TIDMKCOM
RNS Number : 6601X
KCOM Group PLC
28 November 2017
28 November 2017
KCOM GROUP PLC (KCOM.L)
Unaudited Interim Results for the six months ended 30 September
2017
KCOM Group PLC (KCOM.L) announces its unaudited interim results
for the six months ended
30 September 2017.
Key points
-- Hull & East Yorkshire revenue increased by 1% compared to first half last year
_ Growth in each of its core channels, 4% revenue growth in Consumer
-- Enterprise revenue has grown by 1%
_ Further growth impacted by the UK General election and
proposed exit of a previously identified software contract
-- Group revenue reduced by 8% driven by expected decline in its
legacy activities within National Network Services
-- Continued focus on cost base - indirect costs 12% lower than first half last year
-- Profit before tax reduced by 8%
_ Expected decline in legacy activities and the impact of the
previously identified software contracts in Enterprise, which
resulted in the recognition of both incurred losses of
GBP1.7 million and provisions of GBP4.5 million
_ Ongoing depreciation and amortisation impact of continued investments in Hull & East Yorkshire infrastructure
-- On track to make fibre available to the final 25% of premises
in Hull & East Yorkshire addressable market by March 2019
-- Net debt stands at GBP67.8 million, driven predominantly by continued capital investment
-- Interim dividend of 2.00p, consistent with stated dividend commitment
Financial highlights
Unaudited Unaudited
six months six months Change
ended ended over
30 Sept 2017 30 Sept 2016 prior
GBP'm GBP'm year
------------------------------------ -------------- -------------- --------
Performance measure
Revenue 151.3 165.3 (8.5%)
EBITDA (1,3) 29.8 32.0 (6.9%)
Profit before tax (1,3) 13.6 17.7 (23.2%)
Adjusted basic earnings per share
(pence) (2,3) 2.16p 2.78p (22.3%)
Cash capital expenditure (3) 18.6 27.1 (31.4%)
Reported results
Profit before tax 14.8 16.1 (8.1%)
Basic earnings per share (pence) 2.35p 2.52p (6.7%)
Net debt (3) 67.8 45.7 48.4%
Interim dividend per share (pence) 2.00p 2.00p -
(1) Before exceptional items
(2) Adjusted basic EPS is basic EPS adjusted for exceptional
items (including the tax impact of exceptional items)
(3) For definition and reconciliation to statutory measure
see glossary
Bill Halbert, Chief Executive said:
"In the context of today's economic and political uncertainties,
our results demonstrate encouraging progress. Our headline
performance was offset by the expected decline in the legacy
activities in National Network Services and ongoing issues with
previously identified software development contracts within
Enterprise.
"In Hull & East Yorkshire, we achieved particularly strong
growth in the residential market. The take-up of fibre services
across our broadband base has remained robust at 44%. Building on
the success of the current fibre investment, we are pleased to
announce plans to complete the final stage of this deployment,
making fibre available to all premises within our addressable
market by March 2019.
"In Enterprise, despite performance having been affected in the
first half by the slowdown in government spending caused by the
General Election and by continuing issues with the previously
identified software development contracts, there was underlying
growth alongside new contract wins and renewals.
"The interim dividend is 2.00 pence per share as per our stated
commitment, an indication of medium term confidence."
Outlook
The investments we are making, particularly in Hull & East
Yorkshire, will deliver long term sustainable value. We therefore
remain confident about our prospects in the medium term.
We will complete the deployment of the current phase of our
fibre plans in December and begin to make fibre available to the
final 25% of premises in our addressable market. We plan also to
start implementing a number of over the top services to monetise
further this investment, as we begin to migrate value from
infrastructure to services.
In Enterprise, the investment we have made in management and key
skills is expected to generate further growth in the medium
term.
In National Network Services, we expect the decline in legacy
services to continue in the second half. We continue to manage this
decline to maximise value for the Group.
The interim dividend of 2.00 pence is in line with current
dividend commitment of a minimum full year dividend of 6.00 pence
per share, which is in place for the current financial year.
For further information please
contact:
KCOM Group PLC 01482 602 595
Bill Halbert, Chief Executive
Officer
Jane Aikman, Chief Financial Officer
Cathy Phillips, Investor Relations
FTI Consulting LLP 020 3727 1137
Edward Bridges
Matt Dixon
Performance review
Group performance
The results for the period show a decline in both Group revenue
and EBITDA, compared to the first half of last year, by 8% and 7%
respectively.
Our Hull & East Yorkshire segment has performed well with
revenue growth across all three core sales channels. Our fibre
deployment is on track and continues to drive higher
Average-Revenue-Per-User (ARPU(1) ) across our consumer base. The
final c.25% of the deployment has been approved and we expect to
have fibre available to our whole addressable market by the end of
March 2019.
In our Enterprise segment, we have continued to incur losses on
the complex software contracts identified at the year end of GBP1.7
million and have also recognised provisions for future losses of
GBP4.5 million. This has affected adversely both revenue and
contribution in the period. Our relationship with the customer
spans over 10 years and remains strong. We are proposing to exit
one of the contracts and are working through with the customer how
best to manage the remaining contracts. Without the effect of these
contracts, Enterprise revenue would have grown by 5% with gross
margin of 38% and contribution of 12%.
Legacy business in our National Network Services segment
continues to decline, as expected, affecting both revenue and
contribution.
Indirect costs have reduced by GBP5.0 million (12%) compared to
the first half of last year, largely due to actions taken to reduce
our people costs midway through the prior year. Reinvestment of
some of these savings in the second half of this year will reduce
the overall benefit for the full year.
Exceptional items show a net credit due to a regulatory
settlement and a reduction in the level of restructuring costs
attributable to business transformation.
Net debt was GBP67.8 million at 30 September 2017, largely as a
result of the continued investment in the Hull & East Yorkshire
infrastructure.
(1) Refer to glossary
Segmental analysis
Management makes decisions and manages the business in line with
the segmental analysis set out below. This information is presented
before exceptional items in order to provide a better understanding
of underlying performance. A reconciliation of the Group's
pre-exceptional results is set out in Note 1. The definition of
contribution is set out in the glossary.
Hull & East Yorkshire
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 2017 30 Sept 2016 31 Mar 2017
GBP'm GBP'm GBP'm
----------------- -------------- -------------- -------------
Revenue
Consumer 28.8 27.7 56.1
Business 14.4 14.3 29.6
Wholesale 5.3 5.2 11.0
----------------- -------------- -------------- -------------
Sub total 48.5 47.2 96.7
Media 1.2 1.5 2.4
Contact Centres 1.4 1.7 3.2
----------------- -------------- -------------- -------------
Total revenue 51.1 50.4 102.3
----------------- -------------- -------------- -------------
Gross margin 39.6 39.3 78.5
----------------- -------------- -------------- -------------
Contribution 30.5 30.2 60.4
----------------- -------------- -------------- -------------
Each of our core sales channels has shown revenue growth.
Consumer revenue has increased by 4% compared to the first half of
the prior year. Our fibre deployment has enabled us to access more
customers, with a net additional 2,000 broadband (ADSL and fibre)
customers since 30 September 2016. The number of customers within
this broadband base taking a fibre service has increased from 26%
to 44% over the same period, supporting a 4% increase in ARPU.
Our Business and Wholesale channels have seen a slight increase
in revenue as decreases in traditional fixed voice have been offset
by growth in connectivity services and data usage.
As anticipated and signalled previously, our non-core Media and
Contact Centres revenue has continued to decline. We intend to
close our outsourced Contact Centres in this segment by 31 March
2018, when its largest customer contract comes to an end.
Contribution has increased compared to the prior period, despite
those results including a one off supplier credit (GBP1
million).
The success of our ultra-fast Fibre-to-the-Premise (FTTP)
offering continues. Our deployment is ahead of target and as stated
previously we expect to pass 150,000 premises (approximately three
quarters of our addressable market) before the end of December
2017. We plan to pass the remaining c.25% of premises in our
addressable market by March 2019.
During the period we have passed a further 10,000 premises,
taking our total to 147,000. Take-up remains strong with 11,000
premises connected in the half, taking the total connected to
54,000 (including 3,000 businesses). Across our fibre-enabled
areas, 60% of our broadband customers are taking a fibre
service.
Enterprise
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 2017 30 Sept 2016 31 Mar 2017
GBP'm GBP'm GBP'm
----------------- -------------- -------------- -------------
Revenue
Projects 18.3 22.8 48.3
Managed Service 18.9 14.0 30.5
Network 6.6 6.4 12.2
----------------- -------------- -------------- -------------
Total revenue 43.8 43.2 91.0
----------------- -------------- -------------- -------------
Gross margin 10.2 13.4 25.6
----------------- -------------- -------------- -------------
Contribution (0.8) 1.5 4.5
----------------- -------------- -------------- -------------
Revenue for the first half of the year has increased by 1%
compared to the first half of the prior year. The growth rate has
been affected by the unexpected UK General election and its effect
on public sector spending, alongside the proposed exit of one of
the complex software contracts identified at the year end.
We have continued to see successful relationships with key
customers such as HMRC and NFUM and our brand and reputation in
this segment is continuing to strengthen. Revenue from our top 10
customers has grown by 8% compared to the first half of last year.
In the period we signed a number of new names including
Interdigital, SES Water and ITSO and renewed and extended our
contract with NFUM, demonstrating our ability to build and expand
customer relationships.
We have continued to incur losses on the software development
contracts identified at the year end of GBP1.7 million and have
also recognised a provision for future losses of GBP4.5 million.
This has affected adversely both revenue and contribution in the
period. Our relationship with this customer spans over 10 years and
remains strong. We are proposing to exit one of the contracts and
are working through with the customer how best to manage the
remaining contracts. Without the effect of these contracts,
Enterprise revenue would have grown by 5% with gross margin of 38%
(30 September 2016: 33%) and contribution of 12% (30 September
2016: 5%).
National Network Services
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 2017 30 Sept 2016 31 Mar 2017
GBP'm GBP'm GBP'm
----------------- -------------- -------------- -------------
Revenue
SMB 26.0 26.9 52.6
Partners 17.4 21.7 41.8
Large Corporate 15.0 25.1 47.4
----------------- -------------- -------------- -------------
Total revenue 58.4 73.7 141.8
----------------- -------------- -------------- -------------
Gross margin 16.1 20.4 41.0
----------------- -------------- -------------- -------------
Contribution 5.8 7.6 16.0
----------------- -------------- -------------- -------------
As anticipated, we have seen a decrease in revenue compared to
the first half of the prior year. The majority of this decline has
come from large corporate customers taking legacy services which we
took the decision to stop supporting in previous years. Strong cost
control has led to a contribution margin percentage consistent with
the first half of the prior year.
During the period, we have continued to focus on the larger end
of the mid-market (SMB), where we can provide more value, with
continued growth in managed wide area network (WAN) connectivity
services to multi-site organisations, including the deployment to
900 retail convenience stores nationally for One Stop Stores.
Central
Central costs include PLC and corporate costs, where allocation
to the underlying segments would not improve understanding of those
segments. These costs include share-based payments and pensions,
along with the residual Group cost of finance, HR, risk, legal and
communications, once appropriate recharges have been made to the
three business segments.
Central costs have decreased from GBP7.2 million (six months
ended 30 September 2016) to GBP5.7 million largely as a result of
actions taken to reduce people and other costs.
Exceptional items
The Group benefitted from a net exceptional credit of GBP1.2
million in the first six months of the year. This comprises:
-- a credit of GBP1.9 million from an industry wide settlement
which arose as a result of a breach in BT Openreach's contractual
and regulatory obligations relating to compensation for
inadequately and retrospectively applying Deemed Consent; offset
by
-- restructuring costs of GBP0.7 million relating to one off
redundancy costs as we continue to re-shape the business.
Net debt and cash flow
Net debt at 30 September 2017 is GBP67.8 million (30 September
2016: GBP45.7 million), representing a net debt to EBITDA ratio of
1.0x.
The increase in net debt compared to the year end position
arises as a result of continued investment in our fibre deployment
along with a working capital outflow. As in the prior year, much of
the working capital movement relates to timing which we expect to
unwind in the second half of the year.
Underlying working capital continues to be well controlled. Days
Sales' Outstanding (35) is an improvement on the 30 September 2016
position (39) and our Days' Purchases Outstanding remains
consistent with the 30 September 2016 position.
Dividend
The Group's interim dividend is 2.00 pence per share (30
September 2016: 2.00 pence), which is consistent with the Board's
previously stated commitment to pay a total dividend of no less
than 6.00 pence for the year ending 31 March 2018. The dividend
will be paid on 9 February 2018 to shareholders registered on 29
December 2017. The ex-dividend date is 28 December 2017.
Pensions
The IAS 19 pension position at 30 September 2017 is a (net)
liability of GBP3.7 million (30 September 2016: GBP44.1 million
liability and 31 March 2017: GBP19.7 million liability). The
decrease from 31 March 2017 arises as a result of a higher discount
rate used to calculate the schemes' liabilities (driven by
increases in corporate bond yields) alongside a strong asset
performance.
The agreed level of deficit repair payments across both schemes
is GBP6.7 million (until the year ending 31 March 2020). In
addition, the Group makes pre-agreed payments to its pension
schemes through the asset backed partnerships. The full year
payment for both the current year and prior year is GBP2.7
million.
Capital investment
Cash capital expenditure during the period was GBP18.6 million
(30 September 2016: GBP27.1 million), consistent with previous
guidance. The major project in the period was the continued
deployment of fibre in Hull & East Yorkshire.
The Group's depreciation and amortisation charge for the period
is GBP15.1 million (30 September 2016: GBP13.2 million), the
increase resulting from the higher capital investment in recent
years, which has an ongoing impact on profit before tax.
Tax
The Group's tax charge is GBP2.8 million (30 September 2016:
GBP3.2 million). The effective tax rate is 19%, in line with the
prevailing rate of corporation tax of 19%.
Principal risks and uncertainties
The Group has a number of risks and uncertainties which have
been identified through the risk management framework. The risks
set out below could have a material adverse impact on the
Group:
-- growing revenue in our Enterprise segment to offset the
decline of network-based revenue - revenue from legacy activities
may decline faster than the revenue from new services grows;
-- substitute technologies entering the consumer market - the
development of substitute technologies without the need for a fixed
line could present a competitive threat within the consumer part of
our business;
-- upgrading of our network equipment - our equipment requires
upgrading as demand for broadband and cloud-based services
increases;
-- accuracy, security and confidentiality of customer data -
security of customer data is of paramount importance to our
customers and therefore to us;
-- customer service, contract governance and delivery - the
delivery of our complex contracts is a key part of the success our
Enterprise segment and providing exceptional service to our
customers is one of our key strategic aims. Failure to govern
contracts sufficiently may have reputational or financial
impact.
-- security and resilience of our networks and IT systems - our
networks and IT systems are key to all that we do and are crucial
in delivering service to our customers;
-- a breach of our regulatory obligations - we take our
regulatory responsibilities extremely seriously and seek to ensure
we are compliant;
-- health and safety - it is important to mitigate health and
safety risks as far as possible to prevent incidents from
occurring; and
-- flooding - flooding (particularly in Hull) has become an
increasingly regular occurrence and could impact our business if we
don't take appropriate steps to mitigate the risks.
More detail of the Group's risks are shown on pages 26 to 29 of
the Annual report and accounts for the year ended 31 March 2017 and
it is the view of the directors that these risks and uncertainties
remain appropriate for this interim statement.
Forward looking statements
Certain statements in this interim statement are forward
looking. Although the Group believes that the expectations
reflected in these forward looking statements are reasonable, we
can give no assurance that these expectations will prove to be
correct. Because these statements involve risks and uncertainties,
actual results may differ materially from those expressed or
implied by these forward looking statements.
We undertake no obligation to update any forward looking
statements whether as a result of new information, future events or
otherwise.
Consolidated interim income statement
Audited
Unaudited Unaudited year
six months six months ended
ended ended 31 Mar
30 Sept 30 Sept 2017
Notes 2017 GBP'000 2016 GBP'000 GBP'000
Revenue 151,308 165,326 331,303
Operating expenses (135,420) (148,122) (298,547)
------------------------------------ ------ -------------- -------------- ----------
Operating profit 15,888 17,204 32,756
Finance costs 3 (1,070) (1,149) (2,263)
Share of profit of associates 7 12 12
------------------------------------ ------ -------------- -------------- ----------
Profit before tax 1 14,825 16,067 30,505
Tax 4 (2,803) (3,234) (5,743)
------------------------------------ ------ -------------- -------------- ----------
Profit for the period attributable
to owners of the parent 12,022 12,833 24,762
------------------------------------ ------ -------------- -------------- ----------
Operating profit analysed as:
EBITDA before exceptional items 1 29,780 32,041 67,645
Exceptional credits 2 1,918 - -
Exceptional charges 2 (715) (1,671) (7,981)
Depreciation of property, plant
and equipment (7,971) (7,149) (14,279)
Amortisation of intangible assets (7,124) (6,017) (12,629)
------------------------------------ ------ -------------- -------------- ----------
Operating profit 15,888 17,204 32,756
------------------------------------ ------ -------------- -------------- ----------
Earnings per share (pence)
Basic 5 2.35 2.52 4.85
Diluted 5 2.33 2.49 4.81
Consolidated interim statement of comprehensive income
Audited
Unaudited Unaudited year
six months six months ended
ended ended 31 Mar
30 Sept 30 Sept 2017
2017 GBP'000 2016 GBP'000 GBP'000
Profit for the period 12,022 12,833 24,762
Other comprehensive income:
Items that will not be reclassified
to profit or loss
Remeasurements of retirement benefit
obligations 12,061 (33,887) (12,035)
Tax on items that will not be reclassified (2,172) 6,019 1,738
-------------------------------------------- -------------- -------------- ---------
Total items that will not be reclassified
to profit or loss 9,889 (27,868) (10,297)
-------------------------------------------- -------------- -------------- ---------
Total comprehensive income/(expense)
for the period attributable to owners
of the parent 21,911 (15,035) 14,465
-------------------------------------------- -------------- -------------- ---------
Consolidated interim balance sheet
Audited
Unaudited Unaudited as at
as at as at 31 Mar
30 Sept 30 Sept 2017
Notes 2017 GBP'000 2016 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 51,372 51,372 51,372
Other intangible assets 43,380 47,004 45,709
Property, plant and equipment 110,915 100,886 106,323
Investments 52 61 45
Retirement benefit asset 7 3,078 - -
Deferred tax assets 4,530 12,295 7,836
------------------------------------ ------ -------------- -------------- ----------
213,327 211,618 211,285
------------------------------------ ------ -------------- -------------- ----------
Current assets
Inventories 3,572 5,053 3,075
Trade and other receivables 64,252 77,606 68,406
Cash and cash equivalents 8 9,521 16,660 16,093
------------------------------------ ------ -------------- -------------- ----------
77,345 99,319 87,574
------------------------------------ ------ -------------- -------------- ----------
Total assets 290,672 310,937 298,859
------------------------------------ ------ -------------- -------------- ----------
Liabilities
Current liabilities
Trade and other payables (95,333) (113,143) (110,917)
Current tax liabilities - (2,419) -
Bank overdrafts 8 (684) (2,699) (5,903)
Finance leases 8 (1,846) (2,587) (1,942)
Provisions for other liabilities
and charges (295) (297) (377)
Non-current liabilities
Bank loans 8 (73,679) (54,133) (48,587)
Retirement benefit obligations 7 (6,821) (44,076) (19,691)
Deferred tax liabilities (7,135) (6,037) (7,498)
Finance leases 8 (1,116) (2,944) (2,094)
Provisions for other liabilities
and changes (1,858) (2,171) (1,962)
------------------------------------ ------ -------------- -------------- ----------
Total liabilities (188,767) (230,506) (198,971)
------------------------------------ ------ -------------- -------------- ----------
Net assets 101,905 80,431 99,888
------------------------------------ ------ -------------- -------------- ----------
Equity
Capital and reserves, attributable
to owners of the parent
Share capital 51,660 51,660 51,660
Share premium account 353,231 353,231 353,231
Accumulated losses(1) (302,986) (324,460) (305,003)
------------------------------------ ------ -------------- -------------- ----------
Total equity 101,905 80,431 99,888
------------------------------------ ------ -------------- -------------- ----------
(1) Included within accumulated losses for the six months ended
30 September 2017 is a profit after tax of GBP12.0 million.
Consolidated interim statement of changes in shareholders'
equity
Share premium Accumulated
Share capital account losses Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 (audited) 51,660 353,231 (288,624) 116,267
--------------------------------- ----- ------------- ------------- ----------- --------
Profit for the period - - 12,833 12,833
Other comprehensive income - - (27,868) (27,868)
--------------------------------- ----- ------------- ------------- ----------- --------
Total comprehensive income
for the
period ended 30 September
2016 (unaudited) - - (15,035) (15,035)
--------------------------------- ----- ------------- ------------- ----------- --------
Deferred tax charge relating
to share schemes - - (102) (102)
Deferred tax credit relating
to asset-backed Partnership - - 262 262
Purchase of ordinary shares - - (1,310) (1,310)
Employee share schemes - - 703 703
Dividends 6 - - (20,354) (20,354)
--------------------------------- ----- ------------- ------------- ----------- --------
(20,801) (20,801)
--------------------------------- ----- ------------- ------------- ----------- --------
At 30 September 2016 (unaudited) 51,660 353,231 (324,460) 80,431
--------------------------------- ----- ------------- ------------- ----------- --------
Profit for the period - - 11,929 11,929
Other comprehensive income - - 17,571 17,571
--------------------------------- ----- ------------- ------------- ----------- --------
Total comprehensive income
for the
period ended 31 March 2017
(audited) - - 29,500 29,500
--------------------------------- ----- ------------- ------------- ----------- --------
Deferred tax charge relating
to share schemes - - (20) (20)
Deferred tax charge relating
to asset-backed Partnership - - (262) (262)
Purchase of ordinary shares - - (468) (468)
Employee share schemes - - 1,039 1,039
Dividends 6 - - (10,332) (10,332)
--------------------------------- ----- ------------- ------------- ----------- --------
(10,043) (10,043)
--------------------------------- ----- ------------- ------------- ----------- --------
At 31 March 2017 (audited) 51,660 353,231 (305,003) 99,888
--------------------------------- ----- ------------- ------------- ----------- --------
Profit for the period - - 12,022 12,022
Other comprehensive income - - 9,889 9,889
--------------------------------- ----- ------------- ------------- ----------- --------
Total comprehensive income
for the
period ended 30 September
2017 (unaudited) - - 21,911 21,911
--------------------------------- ----- ------------- ------------- ----------- --------
Deferred tax credit relating
to share schemes - - 3 3
Purchase of ordinary shares - - (150) (150)
Employee share schemes - - 917 917
Dividends 6 - - (20,664) (20,664)
--------------------------------- ----- ------------- ------------- ----------- --------
- - (19,894) (19,894)
--------------------------------- ----- ------------- ------------- ----------- --------
At 30 September 2017 (unaudited) 51,660 353,231 (302,986) 101,905
--------------------------------- ----- ------------- ------------- ----------- --------
Consolidated interim cash flow statement
Unaudited Unaudited Audited
six months six months Year
ended ended ended
30 Sept 2017 30 Sept 31 Mar
GBP'000 2016 2017
Notes GBP'000 GBP'000
Cash flows from operating activities
Operating profit 15,888 17,204 32,756
Adjustments for:
- depreciation and amortisation 15,095 13,166 26,908
- increase in working capital (12,513) (26,872) (18,302)
- (Profit)/loss on sale of property,
plant and equipment (15) 69 555
- non-employee-related pension charges 625 316 655
- Share based payment charge 917 703 1,742
Payments made to defined benefit
pension schemes (4,732) (4,697) (7,724)
Tax paid (1,706) (4,872) (8,019)
------------------------------------------ ----- ------------- ----------- --------
Net cash generated from/(used in)
operations 8 13,559 (4,983) 28,571
------------------------------------------ ----- ------------- ----------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (12,133) (16,211) (28,403)
Purchase of intangible assets (5,388) (9,381) (15,792)
Proceeds from sale of property, plant
and equipment 8 53 - 68
------------------------------------------ ----- ------------- ----------- --------
Net cash used in investing activities (17,468) (25,592) (44,127)
------------------------------------------ ----- ------------- ----------- --------
Cash flows from financing activities
Dividends paid 6 (20,664) (20,354) (30,686)
Interest paid 8 (516) (534) (1,257)
Capital element of finance lease
repayments (1,114) (1,479) (3,025)
Payment of loan issue costs - - (720)
Repayment of bank loans (20,000) (5,000) (15,000)
Drawdown of bank loans 45,000 60,000 65,000
Purchase of ordinary shares 8 (150) (1,309) (1,778)
------------------------------------------ ----- ------------- ----------- --------
Net cash generated from financing
activities 2,556 31,324 12,534
------------------------------------------ ----- ------------- ----------- --------
(Decrease)/increase in cash and cash
equivalents (1,353) 749 (3,022)
Cash and cash equivalents at the
beginning of the period 10,190 13,212 13,212
------------------------------------------ ----- ------------- ----------- --------
Cash and cash equivalents at the
end of the period 8 8,837 13,961 10,190
------------------------------------------ ----- ------------- ----------- --------
Notes to the unaudited interim financial information
1. Segmental analysis
The Group's operating segments are based on the reports reviewed
by the KCOM Group PLC Board which are used to make strategic
decisions. The chief operating decision-maker of the Group is the
KCOM Group PLC Board.
The Board considered three "go to market" segments, Hull &
East Yorkshire, Enterprise and National Network Services, along
with a Central segment. These segments are consistent with those
presented in our Annual report and accounts for the year ended 31
March 2017. In the second half of the year ended 31 March 2017 our
operating segments were refined to align with the way the business
is run and the financial analysis performed. Our segmental results
for the period ended 30 September 2016 are represented on this
basis.
Contribution represents gross margin less all costs directly
attributable to the segment. As disclosed in our Annual report and
accounts for the year ended 31 March 2017, KCOM Group PLC continues
to have one business-wide EBITDA with segment profitability
(contribution) used as the metric of reporting segmental
performance.
Revenue Contribution
Unaudited Unaudited Audited Unaudited Unaudited Audited
six months six months year six months six months year
ended ended ended ended ended ended
30 Sept 30 Sept 31 Mar 30 Sept 30 Sept 31 Mar
2017 2016 2017 2017 2016 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Before exceptional
items
Hull & East Yorkshire 51,057 50,365 102,275 30,507 30,205 60,424
Enterprise 43,847 43,199 90,966 (813) 1,462 4,500
National Network
Services 58,439 73,706 141,811 5,806 7,620 15,959
Central (2,035) (1,944) (3,749) (5,720) (7,246) (13,238)
------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Total before
exceptional items 151,308 165,326 331,303 29,780 32,041 67,645
------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Exceptional items
Hull & East Yorkshire - - - (109) (237) (2,338)
Enterprise - - - (91) (234) (2,624)
National Network
Services - - - 1,735 (67) 353
Central - - - (332) (1,133) (3,372)
------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Total - - - 1,203 (1,671) (7,981)
------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Total after exceptional
items 151,308 165,326 331,303 30,983 30,370 59,664
------------------------- ------------ ------------ ---------- ------------ ------------ ----------
A reconciliation of EBITDA to total profit before tax is
provided as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
EBITDA post exceptional items 30,983 30,370 59,664
Depreciation (7,971) (7,149) (14,279)
Amortisation (7,124) (6,017) (12,629)
Finance costs (1,070) (1,149) (2,263)
Share of profit of associates 7 12 12
------------------------------- ------------ ------------ ---------
Profit before tax 14,825 16,067 30,505
------------------------------- ------------ ------------ ---------
The split of total revenue between external customers and
inter-segment revenue is as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
Revenue from external customers
Hull & East Yorkshire 49,022 48,083 97,921
Enterprise 43,847 43,199 90,966
National Network Services 58,439 73,706 141,811
Central - 338 605
--------------------------------- ------------ ------------ ---------
Total 151,308 165,326 331,303
--------------------------------- ------------ ------------ ---------
Inter-segment revenue
Hull & East Yorkshire 2,035 2,282 4,354
Central (2,035) (2,282) (4,354)
--------------------------------- ------------ ------------ ---------
Total - - -
--------------------------------- ------------ ------------ ---------
Group total 151,308 165,326 331,303
--------------------------------- ------------ ------------ ---------
2. Exceptional items
Exceptional items are separately disclosed by virtue of their
size or incidence to improve the understanding of the Group's
financial performance.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
- Regulatory matters (1,918) - -
---------------------------------------- ----------- ----------- --------
Credited to income statement (1,918) - -
---------------------------------------- ----------- ----------- --------
- Restructuring costs 715 1,671 7,271
- Regulatory matters - - 710
---------------------------------------- ----------- ----------- --------
Charged to income statement 715 1,671 7,981
---------------------------------------- ----------- ----------- --------
Net (credit)/charge to income statement (1,203) 1,671 7,981
---------------------------------------- ----------- ----------- --------
Regulatory matters includes a credit of GBP1.9 million for an
industry wide settlement from BT Openreach relating to Deemed
Consent. The Ofcom determined settlement arose as a result of a
breach in BT Openreach's contractual and regulatory obligations
relating to compensation for inadequately and retrospectively
applying Deemed Consent.
In the year ended 31 March 2017, the Group incurred costs of
GBP0.7 million in relation to regulatory matters which principally
related to a notification from Ofcom stating that KCOM may have
failed to comply fully with a required "General Condition" between
2009 and 2015. Ofcom completed its investigation in August 2017 and
a settlement was made.
As part of our continued transformation, the Group incurred
GBP0.7 million of redundancy costs during the period. In line with
our accounting policy these costs have been shown as restructuring
costs within exceptional items. In the year ended 31 March 2017,
GBP7.3 million of costs were incurred in relation to restructuring
(of which GBP3.4 million related to redundancy costs).
The tax charge on exceptional items is GBP0.2 million. The cash
flow impact of exceptional items is a cash outflow of GBP1.8
million. The difference between the cash flow impact and the charge
for the period is due to the timing of cash payments and
receipts.
3. Finance costs
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
Bank loans, overdrafts and other loans 593 527 1,195
Retirement benefit obligations 220 220 375
Finance lease and hire purchase contracts 40 58 110
------------------------------------------ ----------- ----------- --------
853 805 1,680
Amortisation of loan arrangement fees 217 344 583
------------------------------------------ ----------- ----------- --------
Total 1,070 1,149 2,263
------------------------------------------ ----------- ----------- --------
4. Tax
Taxes on income in interim periods are accrued using the tax
rate that would be applicable to the expected total annual
earnings. The Group's effective rate is 19.0% (2016: 20.1%).
5. Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
Number Number Number
Weighted average number of shares
For basic earnings per share 510,987,620 510,141,695 510,384,583
Share options in issue 5,327,084 4,490,038 4,643,349
--------------------------------------- ----------- ----------- -----------
For diluted earnings per share 516,314,704 514,631,733 515,027,932
--------------------------------------- ----------- ----------- -----------
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -----------
Earnings
Profit attributable to equity holders
of the company 12,022 12,833 24,762
Adjustments:
Exceptional items (1,203) 1,671 7,981
Tax on exceptional items 229 (334) (1,596)
--------------------------------------- ----------- ----------- -----------
Adjusted profit attributable to equity
holders of the company 11,048 14,170 31,147
--------------------------------------- ----------- ----------- -----------
Pence Pence Pence
--------------------------------------- ----------- ----------- -----------
Earnings per share
Basic 2.35 2.52 4.85
Diluted 2.33 2.49 4.81
--------------------------------------- ----------- ----------- -----------
Adjusted basic 2.16 2.78 6.10
Adjusted diluted 2.14 2.75 6.05
--------------------------------------- ----------- ----------- -----------
6. Dividends
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
Final dividend for the year ended
31 March 2016 of 3.94 pence per share - 20,354 20,354
Interim dividend for the year ended
31 March 2017 of 2.00 pence per share - - 10,332
Final dividend for the year ended
31 March 2017 of 4.00 pence per share 20,664 - -
---------------------------------------- ------------ ------------ ---------
Total 20,664 20,354 30,686
---------------------------------------- ------------ ------------ ---------
The proposed interim dividend for the six months ended 30
September 2017 is 2.00 pence per share. In accordance with IAS 10
'Events after the balance sheet date', dividends declared after the
balance sheet date are not recognised as a liability in these
financial statements.
7. Retirement benefit obligations
The net post-retirement scheme deficit as at 30 September 2017
is calculated on a year to date basis, using the most recent formal
triennial actuarial valuation for 31 March 2016, updated to the 30
September 2017.
The Group operates two schemes; Kingston Communications Pension
Scheme and Kingston Communications (Data) Pension Scheme referred
to in this disclosure as the main scheme and the data scheme
respectively.
Movement in the net post-retirement position recognised in the
balance sheet were as follows:
Reconciliation of funded status to balance sheet
Main Scheme Data Scheme Total
GBP'000 GBP'000 GBP'000
At 1 April 2017 (audited) (12,690) (7,001) (19,691)
Net finance costs (139) (81) (220)
Net administrative expenses (343) (282) (625)
Contributions by employer 1,197 163 1,360
Deficit repair payments 2,248 1,124 3,372
Remeasurements of retirement benefit
obligations 12,805 (744) 12,061
-------------------------------------- ------------ ------------ ---------
At 30 September 2017 (unaudited) 3,078 (6,821) (3,743)
-------------------------------------- ------------ ------------ ---------
Comprised of:
Main Scheme Data Scheme Total
GBP'000 GBP'000 GBP'000
At 30 September 2017 (unaudited)
Present value of defined benefit obligations (223,341) (40,189) (263,530)
Fair value of plan assets 226,419 33,368 259,787
---------------------------------------------- ------------ ------------ ----------
Surplus/(deficit) 3,078 (6,821) (3,743)
---------------------------------------------- ------------ ------------ ----------
At 31 March 2017 (audited)
Present value of defined benefit obligations (229,723) (41,506) (271,229)
Fair value of plan assets 217,033 34,505 251,538
---------------------------------------------- ------------ ------------ ----------
Deficit (12,690) (7,001) (19,691)
---------------------------------------------- ------------ ------------ ----------
Main financial assumptions:
Audited
Unaudited Unaudited year
six months six months
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
% % %
RPI Inflation 3.15 3.00 3.15
CPI Inflation 2.15 2.00 2.15
Rate of increase to pensions in payment 2.20 2.00 2.20
Discount rate for scheme liabilities 2.60 2.15 2.50
----------------------------------------- ------------ ------------ --------
8. Movement in net (debt)/funds
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
Opening net (debt)/funds (42,433) 7,412 7,412
Closing net debt (67,804) (45,703) (42,433)
----------------------------------------- ----------- ----------- --------
Increase in the period (25,371) (53,115) (49,845)
----------------------------------------- ----------- ----------- --------
Reconciliation of movement in the period
Net cash flow from operations 13,559 (4,983) 28,571
Cash capital expenditure(1) (18,635) (27,071) (47,220)
Proceeds on sale of property, plant
and equipment 53 - 68
Interest (516) (534) (1,257)
Payment of loan issue costs - - (720)
Dividends (20,664) (20,354) (30,686)
Purchase of ordinary shares (150) (1,309) (1,778)
Finance leases(2) 1,074 1,420 2,915
Non cash movement in loan arrangement
fees (92) (271) -
Other - (13) 262
----------------------------------------- ----------- ----------- --------
Increase in the period (25,371) (53,115) (49,845)
----------------------------------------- ----------- ----------- --------
(1) For definition of cash capital expenditure see glossary
(2) Represents the movement in finance lease liabilities during
the period
Net debt comprises:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBP'000 GBP'000 GBP'000
Cash and cash equivalents (including
bank overdrafts) 8,837 13,961 10,190
Bank loans (net of debt issue costs) (73,679) (54,133) (48,587)
Finance leases (2,962) (5,531) (4,036)
------------------------------------- ----------- ----------- --------
Total net debt (67,804) (45,703) (42,433)
------------------------------------- ----------- ----------- --------
9. Basis of preparation and publication of unaudited interim
results
General information
KCOM Group PLC is a company domiciled in the United Kingdom.
The Group has its primary listing on the London Stock Exchange.
Details of the principal activities of the Group are disclosed on
pages 4 to 5 and in the Strategic report in the Group's 2017 Annual
report and accounts.
This condensed consolidated interim financial information was
approved for issue on 28 November 2017.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
March 2017 were approved by the Board of directors on 9 June 2017
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The condensed consolidated interim financial information has
been reviewed, not audited. The review opinion is disclosed on page
26.
This condensed consolidated interim financial information will
be published on the Company's website. The maintenance and
integrity of the website is the responsibility of the directors.
The work carried out by the auditors does not involve consideration
of these matters. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Basis of preparation
This condensed consolidated interim financial information for
the six months ended 30 September 2017 has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority (previously Financial Services
Authority) and with IAS 34, 'Interim financial reporting' as
adopted by the European Union. The condensed consolidated interim
financial information should be read in conjunction with the annual
financial statements for the year ended
31 March 2017, which have been prepared in accordance with IFRSs
as adopted by the European Union.
Going concern
The Group meets its day-to-day working capital requirements
through its bank facilities. The Group's forecasts and projections,
taking account of reasonably possible changes in trading
performance, show that the Group should be able to operate within
the level of its current facilities. After making enquires, the
directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. The Group therefore continues to adopt the going concern
basis in preparing its consolidated interim financial
information.
10. Accounting policies
The accounting policies adopted are consistent with those
published in the Group's Annual report and accounts for the year
ended 31 March 2017, in Note 2 on pages 85 to 91, except as
described below.
Tax policy
Taxes on income in interim periods are accrued using the tax
rate that would be applicable to the expected total annual
earnings.
11. Significant judgements and estimates
In preparing this condensed consolidated interim financial
information, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
Group's Annual report and accounts for the year ended 31 March
2017, in Note 3 on page 91, with the exception of changes in
estimates that are required in determining the provision for income
taxes (see Note 10).
The preparation of interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these judgements and estimates.
In particular, the Group, enters into significant contracts with
customers, which include both a 'project' and an 'in-life service'.
Revenue relating to the 'project' phase is accounted for on a stage
of completion basis. Revenue relating to the 'in-life service' is
recognised in line with the satisfaction of the obligation to
provide the service. The Directors are required to make judgements
in order to separate the contract into the two phases. The
Directors are also required to make judgements relating to the
stage of completion of the installation phase, which includes
estimating the work necessary to complete the phase. On the
previously identified software contracts in our Enterprise segment,
we recognise that material uncertainty exists around certain
judgements. Whilst this could reduce the size of anticipated
losses, there is also potential for an increase in the Group's
exposure.
12. Adoption of new accounting standards
There were no new standards, amendments or interpretations that
were adopted by the Group and effective for the first time for the
financial period beginning after 1 April 2017 that were material to
the Group.
A number of new standards, interpretations and amendments have
been issued by the IASB but had either not been adopted by the
European Union or were not yet effective in the European Union at
30 September 2017. Three of these new standards are expected to
have an impact on the Group financial statements:
IFRS 9 "Financial instruments"
IFRS 9 is applicable to the Group for the year ended 31 March
2019 and covers the classification, measurement, impairment and
de-recognition of financial assets and liabilities together with a
new hedge accounting model. We have completed our assessment of
this new standard and expect the impact to be immaterial.
IFRS 15 "Revenue from contracts with customers"
IFRS 15 sets out the principles for recognising revenue from
contracts with customers and will require the Group to use a five
step approach to allocate the revenue earned from contracts to
individual performance obligations on a relative standalone selling
price basis.
This new standard will be applicable to the Group for the year
ended 31 March 2019. As disclosed in our Annual report and accounts
for the year ended 31 March 2017, we intend to adopt IFRS 15 using
the modified retrospective transition method. Consequently, an
adjustment will be made to equity at the date of transition (1
April 2018) to recognise the full cumulative impact of applying
this standard retrospectively. Currently, we are in the process of
completing our detailed assessment and quantifying the impact which
will arise from the application of this standard.
IFRS 16 "Leases"
IFRS 16 replaces IAS 17 "Leases" and will primarily change lease
accounting for lessees. Lessor accounting under IFRS 16 is expected
to be similar to IAS 17.
For lessees, an operating lease arrangement will give rise to
the recognition of a non-current asset representing the right to
use the leased item and a loan obligation for future lease
payables. Lease costs will be recognised in the form of
depreciation of the right to use assets and interest on the lease
liability.
This new standard will be applicable to the Group for the year
ended 31 March 2020. The Group is continuing to assess the impact
of IFRS 16, which is expected to have an impact on the consolidated
income statement and the consolidated balance sheet. We are yet to
quantify this impact.
13. Financial risk management and financial instruments
Financial risk factors
The Group's activities expose it to a variety of financial
risks; currency risk, interest-rate risk, liquidity risk, and
credit risk. The Group's overall risk management strategy is
approved by the Board and implemented and reviewed by senior
management. Detailed financial risk management is then delegated to
the Finance departments which have a specific policy manual that
sets out guidelines to manage financial risk. The condensed interim
financial information do not include all financial risk management
information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's
annual financial statements as at 31 March 2017. There have been no
changes in the Group's risk management processes or policies since
the year end.
Financial instruments
The Group accounts for financial instruments in accordance with
IFRS 13. This standard requires disclosure of fair value
measurements by level of the following hierarchy;
1. Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
2. Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2)
3. Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
Consistent with the March 2017 year end, all of the Group's
financial instruments fall into hierarchy level 2. The fair value
of financial assets and liabilities is obtained from third party
sources.
14. Related party transactions
There are no material related party transactions.
15. Statement of directors' responsibilities
The directors confirm that this condensed interim financial
information has been prepared in accordance with IAS 34 as adopted
by the European Union and the guidance set out in the Accounting
Standards Board's 2007 Statement Half-Yearly Reports.
The directors also confirm that the interim management report
herein includes a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months 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 financial year;
and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the Group's 2017 Annual report and accounts.
The directors of KCOM Group PLC are listed in the KCOM Group
Annual report and accounts for the year ended 31 March 2017.
Signed by Order of the Board on 28 November 2017 by:
Glossary
Alternative Performance Measures
In response to the Guidelines on Alternative Performance
Measures (APMs) issued by the European Securities and Markets
Authority (ESMA), we have provided additional information on the
APMs used by the Group. The Directors use the APMs listed below as
they are critical to understanding the financial performance of the
Group. As they are not defined by IFRS, they may not be directly
comparable with other companies who use similar measures.
APM Definition and reason for use Reconciliation
to equivalent IFRS
measure of performance
------------- --------------------------------------------- -----------------------------
EBITDA Operating profit before finance A reconciliation
before costs, taxation, depreciation, amortisation of this measure
exceptional and exceptional items. is provided in
items Note 1 of these
This measure is reflective of the results.
underlying operating performance
of the Group. We believe this measure
is useful and necessary to analyse
performance.
------------- --------------------------------------------- -----------------------------
Contribution An equivalent measure to 'EBITDA A reconciliation
before exceptional items' for each of this measure
of the Group's segments. is provided in
Note 1 of these
This metric is used by the Board results.
to compare performance across segments.
------------- --------------------------------------------- -----------------------------
Profit Profit attributable to the shareholders Reported in the
before before taxation and exceptional consolidated income
tax before items. statement:
exceptional Profit before tax
items This measure is reflective of the (GBP14.8m), less
overall underlying performance of exceptional credits
the Group. We believe this measure (GBP1.9m), plus
is useful and necessary to analyse exceptional charges
performance. of (GBP0.7m).
------------- --------------------------------------------- -----------------------------
Adjusted This shows EPS based upon profit A reconciliation
earnings for the period which has been adjusted of this measure
per share for exceptional items. is provided in
Note 5 of these
This provides additional information results.
regarding earnings per share attributable
to the underlying activities of
the business.
------------- --------------------------------------------- -----------------------------
Net debt Net debt is cash and cash equivalents, A reconciliation
bank overdrafts, finance leases of this measure
(current and non-current) and bank is provided in
loans. Note 8 of these
results.
Reported net debt allows management
to assess available funds. It is
used in the monitoring, reporting
and planning of cash flows, and
for the purpose of monitoring compliance
with the terms of the Group's Facilities.
------------- --------------------------------------------- -----------------------------
ARPU Average revenue per user. This measure As ARPU values
is specifically used when analysing are not disclosed
the consumer performance within within these financial
the Hull & East Yorkshire segment. statements a reconciliation
is not deemed necessary.
This is an important measure for
assessing the success of our consumer
market.
------------- --------------------------------------------- -----------------------------
Cash capital Cash outflow for the purchase of Reported in the
expenditure 'property, plant and equipment' consolidated cash
and 'other intangible assets'. flow: Purchase
of property, plant
A proportion of our capital expenditure and equipment (GBP12.1m)
is obtained under financing arrangements plus Purchase of
therefore, compared to capital additions, intangible assets
this measure allows management to (GBP5.4m) plus
monitor, report and plan the cash Capital element
flows relating to capital projects. of finance lease
repayments (GBP1.1m).
------------- --------------------------------------------- -----------------------------
Independent review report to KCOM Group PLC
Report on the interim financial information
Our conclusion
We have reviewed KCOM Group PLC's interim financial information
(the "interim financial information") in the half-yearly report of
KCOM Group PLC for the 6 month period ended 30 September 2017.
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements, comprise:
-- the Consolidated interim balance sheet as at 30 September 2017;
-- the Consolidated interim income statement and Consolidated
interim statement of comprehensive income for the period then
ended;
-- the Consolidated interim cash flow statement for the period then ended;
-- the Consolidated interim statement of changes in
shareholders' equity for the period then ended; and
-- the explanatory notes to the unaudited interim financial information.
The interim financial information included in the unaudited
interim results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial information, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial information and the
review
Our responsibilities and those of the directors
The half-yearly report, including the interim financial
information, is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the
unaudited interim results in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial information in the unaudited interim results based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial information involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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.
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.
We have read the other information contained in the unaudited
interim results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
PricewaterhouseCoopers LLP
Chartered Accountants
London
28 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRBTTMBATTMR
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November 28, 2017 02:01 ET (07:01 GMT)
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