Interim Results

16th August 2011

John Menzies Plc - Interim Results for period ended 30th June 2011

Highlights - "Delivering the strategy - delivering growth"

§ John Menzies plc delivers further growth after strong first half

- Underlying profit before tax up 30%

- Menzies Aviation continues on its growth path with profit up 52%

- Underlying operating profit maintained at Menzies Distribution

- Interim dividend increased by 40% to 7p

Iain Napier, Chairman said:

"The Group has had a good first six months, underlying profit before tax is up 30% and I am pleased with the performance of both divisions.

Menzies Aviation continues to prosper and for the first time was the larger profit contributor. The first half benefited from a large number of contract gains, demonstrating the division's position as the quality player in its market, and also the reversal of the financial loss relating to the volcanic event that occurred in April 2010.

Menzies Distribution continues to perform robustly. Although profit was behind last year this was attributable to the benefit received in 2010 from World Cup collectables. Excluding the World Cup effect the business was largely flat, a commendable result in difficult markets.

Growth opportunities exist and we will continue to invest in new projects that deliver sustainable returns. As a Group we are focussed on driving shareholder value."

For further information:

Paul Dollman, Group Finance Director, John Menzies plc 0131 459 8018

John Geddes, Group Company Secretary, John Menzies plc 0131 459 8180

Jonathon Brill/Caroline Stewart, Financial Dynamics 020 7831 3113

Notes to Editors:

1. John Menzies plc is one of Scotland's largest companies. The company has two operating divisions, Menzies Aviation and Menzies Distribution. Both divisions operate in distinct B2B sectors where success depends on providing an efficient, high quality, time-critical service to their customers and partners.

2. The company was established in 1833 and its head office is in Edinburgh, Scotland. Today the company is an international business with operations worldwide.

3. Menzies Aviation is one of the world's leading independent suppliers of aviation handling services to the aviation market providing ground and cargo services for many of the world's leading airlines at some of the busiest international airports. The division employs 17,000 people worldwide servicing over 500 airline customers at 127 locations in 27 countries. In 2010 the division handled almost 800,000 flight turns, 71 million passengers and 1.7 million tonnes of cargo.

4. Menzies Distribution is a leading provider of added value distribution and marketing services to the newspaper and magazine supply chain in the UK. The division handles around 5.2 million newspapers and 2.4 million magazines (covering 3,000 magazine titles) each day, with deliveries to more than 25,000 customers. The division employs 4,000 people at 48 sites throughout the UK - and is a strongly cash generative business, with around 45% of the newspaper and magazine wholesale distribution market in the UK. It has a track record of investment in innovation and customer service delivery.

5. Further information on John Menzies plc can be found at: www.johnmenziesplc.com, www.menziesdistribution.com and www.menziesaviation.com.

Group Strategy

John Menzies plc is committed to delivering shareholder value by investing in both of our operating divisions where sustainable returns can be generated.

We will continue to expand Menzies Aviation by leveraging existing customer relationships to win more contracts at existing and new airports but we will also increasingly seek to develop new customer relationships and identify new attractive markets where we can deliver Menzies Aviation's market leading service provision.

Menzies Distribution remains central to the Group and we will continue to innovate and evolve the business model to mitigate declining sales whilst at the same time identify and pursue new revenue opportunities away from the core that provide long term sustainable returns.

By operating with these two distinct, strong businesses, each with strong cash flows, the Group is well placed to provide shareholders with both growth and stability.

Group Performance

Overview

The Group has started 2011 positively. Underlying profit before taxation was up 30% to £25.1m on Turnover of £1,005.7m (2010: £984.7m).

At Menzies Aviation, Turnover increased to £332.7m (2010: £300.9m) with underlying operating profit up £4.7m to £13.8m. Menzies Distribution produced a good performance in tough markets with operating profit down by £0.8m to £13.7m on Turnover of £673.0m (2010: £683.8m). Stripping out the positive impact on last year's result caused by the 2010 World Cup year on year operating profit is broadly flat.

Cashflow and Investment

Operating cash flow was £27.8m, a decrease of £4.4m on June 2010, mainly due to an increased working capital requirement. Free cash flow therefore also reduced to £11.2m, and was further impacted by increased capital expenditure at Menzies Aviation to service the significant number of new contracts awarded and a greater tax charge reflecting increased profits made by the Group. Net capital expenditure, although below depreciation at the half year, will be closer to depreciation at the full year as investment is being made to deliver the contract gains within Menzies Aviation. After June's dividend payment in respect of the financial year 2010 of £8.1m and an additional contribution to the pension scheme, net cash flow for the Group was broadly neutral. Net debt at £99.7m, was £21.9m lower than at June 2010 and broadly in line with December 2010.

Debt and Interest

Our total debt to EBITDA ratio at the half year reduced further to 1.45 times as a result of lower net debt and higher profits (June 2010: 1.85 times). Our interest cover increased to 10.5 times, up from 7.3 at June 2010. Our banking facilities remain unchanged from those disclosed in the 2010 annual report and all required facilities are secured until 2013 or beyond.

Dividend

The Board is declaring an interim dividend of 7p which is payable on 25 November 2011 to all shareholders on the register on 28 October 2011. This represents an increase of 40% on the prior year and underlines the Board's continuing confidence in the Group's future and its resilience of earnings.

Menzies Aviation

Performance

Menzies Aviation, once again, delivered an excellent result. Underlying operating profits are up 52% to £13.8m reflecting a significant number of new contracts secured, an increase in ground handling volumes and also the reversal of the negative impact felt in the first half of last year (£2.5m) from the Icelandic volcano.

During the first six months the division were net winners of 35 contracts and at the same time renewed a further 41 contracts. Operations commenced at 11 new airports as the division leveraged existing customer relationships and benefited from its industry leading reputation for providing great service to all its airline customers.

Cargo Handling

Volumes within the cargo handling business have now returned to pre-recession levels and the sharp increases witnessed in 2009 and 2010 have now ceased. Absolute volumes were largely flat, reflecting the loss late in 2010 of a major contract with Cathay Pacific in Chicago. Like for like volumes improved by 1.5%. In the second quarter volumes were softer, reflecting the reduced tonnages leaving the Far East, due to disruption in electronics and auto industries following the Japanese earthquake and slower economic growth in China.

Further progress was made in reducing losses within the cargo operations at Heathrow, Manchester and Chicago that are constrained by airport over-capacity and low yields. New contracts were secured at Heathrow and Chicago and it is expected that further progress will be made in the second half.

Elsewhere in the network cargo handling performed well. Cargo handling remains an attractive product category where the airport dynamics are right and over-capacity does not exist. Operations in India, Oceania and South Africa prospered. Capacity was increased across Oceania and in South Africa, new operations were successfully started in Durban and Cape Town to facilitate new contracts.

At Hyderabad Airport in India, a dedicated "Pharma Zone" was opened within the division's exiting cargo operations. India, and in particular Hyderabad, is emerging as an important pharmaceutical manufacturing centre. The Pharma Zone at Hyderabad Cargo terminal is the country's first airport based temperature controlled facility. This facility, which was delivered on time and under budget, increases the product offering to the local pharma industry and will help to drive volume through Hyderabad cargo centre.

Overall, 13 new contracts were secured (4 lost) during the period, which will deliver an additional £6.2m of revenue in a full year.

Cargo Forwarding

AMI, the division's cargo forwarding arm, traded well delivering returns slightly ahead of expectations. The UK business performed well following the launch of the innovative "Click2Ship" IT platform which allows freight forwarders to book express shipments, with a pickup service from their door to the final destination, entirely online.

Click2Ship has now been launched in the United States. Initial reactions are very positive and the local team is focussed on growing AMI's currently small market share in what is a very large overall market.

Ground Handling

Ground Handling continues to deliver excellent growth and represents 61% of divisional turnover. Volumes were good with absolute aircraft turns up 16.7% (like for like up 8.0%) reflecting the significant number of contracts secured and the annualisation of contracts secured in the second half of 2010.

New contracts were gained in all regions. In total 33 new contracts were won (7 lost) including contracts with Wizz, Jetstar and Air Canada. These new contracts will add an additional £17.8m of revenue on a full year basis. In addition to the contracts gained some 29 contracts were renewed.

The division's reputation for investment in training and safety and for delivering airlines on time performance (a key operating metric for all airlines) is making a difference and secures new contracts. During the period Air Canada, who previously contracted to Menzies in one USA location, awarded contracts at a further three airports. Jetstar, the low cost subsidiary of Qantas, recognised the division's specialisation in handling low cost airlines and awarded a contract to handle their hub operation at Darwin, Australia.

Service Excellence

Investment in IT systems, standard training modules and making safety the number one priority at all times helps the division deliver industry leading performance. Increasingly airlines are recognising the need for quality and reliability and by focussing on the key metrics that are important to our airline customers the division is able to work in partnership to deliver the level of service they demand.

Menzies Distribution

Performance

Menzies Distribution performed well. Although underlying operating profit fell by 5.5% to £13.7m this was a direct result of the impact of the World Cup sticker sales on the 2010 result. Excluding this and allowing for the small upside resulting from this year's Royal Wedding operating profit was largely flat.

Menzies Distribution - Core Business

Sales volumes of both magazines and newspapers were largely as predicted. On a like for like basis Newspaper sales were down 3.2% although sales of dailies were slightly ahead of expectations. Publishers continue to be under cost pressure with advertising revenues soft and print costs increasing. In July, the Daily Mail increased its cover price from 50p to 55p, providing a welcome boost to sales value and it is hoped that other titles will follow. Like for like Magazines sales were 4.9% behind last year with monthly titles performing ahead of expectations but this was offset by a weaker than expected performance from the weekly magazine sector.

The division's joint venture operations in Ireland continued to make progress. Further operational restructuring is required within the branch network in the Republic of Ireland as the business is re-shaped to increase productivity. In Northern Ireland the business is trading in line with expectations.

The implementation of SAP has made significant progress during the first six months of the year and approaching 50% of the branch network is now live. Within the business there is a real appetite for the new systems that bring greater visibility to all processes and which will help drive cost savings and productivity efficiencies. It is anticipated that the UK mainland roll-out will be completed before the end of the year.

The general drive to take cost out of the business to mitigate falling volumes is progressing well. A full year target of £4.5m has been set and costs savings are on track to deliver this amount.

A project to rationalise the division's operations in the Greater London area is progressing well and nearing completion. As a result two sites have been closed, one new site has been created and one downgraded to a nightly newspaper packing centre. The project delivers cost and productivity savings.

Operations have been centralised into a "super" branch in Maidstone and a new larger depot in Greenwich. All magazine titles for the Greater London area are now packed from these two depots. The final stage of this rationalisation is the closure of a central returns processing unit at West Thurrock with all returns being processed in Maidstone and Greenwich.

Menzies Marketing Services - New Revenue Ventures

Further progress was achieved with the marketing services businesses. Media on the Move (MOTM), a media management company specialising in marketing and distribution services to airports, airlines and the wider travel industry was acquired. The maximum provisional consideration of £1.2m is subject to adjustment in respect of normal working capital and net cash or debt based on completion accounts. The acquisition will be earnings enhancing.

The acquisition accelerates the division's expansion in the delivery of print media and related services to the travelling consumer. MOTM will be integrated with the existing Reed Aviation and Menzies Travel Media businesses to create one entity that will deliver significant service and synergy benefits.

The marketing services businesses performed well during the period although overall returns were flat due to challenging markets. Further opportunities in this area have been identified and are being pursued.

Outlook

The positive start to the year at Menzies Aviation has continued. Cargo volumes are slightly softer than expected but the full year effect of the new contracts gained (in both ground handling and cargo handling) and generally positive trading has resulted in the division being on track to exceed the Board's expectations.

The turmoil surrounding News International and the closure of the News of the World has created much activity within the newspaper marketplace. It is too early to predict the long term effect but in the short term volumes have increased as publishers undertake cut price promotions and compete for the available market share. It is not expected to have any material effect.

Overall the Group is in a strong position and is on track to deliver another successful year.

GROUP STATEMENT OF CHANGES IN EQUITY (unaudited)

Notes to the Interim Accounts

1. INTRODUCTION

These interim consolidated financial statements are for the half year to 30 June 2011. They were approved by the Board on 15 August 2011 and are unaudited. These interim financial results do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. Statutory accounts for the year to 31 December 2010, prepared in accordance with IFRS, which carried an unqualified Auditors' Report, have been filed with the Registrar of Companies.

2. BASIS OF PREPARATION

These interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 2010 Annual Report and in accordance with IAS34 "Interim Financial Reporting" as adopted by the European Union and the Disclosure and Transparency Rules of the Financial Services Authority. These interim financial statements have been prepared on the going concern basis as the directors, having considered available relevant information, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

A separate translation reserve has now been recognised within equity and appropriate amounts have been reclassified from retained earnings in order to assist readers of the financial statements with assessing the impact of exchange movements on the financial statements.

3. SEGMENT INFORMATION

For management purposes the Group is organised into two operating divisions: Distribution and Aviation.

These two divisions are organised and managed separately based upon their key markets. The Distribution segment provides newspaper and magazine distribution services across the UK along with marketing services. The Aviation segment provides cargo and passenger ground handling services across the world.

Following a review of internal reporting, the information presented to the Board for the purpose of resource allocation and assessment of segment performance is focused on the performance of each division as a whole but also contains performance information on a number of operating segments within the Aviation division. The Board assesses the performance of the operating segments based on a measure of adjusted segment result before exceptional items and intangibles amortisation. Net finance income and expenditure are not allocated to segments as this type of activity is driven by the central treasury function. The Board does not monitor assets and liabilities on a divisional basis.

Segment information is presented in respect of the Group's reportable segments together with additional geographic and balance sheet information. Transfer prices between segments are set on an arm's length basis.

Comparatives have been adjusted to reflect the new reporting format.

Business Segment Information

A reconciliation of segment pre-exceptional operating profit/(loss) to profit before tax is provided below.

* Pre-exceptional operating profit/(loss) is defined as operating profit/(loss) excluding intangible amortisation and exceptional items but including the pre-tax share of results from joint ventures and associates.

Unallocated assets comprise deferred tax assets, cash and cash equivalents.

Unallocated liabilities comprise retirement benefit obligations, borrowings, current income tax liabilities and deferred tax liabilities.

4 (a) Exceptional Items

4 (b) Intangible amortisation

5. TAXATION

The underlying effective rate for the full year is estimated at 25% (December 2010: actual 24.2%). The underlying effective rate used for the half year to June is 25% (June 2010: 27.5%). The share of results from joint ventures and associates is after taxation of £1.1m (June 2010: £0.8m).

In June 2010 the UK Government announced its intention to reduce the main rate of corporation tax from 28 per cent to 24 per cent. The fall was to be phased in over a period of four years with a 1 per cent reduction in the main corporation tax rate for each year starting on 1 April 2011. Subsequently, in March 2011 the UK Government announced that the main corporation tax rate would be 26 per cent from 1 April 2011 (rather than 27 per cent) and that it would fall to 23 per cent (rather than 24 per cent) from 1 April 2014. The reduction in the main rate of corporation tax to 26 per cent, effective from 1 April 2011, was substantively enacted on 29 March 2011 and this rate reduction is reflected in the amounts recognised at 30 June 2011.The Finance Act 2011, substantively enacted on 5 July 2011, included legislation to reduce the main rate of corporation tax from 26 per cent to 25 per cent from 1 April 2012. The reduction in the tax rate to 25 per cent was not substantively enacted at 30 June 2010, therefore the change has not been reflected in the amounts recognised at that date.

The estimated effect of the proposed reductions in rate by 2014, not currently reflected in the amounts recognised at 30 June 2011, would be to decrease the net deferred tax asset by £0.8m. Most of the UK deferred tax asset relates to the UK pension deficit and it is expected that the majority of the reduction will be debited to other comprehensive income and will not have a material effect on the effective tax rate or on the profit for the year.

6. DIVIDENDS

Dividends of £0.3m were waived by employee trusts during 2011 (2010: £0.1m).

The directors are proposing an interim dividend in respect of the half year to 30 June 2011 of 7 pence per ordinary share, which will absorb an estimated £4.1m of shareholders' funds. Payment will be made on 25 November 2011 to shareholders on the register at the close of business on 28 October 2011.

7. EARNINGS PER SHARE

The weighted average number of fully paid ordinary shares in issue during the period excludes those held by the employee share trusts. The diluted weighted average is calculated by adjusting for those outstanding share options which are potentially dilutive i.e. where the exercise price is less than the average market price of the shares during the period.

*Underlying earnings are presented as an additional performance measure. They are stated before exceptional items and intangible amortisation.

8. Intangible assets

Intangible assets comprise goodwill of £50.6m (June 2010: £50.7m), contracts of £39.4m (June 2010: £40.9m) and capitalised software development costs of £10.2m (June 2010: £7.8m).

Investments also include goodwill in respect of joint ventures and associates of £4.6m (June 2010: £7.5m).

9. ANALYSIS OF CHANGES IN NET BORROWINGS

10. CASH GENERATED FROM OPERATIONS

11. CONTINGENT LIABILITIES

There are contingent liabilities, including those in respect of disposed and acquired businesses, which are not expected to give rise to any significant loss to the Group.

In addition, in the normal course of business, the company has guaranteed certain trading obligations of its subsidiaries.

12. RETIREMENT BENEFIT OBLIGATIONS

(a) In deriving the results the Actuary used the projected unit method and the following financial assumptions: