REG - Caffyns PLC - Half Yearly Report <Origin Href="QuoteRef">CFYN.L</Origin> - Part 1

CaffynsAnnouncement

27/11/2015 07:10

RNS Number : 1403H
Caffyns PLC
27 November 2015
HALF YEAR REPORT 
for the half year ended 30 September 2015
Summary
Strong performance in the first half:

2015
2014

'000
'000



Revenue
117,678
103,912



Underlying* profit before tax 
1,547
1,192



Profit before tax
1,711
1,213



Underlying* EBITDA
2,706
2,295







p
p



Underlying* earnings per share
46.6
35.6



Basic earnings per share
51.4
38.0



Interim dividend per ordinary share
7.25
6.75
 * Underlying results exclude items that have non-trading attributes due to their size, nature or incidence.
 
Highlights
 Underlying profit before tax up 30% to 1,547,000 (2014:1,192,000) 
 Profit before tax up 41% to 1,711,000 (2014:1,213,000)
 Like for like new car unit sales up by 9.3%
 Like for like used car unit sales up by 11.4%
 Underlying earnings per share up 31% to 46.6p (2014:35.6p)
 Basic earnings per share up 35% to 51.4p (2014:38.0p) 
 Dividend increased to 7.25p (2014:6.75p)
Simon Caffyn, Chief Executive, commented:
"I am delighted that we continue to report material increases in our underlying profitability, making four successive years of growth." 
Enquiries:
Caffyns plc
Simon Caffyn, Chief Executive
Tel:
01323 730201

Mark Harrison, Finance Director






HeadLand 
Francesca Tuckett
Tel:
020 7367 5228



07717 896701


INTERIM MANAGEMENT REPORT
Summary
In this our 150th year, I am pleased to report that the group has achieved underlying profit before tax in the six months to 30 September 2015 of 1.55m, up 30% from 1.2m last year. This is a further significant increase following four successive years of growth. Profit before tax after non-underlying items is up 41% to 1.7m from 1.2m last year.
Revenue in the half year period increased by 13% to 117.7m compared to 103.9m last year. 
Underlying earnings per share are 46.6p (2014: 35.6p), an increase of 31% and basic earnings per share are 51.4p (2014: 38.0p), an increase of 35%.
Operating Review
New and Used Cars
 Over the half year period, our new unit sales are up by 9.3% on a like for like basis, which compares favourably to total UK new car registrations which rose by 7.3%. Within this, the private and small business sector in which we operate rose by 3.1%. Our like for like used car unit sales in the period are up 11.4% on last year following a strong performance in the prior year. 
Aftersales
 The increased new car market over the last three years has led to an increase in the number of one to three year old cars in circulation. Our strong sales of both new and used vehicles has meant our own three year car parc has grown and it is encouraging to see our service revenue rise by 9% on a like for like basis as we concentrate on improving our customer retention processes. 
Operations
 Our Volkswagen dealership in Worthing, which opened in April 2014, is trading ahead of plan, with strong growth in new and used car sales as well as aftersales. We started the redevelopment of our Volkswagen dealership in Eastbourne in July 2015 and the new workshop has been completed on schedule. Work has started on a new twelve car showroom with extended used car display areas, which will enable this site to expand although it is expected to be disruptive in the second half of the current year. Our Volkswagen businesses have all performed well in the first half of the year showing good improvements in profitability on the prior year. 
 The refurbishment and expansion of the showroom in our Audi dealership in Eastbourne was completed in August 2014 and, with the expanded used car display area, we have seen a significant increase in new and used sales. All our Audi businesses have also seen strong year on year growth and we have submitted a planning application to relocate our dealership in Worthing to a new and significantly larger site to help this business fulfil its potential. 
 Our Volvo business in Eastbourne continues to trade well and Volvo has some exciting new products recently launched in the UK with more following in the short term. The new XC90 has been particularly well received.
 In October 2014 we opened our first Caffyns Used Car Centre in Ashford. The first year of trading has seen steady sales growth, with the concept very well received by customers who value the Caffyns brand. It has traded profitably in the half year.
 Our Land Rover business has traded profitably over the half year. As we reported in our 2015 Annual Report, our five year fixed term contract with Land Rover comes up for renewal in May 2016 and we remain in discussions with Jaguar Land Rover concerning our territory.
 The emissions problems faced by Volkswagen are well documented. Volkswagen has stated that it expects to have solutions for the affected vehicles and these cars will have the necessary amendments made at authorised Volkswagen dealerships during 2016. We anticipate that this will be a carefully managed programme throughout the year and, in the short term, will involve additional work passing through our service departments. There has been some slowdown in enquiry rates at our Volkswagen dealerships but we have continued to sell at levels in line with last year. We do, however, anticipate a slowdown in sales until Volkswagen is able to fully clarify the solutions to the affected vehicles.
Property
 Capital expenditure in the half year was 0.9m of which 0.3m was incurred on the upgrade to our Eastbourne Volkswagen dealership.
 In July 2015, we completed on the sale of the site in Upperton Road, Eastbourne for 1.55m. The gain on the sale was 272,000. In April 2015 we received the cash proceeds on the sale of an investment property in Uckfield, which had been sold and reported in the previous financial year, amounting to 950,000.
Pensions
 The IAS 19 net pension position at 30 September 2015 was a deficit of 4.8m net of tax (6.0m gross of tax) compared with a deficit of 4.3m net of tax at 31 March 2015 (5.4m gross of tax). Although liabilities reduced following an increase in the discount rate from 3.3% at 31 March 2015 to 3.7% at 30 September 2015, asset values reduced by a greater amount after taking into account benefits paid.
 The Recovery Plan agreed with the trustees requires a cash payment of 300,000 in the current year, increasing by 2.25% per annum thereafter.
People
 I am very grateful for the dedication and patience shown by our employees. Our front line staff have worked hard to address any customer concerns regarding the Volkswagen emissions issue.
 As announced on 31 July 2015, Mark Harrison, our Finance Director, is due to retire in July 2016. As is our policy, we have engaged independent executive search consultants to recruit his successor. 
 Across the Company we have seen hard work and professional application rewarded with strong growth in both sales and aftersales. 
Dividend
 The Board has decided to increase the interim dividend to 7.25p per Ordinary Share. This will be paid on 8 January 2016 to shareholders on the register at close of business on 11 December 2015.
Current Trading and Outlook
 The six months to 30 September 2015 have seen us deliver new car sales ahead of the market in addition to impressive growth in used car sales and aftersales. The economy remains steady and with continuing low interest rates we expect that European manufacturers will channel new vehicles to the UK market and support us with attractive marketing offers. We saw a recovery in new car margins in the second quarter as this marketing support became more apparent. However, the Society of Motor Manufacturers and Traders has reported a dip of 1% in the new car market in October 2015 and this, together with the well documented issues regarding Volkswagen, suggests that trading in the second half may be more challenging. 
Simon G M Caffyn
Chief Executive
27 November 2015


Condensed Consolidated Statement of Financial Performance
for the half year ended 30 September 2015


Half year to 30 September 2015
Half year to 30 September 2014
Year ended 31 March 2015

Note
Underlying
Non-underlying
(note 3)
Total
Underlying*
Total
Underlying*
Total 


'000
'000
'000
'000
'000
'000
'000


















Revenue

117,678
-
117,678
103,912
103,912
210,314
210,314









Cost of sales

(104,174)
-
(104,174)
(91,727)
(91,727)
(185,207)
(185,207)


















Gross profit

13,504
-
13,504
12,185
12,185
25,107
25,107









Operatingexpenses

(11,374)
(21)
(11,395)
(10,411)
(10,461)
(21,410)
(12,675)


















Operatingprofit before other income

2,130
(21)
2,109
1,774
1,724
3,697
12,432









Other income 

-
272
272
-
390
-
794



























Operating profit

2,130
251
2,381
1,774
2,114
3,697
13,226


















Financeexpense 
4
(583)
-
(583)
(582)
(661)
(1,225)
(1,307)









Net finance expense on pension scheme

-
(87)
(87)
-
(240)
-
(481)


















Net finance expense

(583)
(87)
(670)
(582)
(901)
(1,225)
(1,788)


















Profit before taxation

1,547
164
1,711
1,192
1,213
2,472
11,438









Income tax expense 
5
(260)
(33)
(293)
(211)
(165)
(318)
(2,183)


















Profit for the period from continuing operations 

1,287
131
1,418
981
1,048
2,154
9,255


















Continuing operations earnings per share 

















Basic 
6


51.4p

38.0p

335.5p









Diluted
6


50.7p

37.5p

330.7p
Non GAAP measure 

















Underlying basic earnings per share
6
46.6p


35.6p

78.1p










Underlying diluted earnings per share
6
46.0p


35.1p

77.0p

*non-underlying items - see note 3

CondensedConsolidated Statement of Comprehensive Income
for the half year ended 30 September 2015

Half year to
Half year to
Year to

30 September 2015
30 September 2014
31 March 2015

'000
'000
'000




Profit for the period
1,418
1,048
9,255








Other comprehensive income







Remeasurement of net defined liability
(661)
(433)
(2,766)




Deferred tax on remeasurement
132
86
553




Other comprehensive income, net of tax
(529)
(347)
(2,213)








Total comprehensive income for the period
889
701
7,042






Condensed Consolidated Statement of Financial Position 
at 30 September 2015







30 September 2015
30 September 2014
31 March 2015


'000
'000
'000





Non-current assets









Property, plant and equipment

37,275
37,494
37,984
Investment property

-
521
-
Goodwill

286
286
286
Deferred tax asset

-
577
-










Total non-current assets

37,561
38,878
38,270










Current assets









Inventories

33,840
30,631
31,896
Trade and other receivables

8,399
7,003
8,164
Cash and cash equivalents

1,824
91
1,746
Non-current asset held for sale

-
1,400
-










Total current assets

44,063
39,125
41,806















Total assets

81,624
78,003
80,076










Current liabilities









Interest bearing loans and borrowings

500
4,000
500
Trade and other payables

36,602
30,793
35,931
Tax liabilities

515
188
446










Total current liabilities

37,617
34,981
36,877










Net current assets

6,446
4,144
4,929





Non-current liabilities









Interest bearing loans and borrowings

11,125
11,625
11,375
Preference shares

1,237
1,237
1,237
Deferred tax liability

613
-
705
Retirement benefit obligations

5,997
11,852
5,388










Total non-current liabilities

18,972
24,714
18,705










Total liabilities

56,589
59,695
55,582










Net assets

25,035
18,308
24,494










Equity









Share capital

1,439
1,439
1,439
Share premium account

272
272
272
Capital redemption reserve

282
282
282
Non-distributable reserve

1,724
2,390
1,724
Other reserve

106
55
81
Retained earnings

21,212
13,870
20,696










Total equity 

25,035
18,308
24,494











Consolidated Statement of Changes in Equity
for the half year ended 30 September 2015

Share
capital
'000
Share
premium
'000
Capital
redemption
reserve
'000
Non-distributable
reserve
'000
Other reserve
'000
Retained earnings
'000
Total
'000








At 1 April 2015
1,439
272
282
1,724
81
20,696
24,494
















Total comprehensive income















Profit for the period
-
-
-
-
-
1,418
1,418








Other comprehensive income
-
-
-
-
-
(529)
 (529)
















Total comprehensive income for 
the period
-
-
-
-
-
889
889








Transactions with owners:















 Dividends
-
-
-
-
-
(373)
(373)








 Share based payment
-
-
-
-
25
-
25
























At 30 September 2015
1,439
272
282
1,724
106
21,212
25,035








for the half year ended 30 September 2014

Share
capital
'000
Share
premium
'000
Capital
redemption
reserve
'000
Non-distributable
reserve
'000
Other reserve
'000
Retained earnings
'000
Total
'000








At 1 April 2014
1,439
272
282
2,390
30
13,500
17,913
















Total comprehensive income















Profit for the period
-
-
-
-
-
1,048
1,048








Other comprehensive income
-
-
-
-
-
(347)
(347)
















Total comprehensive income for 
the period
-
-
-
-
-
701
701








Transactions with owners:















 Dividends
-
-
-
-
-
(331)
(331)








 Share based payment
-
-
-
-
25
-
25
















At 30 September 2014
1,439
272
282
2,390
55
13,870
18,308










Consolidated Statement of Changes in Equity
for the year ended 31 March 2015

Share
capital
'000
Share
premium
'000
Capital
redemption
reserve
'000
Non-distributable
reserve
'000
Other reserve
'000
Retained earnings
'000
Total
'000








At 1 April 2014
1,439
272
282
2,390
30
13,500
17,913
















Total comprehensive income















Profit for the period
-
-
-
-
-
9,255
9,255








Other comprehensive income
-
-
-
-
-
(2,213)
(2,213)
















Total comprehensive income for the year
-
-
-
-
-
7,042
7,042








Transactions with owners:















 Dividends
-
-
-
-
-
(517)
(517)








 Issue of shares - SAYE scheme
-
-
-
-
-
5
5








 Transfer 
-
-
-
(78)
-
78
-








 Realised surplus on disposal of land and
 buildings
-
-
-
(588)
-
588
-








 Share-based payment
-
-
-
-
51
-
51
















At 31 March 2015
1,439
272
282
1,724
81
20,696
24,494










Condensed Consolidated Cash Flow Statement 
for the half year ended 30 September 2015

Half year to
30 September 2015
Half year to
30 September 2014
Year to
31 March 2015 

'000
'000
'000
Cash flows from operating activities







Profit before taxation
1,711
1,213
11,438




Adjustments for:







Net finance expense
670
901
1,788




Depreciation and amortisation
576
521
1,080




Impairment of property, plant and equipment
-
-
20




Change in retirement benefit obligations
(142)
(170)
(9,222)




Gain on disposal of property, plant and equipment
(272)
(390)
(814)




Share-based payments
25
25
51




Increase in inventories
(1,944)
(3,778)
(5,043)




Increase in trade and other receivables
(235)
(201)
(1,051)




Increase in payables
671
1,197
6,030








Cash generated from/(used by) operations
1,060
(682)
4,277




Income taxes
(183)
-
(11)




Interest paid
(583)
(672)
(1,225)








Net cash generated from/(used) in operating activities
294
(1,354)
3,041








Investing activities







Proceeds on disposal of property, plant and equipment (net of sale costs)
1,304
36
2,295




Purchases of property, plant and equipment
(897)
(1,959)
(3,027)








Net cash used in investing activities
407
(1,923)
(732)








Financing activities







Secured loans repaid
(250)
(250)
(500)




Issue of shares - SAYE scheme
-
-
5




Dividends paid to shareholders
(373)
(331)
(517)








Net cash used in financing activities
(623)
(581)
(1,012)








Net increase/(decrease) in cash and cash equivalents
78
(3,858)
1,297




Cash and cash equivalents at beginning of period
1,746
449
449








Cash and cash equivalents at end of period
1,824
(3,409)
1,746






Notes to the Set of Financial Information
for the half year ended 30 September 2015
1. GENERAL INFORMATION 
Caffyns plc is a company domiciled in the United Kingdom. The address of the registered office is Saffrons Rooms, Meads Road, Eastbourne BN20 7DR.
These condensed consolidated interim financial statements for the half year to 30 September 2015 and similarly for the half year to 30 September 2014 are unaudited. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2015. 
The figures for the year ended 31 March 2015 have been extracted from the statutory accounts, filed with the Registrar of Companies on which the auditor gave an unqualified opinion and did not contain statements under section 498(2) or (3) of the Companies Act 2006. 
These statements have been reviewed by the Company's auditor and a copy of their review report is set out at the end of these statements.
These consolidated interim financial statements were approved by the directors on 27 November 2015. 
2. ACCOUNTING POLICIES 
The annual financial statementsof Caffyns plc are prepared in accordance with IFRSs as adopted by the European Union. The 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. This interim financial report has been prepared under the historical cost convention as modified by the fair value accounting of defined benefit schemes and share based payment transactions. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this set of financial statements has been prepared in accordance with the accounting policies set out in the Annual Report for the year ended 31 March 2015.
Segmental reporting
Based upon the management information reported to the Group's chief operating decision maker, the Chief Executive, in the opinion of the directors, the Group only has one reportable segment. There are no major customers amounting to 10% or more of the Group's revenue. All revenue and non-current assets derive from, or are based in, the United Kingdom.
Basis of preparation: Going concern
The condensed financial statements have been prepared on a going concern basis which the directors consider appropriate for the reasons set out below:
The Group meets its day to day working capital requirements through short-term stocking loans and bank overdraft and medium-term revolving credit facilities. The overdraft and revolving credit facilities include certain covenant tests. The failure of a covenant test would render these facilities repayable on demand at the option of the lenders. 
The directors have undertaken a detailed review of trading and cash flow forecasts for a period in excess of one year from the date of this Half Year Report which projects that the facility limits are not exceeded over the duration of the forecasts. These forecasts have made assumptions in respect of future trading conditions, particularly volumes and margins of new and used car sales, aftersales and operational improvements together with the timing of capital expenditure. The forecasts take into account these factors to an extent which the directors consider to be reasonable, based on the information that is available to them at the time of approval of this financial information. These forecasts indicate that the Group will be able to operate within the financing facilities that are available to it and meet the covenant tests with sufficient margin for reasonable adverse movements in expected trading conditions. 

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For those reasons, they continue to adopt the going concern basis in preparing this Half Year Report.
3. NON-UNDERLYING ITEMS

Half year to
30 September
2015
Half year to
30 September
2014
Year to
31 March
2015

'000
'000
'000
Other income:



 Impairment of property, plant and equipment
-
-
(20)
 Net profit on disposal of investment property
-
-
431
 Net profit on disposal of property, plant and equipment 
272
390
383








Other income (net)
272
390
794








Within operating expenses: 



 Gain on change of service cost of defined pension
 scheme
-
-
8,861
 Service cost on pension scheme
(21)
-
(21)
 Losses incurred on closed businesses
-
-
(66)
 Redundancy costs
-
(39)
(39)









(21)
(39)
8,735








Interest on overdue taxation relating to prior years
-
(79)
(82)




Net finance income and service cost on pension scheme
(87)
(251)
(481)








Within net finance expense
(87)
(330)
(563)








Total non-underlying items before taxation
164
21
8,966




The net financing return and service cost on pension obligations in respect of the defined benefit scheme closed to future accrual is presented as a non-underlying item due to the volatility of this amount. Agreement was reached with the trustees of the Group's defined benefit pension schemein the year ended 31 March 2015 that the inflation measure used in payment increases for pensions in excess of GMP would change from RPI to CPI for members (or dependants of members) who were in service on or after 1 April 1991. The Directors recorded this change as a plan amendment through the Income Statement. The change from RPI to CPI resulted in a gain in the Income Statement of 8,861,000.
4. FINANCE EXPENSE

Half year to
30 September
2015
'000
Half year to
30 September
2014
'000
Year to
31 March
2015
'000




Interest payable on bank borrowings
162
236
489




Vehicle stocking plan interest
316
237
509




Financing costs amortised
54
58
125




Interest on overdue taxation (see note 3)
-
79
82




Preference dividends
51
51
102








Total finance costs
583
661
1,307








There was no interest capitalised in additions to freehold properties (2014: 8,000 at a rate of 3.8%) 

5. TAXATION

Half year to
30 September
2015
Half year to
30 September
2014
Year to
31 March
2015

'000
'000
'000




Current UK corporation tax 







Charge for the period
(252)
(4)
(249)




Adjustment in respect of prior years
-
24
-








Total tax (charge)/credit
(252)
20
(249)








Deferred tax 







Origination and reversal of timing differences
(90)
(185)
(1,969)




Adjustments recognised in the period for deferred 
tax of prior periods
49
-
35




Total charge
(41)
(185)
(1,934)








Total tax charged in the Statement of Financial Performance
(293)
(165)
(2,183)








The tax (charge)/credit arises as follows:







On normal trading
(260)
(211)
(318)




Non-underlying
(33)
46
(1,865)








Total charge
(293)
(165)
(2,183)








Taxation for the half year has been provided at the effective rate of taxation of 20% (2014: 21%) expected to apply to the whole year on ordinary trading. Tax on non-underlying items is provided at the actual rate applicable. 

6. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Treasury shares are treated as cancelled for the purposes of this calculation. 
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. 
Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below.

Half year to
Half year to
Year to

30 September
30 September
31 March
Basic
2015
2014
2015

'000
'000
'000








Profit before tax
1,711
1,213
11,438




Taxation
(293)
(165)
(2,183)








Earnings
1,418
1,048
9,255








Basic earnings per share
51.4p
38.0p
335.5p








Diluted earnings per share
50.7p
37.5p
330.7p








Adjusted







Profit before tax
1,711
1,213
11,438




Adjustment: Non-underlying items (note 3)
(164)
(21)
(8,966)








Underlying profit before tax
1,547
1,192
2,472




Taxation
(260)
(211)
(318)








Underlying earnings
1,287
981
2,154








Underlying earnings per share
46.6p
35.6p
78.1p








Diluted earnings per share
46.0p
35.1p
77.0p




 
The number of fully paid ordinary shares in issue at the period end was 2,759,678 (2014: 2,757,213). The weighted average shares in issue for the purposes of the earnings per share calculation were 2,759,678 (2014: 2,757,213). The shares granted under the Company's SAYE scheme are dilutive. The weighted average number of dilutive shares under option at fair value was 39,133 (2014: 35,409) giving a total diluted weighted average number of shares of 2,798,811 (2014: 2,792,622).
The Directors consider that underlying earnings per share figures provide a better measure of comparative performance.
7. DIVIDENDS
Ordinary shares of 50p each
The interim dividend proposed at the rate of 7.25p per share (2014: 6.75p) is payable on 8 January 2016 to shareholders on the register at the close of business on 11 December 2015. The shares will be marked ex-dividend on 10 December 2015.
Preference shares
Preference dividends have been paid in October 2015. The next preference dividends are payable in April 2016. The cost of the preference dividends has been included within finance costs.

8. PENSIONS
The net liability for defined benefit obligations has increased from 5,388,000 at 31 March 2015 to 5,997,000 at 30 September 2015. The increase of 609,000 comprises the net charge to the Statement of Financial Performance of 108,000 and a net remeasurement loss charged to Reserves of 661,000 less contributions of 160,000. Although liabilities reduced following an increase in the discount rate from 3.3% at 31 March 2015 to 3.7% at 30 September 2015, asset values reduced by a greater amount after taking into account benefits paid.
9. RELATED PARTY TRANSACTIONS
There have been no new related party transactions that have taken place in the first six months of the current financial year that have materially affected the financial position or performance of the Group during that period and there have been no material changes in the related party transactions described in the last Annual Report that could do so.
10. RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Board believes these risks and uncertainties to be consistent with those disclosed in our latest Annual Report, including general economic factors, their impact on the Group's defined benefit pension scheme, liquidity and financing, manufacturers' dependency and stability, used car prices and regulatory compliance. 
11. RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the Half Year Report has been prepared in accordance with IAS34 'Interim Financial Reporting';
b) the Half Year Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules (indication of important events during the first six months and their impact on the set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year); and
c) the Half Year Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules (disclosure of related parties' transactions and changes therein).
By order of the Board
S G M Caffyn
Chief Executive
M S Harrison
Finance Director
27 November 2015


INDEPENDENT REVIEW REPORT
to Caffyns plc
Introduction
We have reviewed the condensed set of financial statements in the Half Year Report for the six months ended 30 September 2015 which comprises the Condensed Consolidated Statement of Financial Performance, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and the related notes. 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's members, as a body, in accordance with ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company's members those matters we are required to state to them in a 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 and the Company's members as a body, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities 
The Half Year Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Year Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 
As disclosed in Note 2, 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 Year 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 a conclusion on the condensed set of financial statements in the Half Year 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 Year Report for the six months ended 30 September 2015 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. 
Grant Thornton UK LLP
Auditor 
Gatwick
27 November 2015

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