Lavendon Group plc

Half Year Results 2016

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 2016.

Good First Half Performance

·      Total revenues up 13% - strong rental revenue growth in UK, Middle East and France

·      EBITDA growth of 17% largely funding net capex programme of £62m

·      Group underlying operating profit increased by 10% - strong growth in UK and Middle East

·      Underlying PBT increased by 10% to £15.9m and underlying EPS increased by 12% to 7.40p

·      ROCE of 12.2% remains comfortably ahead of WACC at 9.5%

·      Strong balance sheet with net debt:EBITDA 1.61x - well supported by operational cash flows

·      Interim dividend up 18% reflecting good performance and Board's confidence in 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; Net debt 2015 stated at 31 December 2015

(iii)    ROCE stated after the exceptional impairment charge made in 2015

Don Kenny, Chief Executive of Lavendon Group plc said:

"The Group's trading performance in the first half has seen the delivery of strong revenue growth that has driven further improvements in our profits and operational cash flows. This growth has built upon the momentum established within the business towards the end of 2015 with the UK, Middle East and France being the primary drivers. The 18% rise in the interim dividend reflects this performance and the Board's confidence in the Group's long term future.

Our growth reflects our strategic fleet investment decisions in 2015 and the actions taken in the first half to optimise our fleet deliveries and improve our operational processes. The restructuring of our German business is progressing as planned and is on track to be operational in quarter four. The Group's strong operational cash flows and strength of our balance sheet enables us to develop our market positions with investment, underpinning the positive momentum created within the business, whilst at the same time remaining within our preferred debt leverage range.

Trading since the half year has continued to be in line with our expectations and, whilst mindful of the recent increased economic uncertainty, the Board remains confident of making further progress in the second half and delivering on its expectations for 2016."

For further information, please contact:

A meeting for investors and analysts will be held today at 10.30am at FTI Consulting, 200 Aldersgate, London EC1A 4HD. A copy of the presentation and audio webcast 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 on 15th November 2016.

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.21,000 units and the Group employs over 1,900 people. 

CHAIRMAN'S STATEMENT

The Group has performed well in the first six months of 2016, with strong revenue growth driving further improvements in the Group's profits and operational cash flows. This performance has been delivered primarily through the increased momentum developed within our UK and Middle East regions which has more than compensated for the weakness in some of our Continental European markets.

The interim dividend increase of 18% reflects these good results and the Board's confidence in the Group's long term future.

The constant currency growth in revenue seen in the first half reflects the benefits of our strategic fleet investment programme in 2015, in particular the additional £20 million invested towards the end of that year. We also accelerated the main part of our 2016 fleet investment into the first half, and allocated a further £7 million to our original UK investment plan to provide extra capacity of high demand machines in the second quarter. These investment decisions demonstrate the flexibility provided by the strength of our balance sheet and operational cash flows, enabling us to deploy additional capital to capture growth opportunities while maintaining capital discipline and remaining within our preferred debt leverage range. Our encouraging start to the year also benefited from operational efficiency gains secured from within our transport and maintenance operations, improving our fleet availability and releasing additional machines for hire.

The restructuring of our German business into a more regionally-based depot business is progressing as planned and is on track to be operational in quarter four of this year. As anticipated, the changes being made have impacted the financial performance of the business in the first half. However we believe that they will provide the firm foundation from which improved financial returns to the Group can be delivered.

Our strategic focus remains on the development of strong market positions with a differentiated service offering that will continue to drive the Group's revenues and improve profitability. We are confident that continued revenue growth delivered from our efficient operational cost base will generate substantial shareholder value in the medium term.

Dividend

The Board has declared an interim dividend of 2.00 pence per share, an increase of 18% over the previous year (2015: 1.70 pence per share). This will be paid on 7 October 2016 to shareholders on the register at 9 September 2016.

The increased dividend reflects the consistent improvement in the Group's profits, the strength of its operating cash flows and the Board's confidence in the Group's future prospects. It is the Board's intention to move towards dividend distributions that are covered around three 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

The Group's return on capital employed ("ROCE") at the half year was 12.2% (2015: 12.7%), firmly above our weighted average cost of capital ("WACC") of 9.5%. On a like for like basis with the prior year, adjusting for the impairment in 2015 of the carrying value of the goodwill in the Group's German and Belgian businesses, the ROCE at the half year was 11.8% (2015: 12.7%). The movement in like for like ROCE over the past 12 months reflects the additional capital deployed in support of our growth plans, from which the delivery of returns will initially lag this investment. The calculation of ROCE has been based on the Group's operating profit prior to exceptional items for the 12 months to 30 June 2016 and the average of the opening and closing capital employed in this period of £352.2 million (2015: £314.0 million).

The Group's key strategic aim remains the delivery of a ROCE greater than its WACC across the business cycle.

Financial Results

The Group's total revenue increased by 13% to £134.2 million (2015: £119.1 million), with rental revenues also increasing by 13% to £127.1 million (2015: £112.2 million).

Underlying operating profits increased by 10% to £18.4 million (2015: £16.8 million) driven by strong growth in the UK and Middle East. Margins slightly softened to 13.7% (2015: 14.1%), as further margin improvement in the UK was offset by expected margin mix changes from Middle East growth and the effects of the German restructuring programme. We expect Group margins to improve during the second half, as the cost of investments made are fully absorbed within the business.

The increased underlying operating profits more than absorbed an increase in underlying net interest costs to £2.6 million (2015: £2.2 million), to enable the Group's underlying profit before tax to increase by 10% to £15.9 million (2015: £14.5 million). With the Group's underlying effective tax rate declining to 21% (2015: 23%), underlying profit after tax increased by 13% to £12.6 million (2015: £11.2 million) and underlying earnings per share increased by 12% to 7.40 pence (2015: 6.60 pence).

Amortisation* charges for the six months to 30 June 2016 were £0.9 million (2015: £0.9 million) and exceptional items totalling £2.4 million were incurred in the period. The exceptional items relate to the costs incurred from in-sourcing the UK's transportation function and the charges associated with the restructuring programme being undertaken in Germany.

After amortisation* charges and exceptional items, the Group's operating profit was £15.1 million (2015: £15.9 million). The Group's profit before tax and after tax were £12.5 million and £9.9 million respectively (2015: £13.7 million and £10.5 million respectively), whilst earnings per share were 5.83 pence (2015: 6.19 pence).

*Amortisation of intellectual property and intangibles recognised on acquisition.

Using exchange rates consistent with 2015, total revenues and rental revenues increased by 9% to £129.9 million and £123.1 million respectively, with underlying operating profits increasing by 5% to £17.5 million. Underlying profit before tax increased by 3% to £15.0 million, whilst underlying profit after tax increased by 5% to £11.8 million and underlying earnings per share increased by 5% to 6.93 pence.

Cash Flow

Underlying earnings before interest, tax, depreciation and amortisation ("EBITDA") increased by 17% to £43.4 million (2015: £37.0 million), with margins improving to 32.3% (2015: 31.0%). The strong growth in the Group's EBITDA in the period is a reflection of the Group's robust business model where the strength of cash generation from revenue growth is a key attribute.

After absorbing movements in working capital and the payment of interest and tax, the Group generated £31.2 million of operating cash prior to the purchase of rental fleet assets (2015: £27.4 million). After funding the purchase of rental fleet assets in the period, the net operating cash used by operating activities was £5.2 million (2015: £6.5 million).

The Group's absorption of working capital in the first half of circa £5 million was consistent with recent years, despite the strong revenue growth of 13% reported in the period and the well-publicised liquidity issues within the Middle East. The working capital pressure within the Middle East region remains primarily within our Saudi Arabian business, however its impact continues to be mitigated by the better working capital metrics seen in our other markets in the region that are driving our current revenue growth. As previously reported, our investment in the Middle East region for 2016 has been moderated compared to previous years and, as a consequence, we expect to increase the level of free cash flow generated by the region this year. We will continue to control the level of capital allocated to the Middle East region until the liquidity pressures show signs of easing.

Investment

During the first half of 2016, a total of £54.9 million (2015: £39.1 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 £3.1 million (2015: £4.5 million). After reflecting movements in the amounts owed to equipment suppliers at the start and end of the period, our investment resulted in a net cash outflow of £36.6 million (2015: £31.0 million) for the first half. As highlighted earlier, the year on year increase in investment reflects our decision to accelerate fleet deliveries into the first half in order to meet growing demand and underpin our drive for revenue growth. This growth in demand, particularly for more specialised equipment, also led us to increase the original planned level of 2016 investment for the UK by £7.0 million in the second quarter. As a result, our overall planned fleet investment programme (net of disposals) for 2016 has been increased to £62.0 million.

Net Debt

The Group's net debt before issue costs at 30 June 2016 was £149.7 million (31 December 2015: £119.9 million). The increase in the level of net debt reflects our investment programme in the six month period, including settlement of amounts owed to equipment suppliers brought forward from 2015, and an adverse foreign exchange movement of £11.0 million as a result of the sharp deterioration in Sterling's value against the Euro and US Dollar at the period end (following the UK's vote to leave the European Union (EU)). After adjusting for the unamortised debt issue costs, the Group's reported net debt at 30 June 2016 was £148.9 million (31 December 2015: £119.2 million). Subject to further movement in foreign exchange rates, we expect the Group's net debt level at the end of this year to be broadly in line with that reported at the half year.

The corresponding debt to equity ratio** was 63% (31 December 2015: 53%) and our net debt to pre-exceptional EBITDA ratio was 1.61 times (31 December 2015: 1.39 times), comfortably within our preferred leveraged range of up to 1.75 times despite the sharp adverse movement in exchange rates at the half year.

During the second quarter, we increased the size of our debt facilities by £25 million in order to maintain the headroom available under these facilities at their level prior to the settlement of amounts owing to equipment suppliers brought forward from 2015. This increase was provided under our existing banking arrangements with the same margin structure, and increases the Group's total debt facilities to circa £205 million (comprising of revolving bank facilities of £75 million and €60 million, together with US Private Placements with a combined value of €95 million). The total debt facilities have maturity dates that range from July 2019 through to August 2024 and the Group's available headroom within the facilities was circa £40 million at 30 June 2016. Of the total borrowings at the period end, circa 65% was denominated in either Euros or US Dollars and circa 50% of the borrowings were at fixed interest rates.

** Net debt as a percentage of equity

Review of Business Operations

Revenues and revenue growth percentages given in this section relate to rental revenue 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).

UK (45% of Group Rental Revenues)

The UK's rental revenues in the first half increased by 7% to £57.2 million (2015: £53.3 million) with underlying operating profits increasing by 8% to £9.5 million (2015: £8.8 million) and margins improving to 15.7% (2015: 15.2%).

The rate of year on year revenue growth increased across the first half with growth in the second quarter reaching 8%. This growth was driven by strong volumes principally derived from market share gains that more than absorbed a 3% year on year softening in pricing. The ability to satisfy this increasing demand has been supported by our fleet investment decisions made in 2015 and the first half of 2016, that improved the scale and mix of the UK's rental fleet. At the same time, the availability of our fleet has improved through efficiency gains made within our transport and maintenance operations. In particular, as previously reported, the successful re-integration during the first half of the UK's previously out-sourced transportation function has reduced the level of fleet unavailable through transportation delays. These operational efficiency improvements have increased the availability of the UK fleet by almost 5% in the first half, effectively releasing around 500 extra machines for hire.

We have continued to successfully promote our differentiated service through our BlueSky safety and efficiency enhancing products together with our managed service capability, securing additional volume from our major customers. At the same time, we have added sales resource and further developed our merchant and rehire partnership programmes in order to drive growth and increase our market share in more localised customer segments.

As we move into the second half, the business is well positioned to strengthen its market leading position and deliver further growth over the balance of the year.

Middle East (28% of Group Rental Revenues)

Our Middle East region has grown strongly in the first half, despite increasingly more demanding comparators, with rental revenues increasing by 22% to $50.1 million (2015: $41.0 million) and underlying operating profits growing by 15% to $14.5 million (2015: $12.6 million). Margins of 27.0% (2015: 30.3%) reflect the region's revenue growth drivers transitioning away from our higher margin Saudi Arabian business.

Within the region, growth in revenue from our operations in the UAE, Kuwait, Oman and Qatar has more than offset the decline in Saudi Arabia. Increased utilisation of an enlarged fleet has been the principal driver generating the strong levels of revenue growth in the first half (there were on average almost 1,000 extra rental machines available within the region's fleet compared to the first half of 2015). This volume growth has more than absorbed any pricing pressure in the region, particularly prevalent in Saudi Arabia, and we expect volumes to continue to be the main driver of revenue growth over the balance of the year.

We continue to be mindful of the current business climate in the Middle East, where the pace of new investments in the region is significantly influenced by the price of oil. However, the structural drivers of growth across the Middle East remain in place and our current geographic spread of large scale projects already under way provides some resilience to the market outlook in the near term.

As we have previously highlighted, compared to recent years, our 2016 investment plans for the region have been moderated with capital only being allocated to those markets where we are seeing strong growth. With this lower level of investment and our manageable working capital profile, we expect to increase the level of free cash flow generated from the region in 2016. This disciplined approach to capital allocation will continue until the liquidity pressures in the region show signs of easing.

On conversion to Sterling, rental revenues increased by 30% to £35.0 million (2015: £26.9 million) and underlying operating profits increased by 22% to £10.1 million (2015: £8.3 million).

Continental Europe (27% of Group Rental Revenues)

Rental revenues for the Group's Continental European region (Germany, France and Belgium) increased by 3% in the first half of the year to €44.9 million (2015: €43.7 million). Underlying operating profits declined to €2.2 million (2015: €3.0 million). Margins for the region of 4.7% (2015: 6.6%), reflect the impact of the German restructuring programme which absorbed the profit growth in France. Once rental revenues are converted to Sterling, they show a 9% increase to £35.0 million (2015: £32.0 million), with underlying operating profits declining to £1.7 million (2015: £2.2 million).

Germany (13% of Group Rental Revenues)

German rental revenues declined by 2% in the first half to €22.4 million (2015: €22.8 million). As expected, a small underlying operating loss for the period of €0.3 million was incurred (2015: underlying operating profit of €0.7 million) as the business became more price competitive to drive volume growth during the period in which operations were being restructured. As we move into the traditionally stronger trading months of the year, we expect margins to improve and the business to return to profit.

The restructuring programme is progressing as planned, with the regional structure now in place and resource realignment on track to be operational in the final quarter of this year. The organisational changes to date have enabled the business to reduce its headcount requirements by circa 9% over the first half.  While these changes have incurred restructuring charges and disrupted our ability to grow revenues in the short term, we firmly believe the adoption of a "local champion" strategy (as seen in the Group's French business) will enable us to grow market share, increase revenues and improve financial returns to the Group.

On conversion to Sterling, rental revenues increased by 4% to £17.4 million (2015: £16.7 million), with an underlying operating loss of £0.2 million for the first half compared to a profit of £0.5 million in the prior year.

France (10% of Group Rental Revenues)

Our French business continued to grow strongly during the first half, despite the market continuing to show little sign of a sustained recovery. Rental revenues increased by 10% to €15.8 million (2015: €14.4 million) with underlying operating profits increasing to €1.8 million (2015: €1.7 million) and margins slightly improving to 11.5% (2015: 11.4%).

Revenue growth has been volume driven, with the business being price competitive where required in order to strengthen its market positions in specific customer sectors or geographic areas. As in previous years, additional resources have been invested in the business to develop its operational base to effectively manage and grow revenues as the rental fleet expands. This investment has constrained margins in the first half but we expect this effect to unwind over the second half.

On conversion to Sterling, rental revenues increased by 17% to £12.3 million (2015: £10.5 million), with underlying operating profits increasing to £1.4 million (2015: £1.2 million).

Belgium (4% of Group Rental Revenues)

Rental revenues in our Belgian business increased by 3% in the first half to €6.7 million (2015: €6.5 million), with underlying operating profits and margins stable at €0.7 million and 9.0% respectively (2015: €0.7 million and 9.5% respectively).

Revenue growth has been driven by strong fleet utilisation which more than compensated for the continuing weak pricing environment. The business continues to be tightly managed and its structure is reviewed on a regular basis to identify opportunities to improve the financial returns to the Group.

On conversion to Sterling, rental revenues increased by 8% to £5.2 million (2015: £4.8 million), with underlying operating profits stable at £0.5 million (2015: £0.5 million).

Summary and Outlook

The Group has performed well in the first half with strong revenue growth driving further improvements in our profits and operational cash flows, building on the momentum established towards the end of 2015.

The interim dividend increase of 18% reflects this good performance and the Board's confidence in the Group's long term future.

The Group's growth over the first six months of the year reflects the benefits of our strategic fleet investment decisions in 2015, as well as the actions taken to optimise the 2016 fleet deliveries and improve the availability of our enlarged fleet. Whilst the cost of these actions has constrained our overall margins in the first half, the Group's profits have continued to improve and we expect this impact on margins to unwind over the second half of the year.

Our ability to accelerate both the scale and timing of investment illustrates the flexibility provided by the strength of the Group's balance sheet and operational cash flows. This is a key factor which underpins our robust business model, whereby our strong cash flows can be used to build strong market positions, respond to growth opportunities and drive earnings or, when more difficult market conditions prevail, can be used to reduce debt levels and protect the sustainability of returns. The Board's core focus is to ensure the allocation of capital, and use of our cash flows, remains disciplined and our 2017 investment plans will be structured accordingly so that our target of maintaining ROCE above our WACC across the business cycle is delivered and that increased shareholder value is created.

Whilst it is still too early to fully assess the wider economic implications of the UK's decision to leave the EU, we do believe the Group remains well positioned with over 50% of its revenues, profits and cash flows being generated from outside the UK. Should there be a prolonged period of Sterling weakness, the Group's reported results would benefit from the translational impact on its overseas earnings which would offer some mitigation should there be any adverse economic consequences on the Group arising from the UK's decision.

Trading since the half year has continued to be in line with our expectations and, whilst mindful of the recent increased economic uncertainty, the Board remains confident of making further progress in the second half and delivering on its expectations for 2016.

John Standen

Non-Executive Chairman

26 August 2016

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 2016 (unaudited)

For the six months ended 30 June 2015 (unaudited)

Group statement of changes in equity 

For the year ended 31 December 2015 (audited)

Notes to the interim financial information (unaudited)

1. Analysis of changes in net debt

Note

(i) Non cash movements relate to the amortisation of debt issue costs and new hire purchase facilities.

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 2016 (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 £15,628,000 (six months ended 30 June 2015: £14,969,000; year ended 31 December 2015: £28,753,000) generated in Saudi Arabia.

* Amortisation of intellectual property and intangibles recognised on acquisitions.

Six months ended 30 June 2015 (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.

Year ended 31 December 2015 (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.

3. Exceptional items and amortisation*

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

Notes

(i)             Exceptional items relate to the costs associated with insourcing the UK's transportation function and the restructuring programme being undertaken in Germany.

(ii)             Exceptional impairment of goodwill related to the impairment of the carrying value of goodwill associated with the Group's Belgian and German businesses in 2015.

    * Amortisation of intellectual property and intangibles recognised on acquisitions.

4. 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 169,778,922 ordinary shares in issue for the six months ended 30 June 2016 being the weighted average number of ordinary shares in issue (six months ended 30 June 2015: 169,129,840; year ended 31 December 2015: 169,392,703). 

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 171,158,759 (six months ended 30 June 2015: 170,016,929; year ended 31 December 2015: 170,262,717).

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

4. Finance income and expense

5. Dividends

The directors are declaring an interim dividend of 2.00 pence per ordinary share which will distribute an estimated £3,400,000 of shareholders' funds. It will be paid on 7 October 2016 to shareholders who are on the register at 9 September 2016.

6. Taxation on profit/(loss)

Analysis of charge for the period:

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

In the July 2015 Budget Statement, it was announced that the standard rate of corporation tax in the UK will be further reduced to 19% with effect from 1 April 2017 and to 18% with effect from 1 April 2020. These changes were substantively enacted on 26 October 2015 and are therefore reflected in the deferred tax balances in this financial information. In the March 2016 Budget Statement, it was further announced that the standard rate of corporation tax will be reduced to 17% from 1 April 2020. This further change had not been substantively enacted at the balance sheet date and is not therefore reflected in this financial information.

7. Property, plant and equipment

8. Basis of preparation

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 2015 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.

This interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the audited consolidated statutory financial statements for the year ended 31st December 2015 has been delivered to the Registrar of Companies. The auditor's report on these financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

New or revised accounting standards and interpretations issued by 30 June 2016 but not yet effective are listed below:

·  IFRS 9 'Financial instruments'

·  IFRS 15 'Revenue from contracts with customers'

·  IFRS 16 'Leases' - recognition, measurement, presentation and disclosure of leases.

·  Amendment to IAS 7 'Statement of cash flows' - disclosure initiative

·  Amendment to IAS 12 'Income taxes' - recognition of deferred tax assets for unrealised losses

The Group has a stable financing platform and its key debt ratios are within the Boards' target range and well within the Group's banking covenant. The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial information.