as disclosed by or on behalf of Morson to MMGG or its advisers in


writing prior to 25 May 2012, MMGG not having discovered that:

(i) any past or present member of the Wider Morson Group has failed
to comply with any and/or all applicable legislation or regulation,
of any jurisdiction with regard to the disposal, spillage, release,
discharge, leak or emission of any waste or hazardous substance
or any substance likely to impair the environment or harm human
health or animal health or otherwise relating to environmental
matters, or that there has otherwise been any such disposal,
spillage, release, discharge, leak or emission (whether or not the
same constituted a non-compliance by any person with any such
legislation or regulations, and wherever the same may have taken
place) any of which disposal, spillage, release, discharge, leak or
emission would be likely to give rise to any liability (actual or
contingent) on the part of any member of the Wider Morson
Group and which is material in the context of the Wider Morson
Group taken as a whole; or

(ii) there is, or is likely to be, for that or any other reason
whatsoever, any liability (actual or contingent) of any past or
present member of the Wider Morson Group to make good, repair,
reinstate or clean up any property or any controlled waters now
or previously owned, occupied, operated or made use of or
controlled by any such past or present member of the Wider
Morson Group, under any environmental legislation, regulation,
notice, circular or order of any government, governmental, quasi-
governmental, state or local government, supranational,
statutory or other regulatory body, agency, court, association or
any other person or body in any jurisdiction and which is material
in the context of the Wider Morson Group taken as a whole.

MMGG reserves the right to waive all or any of conditions (c) to (i) inclusive,
in whole or in part.

Condition (b) must be fulfilled or waived within 21 days after the later of the
first closing date of the Offer and the date on which condition (a) is fulfilled

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5/24/13
and conditions (c) to (i) inclusive must be satisfied as at, or waived on or
before, midnight on the 21st day after the later of the first closing date of
the Offer and the date on which condition (a) is fulfilled (or in each such
case such later date as MMGG may, with the consent of the Panel, agree),
failing which the Offer will lapse provided that MMGG shall be under no
obligation to waive or treat as fulfilled any of conditions (c) to (i) inclusive
by a date earlier than the latest date specified above for the fulfilment
thereof notwithstanding that the other conditions of the Offer may at such
earlier date have been fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment.

Except with the Panel's consent, MMGG will not invoke any of the above
conditions (except for the acceptance condition in (a) and the conditions in
(b) above) so as to cause the Offer not to proceed, to lapse or to be
withdrawn unless the circumstances which give rise to the right to invoke
the relevant conditions are of material significance to MMGG in the context
of the Offer.

B. Certain Further Terms of the Offer

Except where the context otherwise requires, referenc es in this Part B of this
Appendix and in the Form of Acceptance (i) to the Offer shall mean the Offer
and shall include any revision or extension thereof and (ii) to the Offer
becoming unconditional shall include references to the Offer becoming or being
declared unconditional and shall be construed as references to the Offer
becoming or being declared unconditional as to acceptances whether or not
any other condition of the Offer remains to be fulfilled. References to
acceptance of the Offer shall include deemed acceptance of the Offer.

1. Acceptance period

(a) The Offer will initially remain open for acceptance until 1.00 p.m. on the first
closing date. Although no revision is envisaged, if the Offer (in its original or
previously revised form) is revised it will remain open for acceptance for a
period of at least 14 days (or such other period as may be permitted by the
Panel) from the date of posting of written notification of the revision to
Shareholders. Except with the consent of the Panel, no such written
notification of the revision of the Offer may be posted to Shareholders after 46
days after the posting of the Offer Document or, if later, the date which is 14
days before the last date on which the Offer can become unconditional.

(b) The Offer, whether revised or not, shall not (except with the consent of the
Panel) be capable of becoming unconditional after midnight 60 days after the
posting of the Offer Document (or on any earlier date beyond which MMGG has
stated (and not, where permitted, withdrawn such statement) that the Offer
will not be extended), nor of being kept open after that time unless it has
previously become unconditional. However, MMGG reserves the right, with the
permission of the Panel, to extend the Offer to later times and/or dates.
Except with the consent of the Panel, MMGG may not, for the purpose of
determining whether the condition as to acceptances set out in paragraph (a)
of Part A of this Appendix (the "acceptance condition") has been satisfied,
take into account acceptances received or purchases of Morson Shares in
respect of which all relevant electronic instructions or documents are received
by Capita Registrars after 1.00 p.m. on the 60th day after the posting of the
Offer Document (or any earlier time or date beyond which MMGG has stated
that the Offer will not be extended and in respect of which it has not
withdrawn that statement) or such later time and/or date as the case may be
to which the Offer has been extended. If the Offer is extended beyond
midnight on the 60th day after the posting of the Offer Documentacceptances
received and purchases made in respect of which relevant electronic
instructions or documents have been received by Capita Registrars after 1.00
p.m. on the relevant date may (except where the Code otherwise permits) only
be taken into account with the agreement of the Panel.

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(c) If the Offer becomes unconditional, it will remain open for acceptance for not
less than 14 days from the date on which it would otherwise have expired. If
the Offer has become unconditional and it is stated by MMGG that the Offer will
remain open until further notice, then not less than 14 days' notice will be given
to those holders of Morson Shares who have not accepted the Offer prior to
the closing of the Offer.

(d) If a competitive situation arises after MMGG has given a "no extension"
statement or a "no increase" statement (as referred to in the Code), MMGG
may (if it has specifically reserved the right to do so at the time such
statement was made or otherwise with the consent of the Panel) choose not to
be bound by or withdraw the terms of such statement and be free to extend
or increase the Offer, provided that notice is given to that effect as soon as
possible and in any event within four business days after the announcement of
the competing offer and Shareholders are informed in writing thereof or, in the
case of Shareholders with registered addresses outside the United Kingdom or
whom MMGG knows to be nominees holding Morson Shares for such persons, by
announcement in the United Kingdom at the earliest practicable opportunity. If
MMGG has given a "no increase" statement or a "no extension" statement,
MMGG may (if it has specifically reserved the right to do so at the time such
statement was made or in such other circumstances as may be permitted by
the Panel) choose not to be bound by the terms of such statement if it would
otherwise prevent the posting of an increased or improved Offer which is
recommended for acceptance by the Independent Director.

(e) If a competitive situation arises and is continuing 60 days after the posting of
the Offer Document, MMGG will enable holders of Morson Shares in
uncertificated form who have not already validly accepted the Offer but who
have previously accepted the competing offer to accept the Offer by a special
form of acceptance to take effect 60 days after the posting of the Offer
Document. It shall be a condition of such special form of acceptance being a
valid acceptance of the Offer that (i) it is received by Capita Registrars on or
before 60 days after the posting of the Offer Document, (ii) the relevant
Shareholder shall have applied to withdraw his acceptance of the competing
offer but that the Morson Shares to which such withdrawal relates shall not
have been released from escrow before the 60th day after the posting of the
Offer Document by the escrow agent to the competing offer and (iii) the
Morson Shares to which the special form of acceptance relates are not
transferred to escrow in accordance with the procedure for acceptance set out
in the letter from MMGG contained in the Offer Document on or before 60 days
after the posting of the Offer Document, but an undertaking is given that they
will be so transferred as soon as possible thereafter. Shareholders wishing to
use such forms of acceptance should apply to Capita Registrars on 0871 664
0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK
between 9.00a.m. and 5.30p.m. Monday to Friday. Calls to the Capita
Registrars 0871 664 0321 number are charged at 10 pence per minute (including
VAT) plus any of your service provider's network extras. Calls to the Capita
Registrars +44 20 8639 3399 number from outside the UK are charged at
applicable international rates. Different charges may apply to calls made from
mobile telephones and calls may be recorded and monitored randomly for
security and training purposes. Capita Registrars cannot provide advice on the
merits of the Offer nor give any financial, legal or tax advice. Notwithstanding
the right to use such special form of acceptance, holders of Morson Shares in
uncertificated form may not use a form of acceptance (or any other purported
acceptance form) for the purpose of accepting the Offer in respect of such
shares.

(f) For the purpose of determining at any particular time whether the acceptance
condition has been satisfied, MMGG shall not be bound (unless otherwise
required by the Panel) to take into account any Morson Shares which have
been unconditionally allotted or issued before such time unless Capita Registrars
has received written notice on behalf of MMGG, from Morson or its agents, at
the address specified in paragraph 3(a) below of the relevant details of such
allotment or issue before that time. Notification by telex or facsimile or other
electronic transmission will not be sufficient notice for these purposes.

2. Announcements

(a) Without prejudice to paragraph 3 below, by 8.00 a.m. on the business day
following the day on which the Offer is due to expire or becomes or is declared

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5/24/13
unconditional or is revised or extended (as the case may be) (or such later time
or date as the Panel may agree) (the "relevant day") , MMGG will make an
appropriate announcement to a Regulatory Information Service (an "RIS") of
the position. Such announcement will also state (unless otherwise permitted
by the Panel):

(i) the total number of Morson Shares and rights over Morson Shares
(as nearly as practicable) for which acceptances of the Offer have
been received, specifying the extent to which acceptances have been
received from persons acting in concert with MMGG or in respect of
shares which are the subject of an irrevocable commitment or letter of
intent procured by MMGG or its associates;

(ii) details of any relevant securities (as defined by the Code) of Morson in
which MMGGor any person acting in concert with it has an interest or
in respect of which any such person has a right to subscribe in each
case specifying the nature of the interests and rights concerned.
Similar details of any short positions (whether conditional or absolute
and whether in the money or otherwise), including any short position
under a derivative, any agreement to sell or any delivery obligation or
right to require another person to purchase or take delivery, will also
be stated;

(iii) details of any relevant securities of Morson in respect of which MMGGor


any of its associates has an outstanding irrevocable commitment or
letter of intent;

(iv) details of any relevant securities of Morson which MMGG or any person
acting in concert with it has borrowed or lent, other than any
borrowed shares which have been on-lent or sold; and

(v) the total number of shares which MMGG may count towards
satisfaction of the acceptance condition,

and will specify in each case the percentage of each class of relevant
securities of Morson represented by these figures.

Any decision to extend the date and/or time by which the acceptance condition
has to be fulfilled may be made at any time up to, and will be announced not
later than, 8.00 a.m. on the relevant day (or such later time and/or date as the
Panel may agree) and the announcement will state the next expiry time and
date (unless the Offer is then unconditional, in which case the announcement
may state that the Offer will remain open until further notice). In computing
the number of shares which MMGG may count towards satisfaction of the
acceptance condition, there may, at the discretion of MMGG, be included or
excluded for announcement purposes acceptances and purchases which are
not complete in all respects or are subject to verification provided that such
acceptances or purchases of Morson Shares may only be included if they could
be counted towards fulfilling the acceptance condition in accordance with
paragraph 6(j) below and the provisions of the Code.

(b) References in this Appendix to the making of an announcement or giving of


notice by MMGG include the release of an announcement by public relations
consultants or by SPARK Advisory Partners Limited, in each case on behalf of
MMGG, and the delivery by hand, telephone, telex or facsimile transmission or
other electronic transmission of an announcement to a RIS. An announcement
made otherwise than to a RIS will be notified simultaneously to a RIS (unless
the Panel otherwise agrees).

(c) Without limiting the manner in which MMGG may choose to make any public
statement and subject to MMGG's obligations under applicable law, including the
Code, MMGG will have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making release to a
RIS.

3. Rights of withdrawal

(a) If MMGG, having announced the Offer to be unconditional, fails to comply by

3.30 p.m. on the relevant day (as defined in paragraph 2 of this Part B) (or 26/42
5/24/13
such later time(s) and/or date(s) as the Panel may agree) with any of the
other requirements specified in paragraph 2(a) above, an accepting certificated
Shareholder may (unless the Panel otherwise agrees) immediately thereafter
withdraw his acceptance by written notice (as defined in paragraph 3(d) below)
given by post or by hand (during normal business hours only) to Capita
Registrars Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU on behalf of MMGG. Alternatively, in the case of Morson Shares
in uncertificated form, withdrawals can be effected in the manner set out in
paragraph 3(e) below. Subject to paragraph 1(b) above, this right of
withdrawal may be terminated not less than eight days after the relevant day
by MMGG confirming, if that is the case, that the Offer is still unconditional and
complying with the other requirements specified in paragraph 2(a) above. If
any such confirmation is given, the first period of 14 days referred to in
paragraph 1(c) above will run from the date of such confirmation and
compliance.

(b) If by 1.00 p.m. on the 42nd day after the posting of the Offer Document (or
such later time(s) and/or date(s) as the Panel may agree) the Offer has not
become unconditional, an accepting Shareholder may withdraw his acceptance
at any time thereafter at the address and in the manner referred to in
paragraph 3(a) above (or, in the case of Morson Shares in uncertificated form,
in the manner set out in paragraph 3(e) below) before the earlier of:

(i) the time that the Offer becomes unconditional; and

(ii) the final time for lodgement of acceptances which can be taken
into account in accordance with paragraph 1(b) above.

If the Panel determines that Morson is not permitted to invoke, or cause or


permit MMGG to invoke, a condition to the Offer, it may instead determine that
Shareholders shall be entitled to withdraw their acceptances on such terms and
by such time as the Panel may determine and notwithstanding that the Offer
has become unconditional as to acceptances. The Panel may also determine
that the timetable applicable to the Offer shall be varied in such manner as it
may determine. Exercise of such withdrawal rights by accepting Shareholders
could result in the Offer, if it has by then become unconditional as to
acceptances, ceasing to be unconditional as to acceptances.

(c) If after a competitive situation has arisen MMGG chooses not to be bound by a
"no extension" statement or a "no increase" statement in accordance with
paragraph 1(d) above, any Shareholder who accepts the Offer after the date of
such statement may withdraw his acceptance thereafter at the address and in
the manner referred to in paragraph 3(a) above (or, in the case of Morson
Shares held in uncertificated form, in the manner set out in paragraph 3(e)
below) not later than the eighth day after the date of posting of written notice
to that effect by MMGG to the relevant Shareholders.

(d) Except as provided by this paragraph 3, acceptances of the Offer shall be


irrevocable. In this paragraph 3 "written notice" (including any letter of
appointment, direction or authority) means notice in writing bearing the original
signature(s) of the relevant accepting Shareholder(s) or their agent(s) duly
appointed in writing (evidence of whose appointment, in a form reasonably
acceptable to MMGG, is produced with the notice). Notification by telex or
facsimile or other electronic transmissions or copies will not be sufficient. No
notice which is postmarked in or otherwise appears to have been sent from any
Restricted Jurisdiction will be treated as valid.

(e) In the case of Morson Shares held in uncertificated form, if withdrawals are
permitted pursuant to paragraphs 3(a), (b) or (c) above, an accepting
Shareholder may withdraw his acceptance through CREST by sending (or, if a
CREST sponsored member, procuring that his CREST sponsor sends) an ESA
instruction to settle in CREST in relation to each Electronic Acceptance to be
withdrawn. Each ESA instruction must, in order for it to be valid and settle,
include the following details:

· the number of Morson Shares to be withdrawn, together with their ISIN


number, which is GB00B0R7WP21;

· the member account ID of the accepting shareholder, together with his


participant ID;

· the member account ID of the Escrow Agent included in the relevant

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Electronic Acceptance, relevant to the option elected for, together with the
Escrow Agent's participant ID, which is RA10;

· the CREST transaction ID of the Electronic Acceptance to be withdrawn to


be inserted in the shared note field;

· the intended settlement date for the withdrawal;

· the corporate action number for the Offer which is allocated by Euroclear UK
& Ireland and can be found by viewing the relevant corporate action details
in CREST; and

· input with standard delivery instruction priority of 80.Any such withdrawal


will be conditional upon Capita Registrars verifying that the withdrawal
request is validly made. Accordingly, Capita Registrars will, on behalf of
MMGG, reject or accept the withdrawal by transmitting in CREST a receiving
agent reject (AEAD) or receiving agent accept (AEAN) message.

(f) Immediately (or within such longer period not exceeding 14 days, as the Panel
may permit) upon an accepting shareholder validly withdrawing his acceptance:

(i) in respect of Morson Shares held in certificated form the share


certificate(s) and/or other document(s) of title will be returned by post
(or such other method as may be approved by the Panel) at the risk of
the Shareholder concerned, to the person or agent whose name and
address is set out in the Form of Acceptance or, if no address is set
out, to the first-named holder at his registered address; and

(ii) in respect of Morson Shares held in uncertificated form Capita


Registrars will give instructions to Euroclear UK & Ireland to transfer all
Morson Shares held in escrow balances and in relation to which it is
the Escrow Agent for the purposes of the Offer to the original available
balances of the Shareholder concerned.

(g) Morson Shares in respect of which acceptances have been properly withdrawn
in accordance with this paragraph 3 of this Part B may subsequently be re-
assented to the Offer by following one of the procedures described in the Offer
Document, at any time while the Offer remains open for acceptance.

(h) Any question as to the validity (including time of receipt) of any notice of
withdrawal will be determined by MMGG whose determination (save as the Panel
otherwise determines) will be final and binding. None of MMGG, Morson, Capita
Registrars or any other person will be under any duty to give notification of any
defect in any notice of withdrawal or will incur any liability for failure to do so.

4. The Loan Note Alternative

(a) As an alternative to receiving cash under the Offer, Morson Shareholders may
elect to receive the Loan Note Alternative in respect of their total shareholding,
which subject to the terms of the Offer, is available to accepting Morson
Shareholders for as long as the Offer remains open for acceptance. Morson
Shareholders who elect to receive Offer Loan Notes must accede to the terms
of the Intercreditor Agreement.

(b) No election for the Loan Note Alternative will be valid unless the following has
occurred by the time and date on which the Loan Note Alternative closes:

(i) if the Morson Shares to which the acceptance relates are in


certificated form, receipt of the Form of Acceptance containing a valid
acceptance of the Offer and a valid election for the Loan Note
Alternative (including acceding to the Intercreditor Agreement), duly
completed in all respects and accompanied by all relevant share
certificate(s) and/or other documents(s) of title; or

(ii) if the Morson Shares to which the acceptance relates are in


uncertificated form, settlement of an Alternative TTE instruction in
favour of the Escrow Agent in relation to those Morson Shares, in

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accordance with the procedures described in the Offer Document.
Shareholders are also required to accede to the Intercreditor
agreement.

(c) If (in respect of Morson Shares held in certificated form) any Form of
Acceptance which includes an election for the Loan Note Alternative is either
received after the time and date the Loan Note Alternative has closed or is
received before such time but is not valid or complete in all respects at such
time and date, such election shall, for all purposes, be void and the Morson
Shareholder purporting to make such election shall not, for any purpose, be
entitled to receive any consideration under the Loan Note Alternative, but the
acceptance, if otherwise valid, shall be deemed to be an acceptance of the
basic terms of the Offer in respect of the number of Morson Shares inserted
or deemed to be inserted in Box 1 of the Form of Acceptance and the relevant
Morson Shareholder will, on the Offer becoming or being declared wholly
unconditional, be entitled to receive the consideration due under the basic
terms of the Offer.

(d) If (in respect of Morson Shares held in uncertificated form) any alternative
TTE Instruction in favour of the Escrow Agent is made but the Shareholder
does not accede to the terms of the Intercreditor Agreement either before
the time and date the Loan Note Alternative has closed or such agreement so
acceding is received before such time but is not valid or complete in all
respects at such time and date, such election shall, for all purposes, be void
and the Morson Shareholder purporting to make such election shall not, for
any purpose, be entitled to receive any consideration under the Loan Note
Alternative, but the acceptance, if otherwise valid, shall be deemed to be an
acceptance of the terms of the Offer in respect of the number of Morson
Shares in respect of which the alternative TTE Instruction relates and the
relevant Morson Shareholder will, on the Offer becoming or being declared
wholly unconditional, be entitled to receive the consideration due under the
basic terms of the Offer.

5. Revised Offer

(a) Although no revision of the Offer is envisaged, if the Offer (in its original or any
previously revised form(s)) is revised (either in its terms or conditions or in the
value or form of the consideration offered or otherwise) (which MMGG reserves
the right to do) and such revision represents on the date on which such
revision is announced (on such basis as SPARK Advisory Partners Limited may
consider appropriate) an improvement (or no diminution) in the value of the
consideration compared with that previously offered, the benefit of the revised
Offer will (subject to paragraphs 5(b), 5(c) and 7 below) be made available to a
Shareholder who has accepted the Offer (in its original or previously revised
form(s)) and not previously withdrawn such acceptance (a "Previous
Acceptor").

The acceptance by or on behalf of a Previous Acceptor of the Offer (in its


original or any previously revised form(s)) shall, subject as provided below, be
deemed an acceptance of the Offer as so revised and shall also constitute a
separate appointment of MMGG or SPARK Advisory Partners Limited or any
director of MMGG as his attorney and agent to accept any such revised Offer
on behalf of such Previous Acceptor and, if such revised Offer includes
alternative forms of consideration, to make elections and/or accept such
alternative forms of consideration in such proportions as such attorney and/or
agent in his absolute discretion thinks fit and to execute on behalf of and in the
name of such Previous Acceptor all such further documents (if any) as may be
required to give effect to such acceptances and/or elections. In making any
such acceptance or election, such attorney and/or agent shall take into
account the nature of any previous acceptances and/or elections made by the
Previous Acceptor and such other facts or matters as he may reasonably
consider relevant.

(b) The deemed acceptances and/or elections referred to in paragraph 5(a) above
shall not apply and the authorities conferred by paragraph 5(a) above shall not
be exercised if, as a result thereof, a Previous Acceptor would (on such basis
as SPARK Advisory Partners Limited may advise MMGG) receive less in
aggregate consideration than he would have received as a result of his
acceptance of the Offer in the form in which it was originally accepted by him
or on his behalf unless the Previous Acceptor has previously otherwise agreed
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in writing. The authorities conferred by paragraph 5(a) of this Part B shall not
be exercised in respect of any election available under the revised Offer save in
accordance with this paragraph 5(b).

(c) The deemed acceptances and/or elections referred to in paragraph 5(a) above
shall not apply and the authorities conferred by paragraph 5(a) above shall be
ineffective to the extent that a Previous Acceptor (i) in respect of Morson
Shares in certificated form, shall lodge, within 14 days of the posting of the
document pursuant to which the revision of the Offer referred to in paragraph
5(a) above is made available to the Shareholders (or such later date as MMGG
may determine), a form in which he validly elects to receive the consideration
receivable by him under that revised Offer in some other manner than that set
out in his original acceptance or (ii) in respect of Morson Shares in
uncertificated form, sends (or, if a CREST sponsored member, procures that his
CREST sponsor sends) an ESA instruction to settle in CREST in relation to each
Electronic Acceptance in respect of which an election is to be varied. Each
ESA instruction must, in order for it to be valid and settle, include the following
details:

· the number of Morson Shares in respect of which the changed election is


made, together with their ISIN number, which is GB00B0R7WP21 ;

· the member account ID of the Previous Acceptor, together with his


participant ID;

· the member account ID of the Escrow Agent included in the relevant


Electronic Acceptance, relevant to the option elected for, together with
the Escrow Agent's participant ID, which is RA10;

· the CREST transaction ID of the Electronic Acceptance in respect of


which the election is to be changed;

· the intended settlement date for the changed election;

· the corporate action number for the Offer which is allocated by Euroclear
UK & Ireland and can be found by viewing the relevant corporate action
details in CREST;

· input with standard delivery instruction priority of 80;

and, in order that the desired change of election can be effected, must
include:

· the member account ID of the Escrow Agent relevant to the new election.

Any such change of election will be conditional upon Capita Registrars verifying
that the request is validly made. Accordingly, Capita Registrars will, on behalf
of MMGG, reject or accept the requested change of election by transmitting in
CREST a receiving agent reject (AEAD) or receiving agent accept (AEAN)
message.

(d) The authorities referred to in this paragraph 5 and any acceptance of a revised
Offer and/or election pursuant thereto shall be irrevocable unless and until the
Previous Acceptor becomes entitled to withdraw his acceptance under
paragraph 3 above and duly and validly does so.

(e) MMGG reserves the right to treat an executed Form of Acceptance or TTE
instruction relating to the Offer (in its original or any previously revised form(s))
which is received after the announcement or issue of the Offer in any revised
form as a valid acceptance of the revised Offer and such acceptance shall
constitute an authority in the terms of this paragraph 5 mutatis mutandis on
behalf of the relevant Shareholder.

6. General

(a) Except with the consent of the Panel, the Offer will lapse unless all the
conditions (other than the acceptance condition) have been fulfilled by or (if
capable of waiver) waived by or (where appropriate) determined by MMGG in its
reasonable opinion to be or to remain satisfied as at midnight on the 42nd day
after the posting of the Offer Document or within 21 days after the date on
which the Offer becomes or is declared unconditional, whichever is the later or
such later date as MMGG, with the consent of the Panel, may decide. If the
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Offer is referred to the Competition Commission before the later of the first
closing date and the date when the Offer becomes or is declared unconditional,
the Offer will lapse. If the Offer lapses for any reason, the Offer will cease to
be capable of further acceptance and Shareholders who have accepted the
Offer and MMGG will cease to be bound by acceptances delivered on or before
the date on which the Offer so lapses.

(b) All communications, notices, certificates, documents of title and remittances to


be delivered by or to or sent to or from Shareholders or as otherwise directed
will be delivered by or to or sent to or from them (or their designated agents)
at their risk.

(c) The expression "Offer Period" when used in this document means the period
commencing on the date of this announcement until whichever of the following
dates shall be the latest: (i)the first closing date, (ii) the date on which the
Offer lapses and (iii) the date on which the Offer becomes wholly unconditional.

(d) All references in the Offer Document and in the Form of Acceptance to the first
closing date, shall (except in paragraphs 1(a) and 6(c) above and where the
context otherwise requires)be deemed, if the expiry date of the Offer shall be
extended, to refer to the expiry date of the Offer as so extended.

(e) Except with the consent of the Panel, settlement of the consideration to which
any Shareholder is entitled under the Offer will be implemented in full in
accordance with the terms of the Offer without regard to any lien, right of set-
off, counterclaim or other analogous right to which MMGG may otherwise be, or
claim to be, entitled as against such Shareholderand will be effected by the
despatch of cheques or the crediting of CREST accounts or the issue and
despatch of Offer Loan Note certificates:

(i) in the case of acceptances received, complete in all respects (including


the relevant transfer to escrow or (as applicable) receipt of the relevant
share certificate(s) and/or other document(s) of title or indemnities
satisfactory to MMGG), by the date on which the Offer becomes or is
declared unconditional in all respects, and will be effected by the dispatch
of cheques or the crediting of CREST accounts within 14 calendar days of
such date or the issue and despatch of Offer Loan Note certificates; or

(ii) in the case of acceptances of the Offer received, complete in all


respects, after the date on which the Offer becomes or is declared
unconditional in all respects, but while it remains open for acceptance,
within 14 calendar days of such receipt.

All cash payments (other than payments made by means of CREST) will be
made in pounds sterling by cheque drawn on a branch of a UK clearing bank.
Unless otherwise determined by MMGG, no consideration will be sent to any
address in a Restricted Jurisdiction.

(f) The instructions, authorities and provisions contained in, or deemed to be


incorporated in, the Form of Acceptance constitute part of the terms of the
Offer. Words and expressions defined in this document have the same
meanings when used in the Form of Acceptance unless the context otherwise
requires.

(g) The Offer and all acceptances thereof and all elections thereunder or pursuant
thereto and the Form of Acceptance, Electronic Acceptance and all contracts
made pursuant thereto and action taken or made or deemed to be taken or
made under any of the foregoing shall be governed by and construed in
accordance with English law.

(h) Any omission to despatch this document, the Form of Acceptance or any notice
required to be given under the terms of the Offer to, or any failure to receive
the same by, any person to whom the Offer is made or should be made shall
not invalidate the Offer in any way or create any implication that the Offer has
not been made to any such person. Subject to paragraph 7 below, the Offer
extends to any such person and to all Shareholders to whom this document and
the Form of Acceptance may not have been despatched or by whom such
documents may not be received and such persons may collect the relevant
documents from Capita Registrars at its address set out in paragraph 3(a)
above.

(i) MMGG and SPARK Advisory Partners Limited reserve the right to treat

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acceptances of the Offer as valid if received by or on behalf of either of them
at any place or places or in any manner determined by either of them otherwise
than as stated in this document or in the Form of Acceptance. Neither MMGG,
nor any agent acting on behalf of MMGG, shall have any liability to any person
for any loss or alleged loss arising from any decision as to the treatment of
acceptances of the Offer or otherwise in connection therewith.

(j) Notwithstanding the right reserved by MMGG to treat an acceptance of the


Offer as valid even though (in the case of Morson Shares held in certificated
form) the relevant Form of Acceptance is not entirely in order or not
accompanied by the relevant share certificate(s) and/or other document(s) of
title, except with the consent of the Panel:

(i) an acceptance of the Offer will only be counted towards fulfilling the
acceptance condition if the requirements of Note 4 and, if applicable,
Note 6 of Rule 10 of the Code are satisfied in respect of it;

(ii) a purchase of Morson Shares by MMGG or its nominee(s) (or, if MMGG is


required to make an offer under Rule 9 of the Code, a person acting in
concert withMMGG) will only be counted towards fulfilling the acceptance
condition if the requirements of Note 5 and, if applicable, Note 6 of Rule
10 of the Code are satisfied in respect of it; and

(iii) Morson Shares which have been borrowed by MMGG will not be counted
towards fulfilling the acceptance condition.

Save as set out in paragraphs 1(e) and 6(c) above , the Offer may not be
accepted otherwise than by means of a form of acceptance or TTE instruction.

(k) Except with the consent of the Panel, the Offer will not become unconditional
unless Capita Registrars has issued a certificate to MMGG or SPARK Advisory
Partners Limited (or their respective agents) which states the number of
Morson Shares in respect of which acceptances have been received and the
number (if any) of Morson Shares otherwise acquired, whether before or during
the Offer Period, which comply with paragraph 6(j) above.

(l) If the Offer does not become unconditional in all respects:

(i) in respect of Morson Shares held in certificated form the share


certificate(s) and/or other document(s) of title will be returned by post
(or such other method as may be approved by the Panel) within 14 days
of the Offer lapsing, at the risk of the Shareholder concerned, to the
person or agent whose name and address is set out in the Form of
Acceptance or, if no address is set out, to the first-named holder at his
registered address; and

(ii) in respect of Morson Shares held in uncertificated form Capita


Registrars will, immediately after the lapsing of the Offer (or within such
longer period as the Panel may permit, not exceeding 14 days after the
lapsing of the Offer), give instructions to Euroclear UK & Ireland to
transfer all Morson Shares held in escrow balances and in relation to
which it is the Escrow Agent for the purposes of the Offer to the original
available balances of the Shareholders concerned.

(m) For the purposes of this document, the time of receipt of a TTE instruction, an
ESA instruction or an Electronic Acceptance shall be the time at which the
relevant instruction settles in CREST.

(n) All powers of attorney and authorities on the terms conferred by or referred to
in this Part B or in the Form(s) of Acceptance are given by way of security for
the performance of the obligations of the Shareholder concerned and are
irrevocable in accordance with section 4 of the Powers of Attorney Act 1971,
except in the circumstances where the donor of such power of attorney or
authority validly withdraws his acceptance in accordance with paragraph 3
above.

(o) If sufficient Morson Shares are acquired by MMGG, whether pursuant to


acceptances of the Offer or otherwise, MMGG intends to apply the provisions of
sections 974 to 991 of the Companies Act 2006 to acquire compulsorily any
outstanding Morson Shares. If MMGG acquires or agrees to acquire, by virtue
of its shareholding and acceptances of the Offer, issued share capital carrying
75 per cent. or more of the voting rights of Morson, MMGG intends to procure

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that Morson applies for cancellation of the trading in Morson Shares on AIM not
less than 20 business days following MMGG first having acquired or agreed to
acquire such issued share capital and thereafter to procure that the Company
applies to be re-registered as a private limited company under the Companies
Act,

(p) No acknowledgement of receipt of any Form of Acceptance, share certificate(s)


and/or other document(s) of title, or of any TTE instruction will be given by
MMGG or Spark Advisory Partners Limited or any of their respective agents.

(q) The Offer will be made by an Offer Document to be issued within 28 days of the
date of this announcement and will be capable of acceptance from and after
that time. The Offer will be notified to certain Shareholders by means of an
advertisement to be inserted in the London Gazette promptly following the date
of the Offer Document. Copies of this document, and, once issued, the Offer
Document, the Form of Acceptance and any related documents are or will be
available for collection from Capita Registrars, The Registry, 34 Beckenham
Road, Beckenham, Kent, BR3 4TU.

(r) In relation to any acceptance of the Offer in respect of a holding of Morson


Shares which are held in uncertificated form in CREST, MMGG reserves the right
to make such alterations, additions or modifications to the terms of the Offer as
may be necessary or desirable to give effect to any acceptance of the Offer,
whether in order to comply with the facilities or requirements of CREST or
otherwise to confer on MMGG or, as the case may be, the relevant Shareholder
the benefits and entitlements provided for under the terms of the Offer,
provided that such alterations, additions or modifications are consistent with
the requirements of the Code or are otherwise made with the consent of the
Panel.

(s) MMGG may, with the agreement of the Independent Director and the Panel,
elect to implement the acquisition by way of a court sanctioned scheme of
arrangement under Part 26 of the Companies Act. Any such scheme of
arrangement will be implemented on the same terms (subject to appropriate
amendments), so far as applicable, as those which would apply to the Offer.

(t) If the Panel requires MMGG to make an offer for any Morson Shares under the
provisions of Rule 9 of the Code, MMGG may make such alterations to the
Conditions, including condition (a) of Part A of this Appendix, as are necessary
to comply with the provisions of that rule.

7. Overseas Shareholders of Morson

(a) The making of the Offer in, or to, certain persons who are citizens, residents or
nationals of, jurisdictions outside the United Kingdom may be prohibited or
affected by the laws of the relevant jurisdiction. Shareholders in that position
should inform themselves about and observe any applicable legal or regulatory
requirements. It is the responsibility of any such person wishing to accept the
Offer to satisfy himself as to the full observance of the laws and regulatory
requirements of the relevant jurisdiction or territory in connection therewith,
including the obtaining of any governmental, exchange control or other
consents which may be required, or the compliance with other necessary
formalities and the payment of any issue, transfer or other taxes due in such
jurisdiction. Any such shareholder will be responsible for any payment of any
issue, transfer or other taxes or other requisite payments due in such
jurisdiction by whomsoever payable, and MMGG and Spark Advisory Partners
Limited and any person acting on their behalf shall be entitled to be fully
indemnified and held harmless by such shareholder for any such issue, transfer
or other taxes as such person may be required to pay.

If you are an Overseas Shareholder and are in any doubt as to your


position, you should consult your independent financial adviser in the
relevant jurisdiction.

(b) In particular, the Offer is not being made, directly or indirectly, in a Restricted
Jurisdiction, or by use of the mails of or by any means or instrumentality of
interstate or foreign commerce of, or of any facilities of a national securities
exchange of, any Restricted Jurisdiction. This includes, but is not limited to,
the post, facsimile transmission, e-mail, telex, the internet and telephone. The

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Offer cannot be accepted by any such use, means or instrumentality or from
within any Restricted Jurisdiction. Accordingly, copies of this document, the
Offer Document with the Form of Acceptance and any related offering
documents, are not being mailed or otherwise distributed or sent into any
Restricted Jurisdiction, including to Shareholders with registered addresses in
any Restricted Jurisdiction, or to persons whom MMGG knows to be nominees,
trustees or custodians holding Morson Shares for such persons. Persons
receiving such documents (including, without limitation, custodians, nominees
and trustees) must not distribute or send them in, into or from any Restricted
Jurisdiction, or use such mails or any such means or instrumentality for any
purpose, directly or indirectly, in connection with the Offer, and doing so will
render invalid any related purported acceptance of the Offer. Persons wishing
to accept the Offer must not use such mails or any such means, instrumentality
or facility for any purpose directly or indirectly related to the acceptance of the
Offer.

Envelopes containing a Form of Acceptance must not be postmarked in any


Restricted Jurisdiction, or otherwise despatched from any Restricted
Jurisdiction, and all acceptors must provide addresses outside any Restricted
Jurisdiction for the remittance of cash or the return of the Form of Acceptance,
Morson share certificate(s) and/or other document(s) of title.

(c) Notwithstanding the other provisions of this paragraph 7, MMGG may at its sole
discretion provide cash consideration to a person in or resident of any
Restricted Jurisdiction if requested to do so by or on behalf of that person and
if MMGG and/or SPARK Advisory Partners Limited is satisfied in that particular
case that to do so will not constitute a breach of any securities or other
relevant legislation of any Restricted Jurisdiction, as appropriate.

APPENDIX II

A - Summary of the Terms of the Offer Loan Notes

The Offer Loan Notes

The Offer Loan Notes will be created by a resolution of the MMGG Board (or a duly
authorised committee thereof) and will be constituted by the Offer Loan Note
Instrument executed as a deed by MMGG.

The issue of the Offer Loan Notes will be conditional on the Offer being declared
wholly unconditional.

The Offer Loan Notes will not be transferable.

No application will be made for the Offer Loan Notes to be listed or dealt in on any
stock exchange.

The Offer Loan Notes will not be qualifying corporate bonds for United Kingdom
taxation purposes for Morson Shareholders who are individuals.

The Offer Loan Notes will bear interest at 4% per annum but this interest will be
accrued and only paid when the Offer Loan Notes are redeemed. The Offer Loan
Notes are, on the face of the Offer Loan Note Instrument, redeemable on 1 January
2018. However, payments under the Offer Loan Notes are subject to the terms of
the Intercreditor Agreement and it cannot be guaranteed that redemption will occur
on that date. The Offer Loan Notes are and shall remain unguaranteed, unsecured
and unsubordinated.

MMGG may, at any time, elect to redeem all or any part of the Offer Loan Notes (or
any Offer Loan Notes or part of any Offer Loan Notes held by certain Offer Loan
Noteholders as the board of MMGG may elect), but subject to the terms of the
Intercreditor Agreement.

The Offer Loan Note Instrument

The Offer Loan Note Instrument will contain provisions, among other things, to the

effect set out below. 34/42


5/24/13

(a) Form and status

The Offer Loan Notes will be issued by MMGG, credited as fully paid, in denominations
or multiples of 50 pence nominal value and shall be held subject to and with the
benefit of the conditions and the provisions set out in the Offer Loan Note
Instrument. The Offer Loan Notes constitute direct, unsecured obligations of MMGG
but subject to the terms of the Intercreditor Agreement with Barclays.

(b) Interest

Interest shall accrue at the rate of 4% per annum but such interest shall not be
compounded and not paid until redemption of the Offer Loan Notes.

(c) Redemption

Subject to the Intercreditor Agreement, MMGG may, at any time, elect to redeem all
or any part of the Offer Loan Notes (or any Offer Loan Notes or part of any Offer
Loan Notes held by certain Offer Loan Noteholders as the board of MMGG may elect)
at par (together with any accrued interest), without penalty, by serving written
notice on the Offer Loan Noteholders in question in advance of any such redemption
specifying the amount of the Offer Loan Notes which are to be redeemed.

The Offer Loan Notes are, on the face of the Offer Loan Note Instrument,
redeemable on 1 January 2018. However, payments under the Offer Loan Notes are
subject to the terms of the Intercreditor Agreement with Barclays and it cannot be
guaranteed that redemption will occur on that date.

(d) Purchase and cancellation

Subject to the Intercreditor Agreement, MMGG may purchase Offer Loan Notes at
any time from any person. All Offer Loan Notes purchased by MMGG shall be
cancelled and MMGG may not reissue the same.

(e) Transfer

An Offer Loan Noteholder may not transfer his interest in any Offer Loan Notes.

(f) Modification

Subject to the Intercreditor Agreement, the Offer Loan Note Instrument and the
rights of the Offer Loan Noteholders may be modified, abrogated, compromised or
extinguished with the sanction of a special resolution of the Offer Loan Noteholders.
Under the terms of the Offer Loan Note Instrument, a special resolution is defined as
a resolution passed at a meeting of the Offer Loan Noteholders (duly convened and
held in accordance with the provisions of Schedule 3 of the Offer Loan Note
Instrument) by a majority consisting of not less than 51% of the persons voting (in
person or by proxy) upon a show of hands and, if a poll is demanded, by a majority
consisting of not less than 51% of the votes given (in person or by proxy) on the
poll.

(g) Governing law

The Offer Loan Notes and the Offer Loan Note Instrument will be governed by, and
construed in accordance with, English law.

B - Summary of the Intercreditor Agreement

The Intercreditor Agreement has been entered into on 24 May 2012 between
Barclays Bank PLC (in various capacities), Gerard Anthony Mason and MMGG and the
companies named therein (as debtors and intra-group lenders). Following the Offer
being declared wholly unconditional and Morson being re-registered as a private
limited company, certain members of the Morson Group are required to accede to the
terms of the Intercreditor Agreement. It is a term of the Offer that persons
accepting the Offer and electing for the Loan Note Alternative must, for such
election to be valid, accede to the terms of the Intercreditor Agreement as
subordinated lenders. Morson Shareholders should be aware that the terms of the
Intercreditor Agreement make it uncertain when any payments, whether of interest
or principal or otherwise, may be made pursuant to the Offer Loan Notes
notwithstanding the terms of the Offer Loan Note Instrument.

The Intercreditor Agreement contains provisions, among other things, to the effect
set out below.

(a) Ranking

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The parties to the Intercreditor Agreement (including those who accede to its terms)
agree that monies owed to Barclays under the terms of its various facilities (which
currently include the facilities referred to in paragraph 8 of this announcement as well
as other facilities made available to members of the Morson Group (e.g. an overdraft
facility, a confidential invoice discounting facility, hedging and other facilities) (as
amended or varied or supplemented from time to time) will rank in priority to any
monies payable under the Mason Loan, the Offer Loan Notes and any intra group
obligations between MMGG and members of the Morson Group.

Monies payable after Barclays has been repaid in full or as permitted by the
Intercreditor Agreement will firstly be repaid pursuant to the Mason Loan, secondly
the Offer Loan Notes and thirdly any intra group obligations between MMGG and
members of the Morson Group.

(b) Security

The parties to the Intercreditor Agreement (including those who accede to its terms)
agree that any security granted will secure monies due to Barclays which ranks, as
referred to in (a) above in priority to other security. Barclays has security by a
debenture granted by both MMGG and the Morson Group and will take, inter alia,
further security from the Morson Group following the Offer being declared wholly
unconditional and Morson being re-registered as a private limited company. The
Mason Loan is secured in MMGG and he will take, inter alia, further security from the
Morson Group following the Offer being declared wholly unconditional and Morson
being re-registered as a private limited company which will rank behind that of
Barclays as referred to in (a) above. The Offer Loan Notes are neither guaranteed or
secured.

(c) Payments

The terms of the Intercreditor Agreement mean that payments to Barclays can be
made without restriction. Payments in respect of the Mason Loan are subject to
certain conditions, and/or the satisfaction of certain financial covenants and the
receipt of certain information and certificates from MMGG. In addition, payments in
respect of the Mason Loan may be made in certain circumstances where the
Company is deemed to have excess cashflow (as defined in the Intercreditor
Agreement) but there can be no certainty such circumstances will occur. Payments
under the Offer Loan Notes cannot be made until Barclays have been repaid to their
satisfaction and in any event only with the consent of Gerard Anthony Mason whilst
the Mason Loan remains outstanding in whole or in part.

(d) Amendments to Offer Loan Notes

Whilst the Offer Loan Note Instrument permits amendments in certain circumstances,
no amendments (unless of a minor or administrative nature) may be made without the
consent of Barclays (whilst they have any of their facilities outstanding) and Gerard
Anthony Mason (whilst any of the Mason Loan remains outstanding).

(e) Enforcement

No enforcement action may be taken by Gerard Anthony Mason in respect of the


Mason Loan until Barclays have been repaid to its satisfaction and by the holders of
the Offer Loan Notes in respect of amounts due under the Offer Loan Notes until
Barclays have been repaid to their satisfaction and the Mason Loan has been repaid.

APPENDIX III

Sources and Bases of Information

Unless otherwise stated in this announcement:

1. The value attributed to the issued share capital of Morson is based on


45,343,750 Morson Shares in issue as at 24 May 2012, being the last
practicable date prior to the date of this announcement.

2. The financial information relating to Morson has been extracted (without


any adjustment) from the audited consolidated financial statements of
Morson for the relevant years, prepared in accordance with IFRS.

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3. All prices quoted for Morson Shares have been derived from the Daily Official
List and represent Closing Prices on the relevant dates(s).

APPENDIX IV

Part 1: Irrevocable Undertakings to accept the Cash Offer

Name of Morson Number of Morson Percentage of


Shareholder Shares Morson issued
share capital

HSBC Global Custody 185,350 0.41


Nominee (UK) Ltd A/C
912109 (1)(2)

HSBC Global Custody 2,090,000 4.61


Nominee (UK) Ltd A/C
811597 (1)(2)

Statestreet Nominees Ltd 2,450,000 5.40


A/C 2GHL (1)(2)

BNP Paribas Securities 59,400 0.13


Nominees Ltd Des: 309304
(1)(2)

I G Knight (1) 20,000 0.04

Note

These irrevocable undertakings cease to be binding if:

1. the Offer Document is not posted by 30 June 2012; or

2. prior to the Offer being declared unconditional a person other than the Offeror
announces a firm intention to make an offer to acquire the entire issued share
capital of the Company at a price not less than 10 per cent. above the value of
the Offer.

Part 2: Irrevocable Undertakings to accept the Offer Loan Notes

Irrevocable Undertakings

Name of Morson Number of Morson Percentage of


Shareholder Shares Morson issued
share capital

G G Mason (1) 9,984,215 22.02

G A Mason (2) 9,984,215 22.02

P J Gilmour 630,000 1.39

K P Gorton 611,200 1.35

Note

1. Of the Morson Shares included in G G Mason's holding, 921,875 are held by


the trustees of a discretionary trust of which G G Mason is a trustee.

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2. The Morson Shares included in G A Mason's irrevocable undertaking are
921,875 less than those in G A Mason's director's interests. The interests
include the Morson Shares referred to in Note 1 above, over which G A
Mason has no ability to accept the Offer.

APPENDIX V

Definitions

In this announcement the following expressions have the following meaning:

"Accounting Date" 31 December 2011

"AIM" the AIM market of the London Stock


Exchange

"Announcement Date" 25 May 2012

"Authorisations" authorisations, orders, recognitions,


grants, consents, licences,
confirmations, clearances, permissions
and approvals

"Barclays" Barclays Bank PLC

"Business Day" any day (other than a Saturday or


Sunday or a public holiday) on which
banks generally are open for business in
London (other than solely for
settlement and trading in euro)

"Capita Registrars" A trading name of Capita Registrars


Limited

"Cash Offer" the recommended cash offer to be


made by MMGG to acquire all of the
issued and to be issued Morson Shares
on the terms and subject to the
conditions to be set out in the Offer
Document and the Form of Acceptance
and, where the context so requires,
any subsequent revision, variation,
extension or renewal thereof

"Closing Price" the closing middle-market quotation of


a Morson Share as derived from the
Daily Official List

"Code" or "City Code" the City Code on Takeovers and


Mergers as from time to time
interpreted by the Panel

"Companies Act" or the Companies Act 2006, as amended


"Companies Act 2006"

"Daily Official List" the official list of share prices produced


by the London Stock Exchange

the directors of Morson and "Director"


"Directors" 38/42
5/24/13
means any one of them

"Disclosed" fairly disclosed in writing by or on


behalf of Morson to MMGG or its
advisers

"first closing date" the date falling 21 days after the date
on which the Offer Document is posted

"Form of Acceptance" the form of acceptance and authority


relating to the Offer which will
accompany the Offer Document

"FSA" the Financial Services Authority of the


United Kingdom

"FSMA" the Financial Services and Markets Act


2000, as amended

"HS2" High Speed 2 which is a planned high-


speed railway between London and the
Midlands, Northern England and,
potentially at a later stage, the central
belt of Scotland

"Independent Director" Ian Graham Knight, the only Director


who is not also a member of the
Management Team

"intellectual property" all patents, trademarks, trade names,


service marks, copyrights, designs,
databases and any applications
therefore, schematics, technology,
know‑how, computer software,
programs or applications (in both
source code and object code form),
and tangible or intangible proprietary
information or material

"Intercreditor the intercreditor agreement to be


Agreement" entered into between amongst others,
MMGG (in various capacities), Barclays
and Gerard Anthony Mason (and others
from time to time) on 24 May 2012,
further details of which are set out in
the Offer Document and the Form of
Acceptance

"legal proceedings" actions, suits, proceedings,


investigations, references or enquiries

"Loan Note Alternative" the option whereby Morson


Shareholders may elect to receive Offer
Loan Notes instead of all of the cash
consideration to which they would
otherwise be entitled under the Offer

"London Stock London Stock Exchange plc


Exchange"

"Management Team" or each of Gerrard Godfrey Mason, Gerard


"Management" Anthony Mason, Paul John Gilmour and
Kevin Patrick Gorton

"Mason Loan" the loan to MMGG from Gerard Anthony


Mason described in paragraph 8 of this
announcement

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"MMGG" or "Offeror" MMGG Acquisition PLC registered with
company number 07976532 and whose
registered office is at c/o Atticus Legal
LLP, Castlefield House, Liverpool Road,
Manchester, M3 4SB

"MMGG Board" or the board of directors of MMGG


"MMGG Directors"

"Morson" or "Company" Morson Group plc registered with


company number 05111937 and whose
registered office is at Adamson House,
Centenary Way, Salford, Manchester,
M50 1RD

"Morson Board" or the board of directors of Morson


"Morson Directors"

"Morson Group" or Morson, its subsidiaries and its


"Group" subsidiary undertakings

"Morson Projects" Morson Projects Limited, a subsidiary of


the Company

"Morson Shareholders" the holders of Morson Shares from time


or "Shareholders" to time

"Morson Shares" the existing unconditionally allotted or


issued and fully paid ordinary shares of
five pence each of Morson and any
further such shares which are
unconditionally allotted or issued fully
paid, or credited as fully paid, before
the date on which the Offer closes (or
before such earlier date as MMGG may,
subject to the Code, decide, not being
earlier than (a) the date on which the
Offer becomes or is declared
unconditional as to acceptances or (b),
if later, the first closing date of the
Offer)

"Morson Share The Morson Enterprise Management


Schemes" Incentive Scheme 2006, the Morson
Unapproved Share Option Scheme 2006
and the Morson Group plc 2008
Discretionary Share Option Plan UK
Approved Addendum

"Offer" the offer to be made by MMGG to


acquire all of the issued and to be
issued Morson Shares on the terms and
subject to the conditions to be set out
in the Offer Document and the Form of
Acceptance and, where the context so
requires, any subsequent revision,
variation, extension or renewal thereof
and includes any election available in
connection with it

"Offer Document" the document to be sent to Morson


Shareholders and, for information only,
to holders of options under the Morson
Share Schemes which will contain the
Offer

"Offer Loan Note an instrument to be executed by MMGG


Instrument" creating the Offer Loan Notes

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5/24/13
"Offer Loan holders of Offer Loan Notes from time
Noteholders" to time

"Offer Loan Notes" the unguaranteed and unsecured loan


notes in MMGG to be issued as an
alternative to the Cash Offer, further
details of which are set out in the Offer
Document and the Form of Acceptance

"Offer Price" the sum of 50 pence per Morson Share

"Opening Price" the opening middle-market quotation of


a Morson Share as derived from the
Daily Official List

"Panel" the Panel on Takeovers and Mergers

"Publicly Announced" specifically disclosed in the annual


report and accounts of Morson for the
year ended on the Accounting Date, in
this announcement or in any other
announcement made to a Regulatory
Information Service since the date of
publication of such report and accounts
and prior to the Announcement Date

"Regulatory as defined in the UK Listing Rules


Information Service"

"relevant persons" governments, governmental,


quasi‑governmental, supra-national,
statutory, investigative, regulatory or
administrative bodies or trade agencies,
associations, institutions or courts, or
professional or environmental bodies, or
any other persons or bodies
whatsoever in any jurisdiction

"Restricted Jurisdiction" the United States, Canada, Japan,


Australia and any other jurisdiction
where local laws or regulations may
result in a significant risk of civil,
regulatory or criminal exposure for
MMGG or Morson if information or
documentation concerning the Offer is
sent or made available to Morson
Shareholders in that jurisdiction

"SPARK Advisory SPARK Advisory Partners Limited,


Partners" financial adviser to MMGG

"Subsidiary has the same meaning as in section


Undertaking" 1162 of the Companies Act 2006 of
England and Wales

"Subsidiary" has the same meaning as in section


1159(1) of the Companies Act 2006

"substantial interest" a direct or indirect interest in 20 per


cent or more of the equity capital of an
undertaking

"TTE Instruction" a transfer to escrow instruction (as


defined by the Crest manual issued to
CrestCo from time to time)

"third party" person, firm, company or body

"UK" or "United the United Kingdom of Great Britain and


Northern Ireland and its dependent
Kingdom" 41/42
5/24/13
territories

"UK Listing Rules" means the Listing Rules made by the


FSA under section 73A of FSMA

"United States" or "US" the United States of America, its


territories and possessions, any state
of the United States and the District of
Columbia and all other areas subject to
its jurisdiction

"US Securities Act" the US Securities Act 1933, and the


rules and regulations promulgated under
it

"Wider Morson Group" as the context requires, Morson, its


subsidiaries, subsidiary undertakings,
associated undertakings and any other
body corporate, partnership, joint
venture or person in which Morson
and/or such undertakings (aggregating
their interests) have a direct or indirect
interest in 20 per cent. or more of the
voting or equity capital or equivalent

"Wider MMGG Group" as the context requires, MMGG, its


subsidiaries, subsidiary undertakings,
associated undertakings and any other
body corporate, partnership, joint
venture or person in which MMGG
and/or such undertakings (aggregating
their interests) have an interest of
more than 20 per cent. of the voting or
equity capital or equivalent

In this document references to time are to London time.

This information is provided by RNS


The company news service from the London Stock Exchange

END

OFFBCGDUSGDBGDS

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Harvard Int plc


Final Results
RNS Number : 7448J
Harvard International PLC
05 July 2011

Harvard International plc (AIM: HAR)


Preliminary unaudited results for the year ended 31 March 2011
Harvard International plc ("Harvard", "the Company" or "the Group") is a distributor of
consumer electrical goods in the UK and Australia.

Key Points

· Sales for the current period £61.2m (2010: £77.4m)

· Sales were impacted adversely by a number of factors including a lull in the UK Digital
Switchover (DSO) timetable and the very difficult retail market

· Group total pre tax profit £0.9m (2010: Loss £4.3m)

· Operating profit for the period from continuing operations £0.7m (2010: £1.2m)

· No impact from discontinued items in 2011

· UK recovered in the second half led by Set Top Box (STB) sales to customers in
preparation for the DSO timetable and improved interest in iLuv Apple accessories

· Australia produced a better second half performance supported by improved sales in


STB and DAB+ sectors where innovative new products have gained market share

· Cash at 30 June 2011 was £16.0m

· In line with the Group's business plan, new appointments continue to be made which
strengthen the Group's technical, product and marketing teams

Bridget Blow, Chairman, comments:


"We made good progress in 2010/11 and the investment put in place will support and extend our
strategic objectives. It is now clear that for the current financial year producers and retailers of
consumer electronics are continuing to face challenging market conditions and we have
consequently reduced our expectations whilst maintaining investment in our development
programme. The Group's financial position continues to be strong."

5 July 2011

ENQUIRIES:

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Harvard International plc Tel: 020 8238 7650
Mike Ashley, Chief Executive
Colin Grimsdell, Finance Director

Anthony Parker, Media & Analysts Tel: 07791 201467

Chairman's Statement
The restructuring and downsizing programme is now well established and, for the first time in over 5
years, the Board is able to present shareholders with accounts unaffected by discontinued activities.
Our new business plan is from a position of stability that we believe will deliver sustainable profit
whilst protecting our strong cash position.

Investment in improving our technical understanding and capabilities, in combination with the
expansion of the marketing and sales teams, is starting to produce tangible benefits, and new
opportunities to leverage the Group's strengths are being sought.

Group Performance

Against a backdrop of continued weakness in the global economy, particularly in the consumer
electronics sector, the Group has continued with the programme to improve operational efficiency
and address growth opportunities.

Sales for the current period totalled £61.2m (2010: £77.4m) resulting in an operating profit of
£0.7m (2010: £1.2m). After a relatively weak performance in the first half of the period, sales
recovered led by the UK's digital switch over (DSO) timetable and seasonal demand for the iLuv
product range. The Australian market was particularly difficult in the first half but began to recover in
the second half with strong sales in the STB and DAB+ sectors. Net cash at the end of the period
remained strong at £13.5m (2010: £28.9m). A special dividend totalling £10.1m was paid to
shareholders in October. Working capital requirements have increased in response to the timing of
the UK DSO programme.

Progress is being made in developing the Group's growth platform through new investment in
people, marketing and external partnerships such as the recently announced venture with ANT plc.
Through improving our own understanding of technologies, and partnering with selected industry
leaders, we now have an exciting pipeline of new and differentiated products in development
through which to extend and enhance the Group's positioning in our target segments.

Looking into the near future, demand for DTR functionality, and the convergence of digital
broadcasting and broadband services, will mean that ownership of proprietary technology will be
critically important in successfully delivering new products to the mass market. We are positioning
Harvard to be a supplier of choice for retailers and consumers in this space.

The current difficult market environment has widened the possibility to acquire, or partner with,
other businesses, products or brands. The Board is actively investigating opportunities as they are
identified.

Dividend

The Board is not proposing the payment of an ordinary dividend. A special £10.1m dividend was paid
to shareholders on 15 October 2010.

Board Changes

Geoff Brady was appointed as an Independent Non-Executive Director. He is currently the Non-
Executive Chairman of Robert Dyas, a convenience non-food retailer. Geoff brings substantial retail
and marketing knowledge to the Boardroom.

Paul Selway-Swift retired as an Independent Non-Executive Director of the Company at the Annual
General Meeting 2010, where it was noted that the Company wished to thank Paul for his
substantial contribution to the Group over the last twelve years.

Colin Grimsdell, Finance Director and Company Secretary, has given notice of his intention to leave
the business during August 2011. In his time at the Company Colin has contributed to the stabilising
of the business ready for the next stage of its strategy. We wish Colin well in future.
A further announcement will be made when a new Finance Director has been appointed.
Outlook

We have made good progress with our plans and the investment we are making both supports and
extends our strategic objectives. Trading conditions for producers and retailers of consumer
electronics have been challenging, and are expected to remain so for the foreseeable future. We
have therefore reduced forecasts and adjusted budgets for the current financial year, so as to retain
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tight control of inventory levels and working capital. The Group's financial position continues to be
strong.

BRIDGET BLOW
Chairman
5 July 2011

Chief Executive Officer's Report


During the last year we have set about the task of carefully putting in place an infrastructure and
commercial culture capable of competing and growing the existing business in the dynamic Digital
Vision and Apple Accessory markets.

Now that our business platform is established, we have begun to actively invest in our growth
potential. Over the longer term, our strategic intent is for Harvard designed and branded products to
account for a much higher percentage of the Group's turnover, enabling us to capture and retain a
larger share of the total value chain.

To this end we are developing our market positioning through the introduction of a thoroughly
researched new brand, View21™; significantly upgrading our technological capability, so as to drive
new product development (Digital Television Recorder, Digital Internet); expanding marketing and
sales capabilities to increase awareness and demand for iLuv Apple accessories and investigating the
possibility of increasing our rate of progress through complimentary acquisitions and partnerships.

The Board believes that the combined benefits accruing from this strategic investment, will increase
our future incremental rate of growth and profitability in both the UK and Australia.

Brands

We have conducted extensive consumer market research in the digital vision segment. This focussed
on the competitive structure of the DTR segment, where there is growing demand but few brands.
Through our analysis of the data, we have developed a clear market positioning for our newly
created brand, View21™, which will be launched in the 2nd half of 2011/12.

The View21™ brand is positioned to address the needs of more technically savvy consumers,
offering class leading features, greater functionality and enhanced design at affordable prices. Our
Goodmans brand will continue to offer good value products at lower price points. As part of our
branding strategy the Grundig brand is being withdrawn in the UK.

New Product Development

In the past Harvard's product range has been dominated by sourcing products directly from our
supplier base. Going forward, we will increasingly design our own products whilst continuing to
outsource manufacture. New product development will address the needs of both UK and Australian
consumers.

To better support our in-house technical team we have entered into a partnership with ANT plc, a
specialist software designer. This co-operative venture is developing an advanced range of market
leading DTR products which will be launched later this year under the View21™ brand. With
increased marketing support this will enable us to compete in a higher value segment of the market.
The need for ownership of proprietary technologies will result in much greater barriers to entry in
the digital vision segment, particularly at the entry level end of the market. This has created a
substantial opportunity, in partnership with leading retailers, to develop new technically enhanced
products for their in-house own label budget ranges.

As the UK's DSO programme ends in 2012, we will already be supplying a growing demand for an
upgraded range of premium digital vision products.

Marketing and Sales

To maximise the potential returns from iLuv's comprehensive range of Apple accessories we are
making significant investment to improve the effectiveness of our marketing and sales activities. The
commercial team has been strengthened with experienced sales personnel recruited from prominent
competitors in the Apple Accessories sector. This investment will lead our strategy to grow iLuv's
market share through accessing new distribution channels in mobile phone network stores, on-line
retailers and specialist accessory vendors. In addition to this we have agreed a new 10 year

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distribution agreement for the UK and the business is exploring options for distribution in Australia.

A newly appointed brand manager is now supporting the sales drive, through greater marketing and
promotional activity, to build greater awareness and interest among retail outlets in this high quality
brand.

Platform Expansion

To enable us to maximise and then expand beyond our current capacity, and in the longer term to
capture and retain a larger share of the total value chain, we need to examine ways of increasing our
potential growth.
We are actively investigating opportunities to extend the existing business platform through
acquisition, licensing or partnership with additional complimentary businesses, products or brands in
both Australia and the UK. These can then be incorporated into the current business model and
leveraged through using the Group's existing infrastructure and variable cost model.

The agreements with ANT plc, regarding technological partnership, and with iLuv, extending our
licensing agreement, represent the first steps taken in delivering this strategic plan.

Financial Review

The past year saw the Group return to profitability, excluding corporate disposals, for the first time
since 2005, and report numbers unaffected by discontinued activities arising from the earlier
restructuring programme. There is now a sound financial basis against which to report future
progress.

The first half loss of £0.6m was principally the result of a disappointing performance in Australia,
especially when compared with the unusually strong outcome in the same period the previous year,
and the disappointing HD Freeview launch, where sales only achieved a fraction of market
expectations. Despite the occurrence of the football World Cup, consumers failed to appreciate the
benefits of trading up to the higher standard, instead showing greater appetite for DTR products.

The second half was much stronger, more than recovering the first half loss, with the UK DSO
timetable resulting in strong orders for STB's for retailer own label branded products and the
Government's target help scheme. Australia also experienced a seasonal recovery with STB demand
also helped by the regional DSO programme and strong sales in DAB+ radio products where Harvard
is the local market leader.

iLuv continued to launch products and broaden awareness of the product range, building the
platform from which this years new investment is expected to deliver strong growth. iLuv's market
share increased year on year but still only represents a fraction of the UK's £480m Apple Accessories
market.

The Group's financial position remains healthy with a net cash position of £13.5m. Net interest
received in the year amounted to £0.2m.

UK

Overall demand for consumer goods, particularly electronic products, has been weak. Spending
power has been curtailed by a number of factors including price increases for essential food and fuel
items, a rise in the rate of vat, wage restraint, public sector spending cuts and relatively high
unemployment levels.

Much of this has yet to fully impact upon the economy but is expected to have an increasing
influence on household disposable income in the months ahead. March 2011 saw a fall in overall
demand for consumer electronic products of 17% when compared with the previous year. The
decreased consumer demand has had an adverse effect on orders from some of our major
customers.

Digital Media Boxes (DMB)

After a lull in the UK Government's DSO timetable in 2010, with only 11% of households
experiencing DSO, momentum picks up in 2011 with 33% of households due to switch in each of
the next two years, before the programme's completion at the end of 2012. Demand for STB's
continues to respond to the DSO timetable however a growing proportion of consumers, in regions
yet to switch from analogue, already have access to digital through the purchase of integrated digital
TV's or subscription to pay per view services (SKY, Virgin).

The 'free to air' STB business will increasingly move away from the Standard Definition (SD) low cost
Freeview boxes to more complex, higher value, products such as High Definition (HD) DTR, and
STB's which will facilitate the convergence of Digital TV and internet content. Demand for HD STB's
in 2010 got off to a slow start but interest is expected to steadily increase as the price differential
with SD narrows.

The need to upgrade and broaden the Group's technical capability was a key task in 2010/11, to
ensure that we possess sufficient skills in both software and hardware design, to deliver premium

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quality Digital TV Recorders (DTR), demand for which is growing strongly from a low base. A new
Chief Technical Officer position was created and the technical team was expanded.

The first half of 2011/12 will see our partnership with ANT deliver the first View21™ branded
products with more higher specification HD DTR's following later in the year. Further evidence of our
growing technical competence comes with the launch of dedicated App's for Apple iPad, iPhone and
iPod Touch products which enable wireless interactivity between these products and our digital
media boxes.

The launch of YouView, the subscription free, connected digital TV platform, is expected in 2012
ahead of the London Olympics and will require the availability of easy to use, affordable, well
designed DTRs to enable consumers to access the service. It is likely that TV manufacturers will start
to integrate this functionality into their product designs but the relative expense of upgrading TV
sets should support TV recorder demand.

Apple Accessories

Apple accessories continue to outperform the broader consumer electronics market as Apple
continues to deliver a successful product pipeline. Awareness of the New York iLuv brand has grown
with many positive product reviews appearing in consumer electronics media. Headphones, iPad
cases and other accessories sold well through a limited number of distributors offering
encouragement for further growth as new retailers are signed up.

Our strategy is to take advantage of the market's highly fragmented structure to grow our market
share through investment in our marketing, promotional and sales activities. This will extend
awareness, interest and demand for the iLuv brand; deepen appreciation of the comprehensiveness
and high quality of the range, and heighten understanding of the opportunity to provide a 'one stop
shop' service for retailers.

The enlarged and dedicated sales team will focus not only on traditional high street retailers and
supermarkets but will increasingly open up new channels including mobile phone network stores, on-
line retailers and dedicated accessory outlets.

As part of our long term strategic plan, and commitment to this market segment, Harvard has
entered into an agreement with iLuv regarding a significant deepening and extension of the current
partnership agreement, both in the UK and Australia. iLuv has recently further extended its product
portfolio through a partnership endorsement with Samsung on the Galaxy tablet and smartphone
range.

Sales over the next few years are expected to benefit strongly from the Group's investment in sales
and marketing throughout 2011/12.

Australia

Consumer spending remains subdued despite evidence of recovery in some other sectors of the
economy. The Government's spending cuts targeting a reduction of the budget deficit, and interest
rate rises to curtail inflationary pressure, continue to depress consumer demand.

The structure of the consumer electronics market in Australia is less competitive than in the UK and
as a result operating margins are stronger, delivering a higher return on investment. Our operational
structure in Australia has a broader base than the UK and we are actively considering opportunities
to extend both the breadth and depth of the Australian business.

The Group's focus on the digital vision and Apple accessory markets will result in the increasing
importance of these segments, benefiting from the new product pipeline and the launch of brand
View21™.

The strategy in 2011/12 is targeted at maintaining and increasing our strong market shares of the
STB, DTR and Digital Radio categories. Having already grown to represent a 15% share of the STB
market, through the Bush and Grundig brands, and with new innovative products and the launch of
View21™ to come, we are confident of further progress.

Australia's DSO timetable is still in its infancy, with the major cities not due to switch until 2013, but
Harvard has already been awarded contracts to supply regions in Queensland and Victoria. The Group
is strongly positioned to take advantage of increased consumer interest in digital products through its
well established retailer network.

Last year we were the first producer to supply digital 'free to air' STB's equipped with an electronic
programme guide (EPG) and DTR products will follow in 2011. Harvard's speed to market was also
demonstrated through the successful launch of its Digital+ DAB radios which have already captured a
25% market share.

The Apple accessories market, in line with our Group strategy, is an opportunity that we are keen to
develop, leveraging our existing infrastructure and operational variable cost model. Under a new
agreement with iLuv we will start to supply a limited number of products in the fourth quarter of
2011, building towards marketing the full range by the end of 2012.

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5/24/13 Harvard Int plc | Final Results | FE InvestEgate

MIKE ASHLEY
Chief Executive Officer
5 July 2011

Consolidated Income Statement

Year ended Year ended


31 March 31 March
2011 2010
Notes £'millions £'millions
Revenue 2 61.2 77.4
Cost of sales (52.4) (65.2)
Gross profit 8.8 12.2
Net operating expenses 3 (8.1) (11.0)
Operating profit 0.7 1.2
Finance costs 4 - -
Finance income 4 0.2 0.2
Profit before tax 0.9 1.4
Taxation 5 (0.5) (0.7)
Profit for the period from continuing operations 0.4 0.7
Loss for the period from discontinued operations - (5.7)
Profit/(loss) for the period 0.4 (5.0)
Attributable to:
Equity holders of the parent 0.4 (5.0)
Earnings per share (in pence) 6
Basic
- Continuing operations 0.7p 1.5p
- Discontinuing operations - (11.3)p
- Total 0.7p (9.8)p
Diluted
- Continuing operations 0.7p 1.5p
- Discontinuing operations - (11.3)p
- Total 0.7p (9.8)p

Consolidated Statement of Comprehensive Income

Profit/(loss) for the period 0.4 (5.0)


Other comprehensive income
Exchange differences on translation of overseas operations - 0.4
Exchange difference on disposal - (0.2)
Other comprehensive income net of tax - 0.2
Total comprehensive income (all attributable to owners of the parent) 0.4 (4.8)

Consolidated Statement of Financial Position

31 March 31 March
2011 2010
£'millions £'millions
Non-current assets
Property, plant & equipment 0.5 0.7
Total non-current assets 0.5 0.7

Current assets
Inventories 7.2 4.4
Trade receivables and other receivables 13.0 5.6
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Income tax recoverable - 0.1
Cash and cash equivalents 13.5 28.9

Total current assets 33.7 39.0

Total assets 34.2 39.7

Current liabilities
Trade and other payables 13.7 9.7
Income tax payable 0.4 -
Provisions 0.5 0.7
Total current liabilities 14.6 10.4

Total liabilities 14.6 10.4

Net assets 19.6 29.3

Equity attributable to equity holders of the parent


Share capital 5.1 5.1
Share premium 3.2 3.2
Capital redemption reserve 15.4 15.4
Investment in own shares (2.3) (2.3)
Translation reserve (7.6) (7.6)
Share based payments reserve 0.5 0.7
Retained earnings 5.3 14.8
Total equity 19.6 29.3

Consolidated Statement of Changes in Equity

Share
Share Capital Investment based
Share premium redemption in own Translation payment Retained
capital account reserve shares reserve reserve earnings Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Group:
At 1 April 2010
5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3

Transactions with
owners:

Dividends Paid - - - - - - (10.1) (10.1)

Transfer relating
to lapsed options - - - - - (0.2) 0.2 -

Total
transactions
with owners - - - - - (0.2) (9.9) (10.1)

Profit for the - - - - - 0.4


period - 0.4

Total
comprehensive
income - - - - - - 0.4 0.4

At 31 March
2011 5.1 3.2 15.4 (2.3) (7.6) 0.5 5.3 19.6

Share
Share Capital Investment based
Share premium redemption in own Translation payment Retained
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capital account reserve shares reserve reserve earnings Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Group:
At 1 April 2009
5.1 3.2 15.4 (2.3) (7.8) 1.1 19.4 34.1

Transactions with
owners:

Transfer relating
to lapsed options - - - - - (0.4) 0.4 -

Total
transactions
with owners - - - - - (0.4) 0.4 -

Loss for the - - - - - - (5.0) (5.0)


period

Other
comprehensive
income

Exchange
difference on
disposal - - - - (0.2) - - (0.2)

Exchange
difference on
translation of
overseas
operations - - - - 0.4 - - 0.4

Total
comprehensive
income - - - - 0.2 - (5.0) (4.8)

At 31 March
2010 5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3

Consolidated Statement of Cash Flows

Year ended Year ended


31 March 31 March
2011 2010
Notes £'millions £'millions
Cash flow from operating activities
Cash used by operations 8 (5.5) (5.4)
Tax paid - (0.4)
Net cash used in operating activities (5.5) (5.8)

Cash flows from investing activities


Interest received 0.2 0.2
Purchase of property, plant and equipment - (0.1)
Sale of discontinued activities (net) - 10.0
Net cash flow from investing activities 0.2 10.1

Cash flows from financing activities


Dividends paid (10.1) -

Net cash used in financing activities (10.1) -

Net (decrease)/increase in cash and cash equivalents (15.4) 4.3


Net foreign exchange differences - (0.1)
Cash and cash equivalents at beginning of year 28.9 24.7
Cash and cash equivalents at end of year 13.5 28.9

Notes to the statement

1. General information

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The unaudited financial information set out above does not constitute statutory accounts for the purposes of
Section 435 of the Companies Act 2006 but is derived from those financial statements and as such, does not
contain all information required to be disclosed in the financial statements prepared in accordance with International
Financial Reporting Standards ("IFRS"). Statutory accounts for 2011 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The auditors have agreed to the issue of these results and
expect to issue an unqualified audit report on the 2011 accounts following formal completion of the audit.

The financial information in respect of the year ended 31 March 2010 has been produced using extracts from the
statutory accounts prepared under International Financial Reporting Standards. The statutory accounts for this
period have been filed with the Registrar of Companies. The auditors' report on these accounts was unqualified.

The financial information presented in this statement has been prepared using accounting policies consistent with
International Financial Reporting Standards as endorsed by the European Union. The accounting policies are the
same as those published by the Group in the Annual Report & Accounts for the year ended 31 March 2010 which is
available on the Group's website www.harvardplc.com.

These results were approved by the directors on 4th July 2011. Copies of the 2011 Report and Accounts are being
sent to shareholders in due course. Further copies will be available at the Company's registered offices at Harvard
House, The Waterfront, Elstree Road, Elstree Herts WD6 3BS.

2. Segmental Reporting

Revenue and segmental profit has been disclosed by three operating segments of UK Digital, UK other CE and Rest
of the World CE in the manner that the information is presented to the Boards of Directors (being the 'Chief
Operating Decision Makers') in accordance with IFRS8.

Continuing operations:

Year ended 31 March 2011 Year ended 31 March 2010


Rest of Rest of
UK UK other the UK UK Other the World
Digital CE World CE Total Digital CE CE Total
£'millions £'millions £'millions £'millions £'millions £'millions £'millions £'millions
Revenue
External sales 25.6 22.4 13.2 61.2 30.9 30.2 16.3 77.4
Inter-segment sales - - - - - - - -
Segment profit 3.7 1.8 3.0 8.5 5.1 2.4 4.5 12.0
Total assets 14.9 12.9 6.5 34.3 17.3 17.2 4.7 39.2 *
Total liabilities (7.5) (6.3) (0.9) (14.7) (4.7) (4.8) (0.9) (10.4)
Total net assets 7.4 6.6 5.6 19.6 12.6 12.4 3.8 28.8
Capital
expenditure - - - - 0.1 - - 0.1
Depreciation
charge 0.1 0.1 - 0.2 0.1 0.1 0.1 0.3

* Total assets at 31 March 2010 exclude £0.5m for expected earnout from the Grundig disposal as this relates to a
discontinued operation.

Segment figures can be reconciled to the corresponding Group figures as follows:

Year ended Year ended


31 March 31 March
2011 2010
£'millions £'millions
Segment profit 8.5 12.0
Overheads not allocated to segments (7.8) (10.8)
Group operating profit 0.7 1.2

The geographical analysis of turnover of continuing operations by geographical location of customer is as follows:

Year ended Year ended


31 March 31 March
2011 2010
£'millions £'millions
Revenue

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United Kingdom 47.9 61.1
Australia 13.2 15.0
Rest of Europe 0.1 1.3
61.2 77.4

The geographical location of non-current assets of continuing operations is as follows:

Year ended Year ended


31 March 31 March
2011 2010
£'millions £'millions
United Kingdom 0.3 0.4
Australia 0.1 0.1
Hong Kong 0.1 0.2
0.5 0.7

One UK customer represents 24% (2010: 16%) of total Group revenue during the year. Revenue from this
customer is included in both UK Digital and UK other CE segments.

3. Net Operating expenses

Year ended 31st March 2011 Year ended 31st March 2010
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
£'millions £'millions £'millions £'millions £'millions £'millions
Selling and distribution 2.5 - 2.5 4.1 0.3 4.4
Administration 5.6 - 5.6 6.9 6.0 12.9
8.1 - 8.1 11.0 6.3 17.3

4. Finance costs/income

Year ended Year ended


31 March 2011 31 March 2010
£'millions £'millions
Finance costs comprise:
Interest on bank loans and overdrafts repayable

within 5 years - -
Finance income comprises:
Bank interest receivable 0.2 0.2

5. Taxation

Year ended
31 March Year ended
2011 31 March
£'millions 2010 £'millions
The tax charge comprises:

UK corporation tax on profits for the year at 28% (2010:28%) - -


Adjustments for previous periods - -

Non-UK taxation
- Current 0.3 0.5
- Adjustment in respect of prior years 0.2 -
Total current taxation 0.5 0.5
Deferred tax - Origination and reversal of temporary timing differences - 0.2
Adjustments in respect of prior years - -

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Total taxation charge in the income statement 0.5 0.7
Factors affecting taxation charge:
The taxation expense on the profit for the year differs from the amount computed by applying the corporation tax rate to the
profit before taxation as a result of the following factors:
Profit before tax on continuing operations 0.9 1.4
Loss before tax from discontinuing operations - (5.7)
Profit/(loss) for the period before tax 0.9 (4.3)
Notional tax charge/(credit) at UK rate of 28% (2010:28%) 0.3 (1.2)
Effects of:
Non allowable and non taxable items 0.3 4.8
Disposal of discontinued activities - (0.8)
Tax losses not recognised 0.1 (1.9)
Different tax rates on non-UK profits (0.1) (0.2)
Adjustments to tax charges for previous periods: Non-UK taxation (0.1) -
Total taxation charge 0.5 0.7

6. Earnings per ordinary share

Basic earnings per share are based upon earnings of £0.4 million (2010 : £(5.0) million) and 50,589,140 (2010 :
50,578,573) Ordinary Shares being the weighted average number of Ordinary Shares in issue during the twelve
months ended 31 March 2011 excluding the shares held by The ESOP Trust. Basic earnings per share on continuing
activities are based upon earnings of £0.4 million (2010 : £0.7 million) and discontinued operations are based upon
earnings of £nil million (2010 : £(5.7) million).

Diluted earnings per share are based upon earnings of £0.4 million (2010 : £(5.0) million) and 51,284,857 (2010 :
50,578,573) Ordinary Shares allowing for the exercise of outstanding share options exercisable at a price below
the average fair value during the period and the shares held by the ESOP Trust. Diluted earnings per share on
continuing activities are based upon earnings of £0.4 million (2010 : £0.7 million) and on discontinued operations
upon earnings of £nil million (2010 : £(5.7) million).

Potential Ordinary Shares of 696,513 have been excluded from the prior year computation of diluted EPS as the
shares are anti-dilutive.

7. Dividends
Year ended Year ended
31 March 31 March
2011 2010
£'millions £'millions
Special dividend 10.1 -
10.1 -

The company paid a special dividend of 20p per ordinary share on 15 October 2010 to shareholders on
the register at 1 October 2010.

8. Cash flow from operating activities:


Year ended Year ended
31 March 31 March
2011 2010
£'millions £'millions
Operating profit from continuing operations before impairment of properties 0.7 1.2
Operating loss from discontinuing operations - (5.3)
0.7 (4.1)
Adjustment for:
Depreciation of property, plant & equipment 0.2 0.3
(Increase)/decrease in receivables (7.4) 3.1
(Increase)/decrease in inventories (2.8) 1.8
Increase/(decrease) in payables 4.0 (2.5)
Decrease in provisions (0.2) (4.0)
Cash flow used by operating activities (5.5) (5.4)

Net Cash
Cash and cash equivalents 13.5 28.9

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Cash and cash equivalents comprise cash at bank and bank overdrafts all with a maturity of three months or less.

This information is provided by RNS


The company news service from the London Stock Exchange

END

FR UGUUAMUPGGAC

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5/24/13 Harvard Int plc | Statement re. Possible Offer | FE InvestEgate

Harvard Int plc

Statement re. Possible Offer


RNS Number : 9185P
Harvard International PLC
10 October 2011

For immediate release


10 October 2011

Statement re Possible Offer

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE


OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION

This is an announcement falling under Rule 2.4 of the City Code


and does not constitute an announcement of a firm intention to
make an offer or to pursue any other transaction under Rule 2.7
of the City Code. Accordingly, Harvard Shareholders are advised
that there can be no certainty that a formal offer for Harvard will
be forthcoming, even in the event that the pre-conditions set out
in paragraph 3 below are satisfied or waived.

Possible Cash Offer


for
Harvard International plc ("Harvard")
by
Geeya Technology (HongKong) Limited ("Bidco")
a wholly owned direct subsidiary of
Chengdu Geeya Technology Co., Ltd ("Geeya")

1. Introduction

The directors of Bidco, Geeya and Harvard are pleased to announce that
agreement in principle has been reached between Harvard, Geeya and
Bidco on the terms of a Possible Offer for the entire issued and to be
issued share capital of Harvard by Bidco, a wholly owned direct

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subsidiary of Geeya. Geeya reserves the right to implement any Offer


through another of its wholly owned subsidiaries if it so chooses.

The pre-conditions set out in paragraph 3 will be required to be satisfied


or waived prior to any Offer being made.

This Announcement is made under Rule 2.4 of the City Code and does
not constitute an announcement of a firm intention to make an offer or to
pursue any other transaction under Rule 2.7 of the City Code.
Accordingly, Harvard Shareholders are advised that there can be
no certainty that a formal offer for Harvard by Geeya or Bidco will
be forthcoming, even in the event that the pre-conditions set out
in paragraph 3 below are satisfied or waived.

2. The Possible Offer

If the Possible Offer proceeds, Harvard Shareholders would receive:

for each issued and to be issued Harvard Share 45 pence


in cash

The Possible Offer would value the entire existing issued share capital of
Harvard at approximately £23.1 million and would represent a premium
of 100 per cent. to the Closing Price of Harvard Shares of 22.5 pence on
AIM on 27 September 2011 (being the last Business Day immediately
prior to the date on which Harvard announced that it had received an
approach from Geeya that might lead to an offer for Harvard)

Any offer for Harvard would be subject to terms and conditions


customary for a recommended offer subject to the City Code and would
also be conditional upon the approval of Geeya shareholders.

The Harvard Directors, who have been so advised by Investec, have


indicated they are supportive of unanimously recommending the
Possible Offer. In providing advice to the Harvard Directors, Investec has
taken into account the Harvard Directors' commercial assessment of the
Possible Offer.

Commenting on the Possible Offer, Mr Zhou, Chairman of Geeya said:

"We are delighted to announce the possible


acquisition of Harvard, which, if it proceeds,
would represent a significant step in the
implementation of Geeya's strategy to expand
our geographical presence, gain retail exposure
for our set-top boxes and benefit from the value
of Harvard's brands. We look forward to
work ing with Harvard's management and
employees to finalise this possible acquisition."

Commenting on the Possible Offer, Ms Bridget Blow, Chairman of


Harvard said:

"The approach from Geeya represents an


attractive opportunity for shareholders to
realise a substantial premium to the current
share price and recognises the value of the
company's brands (such as Goodmans) and
its investment in STB technology."

3. Pre-conditions to the Offer Announcement


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The issue of an Offer Announcement by Geeya or Bidco pursuant to


Rule 2.7 of the City Code is subject to satisfaction or waiver of the
following pre-conditions:

i. the unanimous recommendation of the Harvard Directors of


the terms of any such Offer, having been advised by Investec
that the terms of such an Offer are fair and reasonable;

ii. the receipt of all necessary approvals from regulatory


authorities in China relating to the Offer, including the
following:

o project approval for outbound investment from the


Development and Reform Commission of Sichuan
Province in China;
o approval for outbound investment from the
Ministry of Commerce of China at provincial level;
o approval for the remittance of foreign exchange
out of China from the State Administration of
Foreign Exchange of China; and
o approval of the Possible Offer by the China
Securities Regulatory Commission.

iii. the receipt by Geeya of irrevocable commitments from


the Directors of Harvard in respect of their entire beneficial
holdings of Harvard shares to accept the Offer; and

iv. the approvals of the Offer by the board of directors of


Geeya and the Geeya shareholders at a general shareholders'
meeting of Geeya.

Geeya reserves the right to waive any of these pre-conditions, but even
if all of these pre-conditions are satisfied or waived, there can be
no certainty that a firm offer will be forthcoming.

On 28 September 2011 Harvard announced that it had received an


approach from Geeya that might lead to a possible offer for Harvard.

On 19 September 2011 changes to the City Code took effect relating to


the requirement for a potential offeror to "put up or shut up" or obtain a
deadline extension following a possible offer announcement. These
changes require that by no later than 5.00 p.m. on the 28th day
following a possible offer announcement (i.e. 26 October 2011) Geeya
must, unless the Panel has consented to an extension of this 28 day
deadline, announce either a firm intention to make an offer or that it
does not intend to make an offer, in which case the announcement will
be treated as an announcement to which Rule 2.8 of the City Code
applies.

Geeya has informed Harvard that obtaining the regulatory consents


referred to above may take 4 months from the date of this
announcement, or potentially longer. In light of this, Harvard confirms
that it currently intends to approach the Panel for an extension to this
deadline in due course. This deadline will only be extended with the
consent of the Panel in accordance with Rule 2.6(c) of the City Code.

Where the Panel consents to an extension of the deadline, Harvard shall


make an announcement setting out the new deadline and commenting
on the status of negotiations between Harvard and Geeya as well as the
anticipated timetable for satisfying or waiving the pre-conditions to
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Geeya Bidco announcing a firm intention to make an offer.

Every effort is being made by Harvard and Geeya to ensure that the
period in which regulatory consents are obtained is as short as
possible.

4. Information on Geeya and Bidco

Geeya

Geeya is a public company admitted to trading on the Shenzhen Stock


Exchange in China. Geeya manufactures and supplies digital television
network equipment and its products include a full series of digital TV
products from head-end to terminal-end, including digital television
support systems and consumer digital appliances, including digital set
top boxes. Geeya was founded in 1999and is based in Chengdu, China.

As at 31 December 2010, Geeya had consolidated total assets of


RMB809.9 million (approximately £79.4 million) and reported a net profit
for the year ended 31 December 2010 of RMB53.8 million
(approximately £5.1 million).

Geeya's current intention is to finance any Offer through a combination


of its existing cash resources and bank facilities.

Bidco

Bidco is a newly incorporated Hong Kong company formed for the


purpose of potentially making the Offer and is wholly owned by Geeya.

5. Information on Harvard

Harvard is a public company admitted to trading on AIM (trading symbol:


HAR). Harvard operates within the global consumer electronics market
focusing on added value digital vision products, such as TV set-top
boxes and recorders, targeting specific local market opportunities such
as the UK's popular, free-to-air TV services. In addition, Harvard markets
a range of accessories for Apple's iPod, iPhone and iPad products in
the UK under the iLuv brand. It is also a major supplier of digital vision,
radio, and other personal consumer electrical products in Australia.
Harvard has comprehensive product development, procurement and
logistical operations based in the UK, Hong Kong and China.

6. Reasons for the Possible Offer

Geeya currently sells its existing products to Chinese based


businesses and has very limited experience of product exporting and no
previous retail experience. It has, however, recently been seeking to
expand its geographical presence and gain retail exposure for its set-top
boxes.

The Possible Offer presents an opportunity for Geeya to address both of


these strategic aims as Harvard has strong business links and
significant sales with retailers in both the UK and Australia.

7. Current trading of Harvard

In its annual report for the year ended 31 March 2011, Harvard reported
a profit before tax of £0.9 million on turnover of £61.2 million and had net
assets of £19.6 million as at 31 March 2011.

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8. Support for the Possible Offer by the Harvard Directors

The Harvard Directors, who have been so advised by Investec, have


indicated they are supportive of unanimously recommending the
Possible Offer. In providing advice to the Harvard Directors, Investec has
taken into account the Harvard Directors' commercial assessment of the
Possible Offer.

9. Background to and reason for the Harvard Directors' support


for the Possible Offer

In May 2011, discussions commenced between Harvard and Geeya. A


meeting between the Chief Executive Officer of Harvard and the
Chairman of Geeya in July 2011 subsequently lead to proposals from
Geeya for the Possible Offer.

If the Possible Offer proceeds to a formal Offer, it will provide an


opportunity for Harvard Shareholders to realise their investment in
Harvard at a significant premium to the current market price, payable in
cash.

10. Break Fee Agreement

Geeya and Harvard have entered into an agreement providing for the
payment to Harvard of a break fee of £500,000 (such sum to be paid into
escrow within 30 days of the release of this announcement) if, inter alia,
a formal offer document is not posted to Harvard shareholders by Geeya
on or before 30 March 2012.

11. General

The implications of the Possible Offer for Overseas Shareholders may


be affected by the laws of the relevant jurisdiction. Any persons who are
subject to the laws of any jurisdiction other than the UK should inform
themselves about and observe any applicable requirements. It is the
responsibility of each Overseas Shareholder to satisfy himself as to the
full observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental, exchange control
or other consents which may be required, or the compliance with other
necessary formalities which are required to be observed and the
payment of any issue, transfer or other taxes due in such jurisdiction.

This announcement and any Offer will be governed by English law and
will be subject to the jurisdiction of the English courts. This
announcement and any Offer will be subject to the applicable
requirements of the City Code.

Appendix I to this announcement provides details of the basis of


calculations and sources of certain information included in this
announcement.

Appendix II to this announcement contains definitions of certain terms


used in this announcement.

In accordance with Rule 30.4 of the City Code, a copy of this


announcement will be published on the following website:
www.harvardplc.com

Enquiries:

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Harvard International plc


Bridget Blow, Chairman 020 8238 7650
Mike Ashley, Chief Executive Officer

Investec, financial adviser, nominated


adviser and corporate broker to
Harvard 020 7597 4000
James Grace

Seymour Pierce, financial adviser to


Geeya and Bidco
Jonathan Wright 020 7107 8000
Tom Sheldon

Seymour Pierce, which is authorised and regulated in the United


Kingdom by the Financial Services Authority, is acting exclusively as
financial adviser to Geeya and Bidco and no-one else in connection with
the Possible Offer and will not be responsible to anyone other than
Geeya and Bidco for providing the protections afforded to clients of
Seymour Pierce or for providing advice in relation to the Possible Offer,
the contents of this announcement or any other matter referred to
herein. Neither Seymour Pierce nor any of its affiliates owes or accepts
any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person
who is not a client of Seymour Pierce in connection with this
announcement, any statement contained herein or otherwise.

Investec, which is authorised and regulated in the United Kingdom by


the Financial Services Authority, is acting exclusively as financial
adviser to Harvard and no-one else in connection with the Possible Offer
and will not be responsible to anyone other than Harvard for providing
the protections afforded to clients of Investec or for providing advice in
relation to the Possible Offer, the contents of this announcement or any
other matter referred to herein. Neither Investec nor any of its affiliates
owes or accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Investec in connection with this
announcement, any statement contained herein or otherwise.

The release, distribution or publication of this announcement in


jurisdictions other than the UK may be restricted by law and therefore
any persons who are subject to the laws of any jurisdiction other than
the UK should inform themselves about and observe any applicable
requirements. Copies of this announcement and any documentation
relating to the Possible Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send such documents in or into or from
a Restricted Jurisdiction. Any Offer, if it proceeds (unless otherwise
determined by Geeya and Bidco and permitted by applicable law and
regulation) will not be made, directly or indirectly, in or into, or by the
use of the mails, or by any means of instrumentality (including without
limitation, telephonically or electronically) of interstate or foreign
commerce of, or any facilities of a national securities exchange of any
Restricted Jurisdiction, and such Offer will not be capable of
acceptance from or within any Restricted Jurisdiction.

This announcement is not intended to and does not constitute or form


any part of an offer to sell or an invitation to purchase or the solicitation
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of an offer to subscribe for any securities or the solicitation of any vote


or approval in any jurisdiction pursuant to the Possible Offer, any
subsequent Offer or otherwise. If it proceeds, any Offer will be made
solely on the terms set out in the Offer Document.

This announcement, including information included or incorporated by


reference in this announcement, may contain "forward-look ing
statements" concerning Harvard, Geeya and Bidco. Generally, the words
"anticipate", "believe", "continue", "estimate", "expect", "forecast",
"intend", "may", "plan", "project", "should" and "will" or similar
expressions identify forward-look ing statements. Such statements
reflect the relevant company's current views with respect to future
events and are subject to risk s and uncertainties that could cause the
actual results to differ materially from those expressed in the forward-
look ing statements. Many of these risk s and uncertainties relate to
factors that are beyond the companies' abilities to control or estimate
precisely, such as changes in general economic and business
conditions, changes in currency exchange rates and interest rates, lack
of acceptance of new exchange rates and interest rates, introduction of
competing products or services, lack of acceptance of new products or
services, changes in business strategy and the behaviour of other
mark et participants and therefore undue reliance should not be placed
on such statements. Neither Harvard, Geeya or Bidco nor their
respective affiliates undertak es any obligation to update publicly or
revise forward-look ing statements, whether as a result of new
information, future events or otherwise, except to the extent legally
required.

The Bidco Directors and the Geeya Directors accept responsibility for
the information contained in this announcement other than information
relating to Harvard, the Harvard Directors and members of their
immediate families, related trusts and persons connected with them
(within the meaning of section 252 of the Act).

To the best of the k nowledge and belief of each of the Bidco Directors
and the Geeya Directors (each of whom has tak en all reasonable care
to ensure that such is the case), the information contained in this
announcement for which they are responsible is in accordance with the
facts and does not omit anything lik ely to affect the import of such
information.

The Harvard Directors accept responsibility for the information


contained in this announcement relating to Harvard, the Harvard
Directors and members of their immediate families and persons
connected with them (within the meaning of section 252 of the Act)
(save in each case for information on Bidco's future plans for Harvard
and its management and employees).

To the best of the k nowledge and belief of the Harvard Directors (each
of whom has tak en all reasonable care to ensure that such is the case),
the information contained in this announcement for which they are
responsible is in accordance with the facts and does not omit anything
lik ely to affect the import of such information.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or


more of any class of relevant securities of an offeree company or of any
paper offeror (being any offeror other than an offeror in respect of which it
has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the
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commencement of the offer period and, if later, following the


announcement in which any paper offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be
made by no later than 3.30 pm (London time) on the 10th business day
following the commencement of the offer period and, if appropriate, by
no later than 3.30 pm (London time) on the 10th business day following
the announcement in which any paper offeror is first identified. Relevant
persons who deal in the relevant securities of the offeree company or of
a paper offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the offeree
company or of any paper offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
paper offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any paper offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a
person to whom Rule 8.3(b) applies must be made by no later than 3.30
pm (London time) on the business day following the date of the relevant
dealing.

If two or more persons act together pursuant to an agreement or


understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper offeror,
they will be deemed to be a single person for the purpose of Rule 8.3.

Details of the offeree and offeror companies in respect of whose relevant


securities Opening Position Disclosures and Dealing Disclosures must
be made can be found in the Disclosure Table on the Takeover Panel's
website at www.thetakeoverpanel.org.uk, including details of the number
of relevant securities in issue, when the offer period commenced and
when any offeror was first identified. You should contact the Panel's
Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt
as to whether you are required to make an Opening Position Disclosure
or a Dealing Disclosure.

Rule 2.10 Requirement

In accordance with Rule 2.10 of the City Code, Harvard confirms that,