REG - Indivior PLC - Half Year Financial Results <Origin Href="QuoteRef">INDV.L</Origin> - Part 2
27/07/2017 07:07
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financial information herein has been
prepared in the basis of the accounting policies set out in the annual
accounts of the Group for the year ended December 31, 2016. The Group prepares
its annual accounts in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations
as adopted by the European Union and the Companies Act 2006 (the Act)
applicable to companies reporting under IFRS. In preparing these condensed
consolidated interim financial statements, the significant judgments made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the consolidated
financial statements for the year ended December 31, 2016, with the exception
of changes in estimates that are required in determining the provision for
income taxes.
The Interim Financial Statements do not include all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the Group's annual financial statements as at December 31,
2016. These Interim Financial Statements have been reviewed and not audited.
These Interim Financial Statements have been approved for issue as at July 26,
2017.
As disclosed in Note 7, the Group carries a provision of $242m relating to the
Department of Justice and Federal Trade Commission investigations and
antitrust litigation. The final amount may be materially higher than this
reserve. This could impact the Group's ability to operate, which would be
further adversely impacted should revenues decline and pipeline products fail
to obtain regulatory approval, all of which could mean the Group could not
continue in business without taking necessary measures to reduce its cost base
and improve its cash flow. As such, this indicates a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern. However, the Directors believe they have the ability to carry out the
measures that would be necessary and that the Group can continue as a going
concern for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis for accounting in preparing these financial
statements, which do not include any adjustments that might result from the
outcome of this uncertainty.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Act. The auditors
issued an unqualified opinion and did not contain a statement under section
498 of the Act on the Group's statutory financial statements for the year
ended December 31, 2016. The Group's statutory financial statements for the
year ended December 31, 2016 were approved by the Board of Directors on March
7, 2017, and have been delivered to the Registrar of Companies.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Indivior Group is engaged in a single business activity, which is the
development, manufacture and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence. The CEO reviews financial information on a
geographic basis for evaluating financial performance and allocating
resources. The Group has a single reportable segment.
Revenues
Revenues are attributed to countries based on the country where the sale
originates. The following table represents revenue from continuing operations
attributed to countries based on the country where the sale originates and
non-current assets, net of accumulated depreciation and amortization, by
country. Non-current assets for this purpose consist of property, plant and
equipment and intangible assets. Revenues and non-currents assets for the six
months to June 30, 2017 and 2016 were as follows:
Revenues from sale of goods:
Q22017$m Q22016$m H12017$m H12016$m
United States 237 222 452 433
ROW 51 52 101 98
Total 288 274 553 531
Non-current assets:
June 30,2017$m December 31,2016$m
United States 67 64
ROW 58 46
Total 125 110
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses information:
Q22017$m Q22016$m H12017$m H12016$m
Research and development expenses (19) (28) (44) (59)
Marketing, selling and distribution expenses (37) (32) (69) (64)
Administrative expenses (86) (77) (143) (143)
Depreciation and amortization (2) (6) (4) (12)
Operating lease rentals (2) (1) (4) (2)
Total (127) (116) (220) (221)
Exceptional Items
Q22017$m Q22016$m H12017$m H12016$m
Cost of sales - 10 - 10
Legal expenses 25 - 25 -
Consulting costs - 4 - 4
Total exceptional items 25 14 25 14
$25m of pre-tax exceptional items in Q2 2017 and H1 2017 are for a conclusive
legal settlement with Amneal Pharmaceuticals LLC in conjunction with
anti-trust litigation. $14m of pre-tax exceptional items in Q2 2016 and H1
2016 are for write offs of manufacturing costs and legal and advisory costs
related to the exploration of strategic initiatives for the event of a
potential negative ANDA ruling. These have been included within administrative
expenses and costs of sales.
4. TAXATION
The Group calculates tax expense for interim periods using the expected full
year rates, considering the pre-tax income and statutory rates for each
jurisdiction. The resulting expense is allocated between current and deferred
taxes based upon the forecasted full year ratio.
In the six months ended June 30, 2017, tax on total profits amounted to $66m
(H1 2016: $65m) and represented a half year effective tax rate of 30% (H1
2016: 38%); $9m of these relate to the tax effects of the exceptional items
within operating profit (H1 2016: $5m). Prior year tax expense also included
an exceptional benefit of $19m related to the tax effect on the movement of
assets within the Group and additional provisions for unresolved tax matters.
The Group's balance sheet at June 30, 2017 included a tax payable liability of
$95m, tax receivables of $31m, and deferred tax asset of $91m. The reduction
in deferred tax assets of $18m relates primarily to temporary differences on
unrealized profit on the sale of inventory between Group entities. This
reduction is expected to be sustained.
The increase in the effective tax rate to 30% was primarily driven by the
relative contribution to pre-tax income by taxing jurisdiction in the
half-year.
The United Kingdom ('UK') decision to withdraw from the European Union ('EU')
could have a material effect on our taxes. The impact of the withdrawal will
not be known until both the EU and the UK develop the exit plan and the
related changes in tax laws are enacted. We will adjust our current and
deferred income taxes when tax law changes related to the UK withdrawal are
substantively enacted and/or when EU law ceases to apply in the UK.
5. EARNINGS PER SHARE
Q22017cents Q22016cents H12017cents H12016cents
Basic earnings per share 10 8 21 15
Diluted earnings per share 10 8 20 14
Adjusted basic earnings per share 12 11 23 19
Adjusted diluted earnings per share 12 11 23 18
Basic
Basic earnings per share ("EPS") is calculated by dividing profit for the
period attributable to owners of the Company by the weighted average number of
ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has dilutive potential ordinary shares
in the form of stock options. The weighted average number of shares is
adjusted for the number of shares granted assuming the exercise of stock
options.
2017Averagenumber ofshares 2016Averagenumber ofshares
On a basic basis 720,713,885 720,597,566
Dilution for Long Term Incentive Plan (LTIP) 26,879,526 24,845,443
Employee Sharesave Scheme 1,050,182 -
On a diluted basis 748,643,593 745,443,009
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted for the impact
of exceptional items after the appropriate tax amount, provides additional
useful information on underlying trends to shareholders in respect of earnings
per ordinary share. A reconciliation of net income to adjusted net income is
as follows:
Q22017$m Q22016$m H12017$m H12016$m
Net income 73 57 153 107
Exceptional items 25 14 25 14
Tax effect of exceptional items (9) (5) (9) (5)
Exceptional items within taxation - 14 - 19
Adjusted net income 89 80 169 135
6. FINANCIAL LIABILITIES - BORROWINGS
Current June 302017$m December 312016$m
Bank loans (129) (101)
(129) (101)
Non-current June 302017$m December 312016$m
Bank loans (352) (434)
(352) (434)
Analysis of net debt June 302017$m December 312016$m
Cash and cash equivalents 792 692
Borrowings* (497) (561)
295 131
*Borrowings reflects the outstanding principal amount drawn, before debt
issuance costs.
Reconciliation of net debt June 302017$m December 312016$m
The movements in the period were as follows:
Net debt at beginning of period 131 (174)
Increase in cash and cash equivalents 100 225
Net repayment of/(increase in) borrowings and overdraft 71 78
Exchange adjustment (7) 2
Net debt at end of period 295 131
The carrying value less provision of current borrowings and cash at bank, as
well as trade receivables and trade payables are assumed to approximate their
fair values. The terms of the loan in effect at June 30, 2017 are as follows:
Currency Nominalinterestmargin Maturity Required annual repayments Maximum leverage ratio Minimum liquidity$m
Term loan facility USD Libor (1%) + 6% 2019 10% 2.50 150
Term loan facility EUR Libor (1%) + 6% 2019 10% 2.50 150
• Nominal interest margin is calculated over 3m LIBOR, subject to a 1% floor.
• The maximum leverage ratio is a financial covenant to maintain net secured
leverage below a specified maximum (Adjusted net debt to Adjusted EBITDA
ratio) which stepped down to 2.50x on June 30, 2017.
• The minimum liquidity covenant requires the Group to maintain cash on hand
plus the undrawn amount available under the Group's $50 million revolving
credit facility of at least $150 million.
• An annual cash sweep may be required depending on the Group's leverage
ratio.
7. CONTINGENT LIABILITIES
The Group carries a provision of $242m for the investigative and antitrust
litigation matters noted below. The provision increased by $25m compared to Q1
2017, reflecting the distinct and conclusive settlement of antitrust
litigation with Amneal Pharmaceuticals LLC (Amneal). Other than adding the
Amneal settlement amount, Group has not changed the previously recorded
provision, as the other litigation and investigations are ongoing. The Group
continues in discussions with the Department of Justice about a possible
resolution to its investigation. The Group cannot predict with any certainty
whether it will reach ultimate resolution with the Department of Justice or
any or all of the other parties, or the ultimate cost of resolving all of the
matters. The final cost may be materially higher than this reserve.
Department of Justice Investigation
· A U.S. federal criminal grand jury investigation of Indivior initiated
in December 2013 is continuing, and includes marketing and promotion
practices, pediatric safety claims, and overprescribing of medication by
certain physicians. The U.S. Attorney's Office for the Western District of
Virginia has served a number of subpoenas relating to SUBOXONE Film, SUBOXONE
Tablet, SUBUTEX Tablet, buprenorphine and our competitors, among other issues.
The Group continues in discussions with the Department of Justice about a
possible resolution to its investigation. It is not possible at this time to
predict with any certainty the potential impact of this investigation on us or
to quantify the ultimate cost of a resolution. We are cooperating fully with
the relevant agencies and prosecutors and will continue to do so.
State Subpoenas
· On October 12th, 2016, Indivior was served with a subpoena for records
from the State of Connecticut Office of the Attorney General under its
Connecticut civil false claims act authority. The subpoena requests documents
related to the Group's marketing and promotion of SUBOXONE products and its
interactions with a non-profit third party organization. On November 16th,
2016, Indivior was served with a subpoena for records from the State of
California Department of Insurance under its California insurance code
authority. The subpoena requests documents related to SUBOXONE Film, SUBOXONE
Tablet, and SUBUTEX Tablet. The State has served additional subpoenas on
Indivior in 2017. The Group is fully cooperating in these investigations.
FTC investigation and Antitrust Litigation
· The U.S. Federal Trade Commission's investigation remains pending.
Litigation regarding privilege claims has now been resolved. Indivior has
produced certain documents that it had previously withheld as privileged;
other such documents have not been produced.
· Fact discovery is continuing in the antitrust class action litigation.
Plaintiffs allege, among other things, that Indivior violated U.S. federal and
state antitrust laws in attempting to delay generic entry of alternatives to
SUBOXONE tablets, and plaintiffs further allege that Indivior unlawfully acted
to lower the market share of these products.
· Amneal Pharmaceuticals LLC (Amneal), a manufacturer of generic
buprenorphine / naloxone tablets, has alleged antitrust violations similar in
nature to those alleged in the class action complaints, and Amneal has also
alleged violations of the U.S. Lanham Act. The Company negotiated a settlement
agreement with Amneal, executed on July 26th, that will result in the
dismissal of Amneal's claims with prejudice.
· A group of states, now numbering 41, and the District of Columbia filed
suit against Indivior in the same district where the antitrust class action
litigation and Amneal cases are pending. The States' complaint is similar to
the other pending antitrust complaints, and alleges violations of U.S. state
and federal antitrust and consumer protection laws. This lawsuit relates to
the investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class action
litigation and Amneal cases, subject to certain stays.
ANDA Litigation and Inter Partes Review
· The ruling after trial against Actavis and Par in the lawsuit involving
the Orange Book-listed patents for SUBOXONE Film issued on June 3rd, 2016. The
ruling found the asserted claims of the '514 patent valid and infringed; the
asserted claims of the '150 patent valid but not infringed; and the asserted
claims of the '832 patent invalid, but found that certain claims would be
infringed if they were valid.
· Based on the ruling as to the '514 patent, Actavis and Par are
currently enjoined from launching a generic product. Par has appealed and
Actavis is expected to appeal this ruling. The generics have also moved to
reopen the judgment based on the claim construction in the Dr. Reddy's case.
In light of the motions to reopen, Par's appeal has been deactivated until the
District Court rules on the motions, and the deadline for Actavis to file a
notice of appeal has been postponed.
· Trial against Dr. Reddy's, Actavis and Par in the lawsuits involving
the process patent (U.S. Patent No. 8,900,497) took place on November 16th and
21st-23rd, 2016.
· Trial against Dr. Reddy's in the lawsuit involving two of the Orange
Book-listed patents for SUBOXONE Film (U.S. Patent Nos. 8,017,150 and
8,603,514) took place on November 7th, 16th, and 21st-23rd, 2016. Dr. Reddy's
30-month stay of FDA approval expired on April 17th, 2017. So far as Indivior
is aware, FDA to date has not granted tentative or final marketing
authorization to Dr. Reddy's (or any other generic SUBOXONE Film alternative).
If FDA were to grant final approval to Dr. Reddy's this would enable them to
market a generic film alternative to SUBOXONE® Film in the U.S. However, any
market launch by Dr. Reddy's before the District Court renders its decision,
or before the court of appeals renders its decision even if Dr. Reddy's was to
prevail before the District Court, would be on an "at risk" basis because
Indivior would have a claim for damages against Dr. Reddy's if it ultimately
prevails after any appeal.
· A stipulation and proposed order was filed with the District Court on
April 28th, 2017, seeking to consolidate the trial against Alvogen in the
lawsuit involving the '150 and '514 Orange Book-listed patents and the '497
process patent for SUBOXONE Film with the trial against Mylan (discussed
below). The District Court approved the stipulation on May 1st, 2017.
Accordingly, the trial against Alvogen will be scheduled for September
25th-27th, 2017, and will be tried concurrently with the trial against Mylan.
The 30-month stay of FDA approval of Alvogen's Abbreviated New Drug
Application is presently set to expire October 29th, 2017.
· By a Court order dated August 22nd, 2016, Indivior's SUBOXONE Film
patent litigation against Sandoz has been dismissed without prejudice because
Sandoz is no longer pursuing Paragraph IV certifications for its proposed
generic formulations of SUBOXONE Film.
· Trial against Mylan in the lawsuit involving '514 Orange Book-listed
patent and the '497 process patent for SUBOXONE Film is scheduled for
September 25th-27th, 2017, and will be tried concurrently with the trial
against Alvogen pursuant to a stipulation filed with and approved by the
District Court. Indivior has dismissed its claim of infringement of the '150
Orange Book-listed patent against Mylan. The 30-month stay of FDA approval of
Mylan's Abbreviated New Drug Application is presently set to expire March
24th, 2018. On January 12th, 2017, the District Court issued a claim
construction decision in the Mylan action that clarified its earlier
construction in the Dr. Reddy's case of certain terms in the '514 patent.
Relying on a recent Supreme Court decision relating to venue in patent cases,
Mylan has recently sought to renew its motion to transfer the case from the
District Court for the District of Delaware to the District Court for the
Northern District of West Virginia. Indivior has opposed that request. If
Mylan's motion is granted, trial against Mylan could be delayed.
· Indivior received a Paragraph IV notification from Teva, dated February
8th, 2016, indicating that Teva had filed a 505(b)(2) New Drug Application
(NDA) for a 16mg/4mg strength of buprenorphine/naloxone sublingual film. The
parties have agreed that infringement by Teva's 16 mg/4 mg dosage strength
will be governed by the infringement ruling on the accused 8 mg/2 mg dosage
strength in the ANDA now owned by Dr. Reddy's that was the subject of the
trial in November 2016.
· On May 31st, 2016, Dr. Reddy's filed petitions seeking inter parties
review (IPR) of the three Orange Book-listed patents covering SUBOXONE Film.
Indivior and Monosol Rx filed Patent Owner Preliminary Responses opposing
institution of the IPRs on September 6th, 2016, arguing that institution of
the IPRs should be denied. On December 2nd, 2016, the US Patent Trial and
Appeal Board (PTAB) denied institution of the IPR as to the '832 Patent, and
on December 5th, 2016, the PTAB denied institution of the IPRs as to the '514
and '150 Patents. On January 3rd, 2017, Dr. Reddy's filed Requests for
Rehearing of the three non-institution decisions. On March 22nd, 2017, the
PTAB denied Dr. Reddy's request for rehearing of its decisions not to
institute its petitions for IPRs of the '150 and '514 patents, and on June
23rd, 2017, the PTAB denied the rehearing request for the '832 patent IPR.
· Mylan has filed a petition seeking an IPR of the '514 patent. On May
12th, 2017, the US Patent & Trademark Office decided to institute IPR
proceedings. On June 9th and 12th, 2017, Par and Dr. Reddy's filed respective
motions to join the Mylan '514 patent IPR. Indivior has opposed Dr. Reddy's
joinder request. Par and Dr. Reddy's are time-barred from bringing independent
IPR petitions against the Orange Book-listed patents.
· In the event that one or more of the generic companies are successful
in their patent challenges, and should there be FDA approval of one or more of
the ANDAs and subsequent commercial launch of generic SUBOXONE Film, and the
Group's pipeline products fail to obtain regulatory approval, there is the
likelihood that revenues and operating profits of the Group will significantly
decline. In these circumstances the Directors believe they would be able to
take the required steps to reduce the cost base, however, this would result in
a significant change to the structure of the business.
Rhodes Pharmaceuticals
· On March 21st, 2017 Rhodes Pharmaceuticals filed a complaint against
Indivior in the District of Delaware, alleging that Indivior's sale of
SUBOXONE Film in the U.S. infringes one or more claims of a patent. The
asserted patent, which was issued in June 2016 traces back to an application
filed in August 2007. Indivior believes this claim is without merit and
intends to vigorously defend this action.
Estate of John Bradley Allen
· On December 27th, 2016, the Estate of John Bradley Allen filed a civil
complaint against Indivior, among other parties, in the Northern District of
New York seeking relief under Connecticut's products liability and unfair
trade practices statutes for damages allegedly caused by SUBOXONE. Indivior
believes this lawsuit is without merit and intends to vigorously defend this
action.
IRS Notice on Manufacturing Deductions
· In August 2015, the IRS issued notices of a proposed adjustment for the
disallowance of certain manufacturing deductions claimed by the Group
following its audit of 2011 and 2012 income tax years. During the 4th quarter
of 2015, the Group was notified by the IRS of their intention to disallow
these claims as part of the 2013 and 2014 audit cycle. The Group has appealed
the proposed disallowance. The Group has evaluated its positions with respect
to these claims and has provided $22m tax reserve for amounts claimed on all
open periods as its best estimate of its expected settlement position for this
issue.
8. TRADE AND OTHER PAYABLES
June 302017$m December 312016$m
Sales returns and rebates (394) (402)
Trade payables (30) (33)
Accruals (160) (212)
Other tax and social security payables (19) (11)
Total (603) (658)
Sales return and rebate accruals, primarily in the US, are provided for by the
Group at the point of sale in respect of the estimated rebates, discounts or
allowances payable to direct and indirect customers. Accruals are made at the
time of sale but the actual amounts to be paid are based on claims made some
time after the initial recognition of the sale. The estimated amounts may not
fully reflect the final outcome and are subject to change dependent upon,
amongst other things, the payor channel (e.g. Medicaid, Medicare, Managed
Care, etc) and product mix. Accrual balances are reviewed and adjusted
quarterly in the light of historical experience of actual rebates, discounts
or allowances given and returns made and any changes in arrangements. Future
events could cause the assumptions on which the accruals are based to change,
which could affect the future results of the Group.
9. SHARE CAPITAL
Equityordinaryshares Nominalvalue$m
Issued and fully paid
At January 1, 2017 720,597,566 72
Allotments 390,817 -
At June 30, 2017 720,988,383 72
Equityordinaryshares Nominalvalue$m
Issued and fully paid
At January 1, 2016 718,577,618 72
Allotments 2,019,948 -
At June 30, 2016 720,597,566 72
Allotment of ordinary shares
During the period, 390,817 ordinary shares (2016: 2,019,948) were allotted to
satisfy vestings/exercises under the Group's Long Term Incentive Plan and US
Employee Stock Purchase Plan.
10. RELATED PARTIES
Indivior's former parent, Reckitt Benckiser Group PLC, was a related party
through 2016 as a result of certain transition management agreements. During
H1 2016, Indivior purchased certain services such as office space rental and
other operational services on commercial terms and on an arm's length basis.
The amount included within administrative expenses in respect of these
services was $2m.
11. POST BALANCE SHEET EVENTS
The Company reached a legal settlement of antitrust litigation with Amneal
Pharmaceuticals LLC.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
· This condensed set of interim financial statements, which have been
prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by
the European Union, gives a true and fair view of the assets, liabilities,
financial position, and profit or loss of Indivior; and
· The interim management report gives a fair review of the information
required pursuant to regulations 4.2.7 and 4.2.8 of the Disclosure Guidance
and Transparency Rules (DTR)
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Indivior's Directors are listed in the Annual Report and Accounts for 2016.
There have been no changes in the period.
Details of all current Directors are available on our website at
www.indivior.com
By order of the Board
Shaun Thaxter Mark Crossley
Chief Executive Officer Chief Financial Officer
July 26, 2017
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim financial
statements (the "Interim Financial Statements") in the Half Yearly Results of
Indivior PLC for the three and six month periods ended 30 June 2017. Based on
our review, nothing has come to our attention that causes us to believe that
the Interim Financial Statements are not prepared, in all material respects,
in accordance with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Emphasis of matter - Going concern
In forming our conclusion on the Interim Financial Statements, which is not
modified, we have considered the adequacy of the disclosure made in note 1 to
the Interim Financial Statements concerning the Group's ability to continue as
a going concern. As more fully stated in note 7 the Group is involved in
investigations by the Department of Justice and the Federal Trade Commission
as well as antitrust litigation. An amount of $242 million has been
established as a provision for potential settlement for all of these matters.
The amount accepted in the final agreed settlement might be materially higher
than this provision. This could impact the Group's ability to operate, which
would be further adversely impacted should revenues decline and pipeline
products fail to obtain regulatory approval, all of which could mean the Group
cannot continue in business without taking necessary measures to reduce its
cost base and improve its cash flow. The Directors believe that they are able
to carry out the necessary measures and that the Group can continue as a going
concern for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis for accounting in preparing these Interim
Financial Statements. These conditions, along with the other matters explained
in note 7 to the Interim Financial Statements, indicate the existence of a
material uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. The Interim Financial Statements do
not include the adjustments that would result if the Group was unable to
continue as a going concern.
Emphasis of matter - Outcome of litigation
In forming our conclusion on the Interim Financial Statements, which is not
modified, we draw your attention to note 7 that describes the uncertain
outcome of the ongoing ANDA patent litigation over Suboxone Film. In the event
of a negative ruling against the Group, and should there be a regulatory
approval and subsequent commercial launch of generic Suboxone Film, and
pipeline products fail to obtain regulatory approval there is the likelihood
that revenues and operating profits may decline. In these circumstances the
Directors believe they would be able to take the required steps to reduce the
cost base, however this would result in a significant change to the structure
of the business. As a result of this decline and extent of its impact, the
Directors would consider a change in the structure of the business and methods
to reduce its cost base, as also described in note 7.
What we have reviewed
The Interim Financial Statements comprise:
· the Condensed consolidated interim balance sheet as at 30 June 2017;
· the Condensed consolidated interim income statement and Condensed
consolidated interim statement of comprehensive income for the period then
ended;
· the Condensed consolidated interim cash flow statement for the period
then ended;
· the Condensed consolidated interim statement of changes in equity for
the period then ended; and
· the explanatory notes to the Interim Financial Statements.
The Interim Financial Statements included in the Half Yearly Results have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1 to the Interim Financial Statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Yearly Results, including the Interim Financial Statements, is the
responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the Half Yearly Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the Interim Financial
Statements in the Half Yearly Results based on our review. This report,
including the conclusion, has been prepared for and only for the company for
the purpose of complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
What a review of interim financial statements involves
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, 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.
We have read the other information contained in the Half Yearly Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the Interim Financial Statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2017
This information is provided by RNS
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