Sodexo S.A.

Pierre Benaich - Investor Relations Michel Landel - Chief Executive Officer Sian Herbert-Jones - Chief Financial Officer

Jarrod Castle - UBS Ed Birkin - Credit Suisse Guillaume Rascoussier - Exane Richard Carter - Deutsche Bank Nick Edelman - Goldman Sachs Jamie Rollo - Morgan Stanley Tim Barrett - Nomura Jaafar Mestari - JP Morgan

Thank you. Good morning ladies and gentleman, welcome to our First Half 2015 Results Call.

On the call today, we have Sodexo CEO, Michel Landel; and CFO, Sian Herbert Jones. Slide and the press release can be downloaded as usual from our Web site at sodexo.com.

We also run a live audio webcast, available on the Web site, and there will be an audio reply of this call available later today at 10:30 AM Paris Time. And to replay, you'll have to dial 44-1452-550-000 and then an access code 48506112 and that will be available through to April 30, 2015.

The webcast will be archived on the web for the next 12 months. This call is being recorded and may not be reproduced or transmitted without our consent.

This presentation contains statements that may be considered as forward looking statements, and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made, and we assume no obligations to update them.

You are cautioned not to place undue reliance on our forward looking statements. I would now like to turn the call over to Mr.

Michel Landel.

Thank you Pierre and good morning everyone. Thank you for joining us this morning for this presentation that we will do with Sian.

So, I am glad to report that Sodexo delivered another set of solid results, in this first half of fiscal 2015. So we are today also reconfirming our full year 2015 objective and of course I will come back on this later during this presentation.

So as you can see on Slide 6, revenues are almost 10 billion and compared to a year ago, they have grown by 7% this includes a 4.8 positive currency impact and a 2.2% organic growth. Operating profit growth is 8.6% at constant currency and our operating margins have improved by 30 basis points to reach 6.2%.

Net income is up 23%, so close to 18% excluding currency effect. Of course Sian will comment the detail behind this solid performance in a moment.

Now, clearly our role as integrator of a wide range of services is one of the strong levels of our growth on On-Site services. Actually, facilities management services growth for the six months was above 6% and our investments are clearly paying off.

In the UK for example where now more than 50% of our revenues are derived from FM services, our organic growth in this first half has been 8.4%. And in corporate services in North America, organic growth has continued the solid trend of the previous fiscal year and reached 6.6% notably through our international partnerships with Fortune 500 companies such as GSK, Citibank, Unilever.

In Benefits and Rewards and despite the more difficult economic backdrop, we have maintained double-digit growth in Latin America. Actually, organic revenue growth was close to 18% in this region and thanks to continuing very strong sales force dynamic and compelling offers.

In Asia too, although our business in this region remains small, within our overall portfolio of organic growth has also been around 18% in this activity with strong growth in both India and China, as well as several other geographies in South East Asia. At the same time, our teams have been heavily focused on executing our various productivity initiatives and have driven an improvement in operating profit.

The 30 basis point operating margin improvement is fully in line with our full year objectives and the targets we announced several years ago. This solid performance includes durable savings realized in the context of our operational efficiency improvement and cost reduction program conducted over the past years.

In the first half we delivered a further €35 million of savings bringing the cumulative annualized savings to €135 million. Profit in our On-Site services activity are up 8% excluding currency, driven largely by progress in North America and in the rest of the world.

Benefits and rewards also achieved another strong performance with operating profit growth of 17% excluding currency. With this performance Sodexo has demonstrated its ability to manage through a complex environment and our robust financials and cash generating model remains unchanged.

Now let me briefly share with you some of our recent commercial success. For On-Site services for the corporate segment, I will mention the partnerships that we've developed with Diageo to provide full integrated FM services both hard and soft across 76 sites, headquarters and manufacturing plants included across all the UK and Ireland.

In healthcare despite the modest growth overall we have won a number of new contracts in many geographies. In the U.S.

I will mention among many others the University of Louisville Hospital in Kentucky. I also would like to mention the Shanghai Starcastle Senior Living which is obviously in China and which offers both independent and assisted living services, this is one of the first contract in this activity in this segment and this is very important when you think about the enormous market that we have potentially in China.

In Brazil we signed a very important hospital in Rio de Janeiro the Perinatal Hospital which is a 1,500 patient hospital specialized in maternity clinic. And finally I'll mention Ostergotland Hospital we have actually won two contracts in this region of Sweden.

One was about running on behalf of the province the medical equipments control system to disabled citizen as we already do in Stockholm, which I'll remind you this is a very important contract for us in this part of the world. The other contract that we've signed is a full integrated service contract for the main hospital in the province.

In education I will mention the Medical University of South Carolina, I will also mention in the UK very prestigious University College of London. In remote site as you know which is now back to growth, we’ve signed a very important contract in Australia with Jerriwah Village for mineral resources which is part of Rio Tinto, this is a contract where we provide a wide range of services for the mine but also for a village or accommodation and living quarters for the staff and the management of this very important industrial site.

And of course Benefits and Rewards which have had a very good first half, I will mention a very important contract with Axis Bank Limited, which is the third largest private bank in India. India I remind you, where we have over 70% market share with a very dynamic growth and also I will mention the GE Medical System contract in Turkey.

Turkey is also a fast growing country for us with a lot of potential for the Benefits and Rewards and also actually the On-Site services. So that's it for my introduction, now I would like to pass the microphone to Sian for more details.

Thanks Michel and good morning everyone, thanks for joining us today. Let me first quickly highlight the key components in the evolution year-on-year of our revenue in the first half of fiscal 2015.

Michel said our consolidated revenues are up 7% from €9.3 billion a year ago to €9.9 billion this first half. Currency effects, for the first time in three years were favorable by close to 5%.

We benefit from an 11.5% favorable effect from the US dollar euro exchange rate and close to 8% positive from sterling to the euro. This much more than offsets the Venezuelan devaluation effect that you'll remember we recorded in the second half last year and also on a first half to first half basis, you should note that the exchange differences on the Brazilian real are minimal, actually slightly positive 0.8%.

As you can see in the bridge, our organic growth was 2.2% and acquisitions have had no real impact in this first half. Zooming now into this organic growth by activity, our 2.2% overall organic growth on Slide 13 is split as follows.

1.9% in On-Site services and continuing very solid almost 10% growth in our Benefits and Rewards services activity. In our On-Site activity the 1.9% overall growth is very much in line with trends shown a year ago but accelerating slightly versus last year's second half performance.

And as you're all aware our group organic growth has also been impacted by our choices to exit some underperforming contracts and activities in the context of our operational efficiency program. These choices that we made impact our organic revenue growth for this first half by approximately €105 million.

So excluding these impacts, our organic onsite revenue growth would be 3.1%. In Benefits and Rewards and in order to enable you to understand the true underlying operational trend, we have and as shared on the footnote to the slide we’ve restated the prior year figures on Venezuela to reflect the devaluation that occurred in the second half of last year.

So close to 10% growth, the dynamics in Benefits and Rewards remain particularly strong. But given the current economic environment in Latin America growth for the six months is understandably a little bit lower than the 13% achieved in full fiscal 2014.

If we turn now to Slide 14, on a consolidated basis and at constant currency also excluding exceptional items booked last year in the first-half. Our Group operating profit is up by 8.6%.

This reflects our underlying operational performance and as Michel said the strong execution for growth of our teams. At constant currency, operating profit is €607 million, up close to €50 million versus the amount posted a year ago.

And as I’ll shortly explain, the this operating profit growth has been achieved in North America, in the UK and in the rest of the world resulting in On-Site services operating profit improvement ex-currency of around 8% and again in Benefits and Rewards, our profit improvement ex-currency is 17%. Currency conversion effects have added 13 million to this operational performance led by driving a total profit to €620 million, representing a year-on-year progression of 11%.

And if we turn now to what this means in terms of operating margin on Slide 15, you can see that we’ve succeeded in driving a 30 basis points improvement in our operating margin and have achieved a 6.2% margin for the first-half. At this half point in mid-year, this 30 basis point operating margin improvement is fully in line with our ambition our team’s numerous initiatives and action plans to deliver against our full year targets and is hence very encouraging.

Moving now to Slide 16, while you have the summary of our consolidated P&L, as I mentioned organic growth is 2.2%, underlying operational profit growth 8.6% and in the first half last year we recorded €30 million of exceptional costs linked to our operational efficiency program. Hence, our reported operating profit is up year-on-year, ex-currency by close to 15%.

Our net financial expense stands at €79 million, which is 6 million better than in the prior year period and this improvement starts to reflect the benefit of our two refinancing conducted both in the U.S. private placement market and also on the Eurobond market during the course of last year.

Well as you know, we signal to you in past calls the full positive impact of these refinancings at lower interest rate only starts to kick in as from the end of January, the end of January last. This follows the repayment or close to €900 million of our 2009 Eurobonds.

As of 28th of February, our consolidated average interest rate on borrowings has now being reduced to 3.8% as compared to 4.3% at the end of August last year. Despite fiscal pressures globally, our Group effective tax rate has decreased from 36% in the prior year first-half, down to 35.5% this year.

This largely reflects the mix of profit generation across our international portfolio. And accordingly as a result, I am pleased to report that Sodexo’s net income reached €343 million, up by more than 23% or close to 18% excluding currency.

Let me now update you on the savings we’ve been able to achieve as planned, under our operational efficiency and cost reduction program. You'll recall the cost of this program were incurred between September 2012 and February 2014.

Total costs were €156 million. As at August last year, we announced that we’ve recorded €100 million of durable annualized savings.

Six months further on as on February 2015, we remain totally on track with our execution plans that are being closely monitored and we’re able to demonstrate in our performance the achievement of our further 35 million of annualized savings. There by bringing total annualized savings to a €135 million.

Approximately 50% of these savings are in our overhead base and a further 50% achieved in our gross margin. So we're very much on track with our roadmap to achieve by the end of fiscal 2015 total cumulative savings of a €160 million versus 2012 cost base.

Coming back now to our first half reported financial statements and turning to Slide 18 on our cash flow. You can see that free cash flow in this period was €51 million down approximately €40 million versus the prior year comparable period and this can mostly be explained by four elements, first a slightly higher level of capital expenditure due to preparation and the timing of payments on our next event for the Rugby World Cup.

Secondly renovation and investment in our sports and leisure facilities in Paris, notably with the new show in Le Lido, which just reopened a week ago. Next, some slightly higher DSOs in North America and Latin America, indeed our DSO group wise is up by around two days versus a year ago and finally slightly lower cash and flow balances linked to our O&M contract in Belgium.

As you know in our industry working capital outflows are somewhat seasonal and are traditionally more negative during the first half of our financial year. Acquisitions during the six month period amounted to €45 million and this primarily relates to the purchase of Motivcom plc in the UK, a leading provider of employee incentive and motivational tools and programs.

So after dividend payments and currency movements net debt as of 28th February increased by little more than €434 million as compared to the balance outstanding at the end of August. On Slide 19 you see our consolidated balance sheet which remains particularly robust.

Principal variances in all major elements reflect above all currency variations. Our cash balances were €2.3 billion and this includes €1.5 billion coming from the Benefits and Rewards services activity.

Net debt at the end of the period amounts to €805 million and we maintain a ratio of debt to equity of 23%, very similar to the last half year. I would add also that Sodexo has maintained its S&P rating in the category A minus.

Let me now drill down and comment a little more on our On-Site services performance by geography. In the UK and Ireland our organic revenue growth has accelerated to 8.4% versus close to 5% for the full fiscal year 2014.

Clearly as Michel said this is driven by the relevance of our quality of life positioning and as an integration of services. Growth comes from all segments and also benefits from our international account focus.

At 4.1% in the rest of the world our growth trend is also accelerating versus fiscal 2014, since as announced last November and as discussed when we announced our first quarter performance, we're back to growth in remote sites. In North America our organic growth has been 1.5%, and whilst we achieved very solid performance in corporate, trends have been more moderate in healthcare and in education as I'll explain in more detail shortly.

In Continental Europe revenues remain flat versus the prior year and this continues to reflect decreasing volumes in food services on the one hand, but it's largely offset by our growth in facility management services. If we look at our organic revenue growth by client segment Slide 22; in corporate which as you know includes corporate activity per se but also defense, sports and leisure, justice and remote sites.

Our organic growth has been close to 4%, this reflects the strong contribution of our integrated quality of life services offers in most geographies particularly in North America and the UK and Ireland. With the progression mostly fueled by demand from facility management services.

It’s also driven by a return to growth in remote sites, with a confirmed momentum for example, remote sites is up 6% for the rest of the world, very different from the negative growth of minus 7% registered in fiscal 2014. In Health Care and Seniors Group wide revenues are broadly flat, albeit slightly positive at 0.1%.

This reflects as you know not only lower new business development in fiscal 2014 in North America and in Europe but also the impact that we talked to you about last November of our withdrawal and partial exit from a number of sites operated with the retirement chain ManorCare. In the meantime, in Health Care and Seniors our performance in emerging markets remain strong, particularly in Latin America and China.

In Education, revenues are slightly down at minus 0.4%, revenues progressed in North America thanks to increased enrollment and participation rates in both K-12 and also with our retail offerings in board plan university sales. However, growth in this segment is being depressed by management decisions and contract exits over the last 12 months.

Firstly, it's been impacted by our choice of non-renewal of our contract at Detroit Public Schools given city's financial difficulties and secondly it's also impacted by our reinforced very selective approach to new business notably in the public sector markets in Europe particularly in Italy. Looking now at Sodexo’s top-line revenue performance in more detail by geography.

As you can see on Slide 23, revenues in North America were €4 billion. In corporate services the growth trend has continued to be very solid up 6.6%.

Our growth comes mainly from new business and from the extension of our service offering and facility management services including technical services or hard FM. This is providing to a prestigious array of clients including Boeing, Walt Disney, Bloomberg and Citibank.

In Health Care and Seniors our revenue has decreased by 1%. The ManorCare partial exit that I mentioned weighs for -- ManorCare together with the closure of several laundry facilities weigh for approximately 250 basis points on this growth.

In this market there remain huge opportunities and we remain confident in continuing to provide an adapted offer to accelerate growth in coming years. In Education, our growth was 0.7% and as I said whilst we’re seen good student participation on school sites in the U.S.

and increased sales of board plans in universities, we did step out of the Detroit Public School contract. And this weighs around 80 basis points on our growth.

Operating profit on Slide 24, you can see North America was €284 million and after adjusting for currency effects this represents a 7.1% increase. Our margin has improved by 50 basis points.

This solid performance reflects effective pass-through of inflationary causes to clients, as well as productivity of efforts achieved particularly in the Education segment. On Slide 25, you’ll see that the Continental Europe our revenues reached €2.9 billion, broadly similar to the prior year.

And here I have to say that performance continues to be varied by geography. Client downsizing, their budget cuts and the economic environment continued to prevail.

And this weighs on food volumes that continued to decline in countries such as Italy, France and Finland. However, Sodexo’s success in more comprehensive facilities management and technical services has helped offset these factors.

In Corporate Services, our growth stands at 2.1%. We’re clearly benefitting from new business and more specifically from the ramp up impact of some integrated international contracts with customers such as GSK in Belgium, Johnson & Johnson or Carlsberg.

In Health Care and Seniors, the revenue were down by 2.6% a trend similar to the first quarter. In an environment where comparable unit growth is weak and new business activity particularly in France has remained very soft, we’re also maintaining our selective stance regarding new business with strong commercial profitability and cash flow requirements.

However, Michel highlighted some good new business opportunities have been secured during the second quarter in the Nordics, for example at Ostergotland. These new business wins will give a boost to second half growth in Europe.

In Education our revenues were down 5.2% given the pressures on public sector budgets throughout Europe and our past choices not to review several contracts at lower prices notably in the public sector and in Italy in the prior year. As a contrast to these challenging market conditions, operating profit in Continental Europe you can see on Slide 26 was €127 million and has been maintained at the level achieved in the first-half of the prior year.

Operating margin is therefore flat overall year-on-year. Different and compensating factors were work to explain this; first significant progress has been made by our teams in France particularly on operating cost efficiency and improved productivity on sites and in our overhead structures.

However, this has been largely offset by more pressures from a challenging environment in Italy and also in Russia as well as from initial investments made in mobilizing some multi-site contracts, specifically in Benelux. Let me turn now, to Sodexo's operations in the rest of the world.

As our revenue here you can see on Slide 27, were close to €1.75 billion. And as I said previously, the organic growth has accelerated positively versus that achieved in fiscal 2014.

Our organic growth in remote sites is now back to positive stands at 6.1% and this is driven by new business wins in energy, infrastructure and with some mining clients, for example, Woodside Energy, BHP, GemCo in Australia or Compania Minera Nevada in Chile. In all other segments, organic growth was almost 10% in India; it remains solid double-digit in South East Asia.

However, we have seen some recent deceleration in our activities in Brazil given the current local economic and political challenges. That said new business momentum in these geographies remains encouraging, with new client wins such as Vipshop in China, Heinz in Brazil and Hyundai in United Arab Emirates.

In Health Care and Seniors our growth is very strong, reached an impressive 21.8% benefiting from the continued leverage of our global healthcare expertise. In education too, our growth remains robust at 7.7% driven by good performance in India and also in Brazil.

Operating profit in the rest of the world was €74 million in the first half. This represents growth of nearly 30% ex-currency.

This growth has been driven by further leverage of synergies following the acquisition of Puras do in Brazil, as well as by ongoing productivity gains and leverage achieved in a number of other countries in Latin America, in South East Asia and in Australia. Profit growth in this period also came from increased activity levels within our worldwide services to offshore drilling companies.

For the first half, our operating margin reached 4.2%, and this gives a very impressive 90 basis points improvement in margin. To conclude now with our On-Site activity, let me comment the UK and Ireland on Slide 29.

Revenues were €821 million, and as I said a very solid organic growth of 8.4%. This is driven by stronger client retention as well as growth coming from new and existing sites.

In corporate services are organic growth is 8.1% and although food volumes are down like elsewhere in Europe, this has been more than offset by Sodexo's strong offering and growth in facilities management. Growth -- our new business performed at clients such as GSK, Rexam, Carlsberg and as Michel said earlier more recently at Diageo.

The early part of the first half also benefits from one-time extra works related to the contract with the Ministry of Justice at Northumberland Prison that you'll recall we started 12 months ago. Sodexo has also won six of the community rehabilitation company contract as part of UK government's transforming rehabilitation initiative.

This is the reform program aimed at changing the way offenders are managed in the community, so as to bring down the offending rates in England and Wales. We started mobilizing these new contracts, at the start of the month of February.

And this significant e-business win should also contribute to an acceleration of growth trends in the second half of this year. In healthcare, our growth accelerated to 10.9% mainly driven by service extensions at various hospitals, but also included a new contract award at Imperial College Healthcare in Central London.

Finally organic revenue in education, growth is back to positive at 5.2% and our teams have had encouraging successes over the last 12 months, particularly in the University market, with wins such as University College in London and also the City of London University. Operating profit in the UK for this first half was €36 million.

This gives close to 10% growth, but in operating margin it remains flat at 4.4%. The progress made in site level and overhead efficiencies has largely been offset by additional costs needed to prepare for the upcoming Rugby World Cup, where revenues will only principally recorded at the time of these events, i.e.

for us in the first quarter of fiscal 2016. Let's now turn to Benefits and Rewards services, which is a key component of our overall quality of life services offering and where the dynamics remain particularly strong as you can see on Slide 32.

As I mentioned previously to calculate organic growth we've restated the prior year first half using August 2014 exchange rates for the Venezuelan Bolivar. Issue volumes for first half has been €8.6 billion with organic growth of 7.2% and our revenues have been €428 million with organic revenue growth at 9.8%.

In Latin America, Slide 33 you can see that organic growth remains very solid at 12.3% for issue volume and 17.7% for revenues. Growth is driven for around 75% by ongoing face value increases in Brazil and Venezuela.

The remaining growth component represents new business and cross selling successes notably in Brazil and also in Chile. Now whilst we're seeing, also less activity in recent months, some signs of the impact of the deceleration of the Brazilian economy.

Our growth and prospects in Brazil remain particularly solid, with revenue growth still in the mid to high teens. In this first half the rise in interest rates over the last year has also positively impacted our performance.

In Europe and Asia organic issue volume growth is 3.1% and organic revenue growth stands at 1.4%. This overall performance includes encouraging new business trends in Turkey, in Central Europe for example in Romania and also in Asian markets such as India and China.

Operating profits on Slide 35, you can see for Benefits and Rewards was a €158 million and excluding currency up by a remarkable 17%. Continued strong issue volume growth and improved efficiencies achieved in processing costs together with strict vigilance on overhead efficiency explain this very strong performance.

Our teams are simultaneously pursuing continued investment in sales, in research and in digital innovation to support our quality of life services offers. Our operating margin in the activity reached 36.9% and after adjusting for currency movements i.e.

the bolivar and also the integration of our recent Motivcom acquisition, you can see this represents a year-on-year improvement of around 30 basis points. Sodexo continues to lead the sector in profitability in this activity.

Thanks for listening to these comments on our first half and let me now hand back to Michel to give some closing remarks regarding our outlook for the full fiscal year.

Thank you Sian for this very detailed full review. So, to conclude I would like to first thank our teams that you know Sian mentioned it several times that remain very focused on demonstrating the value of Sodexo's positioning in a very rapidly changing world and thanks to our unique and differentiated quality of life services offer in our three activities that set out to improve the life of our customers and the performance of our clients.

So as Sian explained we continued to strengthen Sodexo's competitiveness, efficiency and profitability and we are well on track with our objectives. And with recent trends in the new business awards we are also confident in achieving an acceleration of our organic growth over the second half of fiscal 2015.

So I can therefore confirm our full year fiscal 2015 objectives and that target as you know is an organic growth in revenues of around 3% and an increase in operating profit of around 10% excluding exceptional items and currency effects, so as to reach a 5.7% operating margins at fiscal 2014 rates. This represents as you know an overall improvement in operating margins for the year of 30 basis points and an improvement of 80 basis points over a two year period between fiscal '13 and fiscal '15 as we planned.

So thank you for listening and now with Sian we're ready to answer your questions.

Two or three questions if I may. Just in terms of debtors and the DSO going up, can you just talk a little bit about if you've taken any kind of unusual write-downs of your debtors and whether there has been additional provisioning as well for bad debts?

Kind of related to that, can you also just talk a little bit about retention rates across geographies for On-Site contracts? And then lastly just a quick one.

How much or I guess how big is the Rugby World Cup opportunity in revenues or percentage terms of Group revenues?

The last question you asked, the Rugby World Cup, we of course don’t know but we expect roughly £150 million which is similar to the last one we had in France few years ago, so little bit over that. In terms of retention rates, actually they are little bit better than they were a year ago.

So, we’re really on track and we should have a good performance this year, and in terms of DSO Sian told you, we…

What I said on DSOs, yes we’ve seen a degradation of around two days mainly in the Americas, Latin America, North America but it's nothing that it's overly concerning. We don’t have any exceptional write-offs or whatever.

On average our DSOs across the Group is around 42 days which is a very good performance. So there is nothing underlying that we remain very vigilant and it's every site manager has a part of their incentive in terms of cash generation.

So there is nothing significant to mention in that area.

Just three ones from me please. Firstly, in terms of the Europe and Asia Benefits and Rewards, I noticed in Q2 that the revenue, our organic revenue growth was negative down from 6% in Q1 yet the issue volume growth accelerated.

Is that just to do with reversal of the timing of when you book your revenues? Secondly, I notice on the last page of the press release you've talked about potentially having to restate the Venezuelan bolivar going forward with the new SIMADI.

Just maybe what needs to happen for you to move onto that exchange rates and then retrospectively restate for the new valuation? And finally, can you give guidance as to roughly what you expect the full year working capital to be please?

I don't believe many companies give guidance on the full year working capital and as you know Benefits and Rewards given the significant issue volume, whatever it's very, very difficult to give guidance on working capital because you can get orders in the last day. So we don’t give guidance, but that said, our business model hasn’t changed as we grow in both our activities we generate cash from our working capital and you should expect us to continue historic trends.

At the end of this year and I think I said in November, the end of this year obviously the Rugby World Cup there will be a cut-off issue because the Rugby World Cup starts just after the year-end. So there will be little bit of outflow in terms of the investment and preparing for the Rugby World Cup, but nothing is overall changed in our model.

Maybe for example to your second question on the Venezuelan bolivar, I think it's important to understand that Sodexo -- Sodexo we have applied consistently since 2010 a prudent approach to conversion of our earnings in Venezuela from the Venezuelan bolivar. We have applied consistently since then.

Two things, we convert at the rate in which we managed to repatriate cash, that’s the first thing. And the second thing, since 2010 is we have applied hyper inflation accounting.

So, as you can see in the Annex 2 to our press release should we decide to extract cash and repatriate earnings at the SIMADI exchange rate and the SIMADI as it was at the 28th of February, than the impact would be as stated in that page, so less than -- around €300,000 say minimal on our net income. We have been prudent over the last full year in that regard.

We are monitoring the new exchange rate, it's very recent, it's only about six weeks old, it’s currently very volatile. Today we have made no decision to extract earnings at that rate, but we have been fully transparent with you and shown that it would have a minimal impact should we decide to do that.

And I hope that answers your second question. And maybe back to the first question, I think you said Benefits and Rewards, Europe and Asia negative growth quarter two, I don't believe it was negative, but you're absolutely right, it was slightly down versus quarter one.

As you know it is very difficult with the timing of orders and various commissions commissioned from clients, commissioned from affiliates et cetera, to reach quarter by quarter. What I can say is our gift business in Europe and Asia last year was fairly, the orders for the Christmas end of year holiday campaign were very much spread between quarter one and quarter two.

This year much more of the orders fell in quarter one, so we had a weaker quarter two because it all fell back into quarter one, and there is also a small impact in terms of the timing of booking of some of our lost invoice. There's nothing unusual to read in the Europe and Asia quarter-by-quarter trends.

One question on the top-line growth because you have your target of reaching 3%, so you said that you're expecting an acceleration in H2, I guess close to 4%. So can you tell us where exactly you expect this acceleration?

I understand you expect it at least in the UK B&I, but can you elaborate as much what is the trend you're expecting in the U.S., Europe and rest of the world? And as a follow-up on this one, maybe can you tell us what's been the organic growth in Brazil?

Are you still positive? And in China please?

Well Guillaume for your last two questions, in Brazil, On-Site our growth was 1.5% and in Benefits and Rewards I'll remind you it was mid, between 15% and 20%, so still very, very strong. In China in On-Site we are flat for this first half but actually our retention rate are much better and China growth is coming back on track probably in the next part of the year.

Now for the top line the 3% to 4% there are few explanations, first, the first half of the year has been impacted by the exit of some of our contracts and the operational efficiency program if you remember and this represents 105 million on the period and this only weigh for 50 million in the second half, right. Now we also did not renew contract like the School of Rome in Italy which was a big contract.

Second, we had for some contracts very significant ramp up, in the UK transforming rehab, Sian mentioned it, which started only on February 1st, right. In continuance of Europe we are as we speak mobilizing some additional large accounts notably in Benelux and some healthcare contracts in Nordics, we mentioned them.

In France we have the new Ministry of Defense Balard, you know that. And we just reopened Le Lido, Sian also mentioned it, after four months closure for renovation.

Now in North America of course we have the withdrawal of ManorCare which weighs heavily in the first half of the year almost 3%, this will reduce as we go through the remaining of the year, right. And we also in the same time we are mobilizing our new healthcare contracts, we’ve signed many of them, University of Louisville, I mentioned it, Vidant Group and several others.

And in education again, Sian mentioned it, we withdrew from Detroit Public School and that will not wait in quarter four. So all this make the fact that we make such confident, that we'll get to close to 3%.

To remind you as well that in remote site activity is much better than it was a year ago.

And maybe just on the U.S. B&I, have you seen any acceleration in volume or spend ahead?

Well in healthcare B&I is still very strong, right. The U.S.

B&I, we’ve seen very strong acceleration of comprehensive quality of life service solutions, and in terms of food volume, I mean they are positive which is very different from what they are in Europe and some other countries in the world. Do you have other questions?

No.

Couple of questions please. Just on the 28% increase in organic rest of the world EBIT, can you just explain if there was any one-offs there and how sustainable the margin is, obviously increased over 100 basis points in H1.

Is that sustainable and will that continue into the second half? And then secondly, I know you said remote sites has improved, but there have been quite a few headlines recently from peers talking about, especially in Australia, remote sites wanting to downsize and renegotiate contracts further.

So could you just say if you're seeing any pressure there? And then just finally, in terms of Europe I know there's a lot of pressure in terms of inflation.

But could you talk a little about what you're seeing in terms of contracts and what sort of level of inflation you're able to push through specifically in France, Italy and Spain please?

In terms of EBIT growth in the rest of the world, no, there is one-off. Frankly we have improved this regularly and as we’ve said consistently, our goal is to get to the average margin that we enjoy in the rest of the world, right.

For remote site, yes Australia is a tough market as we speak but this renegotiation flow is not new. We’ve been in this for few years, many clients are renegotiating their price, but in the same time Sian told you we’ve signed new contracts specifically in the mining business.

Really there is no new investment in the mining industry and that’s across the board, around the world, but there is still some development to be made because there are bids and so we’ve gained a few ones and we’ve named them and so it's pretty good for us. In terms of the oil and gas, of course there is a huge pressure from our clients, but specifically in the exploration world and for the drillers where we have clearly and over capacity because there is no new investment in that exploration world.

So of course there is pressure, what we are doing today is that we are responding to this pressure which is clearly clients who wants savings from 15% to 20%. What we're doing is we're trying to maintain our margin, but I remind you that for us the oil and gas is not even 6% of our total sales and the drilling business for us is much smaller, right.

And in terms of your last question about Europe and inflation, inflation is low of course, but we are passing through roughly 80% as we said we are actually doing better than we did historically in the last few years. I hope I answered your question.

Just a couple of questions please. First is just on Continental Europe.

You mentioned in the commentary that you had some mobilization costs there in the first half. Does that mean you think you'll move into margin progression there in the second half?

And then secondly, in terms of the contract exits, I think you said that there was €105 million in the first half, there will be €50 million in the second half. Could you just confirm that includes for both of those numbers the ManorCare contract?

And then also just say sort of on a quarterly basis for the first three quarters roughly how much per quarter is the Detroit Schools contract that you exited on top of that please?

In terms of contract exit ManorCare yes, it's part of that absolutely and for the Detroit, Sian do you…

Contract exits, as we told you in November the impact this year would be around 160 million, we've had 105 in the first half, we got 55 to be exact to go that increase ManorCare. Detroit, I am sorry, I don’t have the quarterly figures, but I think in the next quarter we have remaining impact of around 8 million which is probably over the next four months, it's not quite quarterly.

And going back to your first question, a number of things as I said in the commentary around the operating profit in Continental Europe, we’ve made great gains in productivity gains, we’ve realized benefits from our operational efficiency and exceptional plan in many countries including France. But as I said there are pressures in other parts of Europe notably was not a large business for us notably in Russia where we’ve seen significant decrease in volumes at our clients often by 50%.

So it's a very tough operating environment in Russia that’s weighing a little bit on our margin. Italy is also under pressure, together with the mobilization costs.

I think realistically our expectation is our margin in Europe will be flat year-on-year this year.

The first question was just could you please quantify the mobilization costs you referred to in Benelux and Nordics and also the Rugby World Cup one-off cost, just if you can give us feeling for how much of a headwind those were in the first half? And also whether -- it sounds like certainly the Rugby World Cup that will continue into the second half as well.

If you could give us a feeling for those costs please? Secondly on food volumes still being quite negative in Europe.

Do you think if that carries on you will need to do another efficiency program? And then finally on the U.S.

Obviously good margin growth in the half. Any pressure from unit labor costs going forwards?

Well in the U.S., there is labor inflation, which is probably higher than in the rest of the world, but so far we've been able to pass this through general contract terms. So not really worried right now.

In terms of food volume continues to -- it goes down in Europe, right. And you know -- I don't would be able, will be able -- obliged through another plan, we are working everyday to make sure that we adjust our labor force to adapt to the reality of the economics, right.

So as we speak with no plan to do another one. And in terms of mobilization costs, Sian.

Mobilization, but if I may answer both your first and your second question, your first question being mobilization costs in Europe, the second being Rugby World Cup costs in the UK. We don’t give out individual elements; there are always several components in our profit growth.

I did mention in Europe that both Russia, Italy pressures and some mobilization costs in Benelux, we're weighing little bit on margin. I mentioned also that the cost of preparation of the Rugby in the UK is weighing little big on margin.

What I can say is without those elements there would be margin progression in both geographies.

I have two questions please. The first comes back to the topic of food service in Europe.

Are you able to quantify what the volume decline was and enlarge upon where? It sounds like Russia was probably the worst.

And then the second is a bit more big picture. Education and healthcare pretty neutral overall, yet have some of the lowest outsourcing rates.

In the medium term what are your expectations for those industries please?

For your first question, for the food decline, I think it's a mixed bag. Sian mentioned Russia which in some cases is almost 50%, but overall you know between France which is higher than some, probably between 3% and 5% right, in terms of food volume.

And in terms of education and healthcare we're convinced that these markets have high potential, if you look at them separately in healthcare we clearly are effected by our performance in the U.S. and the successive loss of these two massive contracts Ascension a couple of years ago and ManorCare.

In the meantime we've signed new contracts. We are going to recover growth in the future in this part of the world in healthcare.

Now in Europe yes it's disappointing I have to say but I don’t think this is -- I think it's very much linked to the current situation of the economy. There is a very strong trend for outsourcing, that we don't see materialize as we would wish in Europe and probably because governments are concerned by the ripple effect of the labor movement, and I believe that the potential for outsourcing in healthcare and in education is very big.

You look at what's happening in the UK, the UK has always been in advance in that dimension, the Nordics are also continuing to outsource. I see for me in the medium-term increasing outsourcing in healthcare and education in Europe because government will have no choice but to outsource.

But it's true that it's not coming fast as we would have expected to be honest with you. And rest when you look at the rest of the world it's very positive actually.

We have very strong growth in healthcare in Asia, in South America and when we now open and sign contract in this part of the world it's actually very sophisticated type of services, it is exactly the same type of services that we would provide in Continental Europe or in America. So it's very promising and education as well.

So, we are still very, very confident in the future for these markets, these businesses.

Just one question from me on gross margins. It looks like the Group cost of sales have improved by around 50 bps in H1 year-on-year and I think you mentioned that's about a third of your 35 million annualized cost savings came for procurement which would only account for a very small part of that.

And is the rest of this 50 bps just from mix between services and geographies or are there any places where you hit outright deflation in food costs and maybe have been able to retain some of that?

Just to clarify and yes, you're absolutely right our gross profit what you call cost of sales up 50 basis points for the Group. We didn’t mention, I think you mentioned something coming from procurement and I think you’re getting slightly confused; our gross profit improvement includes roughly 50% of the incremental annualized savings from our operational efficiency program, and so I’ve said.

The other 50 the remaining improvement comes from continued ongoing productivity initiatives both in On-Site and in Benefits and Rewards. So I think that clarifies that part of your question.

And the second part of your question, I think was on deflation?

Yes. I'm not absolutely sure I get your 50% bit.

So you've delivered 35 million of incremental annualized efficiency benefits this half and…

From an operational efficiency and cost production program, half of that was in gross profit and half of that was in overhead.

So sorry I got the 30%, that's 50% which wouldn't -- if I'm right would not account for 50 bps improvement in gross margins at a Group level.

It wouldn’t.

So my question was where does the delta come from? Is it through deflation if it's not efficiency programs?

The delta comes from continued ongoing day-to-day work done by our teams on productivity initiatives, productivity initiatives to improve efficiency on site to improve our procurement in Benefits and Rewards to also improve our processing cost, regular ongoing efficiency is the remainder.

And then just as a follow-up maybe if you could just update us on what food inflation you see at the moment in each region. So I think you gave us a pretty good overview as of Q1, 1% to 2% in North America, flat in Europe and then higher in [NIM].

Well overall on average inflation we see the same trends to be honest with you.

Quarter two is not very different from quarter one.

No more questions? If there are no more questions, can I just remind you that if you want to replay this call the number to dial is 44-1452-550-000.

And then the access code is 48506112.

So thank you for being with us this morning and we’ll talk to you soon.

Thank you, bye-bye.