11 May 2023

Grainger plc

Half year financial results

for the six months ended 31 March 2023

Consistent strong performance and excellent outlook: planned doubling of EPRA earnings over next 4 years

§ Net rental income +12%

§ Dividend per share +10%

§ Like-for-like rental growth +6.8%

§ EPRA NTA robust at 310pps

§ Occupancy 98.5%

§ Low cost of debt fixed for c.6 years

Grainger plc, the UK's largest listed residential landlord and leader in the build-to-rent sector, today announces a continuing strong performance for the six months ended 31 March 2023. Grainger's £3.1bn operational portfolio totals c.10,000 homes with a further c.6,000 homes in our £1.6bn build to rent investment pipeline.

Helen Gordon, Chief Executive, said:

"We continue to deliver strong consistent performance across the business. For the first half of our financial year, we have delivered an increase in net rental income of +12%, supporting a 10% increase in our dividend. Rental growth momentum has continued to accelerate which has broadly offset yield movements and the net asset value of our portfolio was resilient.

"Our balance sheet is in a strong position with a low cost of debt fixed for six years, enabling us to deliver on our committed investment pipeline with returns protected. These plans will see us deliver a doubling of EPRA earnings over the next four years, with our build to rent projects secured, financing in place, and both construction and debt costs fixed over that period.  

"Aligned to wage inflation we achieved a like-for-like rental growth of +6.8%, up from 3.5% this time last year. This has mostly offset valuation yield movements with EPRA NTA broadly stable at 310pps (2% down in the six months since FY22 of 317pps, but +2% up in the twelve months since HY22 of 305p). Strong investor appetite and robust transactional evidence from a number of completed deals in recent months provide us with further confidence in the relative low volatility of our sector.

"We are confident in the outlook for our business. With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector."

Key highlights

§ 2% growth in Adjusted Earnings¹ to £47.1m (HY22: £46.3m)

§ 12% growth in Net Rental Income² to £48.0m (HY22: £42.8m)

§ 49% growth in EPRA Earnings to £21.9m (HY22: £14.7m)

§ EPRA Net Tangible Assets (EPRA NTA) robust at 310pps (FY22: 317pps; HY22: 305pps), reflecting strong ERV growth of 4.1% offsetting c.25bps yield expansion in the period

§ IFRS profit before tax of £5.7m reflecting a 1.3% valuation decline (HY22: £98.8m, reflected a 2.3% valuation increase)

§ Dividend³ increased 10% to 2.28p per share (HY22: 2.08pps)

§ 6.8% like-for-like rental growth⁴ in H1 across our total portfolio (FY22: 4.7%; HY22: 3.5%)

o  6.9% like-for-like PRS rental growth (FY22: 4.8%; HY22: 3.5%)

§ 8.2% like-for-like PRS rental growth on new lets (FY22: 5.6%; HY22: 4.4%)

§ 6.1% like-for-like PRS rental growth on renewals (FY22: 4.1%; HY22: 2.7%)

o  5.8% like-for-like rental growth in our regulated tenancy portfolio (FY22: 4.6%; HY22: 3.7%)

§ 98.5% occupancy in our PRS portfolio at the end of March (HY22: 98.1%)

§ Sales performance resilient with £25.2m profit (HY22: £31.6m), reflecting mix, and sales pricing also robust with average sales price within -2.2% of vacant possession value, reflecting continuing strong demand for these attractive properties  

§ £74m of sales in H1, including the sales of vacant regulated tenancies and £44m of asset recycling

§ Remain on track to deliver seven new schemes this calendar year, totalling 1,640 new, purpose-built, energy-efficient, mid-market rental homes

Key financial metrics

Excellent outlook

We have delivered a strong performance in the period, and this is testament to the Grainger team, who have focused on ensuring that we are delivering high quality homes and service, and a sense of community and belonging, all of which supports our success in leasing, high retention and occupancy levels. 

Our committed pipeline of build to rent schemes will deliver a doubling of EPRA earnings within the next four years. The majority of our £1.4bn secured pipeline is committed (£890m) and under construction, with construction costs fixed and funding in place. This will enable us to convert to a REIT in 2.5 years. Alongside the opportunities with our partnerships, such as Transport for London (TfL), we have good visibility over a solid supply of future build to rent developments.

With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector.

¹ Refer to Note 2 for IFRS profit before tax and adjusted earnings reconciliation.

² Refer to Note 5 for net rental income calculation.

³ Dividend - The dividend of 2.28p per share (gross) amounting to £16.9m will be paid on 3 July 2023 to shareholders on the register at the close of business on 26 May 2023. Shareholders will again be offered the option to participate in a dividend re-investment plan and the last day for election is 9 June 2023 - refer also to Note 10.

⁴ Rental growth is the average increase in rent charged across our portfolio on a like-for-like basis.

⁵ Total Property Return (TPR) represents the change in gross asset value, net of capital expenditure incurred, plus net income, expressed as a percentage of gross asset value.

Future reporting dates

§ Capital Markets Day - 27 June 2023

§ Trading Update - September 2023

§ Full year results - 22 November 2023

Half year results presentation

Grainger plc will be holding a presentation of the results at 9:00am (UK time) today, 11 May 2023, which can be accessed via webcast and a telephone dial-in facility (details below), which will be followed by a live Q&A session for sell side analysts and shareholders.

Webcast details:

To view the webcast, please go to the following URL link. Registration is required.

https://webcasting.brrmedia.co.uk/broadcast/6230643961bd9a4d1029096d

The webcast will be available for six months from the date of the presentation.

Conference call details:

Call: +44 (0)330 165 4012

Confirmation Code: 1829192

*Please note that Live Questions can be submitted by analysts and investors via the webcast, but not via the conference call facility.

Presentation material:

A copy of the presentation slides will also be available to download on Grainger's website (http://corporate.graingerplc.co.uk/) from 08:30am (UK time).

For further information, please contact:

Investor relations

Kurt Mueller, Grainger plc:                                                             +44 (0) 20 7940 9500

Media

Ginny Pulbrook / Geoffrey Pelham-Lane, Camarco:                     +44 (0) 20 3757 4992 / 4985  

Forward-looking statements disclaimer

This publication contains certain forward-looking statements. Any statement in this publication that is not a statement of historical fact including, without limitation, those regarding Grainger plc's future financial condition, business, operations, financial performance and other future events or developments involving Grainger, is a forward-looking statement.  Such statements may, but not always, be identified by words such as 'expect', 'estimate', 'project', 'anticipate', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions. By their nature, forward-looking statements involve inherent risks, assumptions and uncertainties as they relate to events which occur in the future and depend on circumstances which may or may not occur and go beyond Grainger's ability to control. Actual outcomes or results may differ materially from the outcomes or results expressed or implied by these forward-looking statements. Factors which may give rise to such differences include (but are not limited to) changing economic, financial, business, regulatory, legal, political, industry and market trends, house prices, competition, natural disasters, terrorism or other social, political or market conditions.

Grainger's principal risks are described in more detail in its Annual Report and Accounts, set out in the Risk Management report on pages 54-57 of the 2022 Annual Report and Accounts, and there has been no change.

A number of risks faced by the Group are not directly within our control such as the wider economic and political environment.

In line with our risk management approach detailed in our Annual Report and Accounts, the key risks to the business are under regular review by the Board and management, applying Grainger's risk management framework.  The war in Ukraine is continuing and inflationary pressures are proving to be persistent.  The macro-economic outlook is unclear.  The risk analysis undertaken in our Annual Report and Accounts factors in these considerations. The risks to Grainger will continue to be monitored closely.

These risks and other factors could adversely affect the outcome and financial effects of the events specified in this publication. The forward-looking statements reflect knowledge and information available at the date they are made and Grainger plc does not intend to update on the forward-looking statements contained in this publication.

This publication is for information purposes only and no reliance may be placed upon it. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in this publication. Past performance of securities in Grainger plc cannot be relied upon as a guide to the future performance of such securities.

This publication does not constitute an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of Grainger plc. 

Chief Executive's review

Overview - continuing strong performance

Our strategic focus on the mid-market in the UK private rented, build-to-rent sector continues to deliver strong results. We have delivered a 12% increase in net rental income, supported by strong like-for-like rental growth of 6.8%, aligned to wage growth, maintaining healthy affordability levels amongst our customers. EPRA earnings over the period have increased by 49% and we expect them to double with the delivery of our committed pipeline of 3,397 homes. We have a high degree of certainty over this significant growth with the necessary permissions in place, construction costs fixed for the majority of projects, financing in place, and debt costs fixed.

Residential valuations have held up exceptionally well compared to the wider real estate sector, and in our portfolio in particular, supported by strong ERV growth of 4.1%. Our EPRA NTA stands at 310p per share, compared to 305pps a year ago, and 317pps six months ago.

We are increasing our dividend by 10%, reflecting the strong growth in net rental income, in line with our policy to distribute 50% of net rental income (with a one third, two third split between interim and full dividend payments).

Growing rental demand and constrained supply continue to move in our favour, particularly due to our mid-market pricing, energy efficient properties and value-add services to our customers, supporting them through the cost-of-living challenges they face. Our investment focus and cluster strategy in the top regional towns and cities in England and Wales has proven to be the right focus. These markets remain one of the most investment friendly residential rental markets globally with no rent controls, and there is a strong political consensus on the need for more housing supply and investment. The long-term market opportunity in the 5m household UK rental market is significant, as the shift in favour of large-scale, institutional professional landlords accelerates.

Grainger is strongly positioned:

·      Secured growth - Our growth, a doubling of EPRA earnings from FY22, is locked-in, with permissions in place, funding in place and construction costs fixed.

·      Strong balance sheet - LTV below our target range and debt costs fixed in the mid 3%'s for the next six years.

·      Inflation beneficiary - Our net rental income is strongly linked to wage inflation, and therefore benefits from a high inflationary environment.

·      Resilient valuations - On a relative basis valuations remain robust with strong rental growth offsetting yield expansion materially, and strong investor appetite and transactional evidence providing a high degree of confidence in valuations.  

·      Strong demand-side characteristics - The demand for our product is growing and will continue to increase. And this demand is economically defensive, growing through cycles. We see a high degree of price inelasticity at our mid-market price point. Our market positioning provides a strong level of occupational demand resilience, with housing at this price point an essential expenditure item for consumers.

·      Healthy customer affordability - Our customers benefit from healthy levels of affordability (c.29% of income spent on rent), well below the recognised affordability ceiling of 33-35% of gross income national average of 33%[1].

·      Positive regulatory landscape and politically aligned - The need for more, better quality homes is widely acknowledged across all major political parties in Westminster. Grainger, and the build-to-rent sector, are directly addressing this, and benefit from political support. The UK market is one of the most institutional-landlord friendly markets globally, with regulations focused on driving out poor-quality landlords from the market, affecting smaller landlords more acutely, and therefore expected to benefit Grainger and the build-to-rent sector on balance.

·      Vast opportunity set - With only approximately 1.5% of the 5m addressable private rented market represented by institutional, build-to-rent landlords today, the opportunity for increasing our market share is vast, with structural changes working in our favour as the shift toward institutional landlords accelerates.

Trading performance highlights

Exceptional leasing performance

We continue to achieve record levels of occupancy in our PRS portfolio of 98.5% and continue to drive like-for-like rental growth at 6.8%.

Good pipeline progress

Delivery of our pipeline continues at pace. We are on track to deliver seven schemes in the second half of this year, totalling 1,640 new homes.

Our pipeline of committed build-to-rent schemes will deliver a doubling of EPRA earnings. The majority of our £1.4bn secured pipeline is committed (£890m) and under construction with construction costs fixed and funding in place.

Our partnership with Transport for London (TfL) is progressing at pace with five planning permissions secured (1,240 homes) within three years of Grainger being selected by TfL as their partner. The joint venture, Connected Living London, has now acquired the land for four of these five schemes from TfL and enabling works have commenced.  

Maintaining sales momentum

We continue to sell down our regulated tenancy portfolio, both on vacancy and tenanted as investment sales through our asset recycling programme. This provides us with a continual source of funding for our build-to-rent investment pipeline.

In contrast to some wider market data and commentary, we continue to see strong pricing in our portfolio, having achieved average sales prices within -2.2% of vacant possession value.

A growth business in a resilient sector

Our £890m committed pipeline will deliver a doubling in EPRA earnings.

We are well positioned to navigate the current macro environment with a strong balance sheet. Our debt costs are fixed in the mid 3%'s for the next six years, and this includes projected drawn facilities which we have aligned with our capital expenditure plans. We have built in a significant amount of headroom to our financial covenants within our plans to enable us to continue on our growth trajectory.

The UK private rented sector and build-to-rent sector in particular are highly resilient through cycles. Rental growth is underpinned by inflation, specifically wage inflation, offsetting the downward pressure on valuations from a higher interest rate environment. Demand for renting equally remains resilient. It demonstrates defensive qualities, as more people choose to rent for longer as borrowing costs rise and economic uncertainty remains. Rental demand is expected to continue to grow over the long term as modern living patterns change with more fluid labour markets. More and more people are choosing to rent for longer as it provides the flexibility they require, offers good value, and a place to put down roots and call home, something Grainger and the wider build-to-rent sector is committed to.

The opportunity in front of us is large. There are 5m households in the UK renting privately, representing 25% of all households. Yet only c.1.5% of these households live in purpose built, build-to-rent properties owned by large scale institutional landlords such as ourselves. The vast majority of the rental market is made up of small individual private landlords whose overall exit from the market is accelerating. This presents a significant opportunity for Grainger to increase market share.

The investment case for the UK build-to-rent sector is underpinned by the severe housing shortage which characterises the UK housing market. Centre for Cities, a think tank, estimate that the UK requires 4.3m additional homes to plug the current gap, while official figures show supply of new homes continuing to reduce.

A leading operating platform, delivering value

Our technology-enabled platform continues to deliver value, both to our customers and shareholders with high satisfaction levels, high occupancy, high retention and strong rental growth. Our deep and growing data insight enables us to continue to improve our value proposition and optimise performance. Our PRS portfolio is mainly modern, energy-efficient homes, with 89% already achieving top energy ratings of A-C, and we are making good progress on our net zero carbon ambitions. And as we achieve critical mass in our target markets through our cluster strategy, we continue to build our consumer-facing brand to further drive customer acquisition and retention.

Excellent outlook

We have delivered a strong performance in the period, and this is testament to the Grainger team, who have focused on ensuring that we are delivering high quality homes and service, and a sense of community and belonging, all of which supports our success in leasing, high retention and occupancy levels. 

Our committed pipeline of build to rent schemes will deliver a doubling of EPRA earnings within the next four years. The majority of our £1.4bn secured pipeline is committed (£890m) and under construction, with construction costs fixed and funding in place. This will enable us to convert to a REIT in 2.5 years. Alongside the opportunities with our partnerships, such as Transport for London (TfL), we have good visibility over a solid supply of future build to rent developments.

With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector.

Helen Gordon

Chief Executive

11 May 2023

Financial review

Despite the challenging macro environment arising in the Autumn, the first six months of FY23 has seen a continuation in the strong performance of our business. Our operational performance has been excellent with record occupancy levels at 98.5% and strong like for like rental growth at 6.8% demonstrating the strong demand for our homes and value of our operating platform. Our strong overall lettings performance combined with the continued lease up of our pipeline schemes has driven significant growth in net rental income at 12%. With a strong pipeline of schemes to deliver in H2 we expect to see strong growth continue as these schemes lease up.

Valuations proved resilient in the period with strong ERV growth of 4.1% offsetting c.25bps of outward yield movement, underlining the strong fundamentals and low volatility of our sector. Our residential sales have also proved resilient with £74.6m of sales in H1 generating £25.2m of sales profit and within -2.2% of previous vacant possession valuations.

Our balance sheet remains strong with a low LTV and strong liquidity. Our secured pipeline is fully funded with very high levels of hedging in line with our policy giving us minimal exposure to interest rate rises for six years. Given the strong performance and positive outlook, we are increasing our interim dividend by 10% to 2.28p on a per share basis (HY22: 2.08p) in line with our policy to distribute 50% of annual net rental income as a dividend, with a one-third payment at the interim stage.

Our portfolio has proved to be highly resilient through both the pandemic and the period of economic uncertainty in the Autumn, rental growth has closely tracked wage inflation and supported robust valuations. While some challenges for consumers remain, most notably with the continued cost-of-living squeeze, our mid-market offering and customer demographic have demonstrated, and continue to ensure, our resilience.

Highlights

Income statement

Adjusted earnings increased by 2% to £47.1m (HY22: £46.3m) with the strong £5.2m increase in net rental income the primary driver offset by lower profits from sales. As our pipeline continues to deliver over the coming years, we will continue to see significant growth in net rents. The operating leverage inherent in our business model, and the margin improvement this delivers, results in an even larger growth in earnings.

¹ HY22 other adjustments comprise fire safety remedial works provisions in respect of legacy assets.

Rental income

Net rental income increased by 12% to £48.0m (HY22: £42.8m). This increase of £5.2m was driven by continued strong demand resulting in high levels of occupancy at 98.5%, continued strong lettings of new launches and strong rental growth.

Like for like rental growth across the portfolio was +6.8%, with rental growth in our PRS portfolio continuing to accelerate at +6.9% (HY22: +3.5%), with rental growth on renewals of +6.1% and +8.2% on new lets. Our regulated tenancy portfolio delivered 5.8% rental growth. Gross to net for the period on our stabilised portfolio is 25.5% consistent with previous periods.

¹ Includes £0.1m from an increase in occupancy in the period.

Sales

Our sales performance continued to be resilient throughout the period with overall sales revenue of £74.6m in line the prior period (HY22: £75.3m). Sales profits were lower at £25.2m (HY22: £31.6m) due to the mix of asset recycling and sales of vacant regulated tenancies.

Residential sales

Vacant property sales in the period were down 18%, delivering £13.2m of profit (HY22: £16.0m) due to the natural run off of the regulated properties resulting in a smaller portfolio along with the timing of sales. The profit margins were broadly flat year on year reflecting a similar sales mix to prior year. Vacancy rates were up to 8.5% (HY22: 6.5%), and pricing achieved remained robust with sales values 2.2% below previous vacant possession values.

Sales of tenanted and other properties delivered £8.5m of profit (HY22: £15.6m) from £29.1m of revenue (HY22: £36.3m) given higher levels of PRS recycling which have much lower margins. The development profits in the period were a result of exiting our remaining interests at Seven Sisters.

We have good visibility on our sales pipeline for the second half and we expect total sales revenue to be broadly in line with FY22 for the full year.

Sales

Overheads

Overheads increased by 5% in the period to £15.4m (HY22: £14.6m) reflecting wage growth across the business, investment in our platform and supporting the growth of our pipeline.

Balance sheet

We are committed to delivering our growth strategy from a position of real financial strength and our balance sheet remains in great shape. Our LTV is 36.1% (FY22: 33.4%) and liquidity is strong with cash and available facilities of £527m. Our committed pipeline is already fully funded and our debt costs are almost fully hedged meaning we have minimal exposure to potential interest rate rises.

EPRA NTA remained robust, decreasing by 2% from the year end to 310p per share (FY22: 317p per share, HY22: 305p per share) with a 6p reduction coming from valuation decreases being the main driver alongside a 6p contribution from adjusted earnings. This was offset by the payment of our final dividend (4)p and disposal of trading assets (3)p. EPRA NTA excludes the value of our reversionary surplus of £217m or 29p per share (FY22: £248m).

Property portfolio valuations

The £3.7bn market value of our overall portfolio proved resilient with a fall of only 1.3% (HY22: +2.3%) over the six-month period. Our PRS portfolio saw strong ERV growth of 4.1% which offset c.25bps outward yield movement in the period. Our regional PRS portfolio outperformed London marginally with c.20bps outward yield movement compared with c.30bps in London. The regulated portfolio again proved its resilience at £767m and 0.5% fall in the six month period.

¹ Excluding CHARM and Vesta.

Financing and capital structure

Net debt increased to £1,394m (FY22: £1,262m) in line with plan as we invested £187m into our pipeline. This was partly offset by £74m of sales split between £30m of vacant sales and asset recycling of £44m. From FY24 we expect to see committed pipeline investment largely offset by operating cashflows resulting in broadly stable net debt.

Our policy of having a fully funded secured pipeline ensures that our headroom of £527m covers our committed pipeline capex of £343m.

We have an average debt maturity of 6 years including extension options and refinancing risk is minimal with no significant maturities until 2027. Our average cost of debt remained relatively flat compared to the full year at 3.2% (FY22: 3.1%).

Summary and outlook

We have continued to deliver a very strong operational performance in the half having seen momentum strengthen further in the period. Valuations proved resilient and demonstrated the strong demand for and low volatility of our asset class and our balance sheet is strong giving us the foundation and flexibility to deliver our strategy.

We are on track to deliver a transformation to our net rents and earnings as our pipeline delivers , supported by our leading operating platform, and this will enable us to convert to a REIT in 2.5 years. Despite the uncertain macro economic backdrop we are confident our business will continue to deliver strong growth as the strong demand for our quality homes at mid-market prices endures.

Rob Hudson

Chief Financial Officer

11 May 2023

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

§ the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK;

§ the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Helen Gordon                                                                                   Rob Hudson

Chief Executive Officer                                                              Chief Financial Officer

11 May 2023                                                                              11 May 2023

Independent Review Report to Grainger plc 

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2023 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Other Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity, the Condensed  Consolidated Statement of Cash Flows and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2023 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.  

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern, and the above conclusions are not a guarantee that the group will continue in operation.

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with UK-adopted international accounting standards.

The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.  Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report. 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

Richard Kelly

for and on behalf of KPMG LLP 

Chartered Accountants 

15 Canada Square

Canary Wharf

London

E145GL

11 May 2023