Final Results

21 May 2013

Eco City Vehicles PLC

 ("ECV" or "the Group")

Audited results for the year ended 31 December 2012

Eco City Vehicles PLC, the co-developer and supplier of the London licensed Mercedes Vito taxi, announces its audited results for the year ended 31 December 2012.

Financial highlights

·; Total revenues increased by 38% to £30.5m (2011: £22.2m) reflecting the increased momentum of sales and popularity of the latest Mercedes Vito Euro V model

·; Gross margin increased to 14.5% (2011: 13.5%)

·; EBITDA before non-recurring items increased by £1.7m to a profit of £0.8m (2011: EBITDA loss of £0.9m) primarily due to increased contribution from the vehicle sales division and return to gross profit by the Group's technology subsidiary, One80 Limited ("One80")

·; Loss before tax excluding non-recurring items reduced to £0.2m (2011: Loss £2.2m)

·; Sold freehold Coventry property for £2m

·; Net debt (being cash and cash equivalents together with long and short term borrowings) reduced by £2.1m to £1m (2011: £3.1m)

Operating highlights

·; Sales of new Vito taxis increased 77% to £19.7m (2011: 11.1m)

·; Total new Vito licenses increased by 69% to 561 vehicles (2011: 331)

·; Increased share of the new London licensed taxi market to 40% (2011: 23%) based on Transport for London data

·; Used taxi sales increased by 34% to £5m (2011: £3.7m) as vehicle units rose to 344 from 267

2013 Outlook

·; Trading momentum has continued into 2013 driven by increasing demand for the new Euro V model Vito and the 15-year age limit introduced for London licensed "black cabs".

·; Diversification into complementary niche markets being considered as part of a review of long term growth strategy by new chief executive Trevor Parker

Commenting on the results, John Swingewood, Chairman of Eco City Vehicles, said:

"Record sales of new and second hand Mercedes Vito taxis together with a sharper focus on the operational performance of the business, notably our technology subsidiary, led to a strong result in 2012. We continued to gain market share, returned to underlying positive EBITDA and also significantly reduced debt last year.

"Demand for the Vito taxi continues to be encouraging in 2013 as the new model gains popularity due to its superior quality, performance and attractive finance packages that together deliver a low total cost of ownership and make our offer highly competitive for the London taxi trade. We also remain focused on further improving our bottom line performance this year. With a trading momentum and the new chief executive Trevor Parker to lead the next stage of the Group's development we look to the future with confidence."

Enquiries:

CHAIRMAN'S STATEMENT

Introduction

ECV delivered a strong performance as the Mercedes Vito business went from strength to strength during the year. This reflects the increasing popularity of the new improved Euro V Vito taxi combined with the competitive financing package introduced by the Group in December 2011. Our market share in the new London taxi market increased significantly even though the London licensed taxi market as a whole saw virtually no growth last year.

The UK is our principal market and splits into four key sectors: new taxi sales, aftersales services, used vehicle sales and vehicle parts distribution.

The new vehicle sales grew by 77% to £19.7m in 2012 (2011: £11.1m) with 561 units sold (2011: 331). The Euro V Vito taxi, launched in April 2011, is fully compliant with new EU vehicle emission standards and also provides improved fuel savings and comfort.

The used taxi vehicle market remains healthy and our parts distribution business has diversified with the introduction of Mercedes parts. However, in contrast to the thriving Vito market, trading at the Group's old-style Manganese Bronze, LTI taxi business was challenging. Although ECV stopped selling new LTI taxis in 2010, we continue to serve the London taxi trade by supplying used vehicles, parts and after sales services - all of which made a materially lower contribution to the Group last year.

Management has spent considerable time seeking to improve the aftersales business and the Board believes this division still presents a significant opportunity to increase profitability through operational improvements and expansion of services to other London based commercial fleets.

A major turnaround was achieved at One80, ECV's technology subsidiary, following the transfer of second stage production to Mercedes-Benz. One80's performance was a major factor in reducing the Group loss for the year and it also contributed to an EBITDA profit from continuing operations, before non-recurring items, of £0.8m (2011: EBITDA loss £0.9m). One80's revenue is derived from a licence fee per production unit, with a guaranteed minimum number of units per annum.

Trading Performance

Group revenues increased by 38% to £30.5m (2011: £22.2m), driven by an increase in demand for our new and used Mercedes Vito taxi, partially offset by a decline in parts and after sales revenues.

Group EBITDA before non-recurring items increased by £1.7m to an EBITDA profit of £0.8m (2011: EBITDA loss £0.9m). The loss before tax of £1.0m (2011: loss £2.7m) was exacerbated by higher non-recurring items and finance costs totalling £0.8m (2011: £0.5m) mainly in relation to property impairment and agreements reached with related parties as part of the September 2012 fundraise.

In December 2012 the Group completed the disposal of a non-core asset, its freehold Coventry property to Penso Consulting Limited for a total cash consideration of £2m which was used to repay the Group mortgage and interest swap in total of £1.8m. The balance of the proceeds was applied as working capital.

Net debt (being cash and cash equivalents together with long and short term borrowings) reduced by £2.1m to £1.0m (2011: £3.1m).

Placing

On 7 September 2012 the Group raised £1.75m (before expenses) through a firm placing of 116,666,666 ordinary shares at 1.5 pence per share (the "Placing") with new and existing institutional investors (representing a discount of approximately 18% against the closing mid-market price on 6 September 2012).

The net proceeds of the Placing have been used to repay debt, fund capital investment and to provide additional working capital to support the growth of the Group. As part of the Placing the Group entered into a number of financing arrangements, as announced in September 2012.

Post Balance Sheet Events

In January 2013 the Group issued 9,216,000 ECV shares in full and final settlement of the consideration owing in respect of the One80 Stake and other matters.

Management, Employees and Board

In September 2012 the Group announced a number of Board changes following the completion of the Placing in order to lead the Group through the next phase in its development. Tim Yeo retired from the Board on completion of the Placing. Keith Marder has also stepped down from the Board on completion of the Placing. In December 2012 Steven McCarthy was appointed to the Board as Chief Operating Officer. Steven has 30 years automotive experience and joined the Group in November 1997 as the Sales Manager of KPM, ECV's wholly owned subsidiary.

In April 2013 Trevor Parker was appointed to the Board as Chief Executive Officer to lead the Group's next phase of development, replacing Peter DaCosta who becomes non executive director after 38 years with the business he founded. Trevor brings more than 20 years' leadership experience in the UK motor and leisure industry. Jeremy Fenn, non-executive director, has also retired from the Board. I would like to thank Peter for his unstinting commitment to the Group for almost four decades as well as Jeremy's wise counsel over many years. 

Future

The strength in new taxi sales reflects the growing popularity of the latest version of the Vito Taxi as drivers continue to recognise its superior quality and performance, as well as take advantage of the Mercedes-Benz three year Agility finance package which has been continued into 2013.

We are delighted with the continued improvement in performance over the last year and the return to positive underlying EBITDA. 2013 has also seen a significant reduction in debt, disposal of non-core assets and the consolidation of our controlling position in One80 that earns revenue through intellectual property licence fees from the manufacture of the Vito Taxi.

Demand for the Vito taxi continues to be encouraging in 2013 as the combination of performance and attractive finance packages deliver a low total cost of ownership and make our offer highly competitive for the London taxi trade. We also remain focused on further improving our bottom line performance this year. With a trading momentum and the new chief executive Trevor Parker to lead the next stage of the Group development we look to the future with confidence.

John Swingewood

Chairman

21 May 2013

Chief Executive Officer's Review

I was delighted to accept the position of Chief Executive of the Group in April 2013. While these results cover a period before my arrival, they provide a solid launch pad for the next phase of the Group's development.

Immediately on joining, I have been involved in a detailed strategic review covering all aspects of the Group's operations. The conclusions from this review are not yet complete but will form the basis of a strategic plan, of which phase one will be to strengthen ECV's performance further and deliver a more profitable and stable core business focusing on productivity improvements across the business, re-energising the team, whilst at the same time laying the foundations for business growth. I look forward to reporting on our progress to all shareholders in due course.

New Taxis

Group revenues in the period under review increased by 38% to £30.5m (2011: £22.3m) reflecting strong demand for new and used London licensed Mercedes Vito taxis. Revenues from new taxi sales were £19.7m (2011: £11.1m) as the Vito continued to gain market share and the introduction of new 15-year age limit for London taxis from 2013.

Gross profit more than doubled to £1.3m compared to £0.6m in the prior year. The strength of the new taxi sales reflects the growing popularity of the latest version of the Vito Taxi as drivers continue to take advantage of the Mercedes-Benz three year Agility finance package which has been continued into 2013.

In April 2011, a year in advance of the implementation of the Euro V regulations, we introduced a new diesel version of the Mercedes Vito. This improved model incorporates Mercedes-Benz's Blue Efficiency technology, which places the vehicle in a lower road tax band and comes with an improved suspension giving a better ride and increased fuel savings.

Overall new Vito taxi licenses increased by 71% to 561 vehicles in 2012 compared to 331 in 2011, enabling the Group to capture 40% share of new taxi sales compared to 23% in 2011. The total number of taxis licensed in London was 1,461 in 2012 compared to 1,442 in 2011, an increase of just 1%.

Used taxis

Unit sales in this segment increased by 29% to 344 (2011: 267).

Used taxi sales followed the increase in new Vito sales, with revenues increasing to £5m (2011: £3.7m) of which Vito sales accounted for 46% (2011:41%). The growth in Vito sales reflects increasing recognition among taxi drivers of the benefits of the Vito taxi in terms of reported fuel savings, superior quality, higher seating capacity and lower overall cost of ownership.

After Sales Division - Service, Bodyshop and Parts

The parts business has seen a revenue decrease of 22.7% to £2.5m (2011: £3.2m) as a result of increased competition from LTI distributors. Gross margins increased slightly from 19% to 24%.

Aftersales saw a decrease in revenues to £1.64m (2011: £2.0m) and a decrease in profits to £43,000 loss (2011: £24,000 Profit) respectively. Revenue from LTI taxis has decreased by 30% to £0.6m, with Mercedes-Benz revenue decreasing slightly to £1.0m.

The Group is pursuing opportunities for further sales growth in the after sales and parts divisions following the implementation of a number of cost reduction actions to mitigate the impact of the revenue reduction.

One80 Limited

On 7 September 2012 the Group agreed to acquire the benefit of a £250,000 short-term loan made to One80 by Cabvision Network Limited. The acquisition of the benefit of the One80 Loan by ECV will ensure that the One80 Loan and the related security over One80's assets are under the control of ECV as majority shareholder rather than an external party. As a result ECV will control the enforceability of the loan and related security over the relevant assets of One80, which are important to the business of ECV.

2013 Outlook

The positive trading momentum seen last year has continued into 2013 driven by increasing demand for new Euro V model Vito and the 15-year age limit introduced for London licensed "black cabs".

ECV is also considering diversification into complementary niche vehicle markets as part of the Group's long term growth strategy. These plans will be finalised and announced in due course.

Given the trading momentum and a new executive team to drive the next phase of growth, we look to the future with confidence.

Trevor Parker

21 May 2013

Finance Directors Review 

Key performance indicators

Note: The amounts shown in the table do not agree to those in the Consolidated Statement of Comprehensive Income due to elements being included within the profit of individual segments. Prior year has been restated to reflect a change in management accounting allocations in the aftersales and parts divisions.

Sales of new Vito taxis increased by 78% in the period under review to £19.7m (2011: £11.1m) and margin increased to 6.8% (2011: 5.1%). Registrations of the Mercedes-Benz Vito have increased to 561 units from 331 units. Revenues from used vehicle sales increased by 34% to £5.0m (2011: £3.7m), as a result of increased part-exchange transactions caused by the uplift in new taxi sales.

Following the termination of the LTI dealership in July 2010 the Group negotiated new contracts to continue sales of used vehicles, parts and service of LTI vehicles. As a result of the current market conditions, parts revenue reduced by 22% to £2.5m (2011: £3.2m).

The after-sales business continues to be impacted by the recession with reduced levels of servicing and longer service intervals, continued reduction in LTI revenues and increased competition from small garages that fall under the VAT threshold. The division's revenues reduced by 19% to £1.6m (2011:£2.0m) and segment profit reduced by £0.67m to a loss of £43,000 (2011: £24,000 profit).

Following the transfer of the second stage manufacture to Mercedes-Benz in 2011 One80 Limited sales reduced by 24% to £1.7m (2011:£2.2m) despite production increasing to 558 units (2011: 375). Due to the transfer of the manufacturing and the licence income from its intellectual rights coupled by reduced cost base One80 segment profit increased by £1.2m to £43,000 (2011: loss £1.1m).

During 2012 the Group continued the implementation of a rationalisation plan to reduce costs and streamline processes in all areas of the business. These steps include cost reductions, renegotiation of a number of the Group leases and exploring additional non-taxi revenue streams, some of which have already been implemented. As a result of these initiatives the Group's central overheads reduced by 35% to £0.8m (2011:£1.2m).

Non recurring items

The Group has incurred £0.8m of non-recurring costs in the year compared with £0.5m in the prior year. During the year the Group undertook a significant refinancing and restructuring exercise, and the increase is mainly due to £0.2m related to impairment of fixed assets as a result of the disposal of the Group's Coventry property in December 2012 and a number of agreements with related parties and directors as part of the placing completed in September 2012.

Finance costs

Finance costs of £0.31m (2011: £0.4m) were incurred with the main decrease related to £0.05m fair value movement of the Group's interest rate swap and £0.05m owing to the reduced usage of the Group's stocking facilities.

Inventory

Inventories reduced by £0.8m mainly due to the reduction in consignment stock as Euro V stock levels reduced during the year as a result of the increased sales.

Intangible assets

The Group has capitalised its design and development costs for the Vito Taxi and its patented rear wheel turning technology and are amortising these costs over the expected life of the development. To date £1.7m has been capitalised and the carrying amount is £0.9m.

Tangible Assets

In December 2012 the Group completed the disposal of a non-core asset, its freehold Coventry property to Penso Consulting Limited for a total cash consideration of £2m which was used to repay the Group mortgage and interest swap in total of £1.8m. The balance of the proceeds was applied as working capital.

One80 Limited ("One80")

One80 have alicenceagreement which provides a fixed license fee per Vito taxi produced with a minimum guaranteed level of 450 units per annum. One80 owns the intellectual property rights to the rear wheel steer technology used on the Mercedes Vito taxi.

The Group increased its shareholding in One80 from 58.8% to 76.6% during the first half of the year, as a result of subscribing in a £0.23m rights issue by One80. One80's trading was improved due to increased units being converted following the transfer of the second stage manufacture to Mercedes-Benz which resulted in a £0.9m gross profit (2011: £0.01m). Cost reductions and restructuring led to a net profit of £0.04m compared to a loss of £1.13m in the same period last year. Amortisation and depreciation of £0.4m (2011: £0.5m) were incurred mainly due to amortisation of development costs for both the original Vito taxi and significant further development costs for the new Euro V model.

As disclosed previously, as part of the agreement dated 16 November 2010 ECV announced its intention to acquire further shares in the capital of One80 (the "One80 Stake. The consideration for the One80 Stake was stated to be £640,000 in cash, which was paid on completion of the acquisition, and up to 12,800,000 shares in the capital of ECV ("ECV Shares") (representing 3.8% of ECV's current issued share capital). The ECV Shares were to be issued following completion of the acquisition of the One80 Stake subject to the satisfaction of certain conditions and potential downwards adjustment following a statutory valuation and report under Section 593 of the Companies Act 2006 (the "Valuation Report"). In January 2013 the Group issued 9,216,000 ECV shares in full and final settlement of the consideration owing in respect of the One80 Stake and other matters.

On 7 September 2012 the Group agreed to acquire the benefit of a £250,000 short-term loan made to One80 by Cabvision Network Limited. The acquisition of the benefit of the One80 Loan by ECV will ensure that the One80 Loan and the related security over One80's assets are under the control of ECV as majority shareholder rather than an external party. As a result ECV will control the enforceability of the loan and related security over the relevant assets of One80, which are important to the business of ECV.

Placing

On 7 September 2012 the Group raised £1.75m (before expenses) through a firm placing of 116,666,666 ordinary shares at 1.5 pence per share (the "Placing"). The Group has undertaken the Placing to certain new and existing institutional investors at a price of 1.5 pence per share (representing a discount of approximately 18% against the closing mid-market price on 6 September 2012). As part of the Placing the Group entered to a number of agreements with related parties

Working capital

Net working capital (being net movement in stock, trade and other debtors and trade and other creditors) increased by £0.7m in the year (2011: decrease £1.7m) mainly due to £1.5m reduction in trade and other payables offset by £0.8m stock reduction.

Cash balances and funding

Cash balances at year end were £0.6m (2011: £0.2m) while net debt reduced by £2.1m to £1.0m (2011: £3.1m). The reduction in Group debt was mainly generated by the disposal of the Coventry property and the repayment of bank debt in total of £1.6m, repayment of £0.28m of pension loan debt and £0.35m of other loans. The Group has agreed total facilities for vehicle stock of £5.75m, with £4m being utilised at the year end (2011:£4.5m). Cash outflow from operating activities was £0.2m (2011: inflow 0.3m) due to working capital movements and in particular the decrease in trade and other payables.

During the year the Group entered into a number of loan agreements with KPM-UK Taxis Plc Discretionary Pension Scheme ("Pension Scheme"), whose beneficiaries are Peter DaCosta, Michael Troullis and Keith Marder. The Pension Scheme provided the Group net additional loans in total of £0.25m. The Pension Scheme holds a first fixed and floating charge over the assets of the Group. The provision of the loan under the agreement is classified as a related party transaction for the purposes of the AIM Rules for Companies. The outstanding balance with the Pension Scheme as at 31 December 2012 was £1.25m (2011:£1.0m).

The Group had a net cash inflow of £1.5m from investing activities (2011: outflow £0.1m) representing predominately the Group's disposal of the property in Coventry.

The Group had a cash outflow from financing activities of £0.9m (2011: outflow £0.1m) representing the share issue offset by the repayment of the mortgage on the Coventry property.

Going Concern

The Group has prepared detailed rolling forecasts taking account of actual results to date and current information on trading on a prudent basis. The Group has also taken into account some of the cost reduction initiatives that had already taken place and further will follow after completion of the review by the new CEO.

Ran Oren

21 May 2013

eco city vehicles plc

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2012

eco city vehicles plc

Consolidated Statement of Financial Position

As at 31 December 2012

eco city vehicles plc

Consolidated Statement of Changes in Equity

As at 31 December 2012

eco city vehicles plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2012

1. Accounting policies

The principal accounting policies adopted in preparation of the Group's financial statements are set out below.

Basis of preparation

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply with IFRSs.

Going concern

The Group has prepared detailed rolling forecasts taking account of actual results to date and current information on trading on a prudent basis. The Group has also taken into account some of the cost reduction initiatives that had already taken place and further actions in progress including a lease surrender and termination of another lease. The Group also considered sensitivities to these forecasts to review the impact on the results and cash balances.

Basis of consolidation

The financial statements incorporate the financial statements of the Group and subsidiaries controlled by the Group made up to the year ended 31 December 2012.

Control is achieved where the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the financial statements from the date that control commences until the date that control ceases.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-Group transactions, balances, income, expenses and unrealised gains are eliminated when preparing the historical financial information. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (r2008) are recognised at their fair value at the acquisition date.

The Group has not applied IFRS 3 (r2008) "Business Combinations" retrospectively to business combinations prior to 1 January 2010.

For business combinations completed on or after 1 January 2010, cost comprised the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit and loss. For business combinations completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as an expense.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

2. Operating loss

Operating loss has been arrived at after charging/ (crediting):

3. Non-recurring items

The operating loss for the year ended 31 December 2012 of £0.6m in total is stated after non-recurring items totalling £0.8m shown below

During the year, the directors reviewed the carrying value of Leasehold Property in the Group. Additional depreciation of £0.2m has been charged. During the year the group undertook a significant refinancing and restructuring exercise. The restructuring costs of £0.3m include consultancy costs of £0.2m and legal costs in respect of refinancing of £50k.

4. Tax credit

There is no provision for UK Corporation tax due to tax losses incurred during the period, subject to agreement with HM Revenue & Customs. Accumulated tax losses of approximately £4,925,000 (2011: £3,410,000) have not been recognised as deferred tax assets due to uncertainty over the timing of future profits.

5. Loss per share

An adjusted loss per share is presented which excludes non-recurring items and movement in fair value on interest rate swap, and therefore reflects the underlying business performance. The dilutitive effect of share based payments is not disclosed as the results for the year were a loss.

On 3 January 2013 a further 9,216,000 shares were issued.6. Goodwill

During 2010 the Group acquired a further 25.7% of One80 Limited for a cash consideration of £640,000 and further consideration of £324,000 was due in the form of share capital in the form of 1,620,000 ordinary 1p shares at a premium of 4p based on an initial valuation. In December 2012 agreement was reached following a s.593 valuation which resulted in 9,216,000 shares being issued in January 2013 for an adjusted consideration of £189,000.

Goodwill has been subject to an impairment review by determining the value in use of the relevant cash generating unit, based on cash flow projections for a five year period to 31 December 2017, discounted at 15%, when the next model update is due. As the assessment demonstrates value in use to be well in excess of carrying value, no impairment loss has been identified and the calculations are not considered to be especially sensitive to changes in underlying assumptions.

The recoverable amount of the goodwill has been determined from value in use calculations based on cash flow projections from formally approved budgets covering a five year period to 31 December 2017. Other major assumptions are as follows:

Discount rate 15% (2011: 15%)

Operating margin 44% (2011: 44%)

Wage inflation 2% (2011: 2%)

Two key assumptions made by the directors are the discount rate used and operation margin. Neither a 1% increase in the discount rate or a 1% reduction in the operating margin would result in any additional impairment being required.

7. Borrowings

During 2012 the Group received net funding of £0.25m from KPM-UK Taxis Plc discretionary pension fund in addition to the £1.0m which was received in 2010 and 2011. These loans are repayable in arrears over a period of up to 5 years, subject to group EBITDA results, and carry a fixed interest rate. The loans from KPM-UK Taxis Plc discretionary pension scheme are secured by way of a first fixed and floating charge over all Group assets and a cross guarantee between the Company, KPM Autos and KPM-UK Taxis Plc.

Prior to the sale of the Group's property in Coventry in December 2012, the Group had a derivative in place to manage the interest rate risk on long term borrowings.

Mortgages were secured against the property in Coventry. This mortgage was repaid on the sale of the property in December 2012.

8. Cash flow adjustments and changes in working capital

The following non-cash flow adjustments and adjustments for changes in working capital have been made to profit before tax to arrive at operating cash flow:

9. Financial information

The financial information in this preliminary announcement which comprises the Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and related notes is derived from the full Group financial statements for the year ended 31 December 2012 and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006.

Group statutory accounts for 31 December 2011 have been delivered to the Registrar of Companies and those for 31 December 2012 will be delivered following the Group's annual general meeting. The auditors have reported on the 2012 Group statutory accounts and their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and (iii) did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.