Preliminary Results for the Year Ended 31 Dec 2013

FOR IMMEDIATE RELEASE 20 March 2014

Cello Group plc

Strong 2013 performance - Double digit profit and gross profit growth and rising margins.

Cello Group plc (AIM:CLL, "Cello" or "the Group"), the insight and strategic marketing group, today announces its final audited results for the year to 31 December 2013.

Cello has two operating divisions, Cello Health and Cello Signal (previously Cello Consumer) which is formally launched today.

Financial Highlights

· Revenue up 18.2% to £159.7m (2012: £135.1m)

· Gross profit up 14.8% to £74.7m (2012: £65.1m)

· Like-for-like1 gross profit growth of 11.4%

· Statutory operating profit up 199% to £6.0m (2012: £2.0m)

· Headline2 profit before tax up 21.1% to £8.5m (2012: £7.0m)

· Headline basic earnings per share3 up 13.8% to 7.25p (2012: 6.37p)

· Statutory basic earnings per share from continuing operations up 28 fold to 4.41p (2012: 0.16p)

· Net debt4 reduced by 59.2% to £3.6m (2012: £8.7m)

• Full Year dividend up 12.5% to 2.25p (2012: 2.00p)

• Strong cash conversion5 of 122% (2012: 79%)

• Good start to 2014, with encouraging bookings momentum continuing from Q4 2013

Divisional Highlights

· Cello Health like-for-like gross profit growth of 6.4%, margins improved, good performance

· Cello Signal like-for-like gross profit growth of 16.2%, margins improved, significantly improved performance.

Operational Highlights

· Successful launch of Cello Health brand (www.cellohealth.com), which replaces a number of existing operating brands.

· Successful acquisition of Mash Healthcare in January 2013.

· Strong performance from new businesses started in 2012, together contributing £3.3m of gross profit in 2013.

· Successful launch of Cello Signal (www.cellosignal.com), formerly Cello Consumer.

Mark Scott, Chief Executive, commented:

"2013 has been a very strong year that has demonstrated the potential of Cello's strategy to deliver superior performance. Both Cello Health and Cello Signal have very clear, focused growth strategies, underpinned by robust management structures. We are confident that both businesses will continue on their growth paths and deliver a successful 2014 performance for the Group as a whole. Reflecting that confidence, we have raised the full year dividend by 12.5%, the eighth successive year of dividend growth."

1 Like-for-like measures exclude the results from companies acquired in the year and results from start-ups in 2013.

2 Headline measures exclude, where applicable, restructuring costs, amortisation of intangible assets, impairment charges, acquisition accounting adjustments, start-up losses and fair value gains and losses on derivative financial instruments.

3 Headline earnings per share is defined in note 9.

4 Net debt is defined in note 16.

5 Cash conversion is defined as cash generated from operating activities before tax expressed as a percentage of headline operating profit.

6 Operating margin is calculated by expressing operating profit as a percentage of gross profit.

Enquiries:

Overview

2013 saw a strong financial and operational performance. The Group reports a 14.8% increase in gross profit to £74.7m (2012: £65.1m) and headline profit before tax up 21.1% to £8.5m (2012: £7.0m).

The success of the year has been underpinned by robust like-for-like gross profit growth of 11.4%. This growth has been achieved across the whole business and notably in Cello Signal, where growing digital gross profit and gross profit from technically related services was supplemented by the impact of a significant incremental project.

The like-for-like gross profit growth was enhanced by the success of the start-up activity implemented in 2012. We have opened new offices, launched new products and started new businesses. Gross profit from such activities started in 2012, rose from £1.0m in 2012 to £3.3m in 2013.

Finally, our growth has been supplemented by the acquisition of Mash Health Limited ("Mash") in January 2013. Mash provides consultancy and communication services to a wide portfolio of pharmaceutical, nutraceutical and consumer healthcare clients. We are pleased with the performance of the business in the first year of ownership.

The investment made in 2013 in preparation for the launch of the Cello Health brand (www.cellohealth.com) has ensured a smooth transition to the new proposition. The launch of Cello Signal (www.cellosignal.com) has also been successfully completed today. For the Group's wide range of blue chip clients, the distinct service benefits offered by the two businesses are now clearer.

The Group started the new year with continued good booking momentum, and a solid new business pipeline, providing good visibility for the first half of the year.

Financial Review

Total Group gross profit was £74.7m (2012: £65.1m) on revenues of £159.7m (2012: £135.1m). Headline profit before tax was £8.5m (2012: £7.0m). The Group's results reflect a strong performance by both Cello Health and by Cello Signal.

Statutory profit before tax was £5.5m (2012: £1.4m) after the impact of restructuring costs of £0.5m (2012: £1.3m); amortisation of £1.2m (2012: £0.9m); and start-up losses of £0.4m (2012: £0.8m).

The Group's headline operating margin was 12.4% (2012: 12.1%) with a headline operating margin of 21.2% in Cello Health (2012: 20.8%), and 10.2% in Cello Signal (2012: 9.1%).

Headline finance costs were £0.6m (2012: £0.7m). The Group's tax charge was £1.8m (2012: £1.2m) reflecting a normalised tax rate on taxable profits of 30.4% (2012: 31.5%). Headline basic earnings per share was 7.25p (2012: 6.37p).

In January 2013, the Group acquired the entire share capital of Mash Health Limited. Total amounts payable with regards to this acquisition are £2.1m with net current assets acquired of £0.6m. £0.7m of this amount has been accounted for as acquisition related employee remuneration which is a charge accounted for below headline operating profit. £1.6m was settled in the year, of which £1.4m was paid in cash with the balance paid in new ordinary shares.

Total Group deferred commitments with regards to acquisitions now stand at £0.6m, all payable in 2014 with a maximum of £0.1m payable in shares.

Cello Health produced headline operating profit growth of 16.2% on an increase in gross profit of 13.8%, reflecting continued robust demand from global clients for its highly specialist range of technical services. It enjoyed a full year contribution from Mash which was acquired in January 2013. Cello Health's continued expansion was helped by the start-up investments made in 2012, the majority of which achieved break-even in 2013, delivering a combined gross profit of £1.6m. Like-for-like gross profit in Cello Health grew by 6.4%.

Cello Signal had a very strong year, delivering headline operating profit of £3.9m (2012: £3.0m) on gross profit of £37.9m (2012: £32.7m). Cello Signal achieved headline operating margins of 10.2% (2012: 9.1%). Like-for-like gross profit in Cello Signal grew by 16.2%.

One notable factor in this impressive like-for-like growth rate was the delivery of a large, non-recurring rebranding project. It is not expected that a project of this size will occur in 2014, however there has been a notable increase in rebranding activity as the UK economy comes out of recession. Cello Signal has benefited from an improvement in the consumer research market, as well as an increase in work of a retained or continuous nature. The business has also developed a growing expertise in technical platform development. For example, the Commonwealth Games 2014 ticketing website was developed by Blonde, a business within Cello Signal.

Social media analysis is also a growing revenue stream. The launch in April 2013 of Pulsar TRAC has been very successful, with several clients purchasing the software on a retained licence fee basis. Cello Signal's rapid transition into a predominantly digital proposition supported by a range of web-centric services has enabled it to continue to develop its wide range of blue chip global client relationships.

As indicated in the Interim Results, the consolidation of Cello Health and Cello Signal into separately branded entities has given rise to an opportunity to pursue further efficiency gains. As a consequence, there was a restructuring charge of £0.5m in 2013 to achieve these ongoing future gains (2012: £1.3m).

In 2012, the Group incurred £0.8m of start-up costs in association with new offices, new products, or the commencement of new businesses. We are pleased that the gross profit in 2013 from these activities totalled £3.3m, and headline operating profit of £0.2m was delivered.

We have continued this strategy in 2013, by opening up offices in Hong Kong and Chicago, as well as investing in the continued development of Cello Business Sciences, a web-based analytic offering for pharmaceutical clients. In addition, we launched a US office for Cello Health Consulting, specialising in early product commercialisation. The total losses from these activities in 2013 were £0.4m.

Operating cash flow before tax of £11.1m (2012: £6.1m) during the year represented a 122% conversion of headline operating profit (2012: 79%). The Group's net debt position at 31 December 2013 was £3.6m (2012: £8.7m). The net debt:ebitda1 ratio has dropped to 0.3 (2012: 1.0). In order to reduce future non utilisation fees, the Board has elected to reduce the existing revolving credit facilities of £25.0m to £20.0m. This facility is in place until March 2016.

The Board is proposing a final dividend of 1.61p per share (2012: 1.42p), giving a total dividend per share of 2.25p (2012: 2.00p), an increase of 12.5%. The dividend has now grown every year since 2006 and has grown by 10% or more for the last three years. Subject to shareholder approval, the final dividend will be paid, on 4 July 2014 to all shareholders on the register at 6 June 2014 and will be recognised in the year ending 31 December 2014.

[1] ebitda is defined as headline earnings before tax, interest, depreciation and amortisation.

The Group incurs a number of charges in the income statement below headline operating profit, which are:

*no cash flow impact

The Group monitors many financial measures on a regular basis but our key performance indicators are headline operating profit, headline operating margin, like-for-like gross profit, headline operating cash flow conversion and headline basic earnings per share.

Operational Review

Cello Health (www.cellohealth.com)

Cello Health had another strong year, delivering headline operating profit of £7.6m (2012: £6.5m) from gross profit of £35.6m (2012: £31.3m). The business continues to service the majority of the largest 50 pharmaceutical clients globally as well as a growing number of biotech clients. The professional employee base increased to 316 during the year (2012: 296) reflecting the addition of senior resource, particularly in the USA, to enable continued growth. Despite this ongoing senior headcount increase, operating margins increased slightly to 21.2% (2012: 20.8%).

The Board of Cello Health has continued to execute against its global strategy of establishing Cello Health as one of a handful of high quality, technically led advisers to the pharmaceutical and healthcare sector. During the course of 2013, the Board of Cello Health went through the detailed organisational planning required to transition its core operating brands into a single brand format reflecting the Cello Health positioning. This has already begun to deliver clear benefits in the form of better sharing of professional resource, and successful joint pitching for larger client opportunities. During 2014, it is expected that the recent launch of the Cello Health brand as the core client facing brand of the business will materially help to raise Cello Health's market profile, with associated commercial benefits.

In line with the stated strategy, the international profile of Cello Health continues to progress rapidly. In July 2013, Cello Health opened an office in Chicago. The consulting division of Cello Health also opened a specialist market access and early product commercialisation business in New York which is being expanded in 2014. All of Cello Health's core businesses are now represented in the US market, which is by far the largest market for such services globally. The core capabilities of Cello Health (Cello Health Consulting, Cello Health Insight and Cello Health Communications) are organised globally, enabling rapid deployment of resource against global opportunity.

The business continues to invest in organic expansion. In 2013 investment was made in the development of a focused consumer health offering. The acquisition of Mash in January 2013 has been a significant addition to the effort to build a major global offering in the consumer health space.

Innovation is at the core of Cello Health's proposition. Cello Health's digital and software based capabilities have continued to gain market traction. Cello Business Sciences, a bespoke web-based analytical tool for marketing Directors in the pharmaceutical industry, has joined forces with Cello Health's consulting capability to secure wider sales reach. Sales of software licences have continued to grow at a strong rate.

New business momentum was strong in Q4 2013 and this momentum has continued into 2014. Notable, disclosable client wins in 2013 included: AbbVie, Abellio, Ahlstrom, Ariad, Avia, Bauer Media, Biogen, Biogen Idec, Boehringer Ingleheim, Canon, Chamberlain, Colgate Palmolive, Consumer Focus, CooperVision, Eisai, Epson, FCA, FedEx, GSK Oncology, HP, Janssen Cilag, Johnson and Johnson, Kimberly Clark, Legal and General, M&G, Marie Curie, MBA Mead Johnson, Medtronic, NHS Blood Transfusions, NHS Business Services Authority, Novartis, Novo Nordisk, NS&I, Otsuka, Pfizer, PruHealth, Saint Gobain, Sandoz, Sanofi Pasteur, Shionogi, Shire, Sony, Swiss Re, Terumo, UCB, Unilever, Vertex, Zentiva, Zoetis, Zurich.

Cello Signal (www.cellosignal.com)

Cello Signal had a very strong year, delivering headline operating profit of £3.9m (2012: £3.0m) on gross profit of £37.9m (2012: £32.7m). Operating margins were increased to 10.2% (2012: 9.1%), reflecting the business's increasing transition to higher value added, global services which command a higher margin. Headcount increased to 478 (2012: 459), reflecting expansion of capability outside the UK, both in the US and Asia.

Cello Signal made material progress in its development as a leading global adviser to marketing clients, enabling them to better manage relationships with customers in an increasingly digital context. The business's unique combination of data analytics, systems delivery and creativity lends it genuine competitive advantage, enabling it to both identify key customer challenges and deliver solutions of a highly technical nature. The launch of Cello Signal as the umbrella brand for the business is expected to contribute to a rapid increase in its market profile.

Cello Signal has continued to develop its strong digital footprint. Through its brand Face, the Group has established an industry leading capability in social media based advisory work, backed by software-enabled analytical products. Through its brand Blonde, it also has a highly successful offering in digital communications and web-based marketing. In addition, through its brand Brightsource, it has developed an industry leading capability in digital based print management, communications planning and delivery. The Group has developed a number of proprietary software products to support its sales process, including Pulsar, a ground-breaking social media analytics tool (www.pulsarplatform.com). Cello Signal continues to grow its focus on delivering proprietary software as a service. Pulsar software sales continue to progress strongly and are now supported by a dedicated sales team.

Cello Signal has a high quality, blue chip client list that underpins its global business growth. The client base spans the full range of technology led sectors, including mobile telephony, electronic games, and personal computing, ensuring Cello Signal is at the cutting edge of digital marketing developments. This is complemented by deep client expertise in fmcg, charities, and retail. Core clients include EA, HP, Sony, Unilever, Tesco, LBG, L'Oreal, NHS, BASF, TfL, IFAW, Oxfam, and General Motors. 2013 saw an ongoing increase in the average size of client contracts and an ongoing increase in visibility achieved through multi-year contracts.

Cello Signal has been rapidly transforming itself from a UK focused business into a global business. With offices in San Francisco, Los Angeles, New York, Singapore and Hong Kong, it can now offer truly global coverage. International gross profits have grown from 16% in 2012 to 18% in 2013. Cello Signal is increasingly selling contracts on a multi-country basis.

Cello Signal's strong new business momentum from the last quarter of 2013 has continued into 2014. Notable, disclosable client wins in 2013 included: Aegon, Age UK, Ahlstrom, Airwave Solutions, Alliance Trust, Anheuser Busch, Apetito, Art Institute of Chicago, Audi (Asia), Baillie Gifford, Barnes & Noble, Border Biscuits, BRG, British Red Cross, Canon, Cash Generator, CBRE, Chamberlain, Cigna, CITB, City of London, Cofunds, Disney, DWP, E.ON, Economist, English Heritage, Ernst & Young, Family Investments, Fantasy Football Manager, FCA, First Group, General Mills, Halo Foods, Hearst Magazines, Homebase, International Cancer Research, IQ Chocolate, JP Morgan, Keen's Footwear, Kimpton Hotels, King.com, Learn Direct, M&G, Macmillan Cancer Support, Michelmores, Microsoft, NBC Syfy, Nest, Nestle, NHS Business Services Authority, NHS Supply Chain, Nokia, North Face, NS&I, Oliver Bonas, ONS, OpenX, OXFAM, Philips, Pizza Express, Prostate Cancer UK, Quality Solicitors, Reckitt Benckiser, Royal British Legion, Royal Mail, Russell (Fruit of the Loom), Sainsbury's Finance, Save the Children, Scottish Government, Singtel (Asia), Spar, SYPTE, The Ritz Carlton, Thomas Cook, US Anheuser Busch, Visit England, Walt Disney, WorldPay.

People

Cello prides itself on investing in developing its people, funding a range of initiatives which encompass both Cello Health and Cello Signal. At the heart of this is the Cello Partnership which comprises 41 Associates, 25 Partners and 11 Managing Partners. The Partnership meets regularly and forms sub-groups to address areas critical to the future of the business, including innovation, international expansion and cross group working. Many Partners and Associates are alumni of Cello Academy.

Cello Academy is the Group's well respected and proprietary training programme through which over 170 people have graduated. In addition there is a Cello graduate forum for the substantial annual graduate intake of the Group. In 2013 26 new graduate trainees were recruited over the course of the year (2012: 33).

In order to properly incentivise the Partnership, the Group administers a robust and demanding annual bonus scheme that rewards based on performance, in addition to a share option scheme.

As part of making a difference, Cello invests in helping its professionals engage in socially contributive activities with a health orientation. In particular, Cello has invested in launching Talking Taboos as a stand-alone charitable foundation. The Talking Taboos Foundation assists selected charities to further develop their positions and to raise their profile supported by market data.

Current Trading and Outlook

Cello begins 2014 with a good level of secured forward bookings and has also seen encouraging levels of new business wins so far this year. The strong balance sheet position of the Group means the Board is able to further invest in the growth strategy and continue to build the Cello brand in the global marketplace. This is an exciting time for the Group and the focus of the Board is set on driving profitable growth from the high level marketing advisory platform that has successfully been established. We have two well managed, well structured and highly competitive brands in Cello Health and Cello Signal. These are only now starting to show their true potential. At this early stage of the year, the Board is confident that expectations for 2014 will be met.

Allan Rich

Non-Executive Chairman

19 March 2014

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2013

CONSOLIDATED BALANCE SHEET

31 December 2013

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2013

Cash flows in the year ended 31 December 2012 have been reclassified. Further details are provided in note 15.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the year ended 31 December 2013

SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation

The financial information included in this report does not amount to full financial statements within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and financial statements for the year ended 31 December 2013, on which an unqualified report has been made by the Company's auditors, PricewaterhouseCoopers LLP.

Financial statements for the year ended 31 December 2012 have been delivered to the Register of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under 498 of the Companies Act 2006. The 2013 statutory accounts are expected to be published on 14 April 2014.

During the year the Group generated a profit before tax on continuing activities of £5.5m and excluding non-recurring restructuring costs and other non-headline charges the Group generated a profit before tax of £8.5m.

The Group meets its day-to-day working capital requirements through its bank facilities. At 31 December 2013 the Group's bank facilities consisted of a £4.0m overdraft facility and a £25.0m revolving credit facility ("RCF"). The RCF is committed to March 2016. On 3 February 2014 the Directors elected to reduce the RCF to £20m. £10.9m of the RCF, at its reduced level, is undrawn at 31 December 2013 and the Group's forecasts and projections show that the Group is able to operate within the level of its current facilities.

After reviewing the Group's performance and forecast future cash flows, the Directors consider the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing the Group's financial statements.

2. Revenue, Cost of Sales and Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable from services, provided by the Group in the ordinary course of the Group's activities. Services include fees, commissions, rechargeable expenses and sales of materials provided by the Group. Revenue is shown net of Value Added Tax and discounts.

Revenue derived from fees is recognised as contract activity progresses, in accordance with the terms of the contractual agreement and the stage of completion of the work. The stage of completion is assessed based on the proportion of costs incurred or milestone completed, as appropriate to the contract. Where recorded revenue exceeds amounts invoiced to clients, the excess is classified as accrued income and where recorded revenue is less than amounts invoiced to clients, the difference is classified as deferred income.

Revenue derived from retainers is recognised evenly over the contract period.

Revenue derived from commissions, rechargeable expenses and sale of materials is recognised when the risk and rewards have been transferred to the client in line with the individual contract.

Cost of sales include amounts payable to external suppliers where they are retained at the Group's discretion to perform part of a specific client project or service where the Group has full exposure to the benefits and risks of the contract with the client. Cost of sales does not include direct labour costs.

3. Headline Measures

The Group believes that reporting non-GAAP or headline measures provides a useful comparison of business performance and this reflects the way the business is reported internally and controlled. Accordingly headline measures of operating profit, finance income, finance costs, profit before taxation and earnings per share exclude, where applicable, restructuring costs, amortisation of intangible assets, impairment charges, acquisition accounting adjustments, start-up losses, share option charges and fair value gains and losses on derivative financial instruments. These are items that, in the opinion of the directors, are required to be disclosed separately, by virtue of their size or incidence, to enable a full understanding of the Group's financial performance.

A reconciliation between reported and headline profit before taxation is presented in note 1. In addition to this, a reconciliation between reported and headline operating profit is presented in note 2, a reconciliation between reported and headline finance income and costs is presented in note 3 and a reconciliation between reported and headline earnings per share is presented in note 9. Headline measures in this report are not defined terms under IFRSs and may not be comparable with similarly titled measures reported by other companies.

4. Accounting Estimates and Judgements

The Group makes estimates and judgements concerning the application the Group's accounting policies and concerning the future. The resulting estimates may, by definition, vary from the actual results. Estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable.

The Directors consider the critical accounting estimates and judgements used in the financial statements and concluded that the main areas of judgements are:

i. Revenue recognition policies in respect of contracts which straddle the year end.

The Group is required to make an estimate of the project completion levels in respect of contracts which straddle the year end for income recognition purposes. Estimates are based on expected total costs and revenues from each contract. This involves a level of judgement and therefore differences may arise between the actual and estimated result. Where immaterial differences arise they are recognised in the income statement for the following reporting period. Any material changes to these estimates would affect revenue recognised in the financial statements and the level of deferred or accrued income on the balance sheet.

ii. Contingent deferred consideration payments in respect of acquisitions and acquisition related employee remuneration.

The Group has estimated the value of future amounts payable in respect of acquisitions. The estimate is based on management's estimates of the relevant entities future performance. If these estimates change in the future as the earn out progresses, the amount of the provision will vary. Any changes to the carrying value of the provision are recognised in the income statement.

As part of a typical acquisition an amount is also payable to the employees of the acquired company. These acquisition related employee remuneration costs are calculated using the same estimates of the relevant entities future performance as the deferred consideration payable. If these estimates change in the future, as the earn out progresses, the amount of the employee liability, which is recognised over the earn out period, will vary. Any changes to the carrying value of these liabilities are recognised in the income statement.

iii. Valuation and amortisation period of separately identifiable intangible assets on acquisitions.

The Group is required to value the separately identifiable intangible assets acquired as part of a business combination. In order to value some of these intangible assets, the Group must make assumptions as to future cash flows derived from these costs and estimate the expected lives of these assets. Changes to these estimates would affect the resulting valuation of goodwill and the amortisation charge recognised in the financial statements.

iv. Impairment of goodwill and intangible assets acquired as part of a business combination.

The Group tests goodwill and intangible assets acquired as part of a business combination annually for impairment, in accordance with the Group's accounting policies. The recoverable amount is based on value-in-use calculations, which requires estimates of future cash flows and the discount rate to apply in order to calculate the present values of these cash flows. The estimates used and sensitivity of these assumptions is disclosed in note 10.

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1 Reconciliation of Profit on Continuing Operations Before Taxation to Headline Profit Before Tax

2 Segmental Information

For management purposes, the Group is organised into two operating groups; Cello Health and Cello Signal. These groups are the basis on which the Group reports internally to the plc's board of Directors, who have been identified as the chief operating decision makers.

The principal activities of the operating segments are as follows:

Cello Health

The Cello Health Division provides market research, consulting and communications services principally to the Group's pharmaceutical and healthcare clients.

Cello Signal

The Cello Signal Division provides market research and direct communications services principally to the Group's consumer facing clients.

Revenues derived from the Group's largest client are less than 10% of the Group's total revenue. Revenue derived from the largest client in each operating segment also represents less than 10% of external revenue in each segment.

Sales between segments are carried out at arms-length. The revenue from external parties reported to the chief operating decision maker is measured in a manner consistent with that in the income.

The Group's operations are located in the United Kingdom and the USA.

The following table provides an analysis of the Group's revenue by geographical market, based on the location of the client:

3 Finance Income and Costs

4 Administration Expenses

5 Restructuring Costs

Restructuring costs comprise of cost saving initiatives including severance payments, property and other contract termination costs. They are included within administration costs and have been separately identified as a non-headline item because of their size or their nature or because they are non-recurring. In the opinion of the Directors, these costs are required to be separately identified, to enable a full understanding of the Group's financial performance.

6 Start-up Losses

Start-up losses have been separately identified as a non-headline item because, in the opinion of the Directors, separate disclosure is required to enable a full understanding of the Group's financial performance.

Start-up losses are defined as the net operating result in the period of the trading activities that relate to new offices, new products, or new organically started businesses. Activities so defined will cease being separately identified where, in the opinion of the Directors, the activities show evidence of becoming sustainably profitable or are closed, whichever is earlier. In any event start-up losses will cease being separately identified after two years from the commencement of the activity.

7 Taxation