Interim Results for the half year to 30 June 2018

Phoenix Spree Deutschland Limited
(The "Company" or "PSDL")

 

Interim Results for the half year to 30 June 2018

 

ACTIVE ASSET MANAGEMENT STRATEGY DRIVES RENTAL GROWTH & VALUATION GAINS

 

Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate, announces its Interim Results for the six months ended 30 June 2018.

 

Financial highlights

-      Annualised like-for-like rental income up 11.4% to €14.5 million (six months to 30 June 2017: €13.1 million).

-      Following the sale of Nuremberg & Fürth and Northern German portfolios, reported gross rental income of €9.1 million (six months to 30 June 2017: €9.5 million).

-      Strong like-for-like rent per sqm growth of 9.9% (six months to 30 June 2017 5.0%).

-      EPRA NAV per share up 2.9% in H1 2018 to €4.23 per share (31 December 2017: €4.11).

-      EPRA NAV per share total return in H1 2018 of 4.1% (six months to 30 June 2017: 23.7%).

-      Profit before tax down 69.3% year-on-year to €19.4 million (six months to 30 June 2017 €63.1 m), due to lower net valuation gains after exceptionally strong prior year.

-      Net loan to value of 25.8% at 30 June 2018 (31 December 2017: 31.6%). Average debt maturity now exceeds 8.1 years, with average interest rate of 2.1%.

-      Increased first half dividend of €2.35 cents (GBP 2.1 pence), up 3.1% year-on-year (30 June 2017: €2.28 cents (GBP 2.0 pence)).

 

Operational highlights

-      Like-for-like Portfolio value, adjusting for impact of acquisitions net of disposals, increased by 5.4% in H1 2018. Berlin like-for-like increase of 5.3% in H1 2018.

-      Aggregate reported Portfolio value decreased by 4.2% to €583.7 million (31 December 2017: €609.3 million), reflecting impact of previously announced North German asset disposals.

-      EPRA vacancy declined to 2.8% (30 June 2017: 3.7%).

-      Condominium sale completions up 9.2% to € 5.7 million (six months to 30 June 2017: €5.2 million). Average achieved value per sqm of €4,477 on sold units, a 34.9% premium to Berlin average value per sqm at 30 June 2018, based on Jones Lang LaSalle valuation.

-      Investment of €3.4 million in Berlin renovations and modernisations during H1 2018, a new six-month high.

-      Significant embedded value remains within the Portfolio: new leases in Berlin signed at an average 40.6% premium to passing rents.

 

Transition to pure-play Berlin portfolio now complete

-      Targeted acquisition and disposal strategy has created a focussed Berlin portfolio, offering potential for greater economies of scale.

-      Disposal of Central and Northern Germany portfolio completed in April 2018 for €73.0 million, a 26% premium to the Jones Lang LaSalle valuation as at 30 June 2017.

-      Contracts to acquire 173 units notarised in H1 2018 for an aggregate value of €27.6 million, representing an average price per sqm of €2,423.

-      As at 25^th September, contracts to acquire a further 37 units notarised for an aggregate value of €6.5 million, representing an average price per sqm of €2,230.

 

 

 

 

Outlook

-      Berlin demographic trends remain favourable with continuing population growth and job creation, a supply-demand imbalance of available rental stock and a high cost of new-build.

-      Yield compression in the Berlin market is expected to moderate, after a multi-year period of declining property yields.

-      Significant potential remains in the Portfolio to create value through reversionary letting and condominium sales.

-      Potential for further value enhancing acquisitions, helped by strong balance sheet with long-term fixed rate debt and low interest rates.

 

 

Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:

"I am pleased to announce that the Company has maintained its record of consistent increases in underlying rental growth, property values and EPRA NAV. The Company has continued successfully to concentrate and enlarge its presence in Berlin following the sale of our Northern German portfolio. Despite increased competition, the Company has made further value-enhancing Berlin acquisitions and the strength of our balance sheet will enable us to continue to grow the Portfolio through further, selective acquisitions.

 

Berlin property values have grown at a significant rate in recent years and, although the demographics remain compelling, this suggests that scope for further market yield compression is now more limited.  However, the Board continues to see significant embedded value within the Portfolio, as demonstrated in the first half of the year by improving rents and further condominium sales at a premium to the Portfolio's rental property valuations. The Board looks forward to the second half of this year with confidence."

 

 

For further information please contact:

Phoenix Spree Deutschland Limited                                                                       +44 (0)20 3937 8760

Stuart Young

                                                                                                                                               

Numis Securities Limited (Corporate Broker)                                                     +44 (0)20 7260 1000

David Benda                                                                                                                     

 

Tulchan Communications (Financial PR)                                                               +44 (0)20 7353 4200
Peter Hewer
Elizabeth Snow

 

 

 

 

 

 

Chairman's Statement

Following an exceptionally strong performance in 2017, I am pleased to report that the Company has made further progress during the first half of the current financial year. Phoenix Spree has continued to deliver best in class rental growth versus its listed peers. The Berlin Portfolio, which has also grown through the acquisition of selective properties, registered additional underlying valuation gains and further progress was made with our condominium programme. During the first six months of the year, the value of the Portfolio increased by 5.4% on a like-for-like basis and the EPRA NAV total return per share was 4.1%.

 

The Company has repositioned its geographic focus through a combination of disposals of properties outside Berlin, all at a premium to trailing book value, and a Berlin-focussed acquisition programme. Following completion of the disposal of the Northern German portfolio in April 2018, Phoenix Spree is now fully focussed on the Berlin residential market, offering scope for greater economies of scale, such as the consolidation of service contracts. The balance sheet remains strong and, notwithstanding significant competition for properties which fit the Company's strict acquisition criteria, there is scope for further Berlin acquisitions during the remainder of the year.

 

Following a number of years of rapid property price inflation, yield compression in the Berlin market is expected to moderate, although the strong demographic trends that have fuelled the growth of Berlin's residential market remain in place. Demand for available rental property continues to outstrip supply and acquisition prices for existing residential property remain below the cost of construction.

 

This undersupply, combined with an ongoing reinvestment programme to improve the overall quality of our living accommodation, has created significant future embedded value within the Berlin Portfolio. This was evidenced in the first half of the year by new leases which continue to be signed at a premium to in-place rents and condominium sales completed at a premium to our average rental property valuations.

 

The City of Berlin continues to afford rental tenants protections among the highest in the Western world and, following the creation of the new Grand Coalition, additional proposals aimed at bolstering tenant protection are being proposed. Phoenix Spree has always operated, and is committed always to operate, within the regulatory framework and the Company's strategy will evolve to ensure compliance at all times.

 

The Company also recognises that its environmental and social responsibilities are intrinsically linked to the success and sustainability of the business. To this end, a Corporate Responsibility Committee has been established to oversee the implementation of our "Better Futures" plan, reporting to the Board and advising on Corporate Responsibility-related issues. We look forward to communicating our plans and progress to shareholders during the second half of the year.

 

The Board continues to view the prospects for the Berlin property market with optimism and remains confident that the Company's active asset management strategy will deliver further capital growth and dividend income to its investors. As previously disclosed, following the disposal of the North German portfolio the Company's portfolio is almost entirely focused on Berlin, where rental yields have historically been lower than in other parts of Germany. The dividend is paid from the operating cash flows including the disposal proceeds from condominium projects, but these are necessarily less predictable than cash flows from rentals. Bearing all these factors in mind, the Board is pleased to declare a dividend of €2.35 cents (£2.1 pence) per share for the first half of the year, an increase of 3.1 % over the comparable period in 2017, which is expected to be paid on or around 19 October 2018 to shareholders on the register on 5 October 2018.

 

 

Operational and Financial Review

 

Financial highlights

 

€ million (unless otherwise stated)	6 months to 30 June 2018	6 months to 30 June 2017	Year to 31 Dec 2017
Gross rental income	9.1	9.5	18.1
Investment property fair value gain	21.7	70.1	157.4
Profit before tax (PBT)	19.4	63.1	138.5
Reported EPS (€)	0.16	0.55	1.21
Investment property value	583.7	519.7	609.3
Net debt	150.5	164.3	195.1
Net LTV	25.8%	31.6%	32.0%
IFRS NAV per share (€)	3.74	3.16	3.96
IFRS NAV per share (£)	3.31	2.78	3.52
EPRA NAV per share (€)	4.23	3.34	4.11
EPRA NAV per share (£)	3.74	2.94	3.65
Dividend per share (€ cents)	2.35	2.28	7.3
Dividend per share (£ pence)	2.1	2.0	6.4
EPRA NAV per share total return for period (€)	4.1%	23.7%	53.0%
EPRA NAV per share total return for period (£)	3.8%	26.9%	57.1%

 

 

 

Financial results

Reported revenue for the six-month period was €9.1 million (six months to 30 June 2017: €9.5 million). This decrease reflects the sale of both the Northern German Portfolio in April 2018, and the Nuremberg & Fürth portfolio in June 2017, partially offset by strong like-for-like rent per sqm growth of 9.9%.

 

The Company has reported a profit before taxation for the period to 30 June 2018 of €19.4 million (six months to 30 June 2017: €63.1 million) which was positively affected by a revaluation gain of €21.7 million (30 June 2017: €70.1 million). Reported earnings per share for the period were €16 cents (six months to 30 June 2017: €55 cents).

 

The Board is pleased to declare an interim dividend €2.35 cents per share (£2.1 pence per share) for the first half of the year (six months to 30 June 2017: €2.28 cents, £2.0 pence). The dividend is expected to be paid on or around 19 October 2018 to shareholders on the register at close of business on 5 October 2018, with an ex-dividend date of 4 October 2018.

 

 

 

 

 

 

 

 

 

 

 

Like-for-like portfolio value increase of 5.4%

 

Market	Berlin (inc.Greater Area)		Baden-Wurttemberg		Total
	30 June 2018	30 June 2017	30 June 2018	30 June 2017	30 June 2018	30 June 2017
% of fund by value	99.3	97.7	0.7	2.3	100.0	100.0
Buildings	92	74	1	2	93	76
Residential units	2,304	1,890	18	18	2,322	1,908
Commercial units	141	128	11	24	152	152
Total units	2,445	2,018	29	42	2,474	2,060
Total sqm ('000)	174.6	147.0	3.6	8.0	178.2	155.0
Annualised Gross rent (€m)	16.6	12.8	0.4	0.8	17.0	13.6
Valuation (€m)	579.5	406.3	4.2	9.8	583.7	416.0
Value per sqm (€)	3,319.1	2,758.0	1,150.5	1,160.0	3,275.1	2,683.9
Gross rent per sqm (€)	8.3	7.8	11.1	8.6	8.4	7.9
Fully occupied gross yield %	3.1	3.5	11.0	8.9	3.1	3.6
Vacancy %	5.4	8.2	13.3	4.4	5.6	8.0
EPRA Vacancy %	2.9	4.0	0.0	2.0	2.8	3.8

 

 

As at 30 June 2018, the Portfolio was valued at €583.7 million (31 December 2017: €609.3 million) by Jones Lang LaSalle GmbH, the Company's external property valuer. This represents a 4.2% decline over the six-month period, following the disposal of assets in Central & Northern Germany.

 

On a like-for like basis, excluding the impact of acquisitions net of disposals, the portfolio value increased by 5.4%. This increase primarily reflects market growth in rental values, assisted by the Company's active asset management strategy. 

 

The valuation as at 30 June 2018 represents an average value per square metre of €3,275 (31 December 2017: €2,853), a gross fully occupied yield of 3.1% (31 December 2017: 3.4%) and a net yield, using EPRA methodology, of 2.6% (31 December 2017 2.8%). Included within the Portfolio as Assets Held for Sale are condominium properties with an aggregate value of €25.7 million (31 December 2017: €29.8 million).

 

 

EPRA NAV total return of 4.1% in H1 2018

Reported EPRA NAV per share rose by 2.9% in the first half of 2018 to €4.23 (£3.74) (31 December 2017: €4.11 (£3.65)). After taking into account the 2017 final dividend of €5.0 cents (GBP: 4.4p), which was paid in June 2018, the EPRA NAV total return in the first half of 2018 was 4.1% (H1 2017: 23.7%).

Adjusted for the one-off movement in tax relating to the North German disposal from deferred to current, and the separately identified non-recurring costs, underlying total shareholder return was 5.2%.

 

 

 

 

 

 

 

 

 

 

 

Accelerating rental growth, falling vacancy.

 

Market	Berlin (inc.Greater Area)		Baden-Wurttemberg		Total
	30 June 2018	30 June 2017	30 June 2018	30 June 2017	30 June 2018	30 June 2017
Total sqm ('000)	174.6	147.0	3.6	8.0	178.2	155.0
Annualised Gross rent (€m)	16.6	12.8	0.4	0.8	17.0	13.6
Gross rent per sqm (€)	8.3	7.8	11.1	8.6	8.4	7.9
Vacancy %	5.4	8.2	13.3	4.4	5.6	8.0
EPRA Vacancy %	2.9	4.0	0.0	2.0	2.8	3.8

 

Against a backdrop characterised by undersupply of available rental property and population growth in Berlin, the Company's portfolio has continued to deliver strong underlying rental growth. Including the impact of acquisitions and disposals, annualised rental income for the period to 30 June 2018 was €17.0 million. This represents a like-for-like increase of 11.4% compared with the period to 30 June 2017.

 

Average in place rent was €8.4 per sqm as at 30 June 2018, an increase of 8.8% compared with 30 June 2017. On a like-for-like basis, the increase was 9.9% (year to 30 June 2017: 5.0%).

 

Berlin reported average rent per sqm was €8.3, an increase of 6.0% compared with 30 June 2017, reflecting underlying like-for-like rental growth, partially offset by the impact of recent acquisitions which typically have lower rental values upon takeover.  On a like-for-like basis, the increase in Berlin rent per sqm was 9.3%.

 

Reported vacancy at 30 June 2018 was 5.6% (30 June 2017: 11.1%). On an EPRA basis, which adjusts for units undergoing development and made available for sale, the vacancy rate was 2.8% (30 June 2017 3.7%). The Berlin EPRA vacancy rate stood at 2.9% in the first half of 2018 (H1 2017: 4.0%).

 

 

Berlin new lettings premium over 40%

During the period, 134 new leases were signed, representing a first half letting rate of 5.9% of units. The average rent achieved on new lettings was €11.7 per sqm, an 18.6% increase on the same period in 2017.

 

The Company continues to re-let units at a substantial premium to in-place rents. During the first six months of 2018, new leases were signed at an average premium of 40.6% to passing rents. The Company believes this uplift illustrates the significant embedded opportunity for continued future rental growth within the Portfolio, particularly on recently acquired buildings which frequently have a historical investment backlog.

 

 

Acquisitions & Disposals

Since listing on the Main Market of the London Stock Exchange in June 2015, the Company has been progressively transitioning its geographic focus with the aim of creating a larger, Berlin-focused portfolio offering greater economies of scale. This has involved the disposal of non-Berlin assets, all at a premium to trailing book value, combined with an ongoing programme of carefully selected Berlin-located acquisitions.

 

This transition was effectively completed following the sale of the Company's Northern Germany assets in April 2018. This portfolio, initially acquired in 2006/2007 for an aggregate purchase price of €38.7 million, consisted of 34 properties located in Bremen, Hannover, Hildesheim, Verden, Delmenhorst, Kiel, Oldenburg, Lüneburg and Lübeck. The portfolio was sold for a cash consideration of €73.0 million, representing a 26% premium to the Jones Lang LaSalle valuation as at 30 June 2017.

 

The Company continues to focus on growing its portfolio of Berlin assets and, during the first six months of the financial year, 8 buildings with an aggregate valuation of €27.6 million were notarised for acquisition. In total, these buildings represent 173 units (163 residential and 10 commercial), at an average price per sqm of €2,423, and annual fully occupied rent of €1.0 million. The acquired properties offer significant scope for improvement through active asset management and will complement the Group's existing portfolio, adding an initial 5.6% to rental income. As at 25 September, 2018, contracts to acquire a further 37 units in Berlin had been notarised for an aggregate value of €6.5 million, representing an average price per sqm of €2,230.

 

Acquisitions have been financed using a combination of debt and equity, with a target loan-to-value ratio of approximately 50%. Following completion of all acquisitions and disposals notarised to date, Berlin represents over 99% of the Company's portfolio value on a pro-forma basis.

 

 

Portfolio enhancements

The Company takes its responsibilities towards its tenants very seriously and has continued to invest in the Portfolio in order to improve the overall standard of accommodation. During the first half of 2018, a total of €3.4 million was invested across the Portfolio (H1 2017 €3.0 million). These items are recorded as capital expenditure in the Financial Statements and a further €0.9 million incurred on repairs and maintenance has been expensed through the profit and loss account. 

 

Rental apartment upgrades include a carefully planned process of modernisation and renovation. Depending on the level of historical underinvestment by previous owners, apartment improvements can involve redecoration, heating system and boiler renewal, new insulation, double glazing, plumbing and flooring, as well as kitchen and bathroom renewal. Communal areas, both indoor and outdoor, are also reviewed for potential improvement where investment has historically been lacking.

 

 

Condominium sales remain high

The Company's condominium strategy involves the division and resale of a small number of selected apartment blocks as private units. This is subject to full regulatory approval and involves the legal splitting of the freeholds in properties that have been identified as being suitable for condominium conversion.  The process aims to utilise the valuation differential that exists between the market value of a rental unit within a rental block and its resale value as a private apartment. The sales proceeds can be redeployed into improvements in the existing portfolio of rental buildings, further acquisitions, repaying debt and supporting the dividend.

 

During the first half of 2018, 15 apartments were notarised for sale, with an aggregate value of €6.1 million (30 June 2017 €3.9 million). The average notarised value per sqm achieved was €4,597, representing a 38.5% premium to the 30 June 2018 Berlin Portfolio average of €3,319 per sqm.

 

Since June, two additional apartments have been notarised for sale for an aggregate value of €0.7 million. Further condominium sales are expected in the second half of the year from programmes that are currently underway and the Company will continue to identify and implement new condominium projects from its existing portfolio of properties.  As at 30 June 2018, 42% of properties within the Berlin portfolio had been legally split, providing opportunities for the implementation of further projects where appropriate.

 

Debt and gearing

As at 30 June 2018, the Company had gross borrowings of €191.4 million (31 December 2017: €222.3 million) and cash balances of €40.9 million (31 December 2017: €27.2 million), resulting in net debt of €150.5 million (31 Dec 2017: €195.1m) and a net loan to value on the portfolio of 25.8% (31 December 2017: 32.0%).

 

The decrease in gross debt in the period partly results from debt repayments of €43.9 million associated with the sale of properties from the Company's Central and Northern Germany portfolio, and €5.5 million from debt repayments associated with the sale of condominiums. This was offset by the disbursement of €12.0 million of debt secured against new acquisitions and €7.8 million equity release against the existing portfolio. The increase in cash balances, and resulting fall in net loan to value, reflects the cash received from the sale of the Northern Germany portfolio in Q2 2018, net of relevant loan repayments and loan disbursements.

 

All of the Group's debt has been refinanced within the past two years, providing stable, long-term, low-cost funding. Nearly all loans have fixed interest rates and, as at 30 June 2018, the blended interest rate of the Company's loan book was 2.1% (30 June 2017: 1.9%). The average remaining duration of the loan book at 30 June 2018 had increased to 8.1 years (30 June 2017: 6.3 years).

 

Since 30 June 2018, the Group has disbursed €1.2 million debt secured against a new acquisition and is currently in the process of arranging new debt to be secured against recent and currently notarised acquisitions.

 

Funds that have been made available to the Group by way of equity release or through disposals are used to invest in the existing portfolio and to fund new acquisitions. Although currently well funded, the Group will continue to assess its financing options for growth, including debt, equity and joint ventures.

 

Outlook

The recent trend towards trade protectionism has begun to affect global growth forecasts and the German economy has not been immune. In May 2018, the European Commission had predicted that the German economy would expand by 2.3 per cent this year, but this has since been moderated to 1.9 per cent, with a similar rate of growth predicted for 2019.

 

However, Berlin's economic growth prospects are relatively insulated from the impact of global protectionism. The City of Berlin is less reliant on the manufacturing sector, which is likely to bear the brunt of any escalation in trade protectionism. The Berlin economy is largely dominated by the service sector, representing over 80% of all employment, with a strong emphasis on education, research, business services, telecommunications, cultural and creative industries and health services. Although downsized since reunification, the public sector still accounts for the majority of jobs.

 

Whilst the wider economic outlook has become less certain, demographic trends within Berlin remain supportive. The population continues to grow, although net immigration has fallen below the peak levels seen in the years since 2011, which averaged c 47,000 new arrivals each year, compared to an estimated 40,000 in 2017. This growth continues to increase demand for rental apartments, whilst supply is set to remain constrained by lack of available land, a shortage of new build permits and high new-build construction costs. Therefore, significant reversionary potential within the portfolio should remain, offering the potential for further growth in rental values and protection against any deceleration in the Berlin market rent levels.

 

With 84% of all Berlin residents renting, tenants have always enjoyed a high level of protection. Berlin's regional government authority is continuing to explore ways of controlling market rental growth. More recently, this has included additional measures to restrict the partitioning and resale of rental blocks as condominiums and a small number of instances where Berlin districts have implemented a first right of refusal to purchase rental blocks when they become available for sale on the open market. Phoenix Spree has always operated, and is committed always to operate, within the regulatory framework and the Company's strategy will evolve to ensure compliance at all times

with all applicable property laws. 

 

The Company also recognises its wider responsibility to demonstrate to shareholders that it is operating responsibly, managing its social and environmental impacts for the benefit of all stakeholders. Following a thorough review of how sustainability is managed within our business our "Better Futures" Corporate Responsibility Plan has been developed. This will provide a framework to measure existing activities better while adding new initiatives to improve our overall sustainability.

 

From a governance perspective, a CR Committee has been established to oversee the implementation of the Better Futures plan reporting on progress to the Board and advising on CR related material issues. It is anticipated that our CR strategy will be fully implemented throughout our business operations by the fourth quarter of the year and the Company looks forward to communicating this strategy in more detail to our stakeholders in its 2018 Annual Report. 

 

The Board remains confident that the Company's active asset management strategy should continue to generate growth in rental income and property values during the second half of the year, supported by selected additions to the portfolio and further condominium projects.

 

Key Performance Indicators

The Company has chosen a number of Key Performance Indicators (KPI's), which the Board believes may help investors understand the performance of the Company and the underlying property portfolio.

 

In the six months to 30 June 2018:

 

·     The value of the property portfolio grew by 5.4% on a like-for-like for basis. This increase was driven by modest yield compression and an increase in like-for-like average rent per let sqm of 9.9% (H1 2017: 5.0%)

·     The EPRA vacancy of the Portfolio at 30 June 2018 stood at 2.8% (30 June 2017: 3.7%)

·     The Group continued with its targeted condominium programme, agreeing sales of €6.1 million in the half year to 30 June 2018 (H1 2017: €3.9 million)

·     EPRA NAV per share increased by 2.9 % to €4.23 as at 30 June 2018 (30 December 2017 €4.11),

·     The declared dividend for the half year 2018 was €2.35 cents (2.1 pence) per share, an increase of 3.1% in Euro terms (H1 2017 €2.28 cents (2.0 pence) per share)

 

Key Performance Indicator	2018 HY	2017 FY	2017 HY	2016 FY	2016 HY	2015 FY	2015 HY	2014 FY	2013 FY
Like-for-like property value growth (%)	5.4	40.1	15.6	19.4	9.8	10.6	5.5	8.6	8.8
Like-for-like property rent per sqm €	8.5	8.1	7.8	8.0	7.7	7.4	7.2	7.1	6.8
EPRA vacancy (%)	2.8	2.9	3.7	2.6	3.2	3.9	5.6	4.1	8.0
Condominium notarisations €m	6.1	9.1	3.9	5.7	1.2	4.7	-	-	-
EPRA NAV per share €	4.23	4.11	3.34	2.73	2.42	2.28	2.19	2.06	1.92
Dividend per share p	2.1	6.4	2.0	5.3	1.6	4.2	1.3	-	-

 

Forward-looking statements
The interim management report contains certain forward-looking statements in respect of Phoenix Spree Deutschland Limited and the operation of its subsidiaries. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.
Responsibility statement
We confirm that to the best of our knowledge;
(a) the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit and loss of the Group, included in the consolidation as a whole as required by DTR 4.2.4R;
(b) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
(c) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the condensed set of financial statements and description of principal risks and uncertainties for the remaining six months of the year); and
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
By order of the Board of Directors
Robert Hingley
Non-executive Director and Chairman
26 September 2018