Interim Results
Cenkos Securities PLC
21 September 2007
CENKOS SECURITIES PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND THE SIX
MONTH PERIOD ENDED 31 MAY 2006
Cenkos Securities plc today announced its unaudited interim results for the six
months ended 30 June 2007. The highlights of the results comparing them with
the first six months of the last accounting period (which was for thirteen
months) which have been produced on a pro forma basis (to illustrate the effect
on the Group's profit had all individual members of Cenkos LLP been employed by
the Group) are:
Financial Highlights
Revenue up 46 % to £ 28.4 million (2006: £ 19.5 million).
Profit before tax for the period is up 21% to £ 11.4 million (2006: £ 9.4
million) based on the pro forma accounts set out in the operating and
financial review. Profit before tax for the period based on the figures
presented on page 6 of the attached interim financial information is down 30% to
£11.6 million (2006: £16.4 million).
Diluted EPS down 22% to 11.1p (2006: 14.2p), whilst earnings are up 24% to £8.1
million (2006: £6.6 million). This fall reflects the issue of partly paid B
shares to new teams recruited in the latter part of 2006.
Net assets up 222% to £44.1 million (£2006: £13.7 million) due to an increase in
retained profits and the issue of B shares.
The Board declares an interim dividend of 10p per share. This reflects the
Company's dividend policy which was set out in the last year's report and
accounts, and this policy will be continued with the declaration of the final
dividend.
Business Highlights
Continued success in attracting new institutional and corporate clients.
The new teams recruited in the second half of 2006 have made a significant
contribution to the present set of results.
Since 30 June 2007 the establishment of a fund management operation, the
recruitment of a team charged with setting up a private client operation in
Jersey and opening an office in Edinburgh.
Andrew Stewart, Chief Executive Officer commented:
'I am delighted that Cenkos continues to build on its strong financial base and
that the partnership spirit has been maintained throughout all the
businesses.'
'We are pleased to have started the second half of the financial year on a
positive note. At present the market is experiencing turbulent conditions.
However we have an encouraging pipeline and are confident that with our
entrepreneurial philosophy we will continue to grow our revenues. Against this
background, we will continue to expand our corporate client base and believe
that our ability to attract high quality individuals will serve the Group
well in its objective of being a first class, relationship based stock
broking business.'
Enquires: Andrew Stewart - CEO Tel. 020 7397 8900
Further information on the Group and its activities is available on the Group's
website www.cenkos.com.
Chairman's Statement
I am delighted to announce a very strong set of interim results for the first
half of 2007. Revenue has increased by 46% from £19.5 million to £28.4 million,
which represents a considerable achievement given that most commentators would
consider the market conditions faced during the period were less benign than
those in the previous year. It has also been very pleasing that this result has
been produced by strong performances from all our teams, including the teams
recruited in the second half of 2006. These teams, which include one
specialising in investment funds and another in providing corporate broking
services to small cap companies, have now been fully integrated into the Group
and have quickly adopted the Cenkos culture. During the period our teams
completed 16 transactions raising approximately £1.2 billion of funds for our
clients. These fund raisings covered a number of industry sectors including
media, oil, minerals and technology.
At 30 June we had a client base which included 65 quoted companies with a
combined market capitalisation of approximately £9.2 billion. This
represents a net increase of 17 clients during the period. It is very much the
Group's intention to continue to enlarge this base without compromising the
quality of our client base. We are continually looking to recruit further teams
who have a proven track record who will respond positively to the Cenkos
environment.
Over the last two months world stock markets have been significantly affected by
the uncertainty caused by concerns over the US sub-prime market. Cenkos has no
direct exposure to this market, however we can not completely isolate ourselves
from any fall out this may cause. We entered the second half with a healthy
pipeline of transactions and were able to complete a number of these in the
period since 30 June 2007. Only time will tell what longer term effects the
present instability will have on the markets we operate in. However as I
have said before given our low fixed cost base and an overall remuneration
package heavily skewed towards performance, we are in a better position than
most to deal with such an event.
In the years ahead, it is our intention to continue to invest in the growth of
our core operations. Given the cash generative nature of our business, we
also aim to offer our shareholders an above average dividend return. This
can, of course, be affected by the market conditions prevailing during the
period. The Board is declaring an interim dividend of 10p per share, this
dividend will be payable on 1 November 2007 to all shareholders on the register
at 5 October 2007. In the view of your Board, after this distribution the
Group still has sufficient funds to pursue its growth strategy and meet its
regulatory capital obligations. It is the Board's intention to adhere to this
policy for all future periods.
John Hodson
Chairman
21 September 2007
Operating and Financial
Review
Financial Review
In order to provide greater clarity about the 2007 and 2006 performance, set out below is unaudited pro
forma financial information. The pro forma statement of profits has been prepared to illustrate the
effect on the profits of the Group if all individual members of Cenkos Securities LLP had been employed
by the Group during the periods to 30 June 2007, 31 December 2006 and 31 May 2006. On the basis of
these pro forma figures revenue in the six month period ended 30 June 2007 rose by 46% to £28.4 million
(six month period to 31 May 2006: £19.5 million) and profit before tax increased by 21% to £11.4
million (2006: £9.4 million).
Pro forma Unaudited
Six months Six months Thirteen
to to months to
30 June 2007 31 May 2006 31 December
2006
£ £ £
Continuing Operations
Revenue 28,359,546 19,471,517 32,670,329
Administrative expenses (17,497,458) (10,166,290) (20,477,994)
Operating profit 10,862,088 9,305,227 12,192,335
Investment revenues - interest receivable 554,064 151,606 811,526
Finance costs - interest payable (11,364) (11,848) (13,740)
Profit before tax 11,404,788 9,444,985 12,990,121
Tax (3,261,346) (2,881,476) (3,978,747)
Profit for the period 8,143,442 6,563,509 9,011,374
Attributable to:
Equity holders of the parent 8,143,442 6,572,103 9,011,374
Minority interests - (8,594) -
8,143,442 6,563,509 9,011,374
Earnings per share
Basic 11.2p 14.2p 16.2p
Diluted 11.1p 14.2p 16.2p
In the statements for each period the administrative expenses have been
increased by the amount of the minority interest (30 June 2007 - £165,491, 31
May 2006 - £6,975,130, 31 December 2006 - £7,762,584) as this would be the
estimated increase in the Group's costs if all members of the Cenkos LLP were to
be employed by the Group. As a result the minority interest has been
eliminated.
Diluted earnings per share decreased by 22% to 11.1 p from 14.2p. Whilst
earnings are up 24%, this decrease is predominantly due to the fact that
the weighted average number of shares in the current period includes the
total number of B shares granted to the new teams, even though they are partly
paid shares, as these shares are entitled to a full dividend payout.
We are delighted by the first half performance of the Group, which represents a
significant increase of 233% in profitability on the seven months to 31 December
2006 and increase of 24% in profitability on the six months to 31 May 2006. We
have seen an increase in both secondary issues and other corporate
transactions including mergers and acquisitions advisory work as well as a 15%
increase in placing fees received from our primary activity. The Board declares
an interim dividend of 10p per share The level of dividend payout reflects the
policy set by the Board and set out in our last annual report and
accounts.
Corporate broking and advisory
We have seen another period of growth, not only in turnover, but also in the
number of transactions completed and funds raised. We continue to grow the
number of retained corporate clients and have a firm strategy in place to
attract new clients. The Group was nominated adviser or corporate broker to 42
companies as at 30 June 2007. During the period, the Group also raised some £1
billion for its clients. During the period we have added to these teams
which we believe will allow us to continue the growth in this area. Finally we
have taken the decision to set up an office in Edinburgh. In our view this
will allow us to service the important Scottish institutions and companies more
effectively.
Institutional equities
The institutional equities team currently provides research-driven investment
recommendations to institutional clients. At present, the team has
particular expertise in the business services, and consumer sectors, having
recruited professionals who were previously top-ranked analysts in these
sectors. The Group intends to expand its institutional equities team by
recruiting further professionals with specific sector expertise.
The team focuses on servicing large institutional and hedge fund clients, as
we believe that this avoids the reduction in margins caused by servicing a
larger number of smaller clients.
Market making
The Group has market making capabilities to support the other services that it
provides to its clients. The Group makes markets in the securities of all
companies where it has a broking relationship, its strategy being to take
small positions in a wide range of stocks, thereby providing liquidity. The
Group does not engage in proprietary trading. By following this strategy we have
not experienced significant losses on our market making positions as a
result of the recent instability in world stock markets.
Investment funds
In 2006, the Group recruited an investment funds team. This team provides a
broad range of services, including corporate broking, corporate finance,
market making and sales, with a sole focus on investment funds. They
act as counterparty for a large number of investment fund investors, and have
detailed knowledge of their asset allocation strategies enabling successful
secondary distribution and primary sales. The Group currently makes markets in
approximately 200 investment fund securities, and by 30 June 2007, the Group
had been appointed as corporate broker to 23 investment funds raising over
£200 million, having completed 2 transactions.
Offshore wealth management and stockbroking services
Offshore wealth management and stockbroking services are provided through Cenkos
Channel Islands Limited, a 75 per cent. owned subsidiary of the Company,
which was founded in 2005 and is based in Guernsey. Varying levels of
stockbroking services, from discretionary to execution-only, are provided
primarily to high net-worth individuals, and also to financial intermediaries
and institutions. The business during the period has grown both in terms of
the number of clients and funds managed, these now stand at 386 and £212
million respectively. We have recently recruited a team of experienced
professionals to set up a business in Jersey servicing the stockbroking
requirements of high net worth private clients. This business will, we feel,
complement our already successful Guernsey based operation.
Fund Management Business
Through a subsidiary we have recently set up a fund management business. This
operation already has an investment management agreement with a £60 million AIM
quoted fund. The fund, The Rapid Realisations Fund Ltd, specialises in making
investments in pre-IPO companies. The team we have recruited to run this
business has a well established track record in this area. Whilst we believe
that this will be a valuable contributor to the Group in the future, it is
unlikely to make a positive contribution until 2008.
Balance Sheet
As can be seen from the balance sheet, the investment funds team uses (and will
continue to use) significant levels of capital to take positions in the
shares of quoted investment funds. These positions primarily facilitate
institutional client trading and support the strategies of its
investment fund clients. As the investment funds business grows, the level of
capital used is expected to increase. In order to reduce the amount of capital
used we have arranged a substantial banking facility to fund a portion of
this activity. This obviously increases our return on capital produced from
this activity.
During the period, we have increased the amount of secondary trading, we
undertake. This has caused a significant increase in both our trade
receivables and payables. The amounts included represent outstanding
trades at the balance sheet date.
In addition, net assets are up 221% to £44.1 million (2006: £13.7 million) due
to an increase in retained profits and the issue of B shares.
People
We have continued to invest in our staff whilst maintaining a tight control over
on overhead base and are looking to acquire further high quality teams and
businesses. We believe that these teams should be rewarded by a mixture of bonus
and equity based payments that align their interests with that of our
shareholders. We have assembled an excellent team and I should like to thank
them all for their achievements and hard work. We have made a commitment
to grow the business and we look forward to their continued support.
Outlook
We are pleased to have started the second half of the financial year on a
positive note. At present the market is experiencing turbulent conditions.
However we have an encouraging pipeline and are confident that with our
entrepreneurial philosophy we will continue to grow our revenues. Against this
background, we will continue to expand our corporate client base and
believe that our ability to attract high quality individuals will serve
the Group well in its objective of being a first class, relationship based
stock broking business.
Andy Stewart
Chief Executive Officer
21 September 2007
Consolidated Income Statement
For the six month period ended 30 June 2007
01 January 07 01 December 01 December
05 05
Note to to to
30 June 07 31 May 06 31 December 06
£ £ £
Unaudited Unaudited Audited
Continuing Operations
Revenue 28,359,546 19,471,517 32,670,329
Administrative expenses (17,331,967) (3,191,160) (12,715,410)
Operating profit 11,027,579 16,280,357 19,954,919
Investment income - 554,064 151,606 811,526
interest receivable
Finance costs - interest
payable (11,364) (11,848) (13,740)
Profit before tax 11,570,279 16,420,115 20,752,705
Tax 2 (3,261,346) (2,881,476) (3,978,747)
Profit for the period 8,308,933 13,538,639 16,773,958
Attributable to:
Equity holders of the parent 8,143,442 6,572,103 9,011,374
Minority interests 165,491 6,966,536 7,762,584
8,308,933 13,538,639 16,773,958
Earnings per share
Basic 4 11.2p 14.2p 16.2p
Diluted 4 11.1p 14.2p 16.2p
All amounts shown in the consolidated financial statements derive from
continuing operations of the Group.
Consolidated Balance Sheet
As at 30 June 2007
30 June 07 31 May 06 31 December 06
£ £ £
Unaudited Unaudited Audited
Non-current assets
Property, plant and equipment 815,075 339,498 737,174
Available for sale investments 5,023,144 5,067,993 3,229,164
Deferred tax asset 463,156 - 158,356
6,301,375 5,407,491 4,124,694
Current assets
Trading investments - long positions 23,451,142 2,719,817 13,123,643
Trade and other receivables 99,942,701 7,040,666 39,620,045
Cash and cash equivalents 9,180,779 16,876,878 9,780,584
132,574,622 26,637,361 62,524,272
Total assets 138,875,997 32,044,852 66,648,966
Current liabilities
Trading investments - short positions (7,666,170) (184,025) (5,127,238)
Trade and other payables (85,954,200) (16,921,273) (26,968,091)
(93,620,370) (17,105,298) (32,095,329)
Net current assets 38,954,252 9,532,063 30,428,943
Non-current liabilities
Deferred tax liabilities (1,205,226) (1,218,681) (669,032)
Total liabilities (94,825,596) (18,323,979) (32,764,361)
Net assets 44,050,401 13,720,873 33,884,605
Equity
Share capital 725,936 482,283 725,936
Share premium account 22,699,777 4,340,551 22,733,114
Revaluation reserves 2,812,195 2,843,589 1,556,408
Retained earnings 17,698,501 6,031,043 8,843,146
Equity attributable to equity holders
of the parent 43,936,409 13,697,466 33,858,604
Minority interests 113,992 23,407 26,001
Total equity 44,050,401 13,720,873 33,884,605
Consolidated cash flow statement
For the six month period ended 30 June 2007
01 January 07 01 December 01 December
05 05
to to to
30 June 07 31 May 06 31 December
06
£ £ £
Unaudited Unaudited Audited
Profit for the period 8,308,933 13,538,639 16,773,958
Adjustments for:
Finance costs (542,700) (139,758) (797,786)
Tax 3,261,346 2,881,476 3,978,747
Depreciation of property, plant and 103,251 46,834 133,552
equipment
Share-based payment expense 675,125 - 372,832
Operating cash flows before movements in working
capital 11,805,955 16,327,191 20,461,303
Net increase in trading investments (7,788,567) (2,513,252) (7,973,865)
(Increase)/decrease in trade and other receivables (60,305,303) 661,193 (14,198,456)
Increase in trade and other payables 55,454,859 4,657,537 13,452,715
Distributions to minority interests (77,500) (6,975,130) (7,762,584)
Net cash (outflow)/inflow from operating activities (910,556) 12,157,539 3,979,113
Interest paid (11,364) (11,848) (13,605)
Taxation paid (106) (2,883,221) (2,891,208)
Net cash (outflow)/inflow from operating activities (922,026) 9,262,470 1,074,300
Investing activities
Interest received 536,710 151,606 535,729
Purchase of property, plant and equipment (181,152) (21,887) (506,281)
Purchase of available-for-sale
investments - - -
Net cash generated by investing activities 355,558 129,719 29,448
Financing activities
Dividends paid - (4,822,834) (4,822,834)
Proceeds from issue of equity shares - 420,000 1,612,147
Fees related to issue of equity shares (33,337) - -
Redemption of preference shares - (400,000) (400,000)
Issue of capital by subsidiary to minority interests - 26,000 26,000
Net cash used in financing activities (33,337) (4,776,834) (3,584,687)
Net (decrease)/increase in cash and cash equivalents (599,805) 4,615,355 (2,480,939)
Cash and cash equivalents at beginning of period 9,780,584 12,261,523 12,261,523
Cash and cash equivalents at end of period 9,180,779 16,876,878 9,780,584
Consolidated statement of changes in equity
For the six months ended 31 May 2006, thirteen months ended 31 December 2006 and six months ended 30
June 2007
Share Share Revaluation Retained Minority Total
capital premium reserve earnings Interests
£ £ £ £ £ £
Attributable to equity
holders of the parent at
1 December 2005 440,283 3,962,551 2,325,452 4,281,774 6,001 11,016,061
Shares issued 42,000 378,000 - - - 420,000
Capital contributed by
minority interest - - - - 26,000 26,000
Retained profit for the period - - - 6,572,103 - 6,572,103
Profit allocated to
minority interests - - - - 6,966,536 6,966,536
Distribution of profit
to minority interest - - - - (6,975,130) (6,975,130)
Revaluation of
available-for-sale
investments - - 518,137 - - 518,137
Dividends paid - - - (4,822,834) - (4,822,834)
Attributable to equity
holders of the parent at
31 May 2006 482,283 4,340,551 2,843,589 6,031,043 23,407 13,720,873
Shares issued 243,653 20,441,945 - - - 20,685,598
Retained profit for the period - - - 2,439,271 - 2,439,271
Profit allocated to
minority interests - - - - 796,048 796,048
Distribution of profit
to minority interest - - - - (787,454) (787,454)
Transfer of amounts to
payables on retirement
of minority interest
members - - - - (6,000) (6,000)
Revaluation of
available-for-sale
investments - - (1,616,771) - - (1,616,771)
Reversal of deferred tax
liability on revaluation
of available-for-sale
investments - - 329,590 - - 329,590
Credit to equity for
equity-settled
share-based payments - - - 372,832 - 372,832
Share issue costs taken
through Share Premium - (2,049,382) - - - (2,049,382)
Attributable to equity
holders of the parent at
31 December 2006 725,936 22,733,114 1,556,408 8,843,146 26,001 33,884,605
Consolidated statement of changes in equity
For the six months ended 31 May 2006, thirteen months ended 31 December 2006 and six months ended 30
June 2007 (continued)
Share Share Revaluation Retained Minority Total
capital premium reserve earnings Interests
£ £ £ £ £ £
Attributable to equity
holders of the parent at
31 December 2006 725,936 22,733,114 1,556,408 8,843,146 26,001 33,884,605
Retained profit for the period - - - 8,308,933 - 8,308,933
Revaluation of
available-for-sale
investments - - 1,793,980 - - 1,793,980
Deferred tax liability
arising on fair
valuation of
available-for-sale
investments - - (538,193) - - (538,193)
Profit allocated to
minority interests - - - (165,491) 165,491 -
Distribution of profit
to minority interest - - - - (77,500) (77,500)
Credit to equity for
equity-settled
share-based payments - - - 675,125 - 675,125
Deferred tax asset
arising on share-based
payments charged to
equity - - - 36,788 - 36,788
Share issue costs taken
through Share Premium - (33,337) - - - (33,337)
At 30 June 2007 725,936 22,699,777 2,812,195 17,698,501 113,992 44,050,401
Notes to the financial
information
1. Accounting
Policies
General Information
Cenkos Securities plc ('the Company') is a company incorporated in United
Kingdom under the Companies Act 1985. The Company's principal activity is
investment banking. These financial statements are presented in pounds
sterling because that is the currency of the primary economic environment in
which the Group operates.
Basis of accounting
The accounting policies used in arriving at these interim figures are consistent
with those followed in the preparation of the Group's annual financial
statements for the thirteen month period ended 31 December 2006.
While the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union, this announcement does not
itself contain sufficient information to comply with IFRSs. The Group's 2006
statutory account comply with IFRSs.
The financial information contained in this interim report does not constitute
the Company's statutory accounts within the meaning of section 240 of the
Companies Act 1985. The comparative information contained in this report
for the year ended 31 December 2006 does not constitute the statutory accounts
for that financial period. The statutory accounts for the year ended 31 December
2006 have been reported on by the Company's auditors, Deloitte & Touche
LLP, 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) of the Companies Act 1985.
The interim financial information is unaudited and was approved by the Board of
Directors on 20th September 2007.
These financial statements have been prepared on the historical cost basis,
except for the revaluation of certain financial instruments.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Although these estimates are based on management's
best knowledge of the amount, event or actions, actual results ultimately may
differ from those of estimates.
2. Tax
The tax charge comprises:
30 June 07 31 May 06 31 December 06
£ £ £
Current tax
United Kingdom corporation tax at 30% (2005 - 30%)
based on the profit for the period 3,531,355 2,837,631 4,091,258
Adjustment in respect of prior period - 43,845 43,845
Total current tax 3,531,355 2,881,476 4,135,103
Deferred tax
Credit on account of timing differences (270,009) - (158,356)
Charge on account of timing differences - - 2,000
Total deferred tax (270,009) - (156,356)
Total tax on profit on ordinary activities 3,261,346 2,881,476 3,978,747
Notes to the financial information (continued)
2. Tax (continued)
The tax charge for the period differs from that resulting from applying the standard rate of UK
corporation tax of 30% to the profit before tax for the reasons set out in the following
reconciliation.
30 June 07 31 May 06 31 December
06
£ £ £
Profit on ordinary 11,570,279 16,420,115 20,752,705
activities before tax
Tax on profit on ordinary activities at the UK
corporation tax rate of 30% (2005: 30%) 3,471,084 4,926,034 6,225,812
Tax effect of:
Depreciation in excess of capital allowances 2,333 1,664 (22,990)
Expenses that are not deductible in
determining taxable profits 89,352 26,662 91,161
Different tax rates of subsidiaries operating
in other jurisdictions (16,211) (63,046) (31,632)
Income not subject to corporation tax (49,647) (2,053,683) (2,327,449)
Deferred Tax on share based payments (235,565) - -
Adjustment in respect of prior period - 43,845 43,845
Tax expense for the period 3,261,346 2,881,476 3,978,747
In addition to the amount charged to the income statement, deferred tax relating to the fair value
of the Group's available for sale investments amounting to £538,193 has been charged directly to
equity (2006: £329,590 credited directly to equity).
3. Dividends
Amounts recognised as distributions to equity holders in the period:
30 June 07 31 May 06 31 December
06
£ £ £
Interim dividend for the period - 4,822,834 4,822,834
The proposed interim dividend for 2007 of 10p per share (2006: 10p per share.
This dividend was paid whilst the company was private and represented
the distribution of retained profits for the period to 30 November 2005
and did not relate to profits earned during 2006, although payment was
made in the tax year 2006/2007) was approved by the Board on 20 September 2007
and has not been included as a liabilitiy as at 30 June 2007. The
dividend will be payable on 1 November 2007 to all shareholders on the
register at 5 October 2007.
Notes to the financial information
(continued)
4. Earnings per share
The calculation of the basis and diluted earnings per share is based on the following data:
30 June 07 31 May 06 31 December 06
£ £ £
Earnings
Earnings for the purpose of basic earnings per share
being net profit attributable to equity holders of the
parent 8,143,442 6,572,103 9,011,374
Effect of dilutive
potential ordinary
shares:
Share options - - -
Earnings for the purpose of 8,143,442 6,572,103 9,011,374
diluted earnings per share
No. No. No.
Number of shares
Weighted average number of ordinary shares for the
purpose of basic earnings per share 72,593,670 46,150,320 55,503,588
Effect of dilutive potential ordinary shares:
Share options 445,787 - 57,870
Weighted average number of ordinary shares for the
purpose of diluted earnings per share 73,039,457 46,150,320 55,561,458
The denominators for the purpose of calculating both basis and diluted earnings
per share have been adjusted to reflect the sub-division of shares on
31 October 2006. The weighted average number of shares considered for
the period also includes the total number of B shares, even though
they are partly paid shares, as these shares are entitled to a full dividend
payout.
Independent review report to Cenkos Securities plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the consolidated
income statement, the consolidated balance sheet, the consolidated cash
flow statement, the consolidated statement of changes in equity and
related notes 1 to 4. We have read the information contained in the interim
report and considered whether it contains any apparent misstatement or material
inconsistencies with the financial information.
This report is made solely to the Company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken
so that we might state to the Company those matters we are required
to state to them in an independent review 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 formed.
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 also responsible for ensuring that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 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 excludes audit procedures such as
tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with International Standards on Auditing (UK and Ireland)
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 30 June 2007.
Deloitte & Touche LLP
Chartered Accountants
London, United Kingdom
21 September 2007
END
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