Dear Shareholders,

Faced with an increasingly harsh economic backdrop since the end of 2011, Demos Group implemented a series of initiatives in 2012 to accompany the restructuring of its commercial activities that began one year earlier. Their aim? To streamline and adapt our cost structure, to restore and cement our profitability and to raise our EBITDA margin from 3% in 2011 to close to 10% in the next three years.

2012: a dynamic action plan to restore the Group’s long-term profitability

The measures presented in April 2012 are based on 4 key priorities:

• to reduce structural costs in order to generate savings of €2.5 million as of 2012 and €4 million over a full year in 2013;
• to continue to revitalise activity by drawing on a new organisation for sales and marketing;
• to restructure and generate savings within overseas subsidiaries;
• to downsize investments.

The first tangible benefits have been immediate, with the Group's figures for the first half of 2012 already reflecting a 6% drop in external costs. Furthermore, in order to adapt to the climate currently weighing on Spain and Portugal, Demos has upped these initiatives and introduced new savings plans in its Spanish and Portuguese subsidiaries. We have also adjusted the headcount and cost structure of our US subsidiary.

The financial statements for 2012 which will be presented in April 2013 should give us a far clearer understanding of the savings achieved on the Group's highest costs, particularly its payroll expenses. Having said that, the morose climate that plagued the second half of 2012 means that any complacency about reaching our target of positive operating income for 2012 as a whole would be incongruous.

€12 million injection supported and guaranteed by Montefiore investment

Lending their full support at every step of the way, both our long-standing and more recent shareholders (it gives me great pleasure to be able to welcome on-board the Montefiore Investment teams) played an important part in strengthening Demos' financial structure in October 2012. The €12 million equity injection and restructuring of our bank debt have given us the necessary latitude to successfully pursue our return to growth.

Our ambition is to get firmly back on track to profitable growth by drawing on our core strengths as a Group that are our diversity, the quality and scope of our multi-channel offer, our strong global presence at the service of major corporate accounts and multinational organisations alike, and our recognition as a technological frontrunner in professional training services.

My thanks as always for your continued support and best regards,

Jean Wemaëre
Chairman