RNS Number:0002O
Royalblue Group PLC
28 July 2003

28th July 2003



royalblue group plc

interim results for the six months ended 30th June 2003



royalblue reports 49% of revenues now recurring and

11 new fidessaNet sales




                                   6 months to 30th June               12 months to 31st December
                                   2003        2002        change      2002
Turnover                           #27.9m      #29.3m      -5%         #57.0m
Operating profit                   #3.5m       #3.9m       -10%        #8.2m
Diluted earnings per share         8.5p        8.5p        nil         19.7p      pre-exceptional gain
                                                                       32.9p      post-exceptional gain
Dividend per share                 1.85p       1.75p       +6%         5.3p
Cash balance                       #22.7m      #12.1m      +88%        #22.7m





Highlights for the six months ended 30th June 2003:



*          Good progress in moving the business model to consistent and
           predictable recurring revenues.

*          fidessa rental fees and fidessaNet service fees up 48%.

*          Recurring revenues now represent 49% of total revenues, up from 35%
           last year.

*          11 new fidessaNet orders signed, 6 in Europe, 5 in US.

*          fidessa workstation product launched at end of Q1 and over 100
           positions already in production.

*          Costs down by 6% before investment in the new fidessa workstation
           business.

*          US revenues are up 48% representing 44% of total revenues.



Chief Executive, Chris Aspinwall, said:

"The difficulties experienced in the financial markets have continued into 2003
and despite some improvements in the market towards the end of Q2 it is too
early to predict any sustained change in trading conditions. Despite the
conditions we have continued to make good progress moving our business model
away from more variable consultancy revenues towards the more consistent and
predictable recurring revenues generated by our enterprise rental and fidessaNet
services. Revenue from these sources has increased by 48% compared to the same
period last year, and recurring revenue now represents 49% of our overall
revenues. As expected, consultancy revenues have come under continued pressure
and are down 23% on the first half of last year. However, cost control has been
tightened further, with costs down 6% on the same period last year after
excluding #0.4 million allocated to development of the new fidessa workstation
business.



A total of 11 new customers have signed for full implementations of fidessaNet
during the first half compared to 5 in the same period last year and 8 in the
whole of last year. Our US fidessaNet business continues to be on schedule to
achieve break even by the end of this year. Our new fidessa workstation product
has made good progress in the three months since its launch at the end of Q1,
with over 100 positions already in production and substantially more scheduled
to go live over the next few months.



Looking ahead we continue to anticipate tough trading conditions. We believe
that we will continue to see substantial growth in high quality recurring
revenues from our fidessaNet and enterprise rental businesses and are
particularly pleased with the momentum developing in our fidessaNet business. We
believe that we will see further falls in consultancy revenues in the second
half but do not believe that the extent of this fall will materially exceed what
we have seen in the first half.



In both the US and Europe we are seeing an increasing convergence of our
enterprise and fidessaNet businesses and we intend to encourage this trend as we
seek to achieve our vision of a single intelligent connectivity network
encompassing all the transaction services required for cost efficient trading.
This vision will have an impact on consultancy revenues as customers
increasingly make use of fidessaNet services rather than taking fidessa products
in house. As a result, in the short-term, we expect full year revenues for 2003
to be slightly below those achieved last year, although the quality of revenue
(i.e. the % of recurring revenue) will be substantially improved. As consultancy
becomes a smaller proportion of our revenues, we expect the negative effect on
consultancy to be more than offset by growth in recurring revenues. We believe
that our cost control measures will be effective in increasing margins in the
established business, but after taking account of the investment in the new
fidessa workstation business, we expect overall profit will be slightly below
that recorded last year. However, we believe that with the investments we are
making in new and existing products, we remain exceptionally well positioned and
that the unique proposition and business model royalblue has developed will
provide a strong basis for long-term growth."





Financial Summary

In the six months to 30th June 2003, revenues declined by 5% to #27.9 million,
from #29.3 million for the same period last year. We have continued to make good
progress in moving our business model away from more variable consultancy
revenues towards the more consistent and predictable recurring revenues
generated by our enterprise rental and fidessaNet services. Growth from fidessa
licence rental and fidessaNet service rental continued to be strong with a
combined 48% increase in the period whilst consultancy revenues continued to
come under pressure and declined by 23%. During the period, consultancy revenues
represented 48% of total revenues (2002: 60%), fidessa licence rentals 27%
(2002: 19%), fidessaNet service rentals 12% (2002: 6%) and maintenance 10%
(2002: 10%). In total, the recurring revenues were #13.6 million representing
49% of total revenues up from 35% last year. Overseas revenues increased to
#16.7 million (2002: #14.5 million) accounting for 60% of total revenues.



Operating profit fell by 10% to #3.5 million from #3.9 million in 2002, an
operating margin of 12.6% (2002: 13.1%). These figures are after investing #0.4
million in the new fidessa workstation business. Throughout the period there has
been a focus on cost control and, excluding the investment in the new fidessa
workstation business, our costs have decreased by 6%, a reduction of #1.6
million. These cost savings have not been at the expense of R&D where we have
continued to invest in future products. The proportion of staff dedicated to
product development has increased to 21% from 18% last year. All of this
expenditure was expensed as incurred. Improved interest earnings from higher
cash balances and a decrease in the anticipated tax rate have contributed to
flat diluted earnings per share of 8.5p.



The business continues to have a strong balance sheet and at 30th June 2003 the
cash balance was #22.7 million. The cash generated from operating activities was
#3.7 million (2002: #2.3 million) and the major outflows were capital
expenditure of #1.8 million (2002: #0.4 million), dividends of #1.1 million
(2002: #0.9 million) and taxation of #1.0 million (2002: #0.7 million). The
Group has no debt, nor any goodwill write off or deferred consideration payable
for previous acquisitions. An increased interim dividend of 1.85p per share
(2002: 1.75p) will be paid on 6th October 2003 to shareholders on the register
on 5th September 2003.





Operations



Introduction



Despite the difficult market conditions, we have continued to make good progress
in key areas of the business. In the US, sales of our US domestic trading system
have continued with the signing of 5 new deals for fidessaNet systems, the same
number as signed in the whole of 2002. Implementation of some of these systems
is complete with others due to come on stream during the second half. Our share
of the US market is increasing rapidly and we estimate that in the period a
little over 4% of US domestic OTC (NASDAQ) flows passed through fidessa systems.
We expect this percentage to rise as we progress towards establishing fidessa as
the de facto standard for US domestic equity trading.



In Europe we have signed a further 6 new deals for fidessaNet systems including
one with CDC IXIS Securities for an implementation based in Paris. This deal
represents our first fidessaNet deal in mainland Europe and will provide a
useful beachhead in establishing the fidessaNet service in this region. In
addition to the new customers we have signed for fidessaNet, we have also seen a
marked increase in the volume of order and executions flowing through the
service. Both order and execution volumes have more than doubled and total
execution volumes flowing through the fidessaNet service now exceed 750,000
executions per month.



Demand has also continued for connectivity services through fidessaNet. This is
both for customers taking all their applications through fidessaNet and also for
enterprise customers who are increasingly finding fidessaNet a more
cost-effective way to achieve the connectivity they need.



In both the US and Europe we are seeing an increasing convergence of our
enterprise and fidessaNet businesses and we are gradually adapting the structure
of our business to best service these new requirements. The change is being
driven by enterprise customers using our hosted services for market and client
connectivity and also customers looking at internal cost savings by outsourcing
their complete enterprise system to royalblue. This convergence also aligns with
our vision of a single intelligent connectivity network encompassing all
transaction services required for cost efficient trading. As a result, we are
introducing a new model of managed enterprise systems within our fidessaNet
business, where we will configure and run an enterprise system on behalf of a
client in our data centres. We will also provide the staff to manage the service
from end to end including onsite consultancy where appropriate. This new model
is much closer to the complete outsourcing of a fidessa system with costing that
works out around one third less expensive than an enterprise customer running
the system themselves in house.



Europe



In Europe we have seen more focus from clients on the automation of the complete
lifecycle from Indications of Interest (IoIs), through Order Processing to Trade
Adverts (TAs). As a result the number of destinations, including both direct and
indirect networks, has continued to grow, resulting in more pressure to
implement workflow management software. This has benefited our new
fidessaExpress offering which has now gone live. In the first implementation,
connectivity to two large buy-side firms has been migrated across to the
fidessaExpress architecture and these connections are now available to any
customer connected to the service. The new fidessaExpress IoI and TA service has
also gone live managing the delivery of IoIs and TAs to buy-side clients over
the third party networks from Bloomberg, Autex and Thomson Financial. This
service allows IoIs and TAs to be managed directly from the orders and trades
flowing through fidessa.



Exchange upgrades continued throughout the first half. These included:



*          the introduction of a Central Counterparty for the Frankfurt market
           in March.

*          the introduction of SETS 6.1 in March for order modification and
           enhanced dealing capacities in London.

*          SuperMontage being introduced on NASDAQ Europe in March, and NASDAQ
           Deutschland support being introduced within fidessa. Subsequently 
           NASDAQ has announced that NASDAQ Europe is to be closed but NASDAQ 
           Deutschland will remain.

*          all Scandinavian markets migrated to SAXESS 4.0 in May

*          Virt-X and SWX upgraded to a new version of software in May



In total 85 customer gateway upgrades were performed in the first half of 2003.



Within fidessaNet we have also benefited from the decision by SunGard to scale
back the BRASS product in the European market. SunGard had entered the European
market with this product in the 1990's and had secured a small number of
customers. These customers are now looking to migrate across to another platform
with royalblue particularly well placed to benefit from this business. We
believe that this decision by SunGard demonstrates the difficulties faced by any
new entrant in addressing the complex, multi-currency business flows in the
European market.



During the first half we have seen the majority of fidessaNet and enterprise
rental customers renew as their contracts have expired. However, we have seen
one enterprise customer switch to a smaller fidessaNet implementation as they
have scaled back their operations in the UK and one fidessaNet customer has
ceased use of fidessaNet and has taken the fidessa workstation as their business
no longer justifies the level of automation provided by fidessaNet.



In the first half royalblue received the Securities Industry Software award for
"Ability to Deliver on Time and on Budget".



North America



In North America, we have continued to make good progress with revenues
increased by 48% and 5 new fidessaNet systems sold. One of these fidessaNet
systems was to Brokerage America, a wholesaler and one of the largest NASDAQ
market makers, making a market in over 3,000 securities. This system is the
largest fidessaNet system implemented to date and is sized to handle execution
volumes peaking at over 75,000 orders per day. The new fidessa V5 architecture
was essential to ensure that fidessaNet could meet and exceed the volume
expectation of this key client.



Our new products have worked well in giving us a unique offering and the ability
to roll up several disparate functional areas into a single integrated solution.
We have seen an example of this at Gerard Klauer Mattison (GKM) where a single
fidessaNet implementation has been selected to replace four individual systems
currently used by the client. The systems replaced are their current OTC
(NASDAQ) order management system, their listed (NYSE) order management system,
their quote management system and their buy-side connectivity solution. We are
seeing more of this across the business where existing fidessaNet customers are
now taking additional fidessaNet services (such as IMAR - Indications of
Interest management) to replace other systems that were not previously
integrated into their business flows. The use of a single fidessa solution in
place of disparate systems not only provides customers with a much more
integrated solution but also one which is much more cost effective and easier to
support going forward.



As a result of the general financial instability of communications and data
centre providers we started a migration programme in 2002 to build and operate
our own data centre and resilient communications network in the US. This
programme is now approaching completion. The new data centre, based in New York
city, is fully operational and customers have now been seamlessly migrated
across to this new centre. In addition, the majority of existing fidessaNet
customers (and all new customers) are now operating on our own managed
communication service. Our former primary data centre based in New Jersey has
now become our backup data centre and our former backup data centre on Long
Island has been closed.



In the US market we continue to see an evolution of the trading model as firms
adapt to SuperMontage and recognise that there is no longer a best price from a
single exchange. This has occurred as a number of the ECNs have decided not to
participate in SuperMontage as they now view NASDAQ as a competitor. In
addition, there is a growing drive to combine listed and OTC trading onto the
same desk and this benefits royalblue as one of the first providers of a fully
integrated trading product for both markets.



royalblue was voted the best vendor in the sell-side Order Management System
category in an independent survey carried out by Risk Waters magazine, a
specialist publication focussing on the US securities industry. According to
Risk Waters, the vote "justifying the company's claims that its fidessa system
is now the market-leading trading system chosen by a majority of the world's
top-tier investment firms". This survey was focussed specifically on US domestic
trading products, and royalblue's win underlines the progress being made in
establishing fidessa as the de facto standard for US domestic trading.



Asia



Throughout Asia trading conditions have remained extremely difficult with the
occurrence of the SARS virus earlier in the year affecting Hong Kong in
particular as many customers closed their offices and restricted meetings with
external parties.



In Hong Kong our primary focus has continued to be to help customers reduce the
costs associated with handling order flow. This has manifested in a number of
initiatives looking at the use of FIX (the industry standard Financial
Information eXchange protocol) and the fidessa workstation to make connectivity
easier between the buy-side and the sell-side. These initiatives have yet to
result in any significant orders. As a result of the challenging conditions in
Hong Kong, royalblue reduced its headcount in this office to ensure costs
remained aligned with expected revenues from the installed customer base.



The Japanese domestic market, which has a significant percentage of legacy
trading systems, continues to show potential although progress is likely to be
slow. We have continued with localisation of the product providing Japanese
language versions, Japanese trade reporting models and a Japanese market-making
product. We have also heightened our market profile through a number of seminars
and trade shows, which have extended our market contacts in the Japanese
domestic market. As the result we have signed a substantial order with Shinko
Securities, one of the top five domestic brokerages, for a fidessa system to
support their local trading requirements. Shinko is affiliated with Mizuho
Securities (an existing royalblue customer and the largest domestic brokerage)
and the deal with Shinko reflects Mizuho's view that fidessa is the best and
most scalable trading platform in the Japanese market.



A further retraction of foreign members (European and US investment banks) from
the Japanese market has balanced some domestic market growth in the first half.
However, the recent go-live of our order management product, OMAR V5, with the
global order routing between Tokyo, London and New York and the continuing
expansion in pan-Asian trading out of Japan has meant that even in the difficult
market conditions, fidessa user numbers have remained relatively static. Our
continued investment in the V5 platform and the continuing growth of transaction
volumes in the Japanese market continues to leave us well positioned if a
recovery in the Asian markets does eventually materialise.



Product Development



Despite the difficult market conditions we have maintained our product
development programme to ensure that fidessa remains the leading product within
the market. However, the structure of the business is evolving rapidly and with
the services offered by fidessaNet expanding and the increased opportunities we
are seeing across the market, we are continuing to see significant demand for
major new products. Recent examples of this include the fidessaExpress product
and the fidessa workstation which were conceived last year and have been
successfully brought into production during the first half.



fidessaExpress went into production, as planned during Q2, in both London and
New York to support Indications of Interest, Trade Adverts and buy-side order
flow. The next version of fidessaExpress is due for delivery in Q3 and will
provide support for new business flows and better interconnection between
fidessaNet customers. These enhancements will include the ability to route order
flow between fidessaNet customers and to route order flow out over FIX to
additional broking services. This is an exciting and important area of
development and provides the potential to add significant value to our installed
fidessaNet customer base.



Following the successful release of the fidessa workstation in March a number of
major enhancements are planned for release in Q3. Specifically, version 2 will
include real-time news from Dow Jones Newswires, enhanced price display pages, a
new stock summary page, sophisticated charting analytics and additional data.
The new data will include more world indices, forex cross rates, benchmark
commodities and index futures. Technical enhancements in this release will also
facilitate the remote upgrading of the workstation which will be key to cost
effective management of the system as the user base expands.



The Basket Execution and Management (BEAM) application has progressed rapidly
during the first half to provide an initial beta release, which has been well
received. We are now taking this beta forward in partnership with a major US
brokerage to deliver a production basket trading application at the end of the
year. BEAM when combined with the V5 OMAR product, and fidessa execution
gateways for all the major markets around the world, will deliver a level of
integration and performance which is not available from any other supplier and
which is marketable in all the major financial centres around the world.



The V5 programme is gathering momentum: OMAR V5 has now been successfully rolled
out in London, Tokyo and New York to support global order flow between these
centres. Work is now well progressed with OMAR 5.1, which will be released in Q3
to coincide with the release of TMAR (Trade Management and Routing) and PMAC
(Position Management and Consolidation) on the new 64-bit architecture. Major
customers in New York, Paris and Tokyo are working with us on a beta programme
for this software.



EMMA (European Multi Market Access) V5 was released in June concluding an 8
month development programme. In the current very volatile markets, throughput
and speed to market are more important than ever, and EMMA V5 offers substantial
improvements in these areas. This release also provides major enhancements in
terms of usability for the trader in response to feedback from customers and has
four new high performance market gateways covering Euronext, London, SWX /
Virt-X and Xetra.



Based on the core of the EMMA V5 system, development of CAMA (Canadian Market
Access), which has been carried out in New York, is nearly complete and due for
delivery to customers in Q3 providing support for the Toronto and Vancouver
exchanges.



In New York the main development focus during the first half of the year has
been a range of enhancements to our fidessaMontage product to ensure that it is
optimised in terms of performance and usability in the NASDAQ market. This has
led to successful rollout of the product, during the first half, with a number
of very high profile NASDAQ market making firms. We believe that fidessaMontage
is now well placed to be a market leader in what is the fastest moving and
aggressive electronic market in the world. A number of further enhancements are
already planned including an upgrade to the latest 64-bit fidessa technology.





Lava Patent Lawsuit



In June 2003 royalblue noted the announcement released by Lava Trading Inc. that
it had filed a patent infringement claim in the US against royalblue. The patent
relates to the concept of displaying prices from more than one source (ECN) on a
single screen in the US. Accordingly, even if the allegations in the complaint
were found to be true, the claim could only relate to a small element of the
royalblue product suite.



royalblue has been aware of Lava's patent and well before the initiation of any
suit against it, royalblue proactively sought legal advice regarding the
validity of Lava's patent, and the merits of any claim that Lava might bring
against it. Based upon the legal advice it received, royalblue believes Lava's
claims are without merit. While royalblue cannot predict the outcome of the Lava
lawsuit, it intends to vigorously defend against Lava's claims.





Outlook



Looking ahead we expect the market to remain difficult into the second half of
the year. However, we believe that our strategy of offering an integrated
platform of trading services, each one leveraging off the others will continue
to prove a valuable proposition in the global trading markets. This will ensure
that we continue to experience strong growth in recurring revenues from our
fidessaNet and enterprise rental businesses. At the same time, we believe that
the consultancy business in our sector has changed permanently and that our
business model will further encourage this change. As a result we believe we
will see a further decline in consultancy revenues in the second half with the
potential for more modest declines or flat consultancy revenues in 2004.



We will continue our product development programme, and will maintain the
investment in our core product set so that we can continue to bring more and
better products to market. In addition, we believe that we will undertake more
business expansions, such as the fidessa workstation, moving us into new market
areas. These developments may take the form of an acquisition or, alternatively,
as with our workstation, where we can achieve better results or offer better
value through direct development, we will use this approach.



We are continuing to develop the value of the fidessa brand and the range of
product we can deliver and as we do so our market offering becomes more and more
unique. This is reflected in the strong growth we are experiencing not just in
the recurring revenues but also in the amount of order flow being handled by the
fidessa products despite the financial industry facing one of its most difficult
periods. It is unfortunate that this strong growth has been offset by falls in
consultancy, but whereas consultancy revenues are transient and susceptible to
market conditions, the recurring revenues from the fidessa and fidessaNet
business represent a much deeper value to the market and are correspondingly
much more secure revenue streams. Overall, we still believe that we are
exceptionally well positioned within a dynamic and long-term market and that the
unique proposition and business model royalblue has developed will provide a
strong basis for long-term growth.





enquiries:


John Hamer, Chairman                                    Edward Bridges, Financial Dynamics
Chris Aspinwall, Chief Executive                        Ben Way, Financial Dynamics
Andy Malpass, Finance Director                          Tel: 020 7831 3113
www.royalblue.com                                       Fax: 020 7831 6341
Tel: 01483 206300 Fax: 01483 206301







Consolidated Profit and Loss Account

for the six months ended 30th June 2003


                                                                        2003            2002              2002
                                                                    6 months        6 months         12 months
                                                                to 30th June    to 30th June  to 31st December
                                                                   Unaudited       Unaudited           Audited
                                                    Notes              #'000           #'000             #'000

Turnover                                              2               27,857          29,315            57,006


Operating profit                                                       3,523           3,853             8,226
Exceptional items:

    Sale of associated undertaking                                         -               -             3,683

    Sale of discontinued operation                                         -               -               500

                                                                     _______         _______           _______
Profit on ordinary activities before interest                          3,523           3,853            12,409
Net interest receivable                                                  324             131               610

Income from other fixed asset investments                                  -               -                39

                                                                     _______         _______           _______
Profit on ordinary activities before taxation                          3,847           3,984            13,058
Taxation on profit on ordinary activities             3              (1,165)         (1,292)           (2,638)

                                                                     _______         _______           _______
Profit on ordinary activities after taxation                           2,682           2,692            10,420
Dividends paid and proposed                           4                (576)           (518)           (1,591)

                                                                     _______         _______           _______
Retained profits for the period                                        2,106           2,174             8,829

                                                                     _______         _______           _______

Earnings per share:                                   5
Basic - pre-exceptional gain                                            8.8p            9.2p             21.2p
Diluted - pre-exceptional gain                                          8.5p            8.5p             19.7p
Basic - total operations                                                8.8p            9.2p             35.4p
Diluted - total operations                                              8.5p            8.5p             32.9p







Consolidated Statement of Total Recognised Gains and Losses

for the six months ended 30th June 2003
                                                                       2003            2002              2002
                                                                   6 months        6 months         12 months
                                                               to 30th June    to 30th June  to 31st December
                                                                      #'000           #'000             #'000
Profit for period                                                     2,682           2,692            10,420

Differences on exchange on re-translation of
net assets of overseas undertaking                                    (199)           (104)             (376)


Prior year adjustment re: deferred tax                                    -           1,033             1,033

                                                                    _______         _______           _______
Total recognised gains and losses                                     2,483           3,621            11,077

                                                                    _______         _______           _______







Consolidated Balance Sheet

at 30th June 2003




                                                         2003                     2002                     2002
                                                    30th June                30th June                     31st
                                                                                                       December
                                                    Unaudited                Unaudited                  Audited
                                                        #'000                    #'000                    #'000

Fixed Assets
Tangible fixed assets                        5,081                  5,032                    4,705
Investments                                      -                     49                        -
Investment in own shares                     2,164                  2,206                    2,196
                                                        7,245                    7,287                    6,901

Current assets
Debtors                                     15,782                 18,613                   14,761
Cash and short-term investments             22,749                 12,140                   22,676
                                                       38,531                   30,753                   37,437


Creditors: Amounts falling due within
one year                                             (16,326)                 (16,937)                 (16,799)

Net current assets                                     22,205                   13,816                   20,638

Total assets less current liabilities                  29,450                   21,103                   27,539

Creditors: Amounts falling due after
more than one year                                      (417)                    (467)                    (442)
                                                       ______                   ______                   ______
Net assets                                             29,033                   20,636                   27,097

                                                       ______                   ______                   ______


Capital and reserves
Called up share capital                                 3,171                    3,064                    3,142
Share premium account                                  11,580                   10,371                   11,580
Profit and loss account                                14,282                    7,201                   12,375
                                                       ______                   ______                   ______
Total equity shareholders' funds                       29,033                   20,636                   27,097

                                                       ______                   ______                   ______







Consolidated Cash Flow Statement

for the six months ended 30th June 2003


                                                                   2003               2002                 2002
                                                               6 months           6 months         12 months to
                                                                to 30th            to 30th        31st December
                                                                   June               June
                                                              Unaudited          Unaudited             Restated
                                                                  #'000              #'000                #'000

Operating profit                                                  3,523              3,853                8,226
Depreciation charge                                               1,362              1,466                2,876
(Increase)/decrease in working capital                          (1,161)            (2,981)                  862
Other items                                                         (1)                  7                  (7)

                                                                _______            _______              _______

Net cash inflow from operating activities                         3,723              2,345               11,957

Returns on investments and servicing of finance                     324                131                  649

Taxation paid                                                   (1,042)              (698)              (2,781)

Capital expenditure and financial investments                   (1,760)              (427)                2,609

Equity dividends paid                                           (1,082)              (936)              (1,452)

                                                                _______            _______              _______
Net cash inflow before financing                                    163                415               10,982

Management of liquid resources                                      749                 78                (128)

Financing                                                            29                 17                   96

                                                                _______            _______              _______

Increase in cash                                                    941                510               10,950

                                                                _______            _______              _______







Notes to The Interim Statement





1.     Basis of preparation

        The interim financial statements are unaudited but have been reviewed by
KPMG Audit Plc and their report is set out below. The interim statement has been
prepared on the basis of the accounting policies as set out in the annual
statements for the year ended 31st December 2002.

        The financial information contained in this interim statement does not
amount to statutory accounts within the meaning of section 240 Companies Act
1985. The figures for the year ended 31st December 2002 are extracted from the
statutory accounts of royalblue group plc. The statutory accounts for that year
have been reported on by the company's auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified and did not contain a
statement under section 237 (2) or (3) Companies Act 1985.  The Consolidated
Cash Flow Statement for the 12 months to 31st December 2002 has been restated to
reflect an amendment for the transfer from cash to liquid resources in the year,
there being no change to the Profit & Loss Account or Balance Sheet.



2.     Analysis of turnover

        Turnover is analysed by geographic destination as follows:


                                                          2003             2002             2002
                                                   6 months to      6 months to     12 months to
                                                     30th June        30th June    31st December
                                                     Unaudited        Unaudited          Audited
                                                         #'000            #'000            #'000
  Continuing operations
  United Kingdom                                        11,122           14,830           26,534
  USA & Canada                                          12,388            8,343           18,465
  Continental Europe                                     1,511            2,018            3,755
  Rest of World                                          2,836            4,124            8,252

                                                       _______          _______          _______
                                                        27,857           29,315           57,006

                                                       _______          _______          _______





3.     Taxation

        The charge for taxation for the six months ended 30th June 2003 reflects
the anticipated effective rate for the period.



4.     Dividend on ordinary shares

        An interim dividend of 1.85p pence per share is declared and will be
paid on 6th October 2003 to shareholders on the register on 5th September 2003.



5.     Earnings per share

        The calculation of basic earnings per share is based on the profit
attributable to shareholders divided by 30,334,772 ordinary shares (2002:
29,318,422 ordinary shares). The number of shares is based on the weighted
average number of shares in issue during the period less the shares owned by the
royalblue group plc Employee Benefit Trust. The number of shares in issue at
30th June 2003 was 31,712,805 (2002: 30,639,240).

The diluted earnings per share is based on 31,649,545 ordinary shares (2002:
31,795,312 ordinary shares). The diluted earnings per share have been calculated
using an average share price of 298p (2002: 529p).



6.     Circulation to shareholders

Copies of this interim report will be sent to shareholders and copies will be
available to the public at the Company's registered office, Dukes Court, Duke
Street, Woking, Surrey GU21 5BH.





Independent Review Report by KPMG Audit Plc to royalblue group plc





Introduction

We have been engaged by the company to review the financial information set out
on pages 8 to 12 and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.

This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority.  Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose.  To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.



Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.



Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review is substantially less in scope than an
audit performed in accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.



Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30th June 2003.





KPMG Audit Plc

Chartered Accountants

Crawley



25th July 2003






                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

IR RAMRTMMJTBJJ