The interim dividend of 5.3m will be paid on 28 June 2013 to holders registered on 31 May 2013.

Transcription

1 Mucklow (A & J) Group plc Half-Yearly Report 20 February 2013 Embargoed: 7.00am Rupert Mucklow, Chairman commented: I am pleased to report steady progress being made during the first six months of our financial year, with a slight improvement in underlying pre-tax profit and net asset value per share. Financial Summary for the six months ended 31 December 2012 Income statement Six months ended Six months ended 31 December December 2011 Underlying pre-tax profit ( m) (1) Gross rental income received ( m) Basic EPS (p) EPRA EPS (p) (2) Interim dividend per share (p) Balance sheet 31 December June 2012 Net asset value ( m) Basic NAV per share (p) EPRA NAV per share (p) (3) Net debt ( m) Gearing (%) Property portfolio 31 December June 2012 Vacancy rate (%) Portfolio value ( m) (4) Valuation gain/(deficit) ( m) 1.1 (15.1) Initial yield on investment properties (%) Equivalent yield (%) The interim dividend of 5.3m will be paid on 28 June 2013 to holders registered on 31 May (1) See the investment/development column in the underlying financial performance tables in note 7 for details. (2) Excludes the profit on disposal of investment, development and trading properties and the revaluation of investment and development properties and financial instruments and tax adjustments. See note 8. (3) Excludes the fair value of derivative financial instruments and includes the surplus on trading properties. See note 8. (4) See note 9. For further information please contact: Rupert Mucklow, Chairman Fiona Tooley David Wooldridge, Finance Director Tooley Street Communications Tel: Tel: Page 1 of 16

2 Chairman s Statement I am pleased to report steady progress being made during the first six months of our financial year, with a slight improvement in underlying pre-tax profit and net asset value per share. Results for the six months to 31 December 2012 The underlying pre-tax profit, which excludes revaluation movements and profit on the sale of investment and trading properties, increased marginally during the first six months, from 6.8m to 6.9m. Statutory pre-tax profit for the half year increased to 8.1m, compared with 1.9m for the corresponding period last year, mainly due to a swing in property revaluation. There was no trading profit during the period (31 December 2011: 1.5m). EPRA net asset value per Ordinary share* increased to 300p at 31 December 2012 (30 June 2012: 297p). Shareholders funds were 179.4m (30 June 2012: 177.6m), while borrowings net of cash amounted to 63.7m and gearing was 35% (30 June 2012: 69.0m and 39%). Dividend The Directors have declared an interim dividend of 8.78p per Ordinary share, an increase of 3% over last year (31 December 2011: 8.52p), which will be paid as a PID on 28 June 2013, to Shareholders on the register at the close of business on 31 May Property review Our occupancy rate during the first half year was maintained at 93.5% of total available space, with a further 1.5% reserved at 31 December We continued to experience encouraging levels of enquiries for our vacant, Midlands industrial space, but the processes to secure decisions and legal commitments remain slow. Leasing incentives are starting to harden for the better quality properties, due to the lack of available space. However, market conditions generally remain fragile and tenants are still benefitting from some very attractive deals on older, secondary properties, which continue to suppress rental growth. There has been an increase in the number of regional investment transactions over the last six months. We have seen an improvement in investor demand for grade A and better quality, second hand industrial space, but very little interest in older, secondary and tertiary properties. DTZ Debenham Tie Leung reviewed the value of our property portfolio at 31 December The investment properties and development land were valued at 254.5m, which showed a revaluation surplus of 1.2m for the period. The initial yield on our investment portfolio was 7.8% (30 June 2012: 8.1%), increasing to 8.1% on the expiry of rent free periods. The equivalent yield was 8.5% (30 June 2012: 8.7%). Our industrial properties, which account for approximately 62% of our investment portfolio, increased in value by 1.9% in the first half year, whilst our office and retail properties declined in value by 2.1% and 0.6% respectively. The majority of the increase in value for our industrial properties came from asset management initiatives, rather than any rental growth or notable yield movement. Page 2 of 16

3 The most significant changes in value came from two industrial properties at Worcester and Birmingham:- First, a new 5 year lease was completed on our 110,000 sq ft distribution warehouse, at Shire Business Park, Worcester. The property was acquired in 2010 for 4.1m, off an initial yield of 13.8%, to reflect a lease expiry in December The passing rent has been maintained at 565,000 per annum. Secondly, conditional contracts were exchanged before Christmas to sell a vacant 40,000 sq ft industrial unit at Golden Cross, Birmingham. The sale is subject to planning consent for a data centre and the purchaser obtaining funding. The price agreed is significantly above 30 June 2012 book value. Only part of the potential surplus was reflected in the December valuation. We did not acquire any investment properties during the period, but have continued actively to monitor the market for suitable opportunities. We remain extremely selective on acquisitions and are well positioned to capitalise on any potential investment propositions that may arise. DTZ Debenham Tie Leung also reviewed the value of our trading properties at 31 December The total value was 1.9m, which showed an unrecognised surplus of 1.4m over book value. No disposals of trading properties were made during the period. Finance We completed a new 20m term loan with Lloyds TSB Bank plc during the half year, which has been used to free up our existing revolving credit facility that we have with HSBC. The loan is for a period of 10 years and is fixed at a rate of 5.23%. We also commenced early discussions with HSBC over renewing our principal banking facilities for a further 5 years, which are due to expire in September Our total net borrowings reduced in the half year from 69.0m to 63.7m at 31 December Undrawn banking facilities totalled 38.5m, while net debt to equity gearing was 35% (30 June 2012: 39%). Principle risks and uncertainties There have been no changes to the principal risks and uncertainties of the Group, which remain as disclosed on page 19 of the Annual Report for the year ended 30 June Outlook There are encouraging signs that the Midlands industrial occupier and investment markets are slowly improving. Economic conditions remain challenging and I am sure we will continue to experience some volatility during the recovery period. Property values appear to have stabilised for now and offer very attractive returns over our current cost of borrowing. We expect to benefit from the improved liquidity in the investment market over the next six months and utilise some of our increased banking facilities. Rupert J Mucklow Chairman 19 February 2013 See the investment/development column in the underlying financial performance tables in note 7 for details. * EPRA (European Public Real Estate Association) net asset value, including the surplus on trading properties and excluding the fair value of financial instruments. See note 8 for details. Page 3 of 16

4 Group Condensed Statement of Comprehensive Income for the six months to 31 December December December June 2012 Notes Revenue 2 10,152 11,827 21,860 Gross rental income relating to investment properties 10,152 10,127 20,160 Property outgoings (140) (460) (953) Net rental income relating to investment properties 10,012 9,667 19,207 Proceeds on sale of trading properties - 1,700 1,700 Carrying value of trading properties sold - (165) (165) Property outgoings relating to trading properties (1) (5) (5) Net (expenditure on)/income from trading properties (1) 1,530 1,530 Administration expenses (1,520) (1,418) (2,856) Operating profit before net gains/(losses) on investment and development properties 8,491 9,779 17,881 Profit on disposal of investment and development properties Revaluation of investment and development properties 1,180 (6,558) (14,978) Operating profit 3 9,763 3,459 3,210 Net finance costs 4 (1,624) (1,562) (3,101) Profit before tax 3 8,139 1, Tax (charge)/credit 5 - (3) 60 Profit for the financial period 8,139 1, Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Revaluation of owner-occupied property (31) (128) (123) Total comprehensive income for the period 8,108 1, All operations are continuing. Basic and diluted earnings per share p 3.15p 0.28p Page 4 of 16

5 Group Condensed Statement of Changes in Equity for the six months ended 31 December 2012 Ordinary Capital Share-based share redemption Revaluation payments Retained Total capital reserve reserve reserve earnings equity Balance at 1 July ,044 11, , ,570 Retained profit ,139 8,139 Other comprehensive income - - (31) - - (31) Total comprehensive income - - (31) - 8,139 8,108 Share-based payment Ordinary share issue Exercise of share options (133) Dividends paid (6,356) (6,356) Balance 31 December 2012 (unaudited) 15,060 11, , ,425 Balance at 1 July ,021 11, , ,618 Retained profit ,894 1,894 Other comprehensive income - - (128) - - (128) Total comprehensive income - - (128) - 1,894 1,766 Share-based payment Ordinary share issue Exercise of share options (154) Dividends paid (6,162) (6,162) Balance 31 December 2011 (unaudited) 15,044 11, , ,331 Balance 1 July ,021 11, , ,618 Retained profit Other comprehensive income - - (123) - - (123) Total comprehensive income - - (123) Share-based payment Ordinary share issue Exercise of share options (154) Release on forfeiture of share options (16) 16 - Dividends paid (11,290) (11,290) Balance 30 June 2012 (audited) 15,044 11, , ,570 Page 5 of 16

6 Group Condensed Balance Sheet at 31 December 2012 Notes Non-current assets Investment and development properties 9 253, , ,789 Property, plant and equipment 1,149 1,240 1,198 Derivative financial instruments Trade and other receivables , , ,325 Current assets Trading properties Trade and other receivables 1,092 2,195 1,554 Cash and cash equivalents 7,160 6,571 1,216 8,706 9,213 3,220 Total assets 263, , ,545 Current liabilities Trade and other payables (13,211) (12,909) (7,989) Tax liabilities (136) (294) (790) (13,347) (13,203) (8,779) Non-current liabilities Borrowings (70,842) (68,162) (70,196) Total liabilities (84,189) (81,365) (78,975) Net assets 179, , ,570 Equity Called up ordinary share capital 15,060 15,044 15,044 Revaluation reserve Share-based payment reserve Redemption reserve 11,162 11,162 11,162 Retained earnings 152, , ,961 Total equity 179, , ,570 Net asset value per share - Basic and diluted 8 298p 306p 295p - EPRA 8 300p 309p 297p Page 6 of 16

7 Group Condensed Cash Flow Statement for the six months to 31 December 2012 Cash flows from operating activities Operating profit 9,763 3,459 3,210 Adjustments for non-cash items - Unrealised net revaluation (gains)/losses on investment and development properties (1,180) 6,558 14,978 - Profit on disposal of investment properties (92) (238) (307) - Depreciation Share-based payments Loss on sale of property, plant and equipment Increase in lease incentives (520) (1,165) (834) Other movements arising from operations - (Increase)/decrease in trading properties (4) Decrease in receivables ,625 - Decrease in payables (1,804) (2,606) (748) Net cash generated from operations 6,783 7,220 18,298 Interest received Interest paid (1,518) (1,398) (2,825) Preference dividends paid - (24) (24) Corporation tax (paid)/refunded (15) 34 (46) Net cash inflow from operating activities 5,270 5,872 15,465 Cash flows from investing activities Acquisition of and additions to investment and development properties (6) (7) (7,133) Proceeds on disposal of investment and development properties ,707 Net expenditure on property, plant and equipment (31) (8) (9) Net cash inflow/(outflow) from investing activities (5,435) Cash flows from financing activities Net increase/(decrease) in borrowings 603 (1,000) 1,000 Equity share issue Payment for derivative financial instrument Equity dividends paid - - (11,290) Net cash inflow/(outflow) from financing activities 619 (977) (10,267) Net increase/(decrease) in cash and cash equivalents 5,944 5,118 (237) Cash and cash equivalents at beginning of period 1,216 1,453 1,453 Cash and cash equivalents at end of period 7,160 6,571 1,216 Page 7 of 16

8 Notes to the Half-Yearly Report 1. Accounting policies Basis of preparation of half-yearly financial information The annual financial statements of are prepared in accordance with IFRS s 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 and the disclosure requirements of the Listing Rules. The Group s condensed set of financial statements for the period ended 31 December 2012 were authorised for issue by the Board of directors on 19 February The half-yearly financial information is unaudited but has been reviewed by Deloitte LLP and their report appears on page 16 of this half-yearly report. The information for the year ended 30 June 2012 does not constitute statutory accounts as defined in Section 434 of the Companies Act A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act The condensed set of financial statements are prepared under the historical cost convention, except for the revaluation of investment and development properties and owner-occupied properties and deferred tax thereon and certain financial assets, with consistent accounting policies to the prior year. As at 31 December 2012 the Group had 38.5m of undrawn banking facilities, comprising the 5.0m overdraft and 33.5m of the 40.0m 2014 Revolving Credit Facility, and had fully drawn down 20.0m from its HSBC 2014 Term Loan. The Group s 5.0m overdraft is the only banking facility due for renewal within 12 months of the date of this document. The Lloyds Bank m Term Loan remains fully drawn. During the period the Group secured a further 20.0m 10 year Lloyds Bank Term Loan, expiring in 2022, which has been fully drawn. Given these facilities, the Group s low gearing level of 35% and 71.1m of unencumbered properties, significant capacity exists to raise additional finance or to provide additional security for existing facilities, should property values fall. Accordingly, the directors continue to adopt the going concern basis in preparing the condensed set of financial statements. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group s latest annual audited financial statements other than the adoption of the amendments to IAS1 Presentation of Items of Other Comprehensive Income. The Group has applied the amendments to IAS 1 Presentation of Items of Other Comprehensive Income with effect from 1 July This amendment increased the required level of disclosure within the statement of comprehensive income. The impact of this amendment has been to analyse items within the statement of comprehensive income between items that will not be reclassified subsequently to profit or loss and items that will be reclassified subsequently to profit or loss in accordance with the respective IFRS standard to which the item relates. The amendments have been applied retrospectively, and hence the presentation of items of comprehensive income have been restated to reflect the change. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 do not result in any impact on profit or loss, comprehensive income and total comprehensive income. Page 8 of 16

9 2. Revenue Total rental income from investment and development properties 10,152 10,127 20,160 Income received from trading properties - 1,700 1,700 10,152 11,827 21,860 Finance income (note 4) Total revenue 10,172 11,867 21, Segmental analysis The Group has two reportable segments: investment and development property and trading property. Investment and development properties - Net rental income 10,012 9,667 19,207 - Profit on disposal Gain/(deficit) on revaluation of investment and development properties 1,180 (6,558) (14,978) 11,284 3,347 4,536 Trading properties - Income received from trading properties - 1,700 1,700 - Carrying value on sale - (165) (165) - Property outgoings (1) (5) (5) (1) 1,530 1,530 Net income from property portfolio before administration expenses 11,283 4,877 6,066 Administration expenses (1,520) (1,418) (2,856) Operating profit 9,763 3,459 3,210 Net financing costs (1,624) (1,562) (3,101) Profit before tax 8,139 1, The property revaluation gain/(deficit) has been recognised as follows: Within operating profit - Investment properties 1,180 (6,558) (14,953) - Development properties - - (25) 1,180 (6,558) (14,978) Within other comprehensive income - Owner-occupied properties (31) (128) (123) Total revaluation gain/(deficit) for the period 1,149 (6,686) (15,101) Page 9 of 16

10 3. Segmental analysis (continued) Segmental information on assets and liabilities, including a reconciliation to the results reported in the Group condensed balance sheet, are as follows: Balance sheet segment assets Investment and development properties - Segment assets 254, , ,147 - Segment liabilities (4,479) (4,471) (5,729) - Net borrowings (63,682) (61,591) (68,980) 186, , ,438 Trading properties - Segment assets Segment liabilities Other activities - Unallocated assets 1,617 2,081 1,732 - Unallocated liabilities (8,868) (8,732) (3,050) (7,251) (6,651) (1,318) Net assets 179, , ,570 Capital expenditure Investment and development properties 6 7 7,133 Other activities ,142 Depreciation Other activities All operations and income are derived from the United Kingdom and therefore no geographical segmental information is provided. Page 10 of 16

11 4. Net finance costs Finance cost on: Debenture stock Preference share dividend Fair value movement of derivative financial instruments Bank overdraft and loan interest payable 1,362 1,228 2,486 Total finance costs 1,644 1,602 3,163 Finance income on: Short-term deposits Bank and other interest receivable Total finance income Net finance costs 1,624 1,562 3, Taxation Current tax - Corporation tax Adjustment in respect of previous years - (140) (190) Total tax charge/(credit) in the statement of comprehensive income - 3 (60) There is no deferred tax charge or credit for any of the periods stated. The Company elected to become a Real Estate Investment Trust (REIT) with effect from 1 July As a result of this, rental income and capital gains of the REIT business are not subject to tax. The tax charge for the periods shown above represents the tax payable on the non-reit business, mainly profits on the disposal of trading properties and interest receivable. Page 11 of 16

12 6. Dividends Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 30 June 2012 of 10.55p (2011: 10.24p) per share 6,356 6,162 6,162 Interim dividend for the year ended 30 June 2012 of 8.52p per share - - 5,128 6,356 6,162 11,290 The directors propose an interim dividend of 8.78p (2011: 8.52p) per Ordinary share. This dividend has not been included as a liability in these financial statements. The interim dividend will be paid on 28 June 2013 to shareholders on the register at the close of business on 31 May Underlying financial performance Presented below is a non-statutory analysis of the underlying rental performance before tax, as shown in the investment/development column, which excludes the profit on sale of investment and trading properties and other items (capitalised interest, property revaluation movements and the fair value movement on derivative financial instruments). The directors consider that this further analysis of our statement of comprehensive income gives shareholders a useful comparison of our underlying performance for the periods shown in the condensed set of financial statements. Unaudited Unaudited Investment/ Unaudited Trading Unaudited Other Total development properties Items Six months to 31 December Rental income 10,152 10, Property outgoings (140) (140) - - Net rental income 10,012 10, Sale of trading properties Carrying value of trading properties sold Property outgoings on trading properties (1) - (1) - Net (expenditure on)/income from trading properties (1) - (1) - Administration expenses (1,520) (1,520) - - Operating profit before net gains on investment 8,491 8,492 (1) - Net gains on revaluation 1, ,180 Profit on disposal of investment and development properties Operating profit 9,763 8,492 (1) 1,272 Finance income Gross finance costs (1,628) (1,628) - - Fair value movement on derivative financial instruments (16) - - (16) Total finance costs (1,644) (1,628) - (16) Profit before tax 8,139 6,884 (1) 1,256 Page 12 of 16

13 7. Underlying financial performance (continued) Unaudited Unaudited Investment/ Unaudited Trading Unaudited Other Total development properties Items Six months to 31 December Rental income 10,127 10, Property outgoings (460) (460) - - Net rental income 9,667 9, Sale of trading properties 1,700-1,700 - Carrying value of trading properties sold (165) - (165) - Property outgoings on trading properties (5) - (5) - Net income from trading properties 1,530-1,530 - Administration expenses (1,418) (1,418) - - Operating profit before net losses on investment 9,779 8,249 1,530 - Net losses on revaluation (6,558) - - (6,558) Profit on disposal of investment properties Operating profit 3,459 8,249 1,530 (6,320) Finance income Gross finance costs (1,494) (1,494) - - Fair value movement on derivative financial instruments (108) - - (108) Total finance costs (1,602) (1,494) - (108) Profit before tax 1,897 6,795 1,530 (6,428) 8. Earnings per share and net asset value per share Earnings per share The basic and diluted earnings per share of 13.52p (31 December 2011: 3.15p) has been calculated on the basis of the weighted average of 60,193,841 (31 December 2011: 60,102,542) Ordinary shares and a profit of 8.14m (31 December 2011: 1.89m). The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of earnings and net asset value per share information and these are included in the following tables. The EPRA earnings per share has been amended from the basic and diluted earnings per share by the following: Earnings 8,139 1, Profit on disposal of investment and development properties (92) (238) (307) Net (gains)/losses on revaluation of investment and development properties (1,180) 6,558 14,978 Loss/(profit) on sale of trading properties 1 (1,530) (1,530) Fair value movement on derivative financial instruments Tax adjustments EPRA earnings 6,884 6,935 13,587 EPRA earnings per share 11.44p 11.54p 22.59p Page 13 of 16

14 8. Earnings per share and net asset value per share (continued) The Group presents an EPRA earnings per share figure as the directors consider that this is a better indicator of the performance of the Group. There are no dilutive shares. Options over 112,583 Ordinary shares were granted in the period (2011: 137,432 Ordinary shares) under the 2007 Performance Share Plan. The vesting conditions for these shares have not been met, so they have not been treated as dilutive in these calculations. The third three-year award under the 2007 Performance Share Plan vested in the period, with 63,176 Ordinary shares being issued and 22,978 shares lapsed. Net asset value per share The net asset value per share of 298p (31 December 2011: 306p) has been calculated on the basis of the number of equity shares in issue of 60,242,518 (31 December 2011: 60,179,342) and net assets of m (31 December 2011: m). The EPRA net asset value per share has been calculated as follows: Equity shareholders funds 179, , ,570 Valuation of land held as trading properties 1,871 1,871 1,871 Book value of land held as trading properties (454) (447) (450) Fair value of derivative financial instruments - (56) (17) EPRA net asset value 180, , ,974 EPRA net asset value per share 300p 309p 297p 9. Properties Unaudited 000 DTZ valuation as at 31 December ,460 Owner-occupied property included in property, plant and equipment (927) Other adjustments (38) Investment and development properties as at 31 December ,495 The properties are stated at market value as at 31 December 2012 and are valued by DTZ Debenham Tie Leung, professionally qualified external valuers, in accordance with the RICS Valuation Professional Standards published by the Royal Institution of Chartered Surveyors. DTZ Debenham Tie Leung have recent experience in the relevant location and category of the properties being valued. 10. Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Page 14 of 16

15 Responsibility Statement We confirm that to the best of our knowledge: a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting ; b) the half-yearly 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 c) the half-yearly report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transaction and changes therein). Signed on behalf of the Board who approved the half-yearly report on 19 February Rupert J Mucklow Chairman David Wooldridge Finance Director Page 15 of 16

16 Independent Review Report to 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 31 December 2012 which comprises the Group condensed statement of comprehensive income, the Group condensed statement of changes in equity, the Group condensed balance sheet, the Group condensed cash flow statement and related notes 1 to 10. 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 31 December 2012 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 Chartered Accountants and Statutory Auditor Birmingham, United Kingdom 19 February 2013 Page 16 of 16