The market for BPO in the UK and Ireland continues to provide excellent growth opportunities. Our extensive infrastructure and capability provide us with a strong competitive edge across our markets and enable us to present strong propositions to clients.

Building value for shareholders
To ensure we are building value for shareholders,
we focus on a number of key measures alongside
profitability: operating margins, cash flow, capital
expenditure, return on capital employed, gearing
and economic profit. We also focus on maintaining a conservative but efficient capital structure. Collectively they form an integral part of building value for our shareholders on a consistent basis over the long term. We have set out our aims and performance regarding these disciplines in 'How do we measure and manage growth'.

Over the 10 years to 14 February 2007, the market
capitalisation of the Group has increased from £360m to £4.1bn. The total shareholder return in this period has been 10.5 fold, equivalent to a 27% compound annual return.

Growing our business
We aim to generate profitable and sustainable growth both organically and through small to medium sized complementary acquisitions. Of the 21% increase in turnover in 2006, 16% was achieved through organic growth and the remaining 5% was derived through acquisitions.

Securing and renewing major contracts is an
important component of our growth. Across the
Group, we have over 20,000 customers and our
retention rate is excellent. Our sales performance
in 2006 was very strong. We secured 23 major new
and extended contracts with an aggregate value of
£1.37bn (2005: £1.14bn).

2007 has started well with a total of £132m of
major contracts won and extended in the first 8 weeks. We are also now in the position where we have no material contracts due for renewal in 2007 and 2008 and only 2 in 2009.

Our current bid pipeline stands at £2.6bn (February
2006: £2.2bn) and contains some exciting opportunities, particularly within the life and pensions and local government markets. Behind this is an active prospect list of opportunities which are yet to reach a shortlist stage.We have already secured strong revenue growth for 2007 and our efforts are now focused upon achieving a similar position for 2008.

Our businesses have developed well and grown
across the year securing new and repeat business.
We have also continued our strategy of expanding
existing offerings and entering new market segments through acquiring small niche businesses. Our operational capabilities continue to grow, evidenced by the smooth running of both our major integrated contracts and our separate businesses.

Growth of our BPO offshore operation in India
has accelerated, with the business doubling in size in the past 12 months. By 2009, we anticipate that we will have approaching 3,000 people based in India. Our offshore facilities are delivering significant savings, providing operational flexibility, raising service quality and increasing productivity.

Our continuing focus
We remain enthused by the many opportunities that exist to develop the Group and we will continue to build long term value for our shareholders, clients
and our employees.

Paul Pindar
Chief Executive