Lavendon Group plc

Half Year Results 2015

Lavendon Group plc ("the Group"), Europe's market leader in the rental of powered access equipment, today announces its Half Year Results for the six months ended 30 June 2015.

Good First Half Performance

·      Total revenues up 1% includes strong rental revenue growth in Middle East & France at constant FX

·      Group underlying operating profit increased by 13%; margins up to 14.1% with notable improvement in UK margin up 220 bps to 15.2%

·      Underlying PBT increased by 18% to £14.5m and underlying EPS increased by 17% to 6.60p

·      Strong ROCE performance, up 210bps to 12.7%

·      Net capex plans for 2015 increased to £75m, bringing forward c£20m from 2016  

·      Interim dividend up 21% reflecting Board's confidence in Group's future prospects

Financial Highlights

Notes

(i)   Underlying results are stated before amortisation of intellectual property and intangibles recognised on acquisition and exceptional items.

(ii)  Underlying and statutory measures are the same.

(iii) ROCE increase of 210bps includes 20bps which is attributable to the impairment in 2014 of the carrying value of the goodwill in the Group's Belgian business.

Don Kenny, Chief Executive of Lavendon Group plc said:

"I am pleased with the Group's performance in the first half of the year, where we delivered growth in revenues, profitability, margins and ROCE. The interim dividend increase of 21% reflects this good performance and the Board's confidence in the Group's long term future.

We are allocating an additional £20m of capital in 2015, increasing the level of fleet investment in the Middle East, UK and France to add capacity in support of our growth plans. Our strong financial position enables us to accelerate our investment plans in response to customer demand and we will continue to use our operational flexibility to build momentum and scale going forward.

Trading since the half year has remained in line with our expectations and, whilst mindful of the re-emergence of some uncertainty in the economic outlook, the Board remains confident that the Group is well positioned to deliver its expectations for 2015 and continue to create substantial shareholder value over the medium term."

For further information please contact:

Lavendon Group plc

A meeting for investors and analysts will be held today at 10.00am at FTI Consulting, 200 Aldersgate, London EC1A 4HD.

Analysts/investors unable to attend in person may join the meeting by conference call by dialling in on +44 (0)20 3059 8125.  A copy of the presentation will be available at http://www.lavendongroup.com/InvestorCentre/Financial-Performance/Reports-Presentations from 9.30am, BST today. 

A copy of the audio recording of the meeting will be available at www.lavendongroup.com later today.

Next Trading Update

The Group's next scheduled announcement of financial information will be its third quarter Trading Update in November 2015.

Notes to Editors

Lavendon Group is the European and Middle East market leader in the rental of powered access equipment. The quality and diversity of its hire fleet, coupled with the professionalism and accessibility of its depot network, provides an exceptional product range for customers.

Powered access equipment is designed to enable people to work safely, productively and comfortably at height. It can be used in a comprehensive range of applications, both inside and outside buildings and structures. 

The Group has operations in the United Kingdom, Germany, Belgium, France, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals c.20,000 units and the Group employs over 1,600 people. 

CHAIRMAN'S STATEMENT

The Group performed well in the first six months of the year, with the combination of revenue growth and an efficient operating model delivering good growth in the Group's profitability, margins and returns on capital employed ("ROCE"). The principal drivers of this performance have been strong revenue growth in our Middle East and French businesses and a notable improvement in margins from our UK business.

The interim dividend increase of 21% reflects these strong results and the Board's confidence in the Group's long term future.

Our investment programme for 2015 provides additional fleet capacity to support our revenue growth plans and ensures that our existing rental fleet remains well invested and highly competitive. As previously announced, we are increasing the scale of our fleet investment this year, above the level originally planned for 2015, to bring forward c.£20 million of investment from 2016 into the current financial year. Accelerating deliveries of additional fleet into the final months of 2015 will provide further capacity to our Middle East, UK and French businesses, to ensure our market positions are enhanced and that we are better positioned to capture growth opportunities as we move into 2016.

The development of strong market positions, offering a differentiated service, continues to be our strategic focus in order to drive revenue growth and better margins. Our ability to allocate additional capital in support of our strategic aims, as we have done this year, illustrates the operational flexibility provided by the strength of the Group's balance sheet. Our healthy capital structure will continue to be utilised as attractive growth opportunities become available in the marketplace.

We are confident that the consistent delivery of revenue growth, driven and serviced from our efficient cost structure with its inherent operating leverage, will generate substantial shareholder value in the medium term.

Dividend

The Board has declared an interim dividend of 1.70 pence per share, an increase of 21% over the previous year (2014: 1.40 pence per share). This will be paid on 9 October 2015 to shareholders on the register at 11 September 2015.

It is the Board's intention to maintain dividend distributions within a range that is covered three to four times by earnings. The actual dividend cover in any one year will be balanced against the Group's investment needs and funding requirements as we move through the business cycle.

Return on Capital Employed

At the half year, the Group's key performance metric, ROCE, improved significantly by 210 basis points (bps) to 12.7% (2014: 10.6%). Of this improvement, c.20 bps is attributable to the impairment in 2014 of the carrying value of the goodwill in the Group's Belgian business. The calculation of ROCE has been based on the Group's operating profit before exceptional items for the 12 months to 30 June 2015 and the average of the opening and closing capital employed in this period of £314.0 million (2014: £312.6 million).

Over the past five years, the Group's principal strategic target has been to improve ROCE above our weighted average cost of capital ("WACC"), and, once achieved, maintain it above this benchmark across the business cycle. This strategic target was achieved in 2014 and further improvement in ROCE has been delivered in the first half of 2015. To recognise the development of our capital structure over time and, in particular, changes to the Group's cost of equity and debt, we have reassessed the Group's WACC.  Going forward a WACC of 9.5% will be used for reporting purposes when measuring the Group's ROCE performance. As we expand our capital base in support of our growth plans, we anticipate that the rate of progress of ROCE will moderate from that seen in the first half, however the Board's key strategic aim remains the delivery of a ROCE greater than WACC across the business cycle.

Financial Results

The Group's total revenue increased by 1% to £119.1 million (2014: £117.4 million) with rental revenues stable year on year. Using constant currency rates with 2014, total revenue increased by 3% to £120.7 million with rental revenues improving by 1%.

Underlying operating profits increased by 13% to £16.8 million (2014: £14.9 million) with margins improving to 14.1% (2014: 12.7%). At constant currency rates, underlying operating profits increased by 8% to £16.1 million (2014: £14.9 million) with margins improving to 13.3%. The translation impact of the movement in exchange rates year on year has increased the Group's underlying operating profits by £0.7 million in the period.

The increased underlying operating profits, combined with a further reduction in underlying net interest costs to £2.2 million (2014: £2.6 million), enabled the Group's underlying profit before tax to increase by 18% to £14.5 million (2014: £12.3 million). With the Group's underlying effective tax rate remaining stable at 23% (2014: 23%), underlying profit after tax increased by 18% to £11.2 million (2014: £9.5 million) and underlying earnings per share increased by 17% to 6.60 pence (2014: 5.63 pence). At constant currency rates, underlying profit before tax increased by 13% to £13.9 million (2014: £12.3 million) and underlying earnings per share increased by 11% to 6.24 pence (2014: 5.63 pence).

Amortisation charges for the six months to 30 June 2015 were £0.9 million (2014: £1.5 million) and there were no exceptional items incurred (2014: nil). After amortisation charges, the Group's operating profits increased by 19% to £15.9 million (2014: £13.3 million). The Group's profit before and after tax both increased by 27% to £13.7 million and £10.5 million respectively (2014: £10.8 million and £8.3 million respectively), while earnings per share increased by 25% to 6.19 pence (2014: 4.91 pence).

Cash Flow

Underlying earnings before interest, tax, depreciation and amortisation ("EBITDA") increased by 6% to £37.0 million (2014: £34.9 million) with margins improving to 31.0% (2014: 29.7%). At constant currency rates, the Group's EBITDA increased by 5% to £36.5 million with margins of 30.2% (2014: 29.7%). Following an increase in cash outflows relating to the Group's planned investment programme to £33.9 million (2014: £21.7 million), which includes the reversal of the £7.5 million year on year increase in amounts owing to equipment suppliers highlighted at the time of our 2014 results, the Group absorbed £0.2 million of cash during the first half of the year (2014: generated cash of £8.4 million). After payment of interest and tax, net cash used by operations was £6.5 million (2014: net cash generated from operations £2.0 million).

Investment

During the first half of 2015, a total of £39.1 million (2014: £21.4 million) was invested in the Group's rental fleet and operational infrastructure. This investment was partly financed by the disposal of retired assets which generated £4.5 million (2014: £4.4 million). After reflecting movements in the amounts owed to equipment suppliers at the beginning and end of the period, this investment resulted in a net cash outflow relating to capital expenditure of £31.1 million (2014: £19.7 million) for the first half.

Following our previously announced decision to bring forward c.£20 million of investment from 2016 into the current financial year, our overall planned investment programme (net of disposals) for 2015 has been increased to £75 million. This investment is principally directed towards the purchase of c. 3,000 rental machines that will provide additional capacity to our Middle East, UK and French operations and enables a further substantial refreshment of the Group's rental fleet to be undertaken. This investment will be funded, in large part, by the Group's strong operating cash flows across the year with the balance financed by our debt facilities.

Net Debt

The Group's net debt before issue costs at 30 June 2015 was £96.8 million (31 December 2014: £90.6 million). The modest increase in the six month period reflects our investment programme being largely offset by the Group's strong operating cash flows and a favourable foreign exchange movement of £7.2 million. After adjusting for the unamortised costs relating to the Group's US Private Placements, the Group's reported net debt at 30 June 2015 was £96.0 million (31 December 2014: £89.7 million).

The corresponding debt to equity ratio was 43% (31 December 2014: 41%) and our net debt to pre-exceptional EBITDA ratio was 1.28 times (31 December 2014: 1.13 times), comfortably within our preferred leverage range of between 1.00 - 1.75 times. The Group continues to operate well within its banking covenants and has significant liquidity available from its combined debt facilities.

Review of Business Operations

Revenues and revenue growth percentages given in this section relate to rental revenues only and exclude revenues derived from the sale of new and ex-rental fleet equipment. For the Group's overseas operations, figures are quoted in local currencies, unless otherwise stated, to remove the impact of movements in foreign exchange rates and ensure a like for like comparison with the previous year (for the Middle East, the US Dollar has been used as a proxy for the basket of Middle East currencies). The split of revenues by country between rental revenues and revenues from the sale of new and ex-rental fleet equipment is given in Note 2 "Segmental Analysis".

UK (47% of Group Rental Revenues)

The UK's rental revenue in the first half declined by 2% to £53.3 million (2014: £54.4 million). After a relatively slow start to the year, rental revenues showed an improving trend across the first half with a more favourable mix of machines on hire and a 2% year on year pricing improvement largely off-setting lower volumes. The improved rental revenue mix, increased sales of our BlueSky products and delivery of operating efficiencies led to an 18% increase in underlying operating profits to £8.8 million (2014: £7.5 million), with margins improving strongly to 15.2% (2014: 13.0%).

Enhancing service levels to build customer loyalty is a key management target as we drive our operational improvement programmes to deliver better business performance. Considerable attention is being directed at both improving fleet availability through maintenance service capability and at successfully embedding the processes and systems associated with the recent outsourcing of the UK's transport function.

We are again undertaking a substantial fleet investment programme during the year which will see a further 11% of the UK's rental fleet being refreshed. The scale of this investment ensures we operate a well-invested fleet to support the development of our differentiated services through the promotion of our BlueSky products and managed services capability. During the period, the use of our BlueSky products has gained further traction with customers seeking the BlueSky safety or efficiency-enhancing features and our design capabilities to resolve specific operational issues through bespoke solutions. Our ability to offer more than the standard rental product has been a key factor in securing additional market share amongst the Tier One contractor base during the period.

As we move into the second half, we are allocating additional capital to increase the UK fleet by the end of the year to ensure that its market-leading position and revenue generation capability is strengthened as we move into 2016.

Middle East (24% of Group Rental Revenues)

Our Middle East region has continued to grow strongly in the first half, despite increasingly more demanding comparators, with rental revenues up 8% to $41.0 million (2014: $37.8 million). Underlying operating profits increased by 11% to $12.6 million (2014: $11.4 million) with margins improving to 30.7% (2014: 30.0%). On conversion to Sterling, rental revenues increased by 19% to £26.9 million (2014: £22.7 million) and underlying operating profits increased strongly by 22% to £8.3 million (2014: £6.8 million).

The year on year revenue growth has been driven by higher volumes with pricing for the region as a whole coming off previous peaks (year on year pricing declined by 4%). The growth in volumes has been supported by additional investment with the region's fleet expanding by c. 150 units in the period. During the first half, we saw a change in the geographic drivers of revenue growth in the region with slower growth in Saudi Arabia being compensated by an acceleration of growth elsewhere in the region.

The overall outlook for the region remains positive with the number of large scale projects providing growth opportunities for the Group both significant and diverse in nature. Although the lower oil price and recent political change are influencing the pace of government investment in parts of Saudi Arabia in the short term, the demand from the structural growth drivers across the Middle East region remain strong. We are therefore allocating additional capital during the second half of the year to increase the scale of the fleet in the region to meet the expected growth in activity levels as we move into 2016. As stated previously, the allocation of additional capital into the region will be undertaken in a controlled manner to ensure we retain flexibility and are able to respond accordingly to changes in market conditions should they occur.

Continental Europe (29% of Group Rental Revenues)

The Euro rental revenues for the Group's Continental Europe region (Germany, France and Belgium) increased by 2% in the first half of the year to €43.7 million (2014: €42.9 million). Underlying operating profits were €3.0 million (2014: €3.8 million). Due to the strength of Sterling compared to last year, once the rental revenues are converted to Sterling, they show a 9% decline to £32.0 million (2014: £35.3 million) with underlying operating profits declining to £2.2 million (2014: £3.1 million).

Germany (16% of Group Rental Revenues)

German Euro rental revenues were stable in the first half of the year at €22.8 million, showing an improving trend across the period that enabled the business to return to year on year growth of 2% in the second quarter. This revenue performance reflects fairly consistent growth in volumes across the first half which more than offset a 3% year on year decline in pricing. Once converted to Sterling, rental revenues show an 11% decline to £16.7 million (2014: £18.8 million).

During the first half, a new management team was appointed and additional resources were made available to drive the sales performance of the business. The benefits of these actions are starting to emerge and whilst the increase in resources has had an impact on the margins in the short term, we expect this to unwind as we move through the second half of the year. As a result of this increased investment to improve the operating structure, underlying operating profits declined to £0.5 million (2014: £0.9 million) with margins at 2.9% (2014: 4.8%).

France (9% of Group Rental Revenues)

Our French business has continued to perform well in a difficult market environment. Euro rental revenues increased by 14% to €14.4 million (2014: €12.6 million) driven by higher levels of utilisation of an expanded fleet and improved pricing increasing by c. 2%. After conversion to Sterling, revenues increased by 1% to £10.5 million (2014: £10.4 million). Underlying operating profits increased to £1.2 million (2014: £1.1 million) with margins improving to 11.5% (2014: 10.1%).

Additional capital is being allocated to the French business in the second half of the year to expand the scale of the fleet and so support the drive for further market share gains and continued revenue growth.

Belgium (4% of Group Rental Revenues)

Euro revenues in our Belgian business declined by 12% in the first half to €6.5 million (2014: €7.4 million). The decline in revenues is weighted towards the first quarter as the impact of the completion of a major contract in the comparative period reduced during the second quarter. Once converted to Sterling, rental revenues declined by 21% to £4.8 million (2014: £6.1 million) with underlying operating profits reducing to £0.5 million (2014: £1.1 million) and margins at 9.5% (2014: 16.3%).

We expect Belgium's trading performance to stabilise as we move through the second half of the year. Market conditions remain difficult and highly competitive and so we continue to manage our cost base accordingly.

Summary and Outlook

The Group performed well in the first half delivering growth in revenues, profitability, margins and ROCE. The interim dividend increase of 21% reflects these strong results and the Board's confidence in the Group's long term future.

Our fleet investment programme for 2015 is substantial, adding capacity to meet growth in customer demand and continuing to undertake a significant refreshment programme. In particular, we have increased the scale of investment in 2015, bringing forward c.£20 million of investment from 2016, to ensure we have additional fleet in place as we move into 2016 to maintain our strong market positions and enable the Group to respond more efficiently to growth opportunities as they emerge.

The Group's ability to accelerate its investment plans in response to improving market conditions reflects our strong financial position and offers considerable operational flexibility going forward. We plan to allocate our financial resources to build momentum and scale in the Group, so enabling our inherent operating leverage to drive attractive incremental margin from future revenue growth.

The Group's performance in the coming years will be underpinned by the allocation of this additional capital as we deliver our growth plans. Whilst the expansion of the Group's capital base and timing of investment decisions may temper the rate of progress in the Group's ROCE in the short term, our disciplined approach with regard to capital allocation will ensure that the Board's objective on delivering ROCE above WACC across the business cycle is maintained.

Trading since the half year has been in line with our expectations and, whilst mindful of the re-emergence of some uncertainty in the economic outlook, the Board remains confident that the Group is well positioned to deliver both its expectations for 2015 and substantial shareholder value over the medium term.

John Standen

Non-Executive Chairman

28 August 2015

Group income statement

Group statement of comprehensive income

Group balance sheet

Group statement of cash flows

Group statement of changes in equity

For the six months ended 30 June 2015 (unaudited)

For the six months ended 30 June 2014 (unaudited)

Group statement of changes in equity 

For the year ended 31 December 2014 (audited)

During the period £nil (June 2014: £6,000; December 2014: £7,000) was debited from retained earnings, representing the nominal value of shares issued following the vesting of Long Term Incentive Plans in the period.

Notes to the interim financial information (unaudited)

1. This condensed consolidated interim financial information has been prepared in accordance with the Disclosure and Transparency Rules and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The same accounting policies, presentation, methods of computation, significant judgements and the key sources of estimation of uncertainties have been followed in the condensed consolidated interim financial information as were applied in the Group's audited financial statements for the year ended 31 December 2014 which were prepared in accordance with IFRS's as adopted by the European Union, with the exception of new standards and interpretations that were only applicable from the beginning of the current financial year and taxes on income in the interim period which are accrued using the tax rates that would be applicable to total expected annual profit or loss.

As at the date of authorisation of this interim financial information, the following standards were in issue but not yet endorsed by the EU. These standards were available for early adoption but the Group has not applied these standards in the preparation of the financial statements. Adoption of these standards is not expected to have a material impact on the Group:

-  Amendment to IAS19 'Employee benefits' on defined benefit plans

-  Annual improvements 2012

-  Annual improvements 2013

New or revised accounting standards and interpretations issued by 30 June 2015 but not yet effective are listed below:

-  Annual improvements 2014

-  IFRS9 'Financial instruments' - classification and measurement

-  Amendment to IFRS9 'Financial instruments' regarding general hedge accounting

-  Amendment to IAS16 'Property plant and equipment' and IAS38 'Intangible assets', on depreciation and amortisation

-  IFRS15 'Revenue from contracts with customers'

2. Segmental analysis

The internal reporting arrangements for Lavendon Group plc comprises of five operating segments based on the geographical locations of the UK, the Middle East, Germany, France and Belgium and one non operating Corporate cost centre. The Corporate cost centre comprises the Group directorate, statutory compliance and Group functions and holds the Group's bank borrowing facilities.

The Group's chief operating decision maker ("CODM") is the Group Board. The Group Board reviews the Group's internal reporting in order to monitor and assess performance of the operating segments for the purpose of making decisions about allocation of resources. Performance is evaluated based on actual results compared to agreed targets and performance in prior periods.

Six months ended 30 June 2015 (unaudited)

Notes

Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

Included within the Middle East is external revenue of £14,969,000 (six months ended 30 June 2014: £13,595,000; year ended 31 December 2014: £29,141,000) generated in Saudi Arabia.

* Amortisation of intellectual property and intangibles recognised on acquisitions.

Six months ended 30 June 2014 (unaudited)

Note

Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

 * Amortisation of intellectual property and intangibles recognised on acquisitions and software amortisation.

Year ended 31 December 2014 (audited)

Notes

Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

*  Amortisation of intellectual property and intangibles recognised on acquisition.

** Exceptional finance expense relates to Corporate items.

3. Exceptional items and amortisation

Exceptional items and amortisation* incurred during the period are set out below:

Notes

(i) Exceptional operating expenses in 2014 related to the closure of the Group's operations in India and is primarily made up of provisions against fixed assets and receivables.

      (ii) Exceptional impairment costs related to the impairment of the carrying value of goodwill associated with the Group's Belgian business in 2014.

      (iii) Fees incurred on bank financing in 2014.
* Amortisation of intellectual property and intangibles recognised on acquisitions (software amortisation of £451,000 included in June 14).

4. Finance income and expense

5. Taxation on profit/(loss)

Analysis of charge for the period:

The tax charge on underlying profits is based on the expected effective tax rate for the year.

In the July 2015 Budget Statement, it was announced that the main rate of UK corporation tax would reduce from 20% to 19% on 1 April 2017 and 18% on 1 April 2020. As the legislation is not enacted by the period end the impact is not included in these results.

6. Earnings per share

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

Earnings per share is calculated on the 169,129,840 ordinary shares in issue for the six months ended 30 June 2015 being the weighted average number of ordinary shares in issue (six months ended 30 June 2014: 168,286,987; year ended 31 December 2014: 168,556,682). 

Diluted underlying earnings per share assumes conversion of all potential dilutive ordinary shares which arise from share incentive scheme awards granted to employees where the performance criteria is being  met as at the end of the period and where the exercise price is less than the average market price of the Company's ordinary share capital during the period. The effect of this dilution is to increase the weighted average number of ordinary shares to 170,016,929 (six months ended 30 June 2014: 170,378,524; year ended 31 December 2014: 169,729,849).

Underlying earnings per share is presented as the directors believe that this provides additional relevant information about underlying business performance.

7. Dividends

The directors are declaring an interim dividend of 1.70 pence per ordinary share which will distribute an estimated £2,884,000 of shareholders' funds. It will be paid on 9 October 2015 to shareholders who are on the register at 11 September 2015.

8. Intangible assets

Included within other intangible additions is £191,000 (June 2014: £641,000, December 2014: £894,000) of internal labour costs. The carrying value of internally generated computer software is £3,517,000 (June 2014: £3,573,000, December 2014: £4,041,000). All other intangible assets related to acquired intangible assets.

Goodwill acquired in a business combination was allocated, at date of acquisition, to the cash generating unit that benefited from that business combination. The directors consider that a cash generating unit is generally an individual country of operation. Where there is a change in the way the Group manages and operates, the goodwill allocation to individual cash generating units is reviewed and reallocated where appropriate.

The allocation of the goodwill by operating segment is shown in the table below:

Goodwill is tested annually for impairment or more frequently if there are indications that goodwill might be impaired. The next goodwill impairment review will be performed at 31 December 2015. Management do not consider there to be any indications of impairment as at 30 June 2015.

9. Property, plant and equipment

10. Inventories

11. Analysis of changes in net debt

Note

(i) Non cash movements relate to the amortisation of debt issue costs.

12. Financial liabilities - borrowings

Bank loans and the loan placement are repayable as follows:

Bank loans and the loan placement are secured by both fixed and floating charges on the assets of the Group.

With the exception of long term borrowings before unamortised debt issue costs, the fair value of the Group's financial instruments are materially equal to their carrying value. The fair value of long term borrowings before unamortised debt issue costs is £118,070,000 (June 2014: £118,317,000; December 2014: £116,989,000).

13. Capital commitments

14. Contingent liabilities

The Group has no significant contingent liabilities as at 30 June 2015 (30 June 2014 and 31 December 2014: £nil).

15. Seasonality of interim operations

The Group's financial results and cash flows have, historically, been subject to seasonal trends between the first and second half of the financial year. Traditionally, the second half of the financial year sees higher revenue and profitability as a result of there being an increased number of working days and higher customer demand in the Group's countries of operation.

There is no assurance that this trend will continue.

16. Principal risks and uncertainties

The principal risks and uncertainties for the Group are set out below:

17. Related party transactions

Jan Åstrand was a Non-Executive Director, the Senior Independent Director, Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees for the Group up to 26 February 2014. During this period Jan Åstrand was also a Non-Executive Director of Northgate plc. Accordingly, Northgate plc and its affiliates were considered to be related parties up to 26 February 2014.

The following transactions were carried out with Northgate plc and its affiliates during the period they were considered to be related parties of the Group:

All transactions with related parties were carried out on commercial terms and conditions at market prices.