8 November 2022

DCC Delivers Strong Growth and Development

DCC, the leading international sales, marketing and support services group, today announces its results for the six months ended 30 September 2022.

·    Strong growth in the seasonally less significant first half of the year, a very good performance in the context of on-going challenges in global commodity prices and the macro-economic environment.

·    Operating profit increased by 13.0% (10.7% on a constant currency basis) to £221.2 million, driven by strong organic growth in DCC Energy and the prior year acquisition of Almo in DCC Technology. Adjusted earnings per share increased 9.1% to 146.4 pence per share.

·    Interim dividend increased by 7.5% to 60.04 pence per share.

·    Excellent period of acquisition activity with approximately £300 million committed to development since the Group's prior year results announcement in May 2022, including:

o  DCC Healthcare's recent completion of the acquisition of Medi-Globe, its largest acquisition to date, significantly expanding DCC Vital's presence in medical devices.

o  DCC Energy has completed several acquisitions which expand its services and renewable offering, including PVO, a leading international distributor of solar panels; Protech, which provides a wide range of renewable and energy efficient heating solutions; and Freedom Heat Pumps, one of the UK's largest distributors of air source heat pumps.

·     DCC expects that the year ending 31 March 2023 will be another year of profit growth and development, notwithstanding the challenging macro environment at present.

Donal Murphy, Chief Executive, commented:

"DCC reported strong growth in the seasonally less significant first half of our financial year. The Group continued to perform well in a volatile and challenging environment, reflecting our resilient business model and strong market positions.

We made good progress in delivering our priorities for the allocation of capital. During the period we committed approximately £300 million to acquisitions in the healthcare and energy services and renewables sectors. The acquisitions in the period are consistent with our aim to build a material position in the European healthcare sector and ensuring we are leading the decarbonisation of our energy customers. Our priorities are consistent with the growth opportunities we see in our chosen sectors of Energy, Healthcare and Technology and we continue to see substantial opportunity in these sectors.

I want to thank all our colleagues for their dedication in continuing to serve our customers with the essential products and services they need every day. We are leading the energy transition and accelerating our growth in the healthcare and technology sectors."

Presentation of results - audio webcast and conference call details

DCC will host a live audio webcast and conference call of the presentation at 09.00 today. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.

Please click here to access the webcast.

The access details for the conference call are as follows:

Ireland:            +353 (0) 1 536 9584   

UK:                  +44 (0) 203 936 2999 

International:    +44 (0) 203 936 2999

Passcode:        859286                       

This report, presentation slides and a replay of the audio will be made available at www.dcc.ie.

About DCC plc

DCC is a leading international sales, marketing and support services group with a clear focus on sustainable growth. DCC is an ambitious and entrepreneurial business operating in 23 countries, supplying products and services used by millions of people every day. Building strong routes to market, driving for results, focusing on cash conversion and generating superior sustainable returns on capital employed enable the Group to reinvest in its business, creating value for its stakeholders.

Headquartered in Dublin, the Group operates across three sectors: energy, healthcare and technology, employing over 16,000 people. DCC plc is listed on the London Stock Exchange and is a constituent of the FTSE 100. In its financial year ended 31 March 2022, DCC generated revenue of £17.7 billion and adjusted operating profit of £589.2 million.

DCC has an excellent record, delivering compound annual growth of 14% in adjusted operating profit and generating an average return on capital employed of approximately 19% over 28 years as a public company.

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www.dcc.ie

Forward-looking statements

This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable; however, because they involve risk and uncertainty as to future circumstances, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed in or implied by such forward-looking statements.

Divisional Performance Reviews

DCC Energy recorded strong operating profit growth in the seasonally less significant first half of the financial year. Operating profit increased by 11.9% (12.4% on a constant currency basis) to £132.5 million. Volumes grew 1.9%, driven by acquisitions completed in the prior year as well as a rebound in commercial and hospitality demand during the first quarter versus the Covid-19 restrictions experienced in the prior year. DCC Energy continued to make good progress during the first half in expanding its capability and broadening its customer offering in energy services and renewables and this was an important contributor to the profit growth in the period. The business invested both organically and through acquisition in capabilities across solar, heat pumps, renewables (both liquid and electricity) and energy services, further strengthening its capability to lead the energy transition.

 1 Billion litres equivalent provides a standard metric for the different products and solutions that DCC Energy sells. Metric tonnes and kilowatts of power are converted to litres. Separately, much of the services and renewables that DCC Energy provides do not have associated volumes such as solar installations, heat pump solutions, energy efficiency services, lubricants and refrigerants. 

Energy Solutions sold 4.8 billion litres in the first half of the year, an increase of 2.8% over the prior year. The business benefited from the first-time contribution of Naturgy Ireland (acquired December 2021), while commercial and industrial volumes also increased, reflecting improved activity after the lifting of almost all Covid-19 related restrictions which were a feature in the first quarter of the prior year.

Energy Solutions Continental Europe saw good demand from domestic and commercial customers, leveraging the strong supply positions the business has established across its markets. In France, the business performed well, notwithstanding the significant volatility experienced in the natural gas and power sector of the market. The Austrian business performed strongly, benefiting from its strong supply position and good cost control. The businesses in Benelux and Germany both performed well, continuing to see the benefit of recently integrated acquisitions. The solar photovoltaic service offering continued to develop and will be significantly enhanced by the recently completed acquisition of PVO, a leading international distributor of solar PV and related energy products.

Energy Solutions Britain and Ireland performed well during the first half of the financial year, benefiting from the organic and acquisitive expansion of its product and service offering in recent years. The business continued its rollout of biofuels for commercial and domestic customers and delivered good growth in lubricants. The business also benefited from the acquisition of Naturgy Ireland, which continues to develop its offering of renewable solutions such as biogas, renewable electricity and solar. The acquisition of Protech, which designs and installs combined heat and power units for commercial and industrial customers, has strengthened the service offering in renewable solutions. The business also recently acquired Freedom Heat Pumps, a leading value-added distributor of air source heat pumps and accessories in the UK. The acquisition further expands DCC Energy's range of solutions, products, supplier relationships and technical expertise in the sales and marketing of heat pump solutions to domestic and commercial customers.

Energy Solutions North America saw robust volume demand notwithstanding the significantly higher energy prices throughout the period. The business has continued to integrate acquisitions completed in the prior year and has also further strengthened its management and technology infrastructure and continued to build its acquisition pipeline. Energy Solutions Nordics achieved excellent volume growth driven by strong commercial demand. Combined with a good supply position, operating profit grew strongly in the first half of the year.

The Mobility business recorded strong growth in operating profit in the first half of the financial year and expanded its presence in renewable products and services. Volumes were modestly ahead of the prior year. The business benefited from the full lifting of Covid-19 restrictions in the first quarter, although summer volumes were lower as holidaymakers travelled less by road relative to the prior year. The business also benefited modestly from the first-time contribution of the retail network in Luxembourg (acquired September 2021). 

In France, the business performed strongly in what was a difficult operating environment, led by a very good supply chain and logistics performance. The business continued its investment in cleaner fuels and energy transition. The business achieved good growth in E85 fuel volume after the investment in the prior year, while the fast-charging infrastructure on the motorway network (in partnership with Engie) will be operational before the end of the financial year. The business also traded well in the Nordic region and invested in new energy infrastructure by doubling its number of EV fast chargers since the end of the last financial year. The Mobility business in the UK achieved good growth, leveraging investments completed in the prior year. 

DCC Healthcare saw operating profits decline in the first half of the financial year. As anticipated, this reflects the very strong prior year comparatives, lower Covid-19 related sales and the impact of labour availability, inflation and supply chain issues. Over the last two financial years DCC Healthcare has enhanced the scale and strategic positioning of the business through acquisitions in the US and continental Europe, and delivered very strong organic growth. Compound annual growth in operating profit over this two-year period was 34%, approximately half of which was organic. DCC Healthcare expects to report profit growth for the full year driven by organic growth in the second half of the year and the benefit of the recently completed Medi-Globe acquisition.

DCC Vital, which is focused on the sales and marketing of medical products to healthcare providers, was impacted by reduced Covid-19 related sales in the first half of the financial year. The underlying business performed well, growing strongly in medical devices in Britain, as elective procedures began to recover. Sales of anaesthesia and cardiac monitoring products in particular rebounded well. DCC Vital also generated strong growth in primary care, particularly in Germany which recorded good organic growth and benefited from two modest bolt-on acquisitions. The ability of healthcare systems to ramp up elective procedures since the pandemic has been hampered by supply chain issues and clinical staff shortages; DCC Vital remains well placed to benefit from the continued recovery in activity as healthcare systems address these issues.

DCC Vital recently completed the acquisition of Medi-Globe, DCC Healthcare's largest acquisition to date. The acquisition significantly expands DCC Vital's presence in the European healthcare market, following on from the acquisition of primary care supplier Wörner Medical in May 2021. The combination of DCC Vital's existing medical devices activities with Medi-Globe will create a leading international platform in single-use medical devices for minimally invasive procedures, with strong product development capability.

DCC Health & Beauty Solutions provides outsourced solutions to international nutrition and beauty brand owners. During the first half of the year the business was impacted by labour availability, inflation and supply chain issues as the world emerged from the Covid-19 pandemic. In Europe, the business saw reduced demand from nutritional brands who destocked following the very strong growth of recent years. In the US, the business performed well despite the challenging labour and supply chain environment, generating excellent growth in sales of effervescent products to leading US nutrition brands. The beauty sales mix was impacted by reduced demand from some premium beauty brands. DCC Health & Beauty Solutions continued to invest in expanding capacity and enhancing capability across its manufacturing facilities, including progressing its nutritional gummy manufacturing capability in both the UK and the US.

DCC Technology recorded very strong revenue and profit growth in the first half of the year, driven by the acquisition of Almo (acquired December 2021). Operating profit increased by 67.4% (52.7% on a constant currency basis) to £45.5 million. The slowdown in consumer confidence due to the challenging macro environment began to have an impact across all markets during the period, although the impact has varied by geography and end-user category. DCC Technology has improved margins and exercised tight cost control in the period.

Market conditions were most challenging in the consumer product sectors, due to the impact on consumer confidence of the substantial increase in the cost-of-living and uncertain economic outlook. This was most evident in continental Europe and the UK but was also a feature in North America. Demand in higher-margin B2B sectors, such as Pro AV and Pro Audio products, held up well as businesses generally maintained planned investment in their technology infrastructure. The supply chain issues experienced by the global technology market have improved, which has reduced product shortages.

The North American business performed robustly in the first half of the year, albeit behind expectations. Revenue and operating profit were significantly ahead of the prior year due to the acquisition of Almo and growth in the Pro AV and Pro Audio sectors. The performance of consumer products was mixed; demand for domestic and premium appliances and consumer electronics was robust, but the market generally experienced much weaker demand during the summer months for certain product segments, such as air-conditioners. During the period the business successfully integrated its pre-existing Pro AV business with the Pro AV operations of Almo to create the largest distributor of Pro AV equipment in North America. Following the progress made in recent years, DCC Technology now has a very strong platform to develop and expand its business in North America.

The more pronounced economic uncertainty in Europe compared with the US led to lower demand in continental European markets. Revenue declined year on year, particularly for consumer products in the retail and etail channels, but margin improvement and good cost control limited the impact on profitability. Consistent with trends seen elsewhere, activity in the B2B sectors in France and the Pro AV businesses across the Nordics and DACH region performed well. 

In the UK and Ireland, the business performed robustly and in line with expectations, notwithstanding the impact of the economic environment on demand. The UK business benefited from more stable operating conditions following constraints last year caused by supply chain and labour shortages and the implementation of new warehouse management systems. The business in Ireland recorded good organic revenue and operating profit growth in the first half of the financial year. 

Group Financial Review

A summary of the Group's results for the six months ended 30 September 2022 is as follows:

Income Statement Review

Reporting currency

The Group's financial statements are presented in sterling, denoted by the symbol '£'. The principal exchange rates used for the translation of results into sterling are set out in note 4, Reporting Currency, on page 22.

The net impact of currency translation on the Group income statement versus the prior period added approximately 2.3% to the reported growth in operating profit, primarily due to the weakening of the average sterling exchange rate versus the US Dollar.

Revenue

Overall, Group revenue increased by 44.1% (44.4% on a constant currency basis) to £10.837 billion, primarily due to significantly higher revenues in DCC Energy where commodity prices were materially higher than during the first six months of the prior year.

DCC Energy sold 7.2 billion litres of product in the first half, a 1.9% increase versus the prior year. Volume growth was driven by acquisitions completed in the prior year as well as a rebound in commercial and hospitality demand during the first quarter versus the Covid-19 restrictions experienced in the prior year.

Combined revenue in DCC Healthcare and DCC Technology was £2.9 billion, an increase of 23.2% reflecting the acquisition of Almo which was completed in the second half of the prior year.

Group adjusted operating profit

Group adjusted operating profit increased by 13.0% to £221.2 million (10.7% ahead on a constant currency basis), in the seasonally less significant first half of the year, driven by good organic growth in DCC Energy and the prior year acquisition of Almo in DCC Technology. This represents a very good performance in the context of on-going challenges in global commodity prices and the macro-economic environment. Following very strong growth in the prior year, operating profit was in line with the prior year organically. Strong organic growth in DCC Energy was offset by the more difficult trading environment across DCC Healthcare and DCC Technology.

DCC Energy traded strongly during a period of significant volatility in energy markets. Operating profit increased by 11.9% (12.4% on a constant currency basis) to £132.5 million.

As anticipated, operating profit in DCC Healthcare declined by 13.9% reflecting the very strong prior year comparatives, lower Covid-19 related sales and the impact of labour availability, inflation and supply chain issues. DCC Healthcare expects to report profit growth for the full year overall driven by organic growth in the second half of the year and the benefit of the recently completed Medi-Globe acquisition.

DCC Technology recorded very strong growth benefiting from the acquisition of the Almo which completed in the second half of the prior financial year. Operating profit increased 67.4% to £45.5 million (52.7% ahead on a constant currency basis).

Finance costs (net) and other

Net finance and other costs increased to £31.9 million (2021: £26.9 million), primarily reflecting increased average gross debt and the increasing interest rate environment. Average net debt, excluding lease creditors, in the period was £883 million, compared to an average net debt of £211 million in the prior year. The increase in average net debt excluding lease creditors reflects the acquisition activity in the second half of the prior year, particularly the acquisition of Almo.

Profit before net exceptional items, amortisation of intangible assets and tax

Profit before net exceptional items, amortisation of intangible assets and tax increased by 12.1% to £189.3 million. 

Net exceptional items and amortisation of intangible assets

The Group recorded a net exceptional charge after tax of £7.0 million in the first six months of the year as follows:

Acquisition and related costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and amounted to £5.1 million.

Restructuring and integration costs and other of £4.0 million relates to the restructuring of operations across a number of businesses and acquisitions.

The level of ineffectiveness calculated under IAS 39 on the hedging instruments related to the Group's US private placement debt is charged or credited as an exceptional item. In the six months ended 30 September 2022, this amounted to an exceptional non-cash gain of £2.5 million. The cumulative net exceptional credit taken in respect of IAS 39 ineffectiveness is £3.0 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.

The charge for the amortisation of acquisition related intangible assets increased to £50.4 million from £36.6 million in the prior year, with the increase primarily reflecting acquisitions, notably Almo, completed during the second half of the prior year.

Profit before tax

Profit before tax increased to £132.3 million.

Taxation

The effective tax rate for the Group in the first half of the year of 19.5% is based on the anticipated mix of profits for the full year. It compares to a full year effective tax rate in the prior year of 18.3%, with the increase reflecting the increasingly international footprint of the Group.

Adjusted earnings per share

Adjusted earnings per share increased by 9.1% to 146.4 pence, reflecting the increase in profit before exceptional items and goodwill amortisation.

Dividend

The Board has decided to pay an interim dividend of 60.04 pence per share, which represents a 7.5% increase on the prior year interim dividend of 55.85 pence per share. This dividend will be paid on 9 December 2022 to shareholders on the register at the close of business on 18 November 2022.

Cash Flow, Development & Financial Strength

Cash flow 

As with its operating profit, the Group's operating cash flow is significantly weighted towards the second half of the year. The cash flow of the Group for the six months ended 30 September 2022 can be summarised as follows:

As expected, working capital increased by £151.3 million in the first half of the financial year, reflecting the typical seasonal outflow across the Group. The net investment through the period in working capital reflects the increasing scale of the Group's activities and seasonal working capital requirements, particularly in DCC Technology and an investment in inventory across the Energy Solutions business to underpin service levels to customers. The absolute value of working capital at 30 September 2022 was £448.8 million versus £25.2 million (negative) at 30 September 2021, principally reflecting the prior year acquisition of Almo and the aforementioned investment across DCC Energy. Overall working capital days at 30 September 2022 was 6.8 days sales (2021: negative 0.5 days sales) reflecting recently completed acquisitions. DCC Technology selectively uses supply chain financing solutions to sell, on a non-recourse basis, a portion of its receivables relating to certain larger supply chain/sales and marketing activities. The level of supply chain financing at 30 September 2022 was £159.3 million (2021: £125.9 million), with the modest increase reflecting higher revenues in the UK business following constraints in the prior year caused by product supply disruption and warehouse upgrades. Supply chain financing had a positive impact on Group working capital days of 2.4 days (30 September 2021: 2.5 days).

Net capital expenditure for the six months amounted to £103.9 million (2021 £67.0 million), was net of disposal proceeds of £7.8 million, and reflects continued investment in development initiatives across the Group.

Capital expenditure in DCC Energy primarily comprised expenditure on tanks, cylinders, depot infrastructure and installations and the continued rollout of 'Click and Collect' services, supporting new and existing customers in Energy Solutions. There was also continued development spend in relation to the Avonmouth LPG storage facility in the UK. In Mobility, there was investment in retail sites and upgrades across the business, including adding further lower emission product capability such as EV fast charging and related services in the Nordics. In DCC Healthcare, the capital expenditure primarily related to increased manufacturing capability and capacity across DCC Health & Beauty Solutions, including investments in progressing gummy capability in Europe and the US. Capital expenditure in DCC Technology included a new fleet of electric forklift trucks in North America along with warehouse and IT developments across the division as part of the programme of continuous system improvement. Net capital expenditure for the Group exceeded the depreciation charge of £69.6 million (excluding right-of-use leased assets) in the period by £34.3 million.

Free cash flow in the six months ended 30 September 2022 of £37.6 million compares to £12.3 million in the prior year.

Total cash spend on acquisitions in the six months to 30 September 2022

The total cash spend on acquisitions in the six months ended 30 September 2022 was £41.7 million. This included the completion of the acquisition of the Danish biogas plant, Frijsenborg Biogas, in DCC Energy and a German primary care bolt-on acquisition in DCC Healthcare which were announced in the prior year Results Announcement in May 2022. Payment of deferred and contingent acquisition consideration previously provided amounted to £10.4 million.

Committed acquisition and capital expenditure

Committed acquisition and capital expenditure in the period amounted to £407.5 million as follows:

Acquisition activity

The Group continues to be active from a development perspective. Acquisition expenditure committed by the Group since the prior year results announcement on 17 May 2022 amounted to c.£300 million and included:

DCC Energy

PVO

In November 2022, DCC completed the acquisition of PVO International BV ("PVO"), a leading distributor of solar panels, invertors, batteries and accessories used in the commercial, industrial and domestic energy sectors across continental Europe. PVO was established in 2014 and has grown rapidly to become one of the leading solar solutions suppliers in Europe, with a market-leading position in the Benelux, and growing positions in eight other European countries including Germany, Poland and Finland. The business is headquartered in Rosmalen, the Netherlands, and employs approximately 50 people.

PVO is an excellent strategic fit for DCC. It will leverage PVO's established market position in the fast-growing solar PV market and DCC Energy's knowledge and experience in transitioning customers to cleaner energy products and services including solar solutions. The majority of the consideration for PVO was payable in cash on completion, followed by earn out payments over three years based on PVO's future trading.

Protech Group

DCC Energy acquired Protech Group in June 2022. Established in 2008, Protech Group provides a wide range of renewable and energy efficient heating solutions to commercial and industrial customers across the UK. The acquisition of Protech strengthens the range of low carbon and renewable technologies for customers in the UK, as well as market leading maintenance and services offerings.

DCC Energy also completed a number of small complementary bolt-on acquisitions in the period in Sweden and Norway and a solar business in Austria.

Freedom Heat Pumps

In October 2022, DCC Energy completed the acquisition of Freedom Heat Pumps ("Freedom"). Freedom is one of the UK's largest distributors of air source heat pumps and accessories required for installation into residential properties, offering a value-added distribution model, including pre and post-sales technical support to installers. Freedom has approximately 400 active customers including heat pump installers, builders' merchants, and smaller distributors. The acquisition of Freedom is in line with DCC Energy's strategy of accelerating the net zero journey of its customers and investing in capabilities to build a strong position in the sales, marketing and distribution of renewable energy products and services. 

Frijsenborg Biogas

In July 2022, DCC Energy entered a joint venture to became co-owner of one of Denmark's largest farming biogas plants, Frijsenborg Biogas. The investment expands DCC Energy's position in the gas market at a time of progress for Danish biogas and enables DCC to provide biogas solutions to its customers in the region.

DCC Healthcare

Medi-Globe

In October 2022, DCC Healthcare completed the acquisition of Medi-Globe Technologies GmbH ("Medi-Globe"), an international medical devices business focused on minimally invasive procedures. The acquisition was based on an enterprise value of approximately €245 million (£213 million) on a cash-free, debt-free basis.

Medi-Globe, founded in 1990, is involved in the development, manufacture and distribution of single-use devices for endoscopy in diagnostic and therapeutic procedures. The business has grown organically and through bolt-on acquisitions to become a leading global player in its focus areas of gastroenterology and urology. These are large and growing therapeutic areas, benefiting from strong demographic and treatment trends. Medi-Globe has revenues of approximately €120 million (£104 million) and employs approximately 600 people. Its products are sold to hospitals and procurement organisations in over 120 countries through direct sales operations in Germany, France, Austria, Netherlands, Czechia and Brazil, and an international network of distributors. 

In May 2022, DCC Healthcare completed its second primary care bolt-on acquisition in Germany following its initial market entry through the Wörner acquisition in April 2021.    

Financial strength

An integral part of the Group's strategy is the maintenance of a strong and liquid balance sheet which, among other benefits, enables it to take advantage of development opportunities as they arise. At 30 September 2022, the Group had net debt (excluding lease creditors) of £782.3 million, cash of approximately £1.2 billion and undrawn committed bank facilities of £338 million. Lease creditors at the same date amounted to £336.0 million. In October 2022, DCC successfully raised a private placement issuance equivalent to £647.7 million to be drawn down in December 2022 to refinance existing indebtedness.

Substantially all of the Group's term debt has been raised in the US private placement market and has an average maturity of 4.3 years (6.1 years pro-forma for the recent private placement transaction).

Management appointments

Dr. Fabian Ziegler commenced his role as CEO, DCC Energy on 1 November 2022. Fabian has extensive senior leadership experience in the energy sector having held various senior management roles in Shell plc during his 26-year career. He was Country Chair of Shell Germany and Chair of the Management Board with responsibility for Shell's businesses (upstream, downstream, power and renewables) in the DACH region. In his previous role Fabian was at the forefront of energy transition having developed and driven Shell's net zero emissions plans for the region. Prior to this, Fabian was the Chief Procurement Officer for the Shell Group. He has also led major global transformation programmes and has held various general management roles in fuels, lubricants and LPG. The breadth of Fabian's leadership experience in the energy sector, coupled with his ambition to drive the energy transition, will enable DCC to accelerate its Leading with Energy strategy.  

Following Fabian's appointment, Eddie O'Brien has moved into the role of Group Chief Strategy & Sustainability Officer, from his role as Interim CEO, DCC Energy.

DCC recently appointed Clive Fitzharris as Managing Director of DCC Technology and he will also join the Group Management Team. Clive was previously Managing Director of DCC Technology's operations in North America and Continental Europe. Clive joined DCC in 2009 and has held a number of senior management positions across the Group, including as Group Head of Strategy & Development. Clive succeeds Tim Griffin, who has been appointed as CEO of DCC Technology's volume distribution businesses in the UK, Ireland, the Middle East and France. 

Principal risks and uncertainties

The Board of DCC is responsible for the Group's risk management and internal control systems, which are designed to identify, manage and mitigate material risks to the achievement of the Group's strategic and business objectives. The Board has approved a Risk Management Policy which sets out delegated responsibilities and procedures for the management of risk across the Group.

The principal risks and uncertainties facing the Group in the short to medium term, as set out on pages 97 to 101 of the 2022 Annual Report (together with the principal mitigation measures), continue to be the principal risks and uncertainties facing the Group for the remaining six months of the financial year.

This is not an exhaustive statement of all relevant risks and uncertainties. Matters which are not currently known to the Board or events which the Board considers to be of low likelihood could emerge and give rise to material consequences. The mitigation measures that are in place in relation to identified risks are designed to provide a reasonable and proportionate, and not an absolute, level of protection against the impact of the events in question.

Group Income Statement