Half-year Report

20 September 2017

Cambian Group plc

("Cambian" or "the Group" or "the Company")

Unaudited results for the six months ended 30 June 2017

1 Adjusted EBITDA is earnings before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items.

2 Exceptional items are defined in the accounting policies (note 1).

3 Adjusted basic earnings per share is defined as statutory basic earnings per share before amortisation of acquired intangible assets, merger and acquisition costs, IPO share option charges and exceptional and extinguished items, net of the tax effect of these adjustments.

4 Re-presented (note 11).

· Underlying business has performed in line with the Board's expectations despite managing the complex separation issues.

· Revenue growth of 6% to £100.6m (2016 H1: £94.5m) from higher severity services and increases in fees, and including one-off transitional services income.

· Adjusted EBITDA of £8.4m (2016 H1: £8.3m) reflects the growth in revenue, offset by the one off impact of the loss of assets temporarily stranded following the sale of Adult Services business, higher overheads to accelerate the completion of the transitional services agreement and an increased provision in relation to "sleep-ins".

· Strong balance sheet with net cash of £122.3m following the repayment of all bank debt at the end of 2016, and before the return of capital.

· Special dividend of £50m returned to shareholders on 15 September 2017.

· Dividend reinstated with interim payment of 0.14 pence per share (2016 H1: nil pence).

· Completed the transitional services agreement following sale of the Adult Services business.

· Finalised the closing statement for the sale of the Adult Services business, with an adjustment which reduces the consideration by £4.0m to £379.0 million excluding expenses.

· Cost reduction programme underway.

Saleem Asaria, Chief Executive Officer, commented:

"Following the successful sale of the Adult Services business the Cambian Group is now focused on being a market leading provider of specialist Children's Services. Our strategy to move more of our portfolio to higher severity is progressing well and the Group is performing in line with the Board's expectations. Furthermore, with a strong balance sheet and confidence in the Group's outlook in the medium term, we have reinstated the dividend as planned."

A results presentation will be held for analysts at 9.00am today at the offices of Investec Bank Plc, 2 Gresham Street, London EC2V 7QP. If you would like to attend, please confirm your attendance to [email protected].

About Cambian:

Cambian Group is one of the UK's leading children's specialist education and behavioural health service providers. Founded in 2004, it has grown to become a significant partner to the UK public sector. The Group's services have a specific focus on children who present high severity needs with challenging behaviours and complex care requirements. Cambian employs over 4,300 people across a portfolio of 224 residential facilities, specialist schools and fostering offices located in England and Wales.

Overview

The underlying performance of the business in the first half of 2017 has been in line with the Board's expectations despite managing the complex issues surrounding the separation of the Adult Services business. 2017 remains a year of transition for the Group and significant progress has been made.

Revenue increased by 6% to £100.6 million (2016 H1: £94.5 million) primarily from the increase in fees from moving more of our portfolio to higher severity services. Revenue in 2017 H1 includes £2.4 million received from the Transitional Services Agreement ("TSA") which ended on 28 June 2017. Underlying revenue, excluding income from the TSA, increased by 4%.

Adjusted EBITDA increased by 1% to £8.4 million (2016 H1: £8.3 million), with an adjusted EBITDA margin of 8.3%, representing a stable performance during a period of transition. This increase is despite the lost EBITDA from a small number of assets temporarily stranded following the sale of the Adult Services business ("Stranded Assets") and the higher overheads incurred to accelerate the completion of the TSA. In addition, as a result of the proposed changes by the Government to "sleep-in" charges, the Group has recorded provisions for these potential costs which were not included in the corresponding period in 2016 H1.

Operating profit before exceptional items was £0.3 million (2016 H1: £1.0 million). Loss before tax for the period was £1.2 million (2016 H1: £12.7 million loss).

Average occupancy levels remained consistent during the period at 1,299 places (2016 H1: 1,309) and includes approximately 370 new admissions. The average daily fee, excluding Fostering, increased by 6% to £353 (2016 H1: £333).

The Group's closing capacity at 30 June 2017 was 1,640 places (2016 FY: 1,744 places) reflecting a planned net reduction of 104 places since the end of 2016. The reduction, predominately within the Specialist Education division, relates to sites re-positioned to enable Cambian to accommodate children with higher acuity needs.

Closing occupancy was 1,332 places, reflecting an increase of 62 places from the end of 2016, giving a closing utilisation of 81% (2016 FY: 73%). Excluding the impact of reduced capacity from re-positioning, closing occupancy was 76%.

Average occupancy in the Fostering division remained consistent at 641 placements during the period (2016 FY: 642).

Disposal of Adults Services business

The disposal of the Adult Services business at the end of 2016 enabled the Group to fully pay down its bank debt, return £50 million to shareholders and focus its attention on the Children's Services business. As part of the sale the Group entered into a TSA to provide services relating to IT, finance, procurement and estates to the purchasers. These services ended on 28 June 2017, ahead of schedule, allowing the Group to focus on its core operations.

As part of the transaction five Stranded Assets, which formed part of the Adult Services business, were required to be transferred back to the Group following certain regulatory approvals. The transfer of the Stranded Assets has taken longer than originally envisaged and this delay has resulted in the Group not being able to benefit from the EBITDA from these assets as it had originally planned. All of these assets were successfully transferred back to the Group by 30 June 2017.

The Sale and Purchase Agreement ("SPA") for the disposal of the Adult Services business required agreement of a Closing Statement, as is customary in such transactions. This was concluded on the 19 September 2017, after agreement was reached between the Group and the buyer, and is reflected in the results for the period. Following a net adjustment of £4.0 million to the buyer the final consideration for the Adult Services business is £379.0 million excluding directly attributable costs.

Focus on re-positioning of the Children's Service business

There is a recognised shortage of high quality specialist education and behavioural health services for children in the UK. The higher the severity of need, the more significant the shortage and the Group estimates there are approximately 88,000 children who would fall into Cambian's core target market. The vision is to become the highest quality provider of specialist education and behavioural health services for children. To this end, the Group took the strategic decision to develop the Children's Services business around a differentiated integrated recovery model incorporating care, education and therapy for children with the highest needs.

This vision has involved the Group re-positioning more of its Residential Care and Specialist Education services and focusing its Fostering services entirely on higher acuity therapeutic fostering. The Group has made significant progress on this transition.

The Group's focus is to fill existing capacity, increase fee levels and reduce the cost base to increase margins. Good progress has been made on increasing average fee levels and average occupancy levels have been maintained with an increase in occupancy at the period end.

Cost base restructuring

Pursuant to the sale of the Adult Services business, and the transition to focus on higher acuity in Children's Services, the Group is undertaking a restructuring exercise including the right-sizing of the cost base. Post the completion of the TSA further restructuring is taking place particularly in the finance, estates and HR functions. Overall, the Group will reduce headcount by 60 people and is looking to make further cost savings in procurement, estates and fleet. The Group is well underway to achieving its goal of creating the optimal overhead structure and to improve margins.

Processes and systems

With the ending of the TSA, the Group has now started upgrading its processes and systems to enable it to operate more efficiently and to support its measured growth plan.

Quality and regulatory

The Group remains committed to providing the highest quality specialist education and behavioural health services to children. Its regulatory scores continued to be strong with 82% of services rated Good or Outstanding with Ofsted or CQC as at 30 June 2017. It is especially pleasing that 11% of sites have received an Outstanding inspection report.

The sector continues to see an increasingly stringent regulatory environment with an enhanced rigour of inspections. This is welcomed and we are well-positioned to benefit from this drive to improve the focus on quality of care. Our aim is to achieve Good or Outstanding ratings in all of our facilities. In the short-term some fluctuation may be expected during the transition to higher severity services.

Board and management

Anoop Kang joined the Board as Chief Financial Officer on 12 July 2017. Anoop's most recent role was as Group Financial Controller at Kier Group plc, having previously held senior positions in the construction industry. Martin Hopcroft having joined the Group in late 2015 stepped down as Chief Financial Officer on this date.

At the conclusion of the Company's Annual General Meeting on 5 June 2017, both Alison Halsey, Chair of the Audit and Risk Committee, and Christopher Brinsmead, Senior Independent Director and Chair of the Remuneration Committee, stepped down from the Board.

Dr. Graham Rich is the newly appointed Senior Independent Director in addition to his role as Chair of the Quality and Safeguarding Committee. Mike Butterworth took over as Chair of the Audit Committee on 1 January 2017 and Donald Muir took over as Chair of the Remuneration Committee on 5 June 2017.

We would like to thank Martin, Alison and Christopher for the extremely valuable contribution they made to Cambian during a time of significant transition.

Dividend

The Board took the decision in early 2016 to suspend the dividend in view of the Group's financial performance. Following the sale of the Adult Services business, the balance sheet strength and confidence in the Group's outlook over the medium term, the Board has decided to reinstate the dividend at an appropriate level. The Board is therefore declaring an interim dividend of 0.14 pence per share, which will be paid by 31 October 2017.

Outlook

In the short-term we look to complete our re-positioning, cost reduction programme, and upgrading of processes and systems. We remain confident for the medium-term outlook.

Saleem Asaria

Chief Executive Officer

Capacity and occupancy

Average occupancy remained consistent during the period despite re-positioning of services. Capacity utilisation at 30 June 2017 increased to 81% (2016 FY: 73%) reflecting sustained conversion of service user referrals as well as the planned reduction in capacity. Operational capacity was reduced by a net 104 places in the period predominately within the Specialist Education division. Fostering placements remained constant.

1  Includes Stranded Assets owned by Cygnet Health Care Ltd on 1 January 2017 but transferred to Cambian during the period.

2 Re-presented to reflect transfers of sites that occurred prior to the sale of the Adult Services business.

3 Fostering is excluded from the capacity and occupancy numbers and disclosed separately.

Fees

The average daily fee increased by 6% to £353 reflecting improved fee levels from higher severity services.

1 Implied daily fee from revenue (excluding other income for 2017 H1) and average number of places or foster placements during the period.

Revenue

The Group delivered underlying growth in revenue of 4% to £100.6 million (2016 H1: £94.5 million) reflecting the re-positioning to higher severity services and increases in fees. The total growth in revenue of 6% in 2017 H1 includes £2.4 million received from the TSA, which ended on 28 June 2017.

1 Fostering revenue is included within revenue, and also disclosed separately.

Adjusted EBITDA

Adjusted EBITDA remained stable in the period at £8.4 million (2016 H1: £8.3 million) despite the lost EBITDA from the Stranded Assets and the higher overheads incurred to accelerate the completion of the TSA. In addition, the 2017 H1 result has been impacted by the provision for "sleep-ins", which were first created at the end of 2016.

1 Adjusted EBITDA is earnings before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items (Note 2).

Operating profit

Operating profit before exceptional items was £0.3 million (2016 H1: £1.0 million). After exceptional costs of £1.5 million, which relate mainly to restructuring and reorganisation of the business post the disposal of the Adult Services business and professional fees in relation to restructuring of reserves, the operating loss was £1.2 million in 2017 H1 (2016 H1: £5.4m loss).

Finance charges

As a result of the repayment of the Group's borrowings, following the sale of the Adult Services business on 28 December 2016, net finance costs have decreased to £0.1 million (2016 H1: £7.3 million).

Tax

The Group's tax charge was a credit of £0.2 million (2016 H1: £2.8 million credit) which represents an effective tax rate of 17.5% (2016 H1: 25.3%). The difference between the current statutory rate of 19.25% and the effective tax rate is principally due to non-deductible expenditure.

Earnings per share

Adjusted basic earnings per share was 1.4 pence (2016 H1: 2.0 pence). The statutory basic loss per share was 0.6 pence (2016 H1: 5.4 pence loss), primarily reflecting the impact of exceptional items and the amortisation of acquired intangible assets.

Capital expenditure

£2.2 million (2016 H1: £5.2 million) of capital expenditure was incurred in 2017 H1, of which £0.5 million (2016 H1: £2.1 million) was spent on development of new capacity, and £1.7 million (2016 H1: £3.1 million) was spent on the improvements to existing units.

Cash flow

Net cash from operating activities was an inflow of £7.7 million (2016 H1: £2.7 million inflow), which represents a good operating cash flow conversion and reflects stability following the changes in the business. Net cash of £122.3 million (2016 H1: £246.0 million net debt) reflects the proceeds from the sale of Adult Services after the settlement of the Group's borrowings. This does not take into account the return of capital to shareholders of £50 million on 15 September 2017.

Disposal of Adult Services

The disposal of the Adult Services business took place on 28 December 2016 for consideration of £383.0 million excluding directly attributable costs. For the six months to 28 June 2017 the Group continued to provide IT, finance, procurement and estates services to the purchasers under a TSA for an agreed fee. These central services are in the process of being realigned to reflect the requirements of the continuing Children's Services business.

Pursuant to the SPA the original purchase has been adjusted following agreement between the Group and the buyer on the Closing Statement. The consideration of £383.0 million has been reduced by a net adjustment of £4.0 million resulting in a final consideration of £379.0 million excluding directly attributable costs (note 6).

At the time of the sale, the transfer of all business contracts to the continuing Children's Services business was not possible for five sites, termed Stranded Assets, because the requisite regulatory approval had not been received. All of these sites have been successfully transferred back into the ownership of the Group. Whilst this has not materially changed the overall economics, there was a modest decrease in revenue and Adjusted EBITDA during the six months to June 2017 as a consequence of these assets not being owned throughout the period.

Debt facilities

On 18 May 2017, the Group entered into a three year £30 million revolving credit facility agreement with a flat rate margin of 2.0% over LIBOR payable on the amounts drawn. No drawdowns have occurred.

Return of capital

On 15 September 2017, a special dividend of £50 million (27.1 pence per share) was paid to shareholders. This is in line with previous announcements on the return of capital to shareholders following the sale of the Adult Services business.

The principal risks and uncertainties facing the business are considered to be as follows:

Further details on the principal risks and uncertainties can be found in the Group's Annual Report and Accounts 2016.

We confirm to the best of our knowledge that this unaudited consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report 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 of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report and Accounts.

By order of the Board

Cautionary statement

Certain statements in this half yearly 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 have been correct. Because these statements contain 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.

1 Restated as per note 11

1. Accounting policies

General information

Cambian Group plc. (the "Company") is a company incorporated in England and Wales under the Companies Act 2006 and its registered office is at 4th Floor, Waterfront Building, Chancellors Road, Hammersmith Embankment, London W6 9RU. The Company is listed on the London Stock Exchange. The principal activity of the Company and its subsidiaries (collectively, the "Group") is the provision of high quality behavioural health services to children.

Basis of preparation

The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The results for the year ended 31 December 2016 are an abridged version of the full accounts for that year, which received an unqualified report from the auditor, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 or include a reference to any matter to which the auditor drew attention by way of emphasis without qualifying the auditor's report, and have been filed with the Registrar of Companies. The annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Half-Yearly Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the latest audited annual financial statements except that the comparative information has been restated and re-presented in notes 11 and 12 respectively in accordance with IAS 8.

Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis of accounting in preparing the financial statements. The directors have considered the Group's forecasts and projections, taking account of reasonably possible changes in trading performance, and are satisfied that the Group should be able to operate within the level of its current facilities.

Exceptional items

Exceptional items reflect items which individually or, if of a similar type, in aggregate, need to be disclosed separately due to their size or incidence in order to obtain clear and consistent presentation of the Group's performance.

Critical accounting judgements and key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are consistent with those set out in the 2016 Annual Report and Accounts. These include the carrying value of goodwill and trade receivables, the judgements in connection with the "sleep-ins", and an onerous contract.

HMRC has continued its industry wide enquiries on the provision of "sleep-ins" during 2017. In July 2017 the Government announced that it would waive historic financial penalties in connection with "sleep-ins", as well as suspend HMRC enforcement activity until October 2017. The directors have used their judgement to make a provision for this. If it is judicially determined that Cambian had to pay each individual engaged in a "sleep-in" an amount calculated by reference to the National Living Wage, the additional cost could be material. The amount of the provision made has not been separately disclosed to avoid commercially prejudicing the issue.

In the 2016 Annual Report and Accounts, the Company referenced to an onerous contract in relation to an exclusive supply agreement in respect of pharmaceutical supplies, where the supplier indicated that the sale of the Adult Services business was a breach of the agreement and therefore was seeking novation of the agreement or compensation. The novation was not agreed and the supplier is seeking compensation. The directors have used their judgement to make a provision for this. The amount has not been separately disclosed to avoid commercially prejudicing the issue.

2. Segmental analysis

Products and services from which reportable segments derive their revenues

Following the sale of the Adult Services business, the directors have determined there is one remaining operating segment.

Performance is measured by Adjusted EBITDA, which is defined as earnings from continuing operations before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items.

The following is an analysis of the Group's revenue and results.

1 Adjusted EBITDA is earnings before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items (note 4).

2 IPO share option charges arise on Continuation Option Plan shares awarded as part of the IPO, the impact of which is excluded from Adjusted EBITDA. Charges on future share based awards are included within Adjusted EBITDA.

3. Revenue

Revenue from operations is derived from the provision of specialist educational and behavioural health services for children in the UK. Other income is derived from the TSA to provide services relating to IT, finance, procurement and estates to the purchasers. These services ended on 28 June 2017.

4. Exceptional items

The following table provides a breakdown of exceptional items:

Restructuring and reorganisation costs relate to the Group restructuring following the sale of the Adult Services business and other post completion matters and professional fees in relation to the restructuring of reserves.

5. Tax

The underlying effective income tax rate for the six months ended 30 June 2017 is 17.5% (six months ended 30 June 2016: 25.3%), representing the best estimate of the annual effective income tax rate expected for the full year applied to the profit before income tax for the period.

6. Discontinued operations

On 5 December 2016, the Group entered into a sale agreement to dispose of Cambian Healthcare Limited and its subsidiaries, Care Aspirations Developments Limited and its subsidiaries, and Cambian Care Services, ("the Adult Services business"), which carried out all of the Group's Adult Services operations. The disposal was completed on 28 December 2016, on which date control of the Adult Services business passed to the acquirer, Cygnet Health Care Limited ("Cygnet").

A profit of £144.3m was reported in the year ended 31 December 2016 on the disposal of the Adult Services business, being the difference between the proceeds of disposal and the carrying amount of the subsidiaries' net assets sold. Under the terms of the Share Purchase Agreement, Cambian delivered a Closing Statement on 24 April 2017 to Cygnet. The Closing Statement was agreed between the Company and Cygnet on 19 September 2017 resulting in a reduction in the purchase price of £4.0m to £379.0m (excluding directly attributable costs). The final consideration after directly attributable costs of £4.0m was £375.0m.

The following table provides a breakdown of disposal of the Adult Services business:

The below table provides a breakdown of the final profit on sale of the Adult Services business:

7. Loss per share

The (loss)/earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows:

The weighted average of share options under the Continuation Option Plans has been excluded from the calculation of diluted earnings per share as they were anti-dilutive for the periods presented but could dilute earnings per share in the future.

Adjusted basic earnings per share reconciles to statutory basic earnings per share as follows:

8. Cash and cash equivalents

Cash and cash equivalents include cash held on behalf of clients, which is not available for use by the Group. All interest earned on these funds is returned back to the client and is not included in the Group's statement of comprehensive income. An equivalent liability of £0.9 million (30 June 2016: £3.3 million and 31 December 2016: £0.8 million) exists for this amount.

9. Notes to the cash flow statement

Other non-cash items relate to the charge to the income statement on the IPO share option plans shares under Continuation Option Plan 1 and Continuation Option Plan 2, and non-cash exceptional items.

10. Related party transactions

Balances and transactions between Group companies have been eliminated on consolidation and are not disclosed in this note. Other than remuneration of executive and non-executive directors and members of the senior executive team, there were no related party transactions except for expenses paid to GI Partners (being a shareholder with representation on the Board) of £12,000 (six months ended 30 June 2016: £20,000, year ended 31 December 2016: £40,000). There were no balances outstanding at the period ends.

All related party transactions are considered to be on an arm's length basis, and in the ordinary course of business.

In addition to these related party transactions, the Group uses the services of PHS Group Limited, a hygiene business chaired by Christopher Kemball, our Chairman. The total cost of these services amount to £32,000 (six months ended 30 June 2016: £58,000, year ended 31 December 2016: £106,000) and Mr Kemball took no part in the contract negotiations.

11. Restatement

Cambian Group Plc acquired Cambian Capital Limited, Care Aspirations Capital Limited and Advanced Childcare Capital Limited and their underlying subsidiaries on 15 April 2014. The difference between the initial cost of Cambian Group Plc's investments in these subsidiaries (determined by reference to their fair value at the date of acquisition) and the nominal value of the shares issued in exchange was initially classified as share premium. Following further review and analysis, and as confirmed by external legal and accounting advice, it has been determined that this difference of £366.2 million should instead have been classified as a merger reserve as required by section 612 of the Companies Act 2006. Consequently, the company has retrospectively restated the equity classification of this £366.2 million balance from share premium to merger reserve. There are no further adjustments required as a result.

12. Re-presentation of financial statements

Change of perimeter

The allocation between Adult and Child included in the 2016 Half year Report has been re-presented in the 2017 half year report to re-present the continuing operations. This is because the perimeter of Adult and Child was changed, due to sites which carry out the Adult Services business which were not included in Adult being transferred to Adult, and likewise sites which carry out the Children's Services business which were not included in Child being transferred to Child. Further, the allocation of central costs between Adult and Child was realigned to be consistent with the new perimeter. This is now consistent with the Cambian Group Circular dated 9 December 2016 which is available on the Company's website. The resulting changes are reflected below:

Change in revenue and cost allocation

Additionally, the Group has reviewed its allocation of divisional and central costs between cost of sales and administrative expenses, and realigned the classification to be more representative of the business model and the environment in which the Group operates ("A"). Furthermore, in the prior year the Group had made an adjustment to educational revenue to recognise this in the correct accounting period under IAS18. This was adjusted for on a net basis, as the costs incurred to generate the revenue were netted off against revenue. This has been re-presented on a gross basis ("B"). These changes result in the financial statements providing reliable and more relevant information about the effects of transactions on the entity's financial positon and performance. The resulting changes are reflected below:

13. Subsequent events

In line with the previous announcement, on 15 September 2017, the Group paid a dividend of £50 million (27.1 pence per share).

On 15 September 2017, the purchase price was adjusted for the sale of the Adult Services business (note 6)

Independent review report to Cambian Group plc (the "Company")

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

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 inquiries, 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, United Kingdom

19 September 2017