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Xaar PLC (XAR)

  Print      Mail a friend       Annual reports

Wednesday 18 August, 2010

Xaar PLC

Half Yearly Report

RNS Number : 2336R
Xaar PLC
18 August 2010
 



 

FOR IMMEDIATE RELEASE

18 August 2010

 

 

Xaar plc

 

 

2010 HALF YEARLY REPORT AND UNAUDITED RESULTS

 

 

 

Xaar plc ("Xaar"), the inkjet printing technology group headquartered in Cambridge, has issued its half-yearly report and unaudited results for the 6 months ended 30 June 2010.

 

Financial summary

 

Figures in £m

Six months to June 30

Year to December 31


2010

2009

2009

Turnover

23.9

20.9

42.1

Gross margin

9.3

8.8

17.3

Adjusted profit before tax*

1.3

1.3

2.6

Reported profit/(loss) before tax

1.8

(0.8)

(0.2)

Earnings Per Share (pence)

2.2

(1.4)

0.6

Net cash at period end

8.2

10.3

11.1

Dividend per share (pence)

1.0

1.0

2.5

                                                                                   

*Before restructuring provisions, impairment of trade investment, foreign exchange gains or losses on Swedish Kronor inter-company balances, loss/ (gain) on derivative financial instruments, exceptional commercial agreement costs and the cost of share-based payments.

 

Key points

 

Substantial increase in demand for Platform 3 (P3) products; further investment being made in P3 production capacity in Huntingdon, UK.

 

Increasing capacity in Huntingdon will require Sweden closure programme to stop; printhead manufacturing will now remain in the Swedish plant.

 

Platform 1 (P1) product sales stable; new P1 products continue to be the leader in the Graphic Arts market in China.

 

Gross margin down as a result of high new product implementation costs; the level of these costs now showing a marked downward trend.

 

Chairman, Phil Lawler commented:

 

"We are increasingly confident about the market potential for P3. Whilst the last two years have been testing for the management team, we are excited about the opportunities that have emerged and are committed to pursuing them."

 

 

CONTACTS

 

Xaar plc:

01223-423663

Ian Dinwoodie, Chief Executive

www.xaar.com

Andrew Taylor, Finance Director




Singer Capital Markets Limited:

020-3205-7626

Shaun Dobson




Bankside Consultants:


Simon Bloomfield or Andy Harris

020-7367-8888

 

 

  

 

 

 

CHAIRMAN'S STATEMENT

 

Introduction

Revenues have continued to increase, up 14% compared with H1 2009 against a backdrop of substantial demand for Platform 3 (P3) whilst Platform 1 (P1) sales have been stable. Product costs were still too high but are now showing a marked downward trend.

The geographic spread of our sales is now much more balanced although a high proportion remains sterling denominated maintaining our limited exposure to external currency fluctuations.

Royalty revenue has shown healthy growth.

The group is profitable and continues to be cash generative whilst maintaining dividends and capital investment.

Results

Revenues for the six months ended 30 June 2010 were £23.9m (H1 2009: £20.9m; H2 2009: £21.2m).  Product sales were £20.6m (H1 2009: £18.3m; H2 2009: £18.2m).  Royalty revenue was £3.1m (H1 2009: £2.1m; H2 2009: £2.6m), the significant increase reflecting Xaar's licensees' improved sales but not at the expense of our own.  Development income continues to be immaterial and as expected has reduced to £0.2m.

Gross margin at 39% has declined (H1 2009: 42%; H2 2009: 40%).  Excessive costs of manufacturing, warranty and customer support related primarily to new products have combined to keep gross margin at a lower than anticipated level.  These cost variances are the financial consequence of issues arising in 2009 and are now under control and are continuing to reduce.

Adjusted profit before tax for the period was £1.3m (H1 2009: £1.3m; H2 2009: £1.3m).  Reported profit before tax was £1.8m (H1 2009: £0.8m loss; H2 2009: £0.6m profit) after a £1.1m gain (H1 2009: £0.2m cost; H2 2009: £2.5m cost) from the release of previously provided restructuring costs, exceptional commercial agreement costs of £0.4m (H1 2009: £nil, H2 2009: £nil), and a foreign exchange loss of £0.2m (H1 2009: £1.3m loss, H2 2009: £1.1m gain) on Swedish kronor inter-company balances. 

After payment of the final dividend for 2009 of £0.9m and £2.8m of capital investment, net cash at 30 June 2010 was £8.2m (31 December 2009: £11.1m; 30 June 2008: £10.3m).

Business Commentary

The new P1 products launched during the last 18 months have continued largely to maintain the market share they regained and have enabled us to continue as market leader in graphic arts where China remains the biggest market.

The trends alluded to in last year's interim statement have now led to a better geographic balance in that our European business has grown by 68% over H1 2009 to almost the same size as Asia. The geographic split in sales at 30 June 2010 is Asia: 43%; Europe: 42% and Americas: 15%.

This increase is mostly due to the adoption in industrial applications of P3.  I have mentioned before the potential of P3 as a disruptive technology and in this marketplace, constrained by the global economy and particularly the construction industry, we have been able to offer OEMs substantial advantage by the adoption of our patented technology. As a consequence sales into the industrial sector have increased by 131% over H1 2009.

We have seen similar success with P3 but on a smaller scale in the packaging printing segment where development and integration have taken longer to complete. When combined with our P1 business in coding and marking, total sales into the packaging sector grew 6% in the period.

Sales into the graphic arts market are still dominated by P1 business which has been broadly stable, however our P2 product sales have been significantly reduced to allow a number of required engineering changes to be applied to the product during the period. As a result sales into graphic arts were down 10% in the period primarily due to the P2 interruption.

As already announced our commercial focus now is entirely on a few applications and leading OEMs where we can make the most impact. However we continue to invest in future technologies for the longer term.

The difficulties surrounding new product development, manufacturing and integration have continued to frustrate us and we have not overcome these as quickly as we would have expected. Progress has been made, with the level of these costs in Q2 being less than that of Q1.  We expect this trend to continue and these costs to be eliminated during H2.

In view of the growth in demand for P3 and our confidence in its long-term potential, we are now investing in further capacity.  This will involve the installation of complex and specialised equipment and, in some instances, major tools which are unique to Xaar.  Taking into account the lead time for commissioning, we expect production from this new capacity to commence for delivery in 2011. 

In the meantime, where possible we will increase production using existing capacity, for example through increased shift patterns.  We have also reviewed our decision, announced in March 2009, to reduce costs by rationalising our manufacturing capacity through the relocation of all production to the Company's 'state of the art' facility in Huntingdon, UK.  In order to maximise P3 output we have decided to stop the closure of our Swedish plant and will maintain manufacturing capability at both our plants for the foreseeable future. Consequently the manufacture of certain finished goods and sub assemblies for the UK will now remain in our Jarfällä facility where we still have the appropriate equipment and skilled workforce.  Operations already transferred to Huntingdon will remain there. This allows us to maximise P3 production, the benefits of which will significantly outweigh the benefits of the previously planned plant consolidation.

Dividend

Based on the continuing cash generation of the business an unchanged interim dividend of 1.0p per share will be paid on 24th September 2010 to shareholders on the register at close of business on 27th August 2010.

Board

As previously reported, John Scott, non-executive and senior independent director, retired from the board at the company's Annual General Meeting in May of this year.  I would like to thank John for his many years of wise counsel and dedicated service.  Robin Williams, non-executive director, was appointed to the board as John's replacement in March 2010.

Outlook

Although the global economy remains uncertain, better visibility of certain markets and increasing P3 product demand are leading the board to conclude that further and substantial investment in capacity and capability will be necessary to capitalise on the potential. There are market and competitive risks associated with the lead time from an investment decision to increased product availability.  However, we are increasingly confident about the market potential for P3. Whilst the last two years have been testing for the management team, we are excited about the opportunities that have emerged and are committed to pursuing them.

Phil Lawler

Chairman

17 August 2010

 

 

DIRECTORS' RESPONSIBILITIES STATEMENT

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";

·      The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      The interim management report includes a air review if the information required bY DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

By order of the board

 

IAN DINWOODIE

CHIEF EXECUTIVE

 

ANDREW TAYLOR

FINANCE DIRECTOR

 

 

17 August 2010



Condensed consolidated income statement

for the six months ended 30 June 2010

 



Six months ended

Six months ended

Twelve months ended



30-Jun

30-Jun

31-Dec



2010

2009

2009



(unaudited)

(unaudited)

(audited)


Notes

£'000

£'000

£'000

Continuing operations





Revenue

2

23,863

20,908

42,073

Cost of sales

Restructuring costs

 

 

(14,468)

(111)

(12,069)

-

(24,822)

-

Gross profit


9,284

8,839

17,251

Distribution costs


(1,863)

(1,644)

(3,412)

Administrative expenses


(6,771)

(7,834)

(11,420)

Restructuring costs


1,172

(209)

(2,686)

Operating profit/(loss)


1,822

(848)

(267)

Investment income


14

89

117

Finance costs


(50)

(19)

(36)

Profit/(loss) before tax


1,786

(778)

(186)

Tax

3

(425)

(97)

585

Profit/(loss) for the period attributable to shareholders


1,361

(875)

399

Earnings per share from continuing operations





Basic

4

2.2p

(1.4)p

0.6p

Diluted

4

2.1p

(1.4)p

0.6p

 

 

Dividends paid in the period amounted to £928,000 or 1.5p per share 2009 final dividend (six months to 30 June 2009: £928,000 or 1.5p per share 2008 final dividend; twelve months to 31 December 2009: £1,545,000 or 2.5p per share being 1.5p per share 2008 final dividend and 1.0p per share 2009 interim dividend).

 



 

Reconciliation of adjusted financial measures

 

 



Six months ended

Six months

ended

Twelve months ended



30-Jun

30-Jun

31-Dec



2010

2009

2009



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000

Gross profit


9,284

8,839

17,251

Restructuring costs


111

-  

-  

Exceptional commercial agreement costs


192

-

-

Gross profit (adjusted)


9,587

8,839

17,251






Profit/(loss) before tax


1,786

(778)

(186)

Restructuring costs


(1,061)

209

2,686

Exceptional commercial agreement costs


382

-

-

Impairment of trade investments


-

639

639

Foreign exchange gain on Swedish kronor denominated intercompany loans


207

1,255

157

Loss/(gain) on derivative financial instruments


(39)

-

46

Share-based payments


46

(46)

(779)

Profit before tax (adjusted)


1,321

1,279

2,563



 

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2010

 



Six months ended

Six months ended

Twelve months ended



30-Jun

30-Jun

31-Dec



2010

2009

2009



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000

Profit/(loss) for the period


1,361

(875)

Exchange differences on translation of foreign operations


(65)

814

(180)

Gain/(loss) on cash flow hedges


74

(677)

(349)

Tax relating to components of other comprehensive income


242

316

499

Other comprehensive income for the period


251

453

(30)

Total comprehensive income for the period


1,612

(422)

369

 

 

 

 



 

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2010

 







Hedging and





Share

Share

Own

Other

translation

Retained




capital

premium

shares

reserves

reserves

earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balances at 1 January 2010


6,351

10,525

(4,465)

3,140

904

20,769

37,224

Profit for the period


-

-

-

-

-

1,361

1,361

Exchange differences on translation of foreign operations


-

-

-

-

(65)

-

(65)

Gains on cash flow hedges


-

-

-

-

74

-

74

Tax on items taken directly to equity


-

-

-

-

13

-

13

Tax benefit taken directly to equity


-

-

-

-

-

229

229

Total comprehensive income for the period


-

-

-

-

22

1,590

1,612

Dividends


-

-

-

-

-

(928)

(928)

Credit to equity for equity-settled share-based payments


-

-

-

46

-

-

46

Balance at 30 June 2010


6,351

10,525

(4,465)

3,186

926

21,431

37,954

























Hedging and

 

 




Share

Share

Own

Other

translation

Retained




capital

premium

shares

reserves

reserves

earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balances at 1 January 2009


 6,350

   10,525

(4,465)

3,919

1,335

21,514

39,178

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


6,350

10,525

(4,465)

3,873

1,662

19,837

37,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of financial position

as at 30 June 2010

 



Six months ended

Twelve months

ended



30-Jun

31-Dec



2010

2009



(unaudited)

(audited)


Notes

£'000

£'000

Non-current assets




Property, plant and equipment


15,791

14,513

Goodwill


720

720

Other intangible assets


4,616

5,108

Investments


1,311

1,261

Deferred tax asset


147

200



22,585

21,802

Current assets




Inventories


6,145

5,766

Trade and other receivables

Current tax asset


8,722

26

7,554

-

Cash and cash equivalents


9,778

11,521

Derivative financial instruments


-  

47

 


24,671

24,888

Total assets


47,256

46,690

Current liabilities




Trade and other payables


(6,291)

(5,435)

Other financial liabilities


(231)

(224)

Current tax liabilities


-

(417)

Obligations under finance leases


(259)

-

Provisions

5

(546)

(2,408)

 


(7,327)

(8,484)

Net current assets


17,344

16,404

Non-current liabilities




Deferred tax liabilities


(871)

(765)

Other financial liabilities


(1,104)

(217)

Total non-current liabilities


(1,975)

(982)

 




Total liabilities


(9,302)

(9,466)

Net assets


37,954

37,224

Equity




Share capital


6,351

6,351

Share premium


10,525

10,525

Own shares


(4,465)

(4,465)

Other reserves


3,186

3,140

Hedging and translation reserves


926

904

Retained earnings


21,431

20,769

Equity attributable to shareholders


37,954

37,224

Total equity


37,954

37,224

Condensed consolidated cash flow statement

for the six months ended 30 June 2010-08-12

 



Six months ended

Six months ended

Twelve months

ended



30 Jun

30 Jun

31 Dec



2010

2009

2009



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000


Net cash from operating activities

6

1,054

1,419

6,979

Investing activities





Investment income


14

89

81

Purchases of property, plant and equipment


(2,843)

(875)

(5,172)

Proceeds on disposal of property, plant and equipment


1

5

-  

Expenditure on capitalised product development


(48)

(26)

(185)

Net cash used in investing activities


(2,876)

(807)

(5,276)

Financing activities





Dividends paid


(928)

(928)

(1,545)

Loan financing


1,388

-  

-  

Acquisition of investment in an associate


(50)

-  

-  

Finance costs


(81)

-

-

Repayments of borrowings


(298)

(103)

(210)

Net cash from/(used) in financing activities


31

(1,031)

(1,755)

Net decrease in cash and cash equivalents


(1,791)

(419)

(52)

Effect of foreign exchange rate changes


48

(326)

(28)

Cash and cash equivalents at beginning of year


11,521

11,601

11,601

Cash and cash equivalents at end of year


9,778

10,856

11,521



Notes to the interim financial information

for the six months ended 30 June 2010

 

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 group's annual report and accounts 2009 on pages 40 to 46 and were approved by the board of directors on 17 August 2010. The interim financial statements for the six months ended 30 June 2010 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 group's annual financial statements as at 31 December 2009.

 

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 2009 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 498(2) or (3) of the Companies Act 2006.

 

The interim financial statements are unaudited but have been reviewed by the auditors, Deloitte LLP. The report of the auditors to the company is set out on page 12.

 

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 2009.

 

Risks and Uncertainties

 

An outline of the key risks and uncertainties faced by the group was outlined in the 2009 financial statements on page 40, 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-Jun

30-Jun

31-Dec


2010

2009

2009


(unaudited)

(unaudited)

(audited)


2010

2009

2009

Revenue




Printheads and related products

20,589

18,322

36,655

Development fees

126

529

745

Licence fees and royalties

3,148

2,057

4,673

Total revenue

23,863

20,908

42,073






Six months ended

Six months ended

Twelve months ended


30-Jun-10

30-Jun-09

31-Dec-09


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Result




Printheads and related products

(948)

(1,244)

(1,559)

Development fees

43

(170)

34

Licence fees and royalties

2,565

1,457

4,007

Total segment result

1,660

43

2,482

Unallocated corporate expenses

162

(891)

(2,749)

Operating profit/(loss)

1,822

(848)

(267)

Investment income

14

89

117

Finance costs

(50)

(19)

(36)

Profit/(loss) before tax

1,786

(778)

(186)

Tax

(425)

(97)

585

Profit/(loss) after tax

1,361

(875)

399

 

 

 

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.

 

Assets in the printheads and related products segment have increased by £2.5m over the period; there have been no other material movements 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

Twelve months ended


30-Jun

30-Jun

30-Dec


2010

2009

2009


£'000

£'000

£'000

Current income tax




Income tax charge

25

144

371

Deferred income tax




Relating to origination and reversal of temporary differences

400

(47)

(956)

Income tax expense

425

97

(585)

 

 

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-Jun

30-Jun

31-Dec


2010

2009

2009


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Earnings




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

1,361

(875)

399

Number of shares




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

61,797,389

63,505,633

61,797,389

Effect of dilutive potential ordinary shares:




Share options

1,548,756

-

130,116

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

63,346,145

63,505,633

61,927,505

 

 

 

 

 



 

5. Provisions

 


Warranty provision

Closure of Swedish manufacturing




facility

Total


£'000

£'000

£'000





At 1 January 2010

467

1,941

2,408

Additional provision in the period

77

212  

289

Utilisation of provision

(184)

(694)

(878)

Release of provision

-

(1,273)

(1,273)

At 30 June 2010

360

186

546

 

The warranty provision represents management's best estimate of the group's liability under twelve month warranties granted on printheads, based on past experience of returns for defective products.

 

On 1 April 2009 the Group announced the rationalisation of its manufacturing facilities which would have involved the eventual closure of its plant in Stockholm, Sweden and the relocation of that manufacturing capability to the Group's manufacturing facility in Huntingdon, England.  The board has now announced that the rationalisation programme has been stopped.  As a result, the remaining provision is for any residual costs associated with the project.   

 

6. Notes to the cash flow statement

 


Six months ended

Six months ended

Twelve months ended


30-Jun

30-Jun

31-Dec


2010

2009

2009


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Profit/(loss) before tax

1,786

(778)

(186)

Adjustments for:




Share-based payments

46

(46)

(779)

Depreciation of property, plant and equipment

1,859

1,546

3,035

Impairment loss on trade investments

-  

639

639

Movements on cash flow hedge valuations

47

-  

(47)

Finance costs

31

-  

-  

Amortisation of intangible assets

540

804

1,727

Loss on disposal of property, plant and equipment

25

12

18

(Decrease)/increase in provisions

(1,862)

(207)

1,880

Operating cash flows before movements in working capital

2,472

1,970

6,287

(Increase)/decrease in inventories

(452)

1,233

1,389

(Increase)/decrease in receivables

(1,223)

510

236

Increase/(decrease) in payables

727

(1,760)

(516)

Cash generated by operations

1,524

1,953

7,396

Income taxes paid

(470)

(534)

(417)

Net cash from operating activities

1,054

1,419

6,979

 

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 short term highly liquid investments with a maturity of three months or less.

 

7. Date of approval of interim financial statements

 

The interim financial statements cover the period 1 January 2010 to 30 June 2010 and were approved by the board on 17 August 2010.

 

Further copies of the interim financial statements are available from the company's registered office, Science Park, Cambridge CB4 0XR and can be accessed on the Xaar plc website, www.xaar.com.

 



Independent review report

for the six months ended 30 June 2010

 

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 2010 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity, condensed consolidated statement of financial position, condensed consolidated cash flow statement and related notes 1 to 7.  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 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.  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 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 inquiries, 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 2010 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, UK

17 August 2010

 

 

 

 


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