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Xaar PLC (XAR)

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Wednesday 19 August, 2009

Xaar PLC

Half Yearly Report & Results

RNS Number : 6587X
Xaar PLC
19 August 2009
 




FOR IMMEDIATE RELEASE

19 August 2009



Xaar plc


HALF-YEARLY REPORT AND RESULTS

FOR THE 6 MONTHS TO 30 JUNE 2009



Xaar plc ('Xaar'), the inkjet printing technology group headquartered in Cambridge, has issued its half-yearly report and unaudited results for the six months ended 30 June 2009.



KEY POINTS:

  • Results for the period reflect a turn round to underlying profitability after losses in H2, 2008. 

  • The financial results were:

       *  Turnover was £20.9m (H1, 2008: £22.5m; H2, 2008: £16.9m);

       *  Gross margins were 42% for the period, up from 39% for H2, 2008 but
           below the 58% for H1, 2008;

       *  Adjusted profit before tax* was £1.3m (H1, 2008: £3.4m; H2, 2008: 
           loss of £0.3
m);

       *  The reported loss before tax was £0.8m (H1, 2008: profit of £3.8m);

       *  The stated loss per share was (1.4)p (H1, 2008earnings of 4.5p);

       *  Net cash at 30 June 2009 was £10.3m (31 Dec 2008: £11.0m; 30 June 
           2008: £10.0m)
.

*    After providing for restructuring costs, the impairment of a trade investment, foreign exchange losses on Swedish kronor inter-company balances and the cost of share-based payments

  • Interim dividend maintained at 1.0p per share (H1, 2008: 1.0p).

  • Recovery in market share achieved in China after new product launches.

  • Continuing strong interest in new Platform 3 productshowever volume growth remains modest.

  • Transfer of manufacturing capability from Sweden to UK under way; relocation process is on track.

On outlook, Chairman, Phil Lawler stated:

'Continuing favourable industry comment and further P3 product adoption strengthen the Board's belief that the commercial inkjet printing market is healthy and over the medium term will continue to grow and that Xaar is a clear leader in that business. Whilst the Board is somewhat encouraged by trading volumes in the period, the continuing lack of visibility and uncertainty in the economic environment means that caution must be maintained when looking forward.'


Contacts


Xaar plc:

today: 020-7367-8888

Ian Dinwoodie, Chief Executive

thereafter: 01223-423663

Andrew Taylor, Finance Director

www.xaar.com



Singer Capital Markets Limited:

020-3205-7500

Shaun Dobson




Bankside Consultants:


Steve Liebmann or Andy Harris

020-7367-8883 / 07802-888159


  Chairman's statement



Introduction


Trading in the first half of 2009 has improved following the difficult second half of 2008 with revenues up 7% compared with that period. New Platform 1 ('P1') product launches have taken place resulting in the recovery of market share in China, albeit at reduced margins. The workforce restructuring announced last year in response to trading conditions has reduced costs as planned, with only a limited effect on operations as a whole. 


I am encouraged by the number of printing equipment manufacturers announcing new models based on Xaar's Platform 3 ('P3') technology and further developments are underway. 


The Company continues to be cash generative and has maintained a robust cash balance while maintaining dividends.  



Results


Revenues for the six months ending 30 June 2009 were £20.9m (H1, 2008: £22.5m; H2, 2008: £19.5m). Product sales were £18.3m (H1, 2008: £20.6m; H2, 2008: £16.9m). Royalty revenue was £2.1m (H1, 2008: £1.6m; H2, 2008: £2.3m). Development income increased to £0.5m (H1, 2008: £0.3m; H2, 2008: £0.2m).


Gross margin at 42% has improved against the 39% achieved in the second half of last year but is still below the margin achieved in last year's first half (H1, 2008: 58%). Several factors contributed to the still depressed level of gross margin in the period: aggressive pricing was used to win back market share for P1 products in China; lower production volumes negatively impacted manufacturing unit costs and the costs incurred stabilising and supporting customers new product launches, were above those expected.


Adjusted profit before tax for the period was £1.3m (H1, 2008: £3.4m; H2, 2008: loss of £0.3m). After providing for restructuring costs of £0.2m (H1, 2008: £nil), the impairment of a trade investment of £0.6m (H1, 2008: £nil), foreign exchange losses of £1.3m (H1,2008: gain of £0.9m) on Swedish kronor inter-company balances and the £46k credit in relation to share-based payments (H1, 2008: cost of £0.5m), the reported loss before tax was £0.8m (H1, 2008: profit of £3.8m).


After payment of the final dividend for 2008 of £0.9m, net cash at 30 June 2009 was £10.3m (31 December 2008: £11.0m; 30 June 2008: £10.0m). 


During July the board became concerned over the ability of a small print integration company, in which the Company has had a 10% shareholding since 2005, to continue trading. Whilst the board is hopeful that a resolution can be found that realises some value for shareholders, the board has taken a conservative view and impaired the investment of £0.6m in full.



Business Commentary


Following difficult trading in 2008, it was essential to accelerate the development of new products to re-establish Xaar's market leadership in China, still the Company's biggest market. The first new product to be launched was the Proton, followed by the Electron (formally launched in early July 2009). A modified launch strategy was used to develop a sharper competitive edge. Focus was placed on a small number of leading original equipment manufacturers as launch partners, rather than making the new products available to the market as a whole.  Proton has exceeded the Company's expectations in terms of initial sales and been instrumental in helping Xaar to win back market share and regain its market leadership in China.


Proton's price/performance coupled with the more controlled distribution strategy has so far proved to be a successful response to the specific licensee competitive activity in China. Other licensees continue to increase their sales of Xaar technology-based products in non-competitive areas. Proton and Electron will extend the P1 family longevity and further product releases are planned. 


The continuing relatively stable internal economies of both China and India have helped Xaar to weather the global economic downturn. In Europe, printer manufacturers' increased uptake of the Company's new technologies (P2 and P3) has been insufficient to offset the continued decline in the wide format graphics and coding and marking markets (P1). In contrast, our business in the Americas has shown growth in the period as a decline in P1 business in South America has been more than compensated for by growth of P3 business in North America. The Company expects these trends to lead to a better geographic balance in its business.


In the period, digital printing machine manufacturers announced a further ten machines incorporating Xaar's Platform 3 technology. These new printing machines cover diverse applications ranging from high speed label printing through to industrial/ceramics printing. These have been mainly in Europe and North America and provide real evidence that Xaar technology can be applied successfully in other 'printing' applications. However, as previously stated, the Board expects the transition from product launch to volume sales to be slower than originally expected, given both the technical challenges involved and the current economic environment.  


As stated above, the support costs of getting customers to market with new products have been higher than expected. The considerable variety of inks, substrates and operating conditions has resulted in the requirement for a level of printhead upgrade or replacement, application engineering and on-site development effort that were not anticipated. This has been exacerbated by sales into new markets where the Company has less experience than in its traditional markets.


Following the announcement in March of the decision to rationalise manufacturing in order to focus all production on the Company's 'state of the art' facility in HuntingdonUK, the relocation process is on track to be completed within the originally stated timescale. The first tranche of equipment has now been moved from the Company's Swedish plant in Jarfällä to the Huntingdon facility.



Change of Advisor


After conducting a formal review of candidates, the board appointed Landsbanki Securities (UK) Limited as the Company's stock broker and financial advisor during the second half of 2008. Following the Icelandic banking crisis the securities business transferred out of Landsbanki, trading briefly under the Teathers banner before becoming part of Singer Capital Markets Ltd (a wholly employee owned independent firm). Whilst the Advisor's names have changed, the Company's advisory team has remained largely unchanged throughout this process.



Dividend


Based on the continuing cash generation of the business the interim dividend will be maintained at 1.0p per share and will be paid on 25 September 2009 to shareholders on the register at close of business on 28 August 2009.



Outlook


Continuing favourable industry comment and further P3 product adoption strengthen the Board's belief that the commercial inkjet printing market will continue to grow over the medium term and that Xaar will remain a leader in that business. Whilst the Board is somewhat encouraged by trading volumes in the period, the continuing lack of visibility and uncertainty in the economic environment means that caution must be maintained when looking forward.




Phil Lawler

Chairman

18 August 2009

  Directors' responsibilities


We confirm that to the best of our knowledge:


    the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union;


    the Chairman's statement includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and


    the Chairman's statement includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during the period; and also any changes in the related party transactions described in the last annual report that could do so.



Ian Dinwoodie    Andrew Taylor

Chief Executive    Finance Director

18 August 2009

  Condensed consolidated income statement

for the six months ended 30 June 2009





Six months

ended

Six months

ended

Twelve months

ended



30 June

2009

30 June

2008

31 December

2008



(unaudited)

(unaudited)

(audited)


Notes

£'000

£'000

£'000

Continuing operations





Revenue

2

20,908

22,478

42,017

Cost of sales


(12,069)

(9,424)

(21,389)

Gross profit 


8,839

13,054

20,628

Distribution costs


(1,644)

(2,444)

(5,012)

Administrative expenses


(8,043)

(7,049)

(11,657)

Operating (loss) / profit


(848)

3,561

3,959

Investment income


89

225

450

Finance costs


(19)

(32)

(57)

Profit before tax before restructuring costs, share-based payments, impairment of trade investments and foreign exchange gain/(loss) on Swedish kronor denominated intercompany loans


1,279

3,386

3,064

Restructuring costs


(209)

-

(553)

Share-based payments


46

(487)

132

Impairment of trade investments


(639)

-

(120)

Foreign exchange gain/(loss) on Swedish kronor denominated intercompany loans


(1,255)

855

1,829

(Loss)/ profit before tax


(778)

3,754

4,352

Tax

3

(97)

(923)

(921)

(Loss)/profit for the period attributable to shareholders


(875)

2,831

3,431

Earnings per share from continuing operations





Basic

4

(1.4)p

4.5p

5.6p

Diluted

4

(1.4)p

4.4p

5.5p


Dividends paid in the period amounted to £928,000 or 1.5p per share 2008 final dividend (six months to 30 June 2008: £1,530,000 or 2.5p per share 2007 final dividend; twelve months to 31 December 2008: £2,148,000 or 3.5p per share being 2.5p per share 2007 final dividend and 1.0p per share 2008 interim dividend).


  Condensed consolidated statement of changes in equity

for the six months ended 30 June 2009




Share

capital


Share

premium


Own

shares


Other

reserves

Hedging &

translation

reserves


Retained

earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2009 (audited)


6,350


10,525


(4,465)


3,919


594


21,514

38,437

(Loss) for the period

-

-

-

-

-

(875)

(875)

Exchange differences on translation of foreign operations


-


-


-


-


814


-

814

Losses on cash flow hedges

-

-

-

-

(677)

-

(677)

Tax on items taken directly to equity

-

-

-

-

190

126

316

Total comprehensive income for the period


-


-


-


-


327


(749)

(422)

Dividends

-

-

-

-

-

(928)

(928)

Charge to equity for equity-settled share based payments


-


-


-


(46)


-


-

(46)

Balance at 30 June 2009 (unaudited)


6,350


10,525


(4,465)


3,873


921


19,837

37,041



























Share

capital


Share

premium


Own

shares


Other

reserves

Hedging &

translation

reserves


Retained

earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2008 (audited)


6,285


10,146


(4,465)


4,051


529


20,550

37,096

Profit for the period

-

-

-

-

-

2,831

2,831

Exchange differences on translation of foreign operations


-


-


-


-


(115)


-

(115)

Tax on items taken directly to equity

-

-

-

-

-

69

69

Total comprehensive income for the period


-


-


-


-


(115)


2,900

2,785

Issue of share capital

21

174

-

-

-


195

Dividends

-

-

-

-

-

(1,530)

(1,530)

Credit to equity for equity-settled share based payments


-


-


-


487


-


-

487

Balance at 30 June 2008 (unaudited)


6,306


10,320


(4,465)


4,538


414


21,920

39,033


  Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2009




Six months

ended

Six months

ended

Twelve months

ended


30 June

2009

30 June

2008

31 December

2008


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

(Loss)/profit for the period

(875)

2,831

3,431

Exchange differences on translation of foreign operations

814

(115)

(260)

(Loss) / gain on cash flow hedges

(677)

-

452

Tax relating to components of other comprehensive income

316

69

(446)

Other comprehensive income for the period

453

(46)

(254)

Total comprehensive income for the period

(422)

2,785

3,177


  Condensed consolidated balance sheet

as at 30 June 2009





As at

As at

As at



30 June

2009

30 June

2008

31 December

2008



(unaudited)

(unaudited)

(audited)


Notes

£'000

£'000

£'000

Nonߛcurrent assets





Property, plant and equipment


12,193

12,763

12,667

Goodwill


720

720

720

Other intangible assets


5,872

6,916

6,650

Investments


1,261

2,020

1,900

Deferred tax asset


4

316

239

 


20,050

22,735

22,176

Current assets





Inventories


6,388

7,164

7,269

Trade and other receivables


7,300

10,325

7,796

Cash and cash equivalents


10,856

10,723

11,601

Derivative financial instruments


147

263

704

 


24,691

28,475

27,370

Total assets 


44,741

51,210

49,546

Current liabilities





Trade and other payables 


(4,889)

(7,884)

(5,997)

Other financial liabilities


(180)

(204)

(210)

Current tax liabilities


(88)

(1,666)

(1,321)

Obligations under finance leases


-

(1)

-

Provisions


(321)

(143)

(528)

Derivative financial instruments


(327)

-

(352)

 


(5,805)

(9,898)

(8,408)

Net current assets 


18,886

18,577

18,962

Nonߛcurrent liabilities





Deferred tax liabilities


(1,527)

(1,731)

(2,260)

Other financial liabilities


(368)

(548)

(441)

 


(1,895)

(2,279)

(2,701)

Total liabilities


(7,700)

(12,177)

(11,109)

Net assets


37,041

39,033

38,437

Equity





Share capital


6,350

6,306

6,350

Share premium


10,525

10,320

10,525

Own shares


(4,465)

(4,465)

(4,465)

Other reserves


3,873

4,538

3,919

Hedging and translation reserves


921

414

594

Retained earnings


19,837

21,920

21,514

Equity attributable to shareholders


37,041

39,033

38,437

Total equity


37,041

39,033

38,437

  Condensed consolidated cash flow statement

for the six months ended 30 June 2009





Six months

ended

Six months

ended

Twelve months

ended



30 June

2009

30 June

2008

31 December

2008



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

£'000

Net cash from operating activities

5

1,419

1,674

4,228

Investing activities





Investment income


89

-

457

Purchases of property, plant and equipment


(875)

(2,010)

(3,307)

Proceeds on disposal of property, plant and equipment


5

60

75

Expenditure on capitalised product development


(26)

(468)

(854)

Net cash used in investing activities


(807)

(2,418)

(3,629)

Financing activities





Dividends paid


(928)

(1,530)

(2,148)

Proceeds from issue of ordinary share capital


-

195

444

Finance costs


-

-

(57)

Repayments of borrowings


(103)

(97)

(198)

Repayments of obligations under finance leases


-

(258)

(259)

Net cash used in financing activities


(1,031)

(1,690)

(2,218)

Net decrease in cash and cash equivalents


(419)

(2,434)

(1,619)

Effect of foreign exchange rate changes


(326)

121

184

Cash and cash equivalents at beginning of period


11,601

13,036

13,036

Cash and cash equivalents at end of period


10,856

10,723

11,601


  Notes to the interim financial information

for the six months ended 30 June 2009


1. Basis of preparation and accounting policies


Basis of preparation


These interim financial statements have been prepared in accordance with the accounting policies set out in the Company's 2008 annual report and were approved by the board of directors on 18 August 2009. The interim financial statements for the six months ended 30 June 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements do not include all the information and disclosures in the annual financial statements, and should be read in conjunction with the Company's annual financial statements as at 31 December 2008. 


The financial information in these interim financial statements does not constitute statutory financial statements as defined in section 435 of the Companies Act 2006. The group's annual report for the year ended 31 December 2008 has been filed with the Registrar of Companies and the auditor's reports on those financial statements was not qualified and did not contain statements made under section 237(2) or section 237(3) of the Companies Act 1985. 


The interim financial statements are unaudited but have been reviewed by the auditors, Deloitte LLP, who were appointed during the period and their report to the company is set out on page 13. 


Significant accounting policies


The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the group's annual financial statements for the year ended 31 December 2008, except for the adoption of new Standards and Interpretations, noted below. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the group.


IFRS 8: Operating Segments


In the current financial year, the Group has adopted International Financial Reporting Standard 8 'Operating Segments'. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance.  The adoption of IFRS 8 has not resulted in any change to the identified segments previously reported.


IAS 1 (revised): Presentation of Financial Statements


The Group has also adopted IAS 1 (revised) 'Presentation of Financial Statements' during the period. The standard requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement and statement of comprehensive income. As a result, a consolidated statement of changes in equity has been included in the primary statements, showing changes in each component of equity for each period presented.


Income statement presentation


Following the decision to rationalise manufacturing by transferring production facilities from Sweden to the UK, certain costs that will no longer be incurred once the move is completed have been shown separately on the face of the income statement to enable users to identify the Group's ongoing operating performance without such items. The restructuring balance includes the relevant costs from the transfer project. Foreign exchange movements on the Swedish kronor denominated intercompany trading balances have also been separately identified.


Additionally an impairment charge on investments is shown separately on the face of the income statement. As the result of an impairment review, the group concluded that there was no longer sufficient evidence that the future economic performance of one of its trade investments supported its carrying value. The full value of this investment has therefore been recognised as an impairment loss in the income statement in the period, within administrative expenses.


  


Risks and Uncertainties


An outline of the key risks and uncertainties faced by the Group was outlined in the 2008 Financial Statements, including anticipating technology trends, retaining key staff and successfully executing business growth initiatives. It is anticipated that the risk profile will not significantly change for the remainder of the year. Risk is an inherent part of doing business and the strong cash position of the Group along with the underlying profitability of the core business leads the directors to believe that the Group is well placed to manage business risks successfully.


Going Concern


The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis has been adopted in preparing the half-yearly financial statements.



2. Business segments


For management reporting purposes, the group's operations are currently analysed according to product type. These product groups are the basis on which the group reports its primary segment information. 


Segment information about these product types is presented below:



Six months

ended

Six months

ended

Twelve months

ended


30 June

2009

30 June

2008

31 December

2008


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Revenue




Printheads and related products

18,322

20,600

37,511

Development fees

529

316

605

Licence fees and royalties

2,057

1,562

3,901

Total revenue

20,908

22,478

42,017










Six months

ended

Six months

ended

Twelve months

ended


30 June

2009

30 June

2008

31 December

2008


(unaudited)

(unaudited)

(audited)



restated

restated


£'000

£'000

£'000

Result




Printheads and related products

(1,244)

9,114

1,736

Development fees

(170)

(38)

(75)

Licence fees and royalties

1,457

897

2,643

Total segment result

43

9,973

4,304

Unallocated corporate expenses

(891)

(6,412)

(345)

Operating profit

(848)

3,561

3,959

Investment income

89

225

450

Finance costs

(19)

(32)

(57)

(Loss)/profit before tax

(778)

3,754

4,352

Tax

(97)

(923)

(921)

(Loss)/profit after tax

(875)

2,831

3,431


Unallocated corporate expenses relate to administrative expenses which cannot be directly attributed to any of the principal product groups. 


Comparatives have been restated to reflect a charge in allocation of certain costs between segments.


There has been no material movement in segment assets during the period.



3. Income tax


The major components of income tax expense in the income statement is as follows:



Six months

ended

Six months

ended


30 June

2009

30 June

2008


(unaudited)

(unaudited)


£'000

£'000

Current income tax:



Income tax charge

144

979

Deferred income tax:



Relating to origination and reversal of temporary differences

(47)

(56)

Income tax expense

97

923



4. Earnings per ordinary share - basic and diluted


The calculation of basic and diluted earnings per share is based upon the following data:



Six months

ended

Six months

ended

Twelve months

ended


30 June

2009

30 June

2008

31 December

2008


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Earnings




Earnings for the purposes of basic earnings per share being net (loss) / profit attributable to equity holders of the parent

(875)

2,831

3,431

Number of shares




Weighted average number of ordinary shares for the purposes of basic earnings per share

63,505,633

62,881,307

61,458,643

Effect of dilutive potential ordinary shares:




Share options

-

1,143,744

526,969

Weighted average number of ordinary shares for the purposes of diluted earnings per share

63,505,633

64,025,051

61,985,612


  5. Notes to the cash flow statement



Six months

ended

Six months

ended

Twelve months

ended


30 June

2009

30 June

2008

31 December

2008


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

(Loss) / profit before tax

(778)

3,754

4,352

Adjustments for:




Shareߛbased payments

(46)

487

(132)

Depreciation of property, plant and equipment

1,546

1,594

3,010

Impairment loss on trade investments

639

-

120

Finance costs

-

-

57

Investment income

-

-

(450)

Amortisation of intangible assets

804

692

1,351

Loss / (gain) on disposal of property, plant and equipment

12

(14)

-

Increase / (decrease) in provisions

(207)

(50)

335

Operating cash flows before movements in working capital

1,970

6,463

8,643

Decrease / (increase) in inventories

1,233

(3,050)

(2,769)

Decrease / (increase) in receivables

510

(1,842)

609

(Decrease) / increase in payables

(1,760)

764

(1,206)

Cash generated by operations

1,953

2,335

5,277

Income taxes paid

(534)

(661)

(1,049)

Net cash from operating activities

1,419

1,674

4,228


Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and other shortߛterm highly liquid investments with a maturity of three months or less. 



6. Date of approval of interim financial statements


The interim financial statements cover the period 1 January 2009 to 30 June 2009 and were approved by the board on 18 August 2009.


The interim financial statements will be sent to shareholders in due course. Further copies will be available from the company's registered office, Science ParkCambridge CB4 0XR and can be accessed on the Xaar plc website, www.xaar.com.


  Independent review report

for the six months ended 30 June 2009


Introduction 


We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the consolidated income statement, consolidated statement of recognised income and expense, consolidated balance sheet, consolidated cash flow statement and the related notes 1 to 6. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 


This report is made solely to the company in accordance with guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.


Directors' responsibilities 


The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 


As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. 


Our responsibility 


Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 


Scope of review 


We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 


Conclusion 


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 



DELOITTE LLP

Cambridge

18 August 2009



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