Half Yearly Report

Hansteen Holdings PLC

("Hansteen" or the "Group" or the "Company")

HALF YEAR RESULTS

Hansteen Holdings PLC (LSE: HSTN), the investor in continental European and UK industrial property, announces its half year results for the six months ended 30 June 2013.

Financial Highlights

· Normalised Income Profit increased by 29% to £18.9 million (H1 2012: £14.7 million)

· Normalised Income Profit per share, before tax, increased by 26% to 2.9p (H1 2012: 2.3p)

· Normalised Total Profit increased by 29% to £22.0 million (H1 2012: £17.1 million)

· IFRS profit before tax of £14.9 million (H1 2012: £23.7 million)

· Diluted EPRA NAV per share 85p (31 December 2012: 83p)

· November interim dividend increased by 6% to 1.9p per share (November 2012: 1.8p per share)

· Net debt to property value ratio 41.9% (31 December 2012: 38.6%)

Operational Highlights

· 20 sales across the Group with a total value of £77.3 million and a combined profit of £3.2 million

· £64.0 million of properties acquired in the year to date at an average yield of 10.8% and a vacancy of 15.4%

· Launch of the second co-investment fund (HPUT II) seeded with £49.0 million of property from the wholly-owned portfolio.

Post 30 June 2013:

· Successful issue of €100 million convertible bond

· £52 million investment in the Ashtenne Industrial Fund and contract to manage the Fund

James Hambro, Chairman, commented: 

"The first half of 2013 was a busy period for Hansteen resulting in strong profits, a large number of sales and new acquisitions. This activity, together with a positive currency movement, produced NAV growth. Significant increases in the rent roll, normalised profits and the half year dividend show that the portfolio continues to perform strongly. Values of secondary industrial property have not yet shown the yield compression evident in relation to prime industrial property although if investor sentiment continues to improve we expect it to do so. At the end of this busy period, as announced at the end of June 2013, the €100 million convertible bond offering provides the Group with capacity to make further acquisitions."

For more information:

CHAIRMAN'S INTERIM STATEMENT

The first half of 2013 was a busy period for Hansteen resulting in strong profits, a large number of sales and new acquisitions. This activity, together with a positive currency movement, produced NAV growth. Significant increases in the rent roll, normalised profits and the half year dividend show that the portfolio continues to perform strongly. Values of secondary industrial property have not yet shown the yield compression evident in relation to prime industrial property although if investor sentiment continues to improve we expect it to do so. At the end of this busy period, as announced at the end of June 2013, the €100 million convertible bond offering provides the Group with capacity to make further acquisitions.

The £64.0 million of purchases in the period are in line with the Hansteen strategy of buying high yielding industrial properties at less than replacement cost with opportunities to add value. £77.3 million of sales generated £3.2 million of profit in the six month period.

The issue of €100 million of senior, unsecured Convertible Bonds provides flexibility when refinancing the existing debt and funds for future growth. Whilst maintaining Euro debt exposure, the convertible improves the maturity profile of the capital structure and diversifies the source of debt funding.

The launch of the second co-investment fund (HPUT II) in May 2013, allows Hansteen to take advantage of opportunities in smaller-scale industrial estates in the UK over the initial 18 month investment phase. The fund enables the Company to stretch its capital further and to enjoy targeted returns of 12% to 15% in addition to asset management and performance-based fees.

Results

Normalised Income Profit (recurring income less costs excluding profit from sales of properties, valuation movements and one-off items) increased by 29% to £18.9 million (H1 2012: £14.7 million).

Normalised Total Profit for the half year (Normalised Income Profit plus profits or losses from property sales and realised profits from one-off items) increased by 29% to £22.0 million (H1 2012: £17.1 million including £1.1 million insurance receipt). Excluding the insurance receipt, Normalised Total Profit increased by 38%.

The table below shows how these profit measures were calculated:

Normalised Income Profit per share (pre-tax) increased by 26% to 2.9p (H1 2012: 2.3p) and Normalised Total Profit per share (pre-tax) increased by 29% to 3.5p.

Under IFRS, Hansteen reported a £14.9 million pre-tax profit for the period (H1 2012: £23.7 million). Diluted EPRA earnings per share were 2.2p (H1 2012: 2.4p). This number is distorted by the inclusion in the EPRA calculation of unrealised foreign exchange movements on intercompany borrowings. Excluding these the EPRA earnings per share were 2.8p (H1 2012: 2.2p).

The improvement in net assets of £13.7 million since the year end is due to Normalised Total Profit of £22.0 million and favourable exchange movements of £15.6 million, less reduction in valuation of investment properties of £3.5 million, tax of £3.2 million and dividends paid of £17.2 million.

The movement in net assets can be summarised as follows:

The post tax IFRS profit of £11.7 million and favourable currency movements of £18.9 million were offset by £17.2 million of dividends paid, resulting in an increase of £13.7 million in net assets. The Group's diluted EPRA net asset value (NAV) was 85p per share (31 December 2012: 83p).

Dividend

The Board has increased the interim dividend to be paid on 21 November 2013 by 6% to 1.9p per share (November 2012: 1.8p per share) reflecting the intention of the Board to maintain its prudently progressive dividend policy. 0.9p of the dividend payment will be a PID. The associated record date is 25 October 2013 and the ex-dividend date is 23 October 2013.

Property Portfolio

At 30 June 2013, the total portfolio, both owned and under management comprised 2.75 million sq m with 19% vacant, a rent roll of £93.5 million per annum and a value of £1.084 billion. The yield on the portfolio was 8.6%, generated from 302 estates with 3,100 tenants in five different countries.

The movement in the total portfolio value was a decrease of £3.5 million or 0.3%. The bulk of this decrease came from the Benelux (£3.9 million) with the UK slightly down (£1.0 million) and Germany showing a marginal increase (£1.4 million).

The first half of 2013 saw significant sales and acquisition activity with 20 completed sales totalling 165,000 sq m of space with a combined consideration of £77.3 million generating profits of £3.2 million. This includes the wholly owned properties transferred to the Fund (in which the Group has a 33% unit holding). A further £5.6 million of profitable sales have been completed or notarised since 30 June.

£64.0 million of property has been added to the portfolio in two transactions. In January 2013, Hansteen acquired £60 million of assets from The Industrial Trust. The portfolio comprised 32 properties across England, Wales and Scotland totalling 150,771 sq m with a vacancy rate of 16.2% by floor area and a rent roll of £6.1 million per annum reflecting an initial yield of 10.14%. A 19,000 sq m property in Berlin was also purchased in the period for €3.8 million with an annual rent of €773,000 pa.

HPUT II was formed in May 2013 with £49.0 million of property being transferred into it from the wholly owned portfolio. The Fund will be focused on high-income generation as well as growth in net assets. The life of the Fund will be six years and will be prudently geared to a maximum of 45% as equity is deployed. The Fund has a debt facility in place with Royal Bank of Scotland and Barclays.

As property advisor, Hansteen will receive asset management fees and a performance-based exit fee, in addition to the return on its investment.

On a like-for-like basis after allowing for sales, purchases and currency movements, annual rental income for the Group, including the HPUTs, increased by £0.95 million per annum from the December 2012 rent roll of £84.7 million, a net like-for-like improvement of 1.1%. The net effect of acquisitions and sales was £4.7 million per annum, the gain due to exchange rate movements was £3.1 million per annum resulting in the closing rent of £93.5 million.

Germany continued to deliver a solid income performance in the first half of 2013 with an improvement in like-for-like rent of £0.9 million per annum. The UK also performed well with a like-for-like increase of £0.7 million per annum. In the Benelux, two large units became vacant, leading to a like-for-like rental income decrease of £0.6 million per annum.

Like-for-like net occupancy decreased by 29,192 sq m (measured by taking the vacant area at the year-end plus purchased vacancy during the period and comparing it with vacancies at the end of the period). The greater part of this decrease relates to Germany where despite the improvement in like-for-like rental income, occupancy decreased by 32,848 sq m or 2.2% of the German portfolio. This decrease was due to some large lease terminations rather than deterioration in the market and the Board believes the occupancy position will reverse to a large extent during the second half of 2013.

Like-for-like net occupancy in the UK, including both HPUT and HPUT II, increased by 12,717 sq m or 8.7% of the vacancy at the beginning of the period. Like-for-like occupancy in the Benelux decreased by 9,061 sq m.

Activity levels remained high in the first half of the year with 430 new leases and lease renewals completed, securing £13.8 million per annum of rental income at an average of £32,000 per letting.

Hansteen Property Portfolio: Summary at 30 June 2013

* Figures include 100% of HPUT and HPUT II's portfolio. Hansteen has an investment of 33% in HPUT and 33% in HPUT II.

The Ashtenne Industrial Fund

Yesterday Hansteen announced its intention to take a 26.3% stake in the Ashtenne Industrial Fund and be appointed asset manager to the Fund.

The Fund was originally formed in July 2001 when Morgan Jones and Ian Watson, founders of Hansteen, were Joint Chief Executives of Ashtenne Holdings PLC. The Fund owns over 1.4 million sq m of multi-let industrial properties in the UK. The portfolio has over 3,000 units, on 240 individual estates, with an annual rent roll of £43.5 million and a current vacancy of 18%. At 30 June 2013, the gross asset value of the properties was £460 million.

Following the new acquisition, Hansteen will have approximately 4.1 million sq m of property wholly owned or under management with a value of approximately £1.6 billion.

Financing and Hedging

Finance

At 30 June 2013, net debt was £366.2 million (31 December 2012: £325 million); net debt to property value was 41.9% (31 December 2012: 38.6%) and net debt to shareholders' equity was 69% (31 December 2012: 63%). Bank borrowings were £458.8 million compared with £441.6 million at 31 December 2012.

The Group has interest rate swaps of £294.6 million at an average rate of 2.0% and £101.0 million is capped at an average rate of 4.64%, giving a weighted average cost of debt of 3.2% at 30 June 2013.

The maturity of the Group's facilities is such that only £6.9 million of the existing £458.8 million bank loans fall due for repayment before October 2014 and all of the loans continue to have significant headroom on their loan-to-value and interest cover covenants.

In July 2013 Hansteen made its debut issue in the Bond market with the issue of €100 million of senior, unsecured Convertible Bonds. The Bonds attract a 4% coupon, payable semi-annually in arrears. The Bonds will, subject to the satisfaction of certain conditions, be convertible into ordinary shares of the Company. The initial conversion price has been set at £0.9892 per share, and if not converted at the option of the Bond holder previously, the Bonds will mature in July 2018, at which time Hansteen will have the right to elect to settle any conversion entirely in shares, cash or a combination of shares and cash. This offering has enabled Hansteen to diversify its medium term sources of finance and the Company intends to use the net proceeds of the issue to allow flexibility when refinancing its existing debt and to provide funds for future growth. Following the issue of the convertible bond, the all-in-cost of borrowing is 3.4% and the weighted average time to maturity of borrowings increased from 2.3 years to 2.7 years.

Currency

As at 30 June 2013 the Group's net assets were £529.1 million, of which £202.1 million or 38.2% were located in the UK and denominated in £ sterling. The balance of £327.0 million (€381.3 million) or 61.8% were located in the northern European countries of Germany, the Benelux and France.

The Board continues to regularly review its currency hedging policy. The current policy can be summarised as:

· Hedging instruments are used to cover a substantial proportion of Group Euro net assets and estimated net Euro income for the short-term.

· Hedges are implemented at levels which the Board believe are cost effective.

· Hedging is employed as an insurance policy against the impact of a significant fall in the value of the Euro against Sterling rather than a means to speculate for profit.

· Matching the Euro denominated assets with Euro debt, as far as practicable.

With the above policy in mind the following actions have been implemented. As cover for Euro income the Group has hedged a net Euro income amounting to €70 million by entering into four options expiring on 31 December 2013, 30 June 2014, 31 December 2014 and 30 June 2015. Three of these options were entered into during the year ended 31 December 2012. Each option is to put €17.5 million and call for GBP at an exchange rate of €1.3/£1. The issue of the convertible bond in Euros increases the Group's ability to match Euro denominated assets with Euro debt.

Outlook

In an environment where high and stable income is difficult to obtain, Hansteen has consistently produced and distributed a growing stream of such income. However, the Board's objective is to enhance this income with material capital growth in the longer term.

In Hansteen's report and accounts for 2012, the Board highlighted early signs of improving sentiment towards industrial property from the investment community. That improvement continues and is starting to be reflected in increased competition for opportunities and in the case of prime properties, improved values.

The likelihood is that in time this value improvement will spread to good secondary portfolios such as Hansteen's.

Hansteen's results show that a large, diverse industrial property portfolio can produce secure, high distributable returns. Hansteen's particular business model, which is to focus on acquiring properties with real opportunities to grow income and value, most often through the inclusion of a vacant element, enhances those attractions.

Given the high yields that such portfolios are currently valued at relative to other investments with similar characteristics, it seems likely that as economies improve values will increase. Despite the challenging economy, we have successfully assembled a very large European portfolio of these properties with a current yield of 8.6% and a yield when fully let of 10.9%, low average rent levels and capital values substantially below replacement cost, as a result we are well placed to benefit.

James Hambro

Chairman

28 August 2013

Responsibility statement

We confirm to the best of our knowledge:

(a) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

On behalf of the Board

28 August 2013

The Interim Report and condensed set of financial statements will be posted to shareholders and will be available from the Company's RegisteredOffice at 6th Floor, Clarendon House, 12 Clifford Street, London W1S 2LL.

Consolidated income statement

for the six months ended 30 June 2013

Consolidated statement of comprehensive income

for the six months ended 30 June 2013

All components of other comprehensive income and expense will be recycled through the income statement.

Consolidated balance sheet

as at 30 June 2013

Consolidated statement of changes in equity

for the six months ended 30 June 2013

Consolidated cash flow statement

for the six months ended 30 June 2013

Notes to the condensed set of financial statements for the six months ended 30 June 2013

1. General information

Hansteen Holdings PLC is a company which is incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 6th Floor, Clarendon House, 12 Clifford Street, London, W1S 2LL.

The Group's principal activities are those of a property group investing mainly in industrial properties in Continental Europe and the United Kingdom.

The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2012 was derived from the statutory accounts for the year ended 31 December 2012, a copy of which has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Basis of preparation

The annual financial statements of Hansteen Holdings PLC are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 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 Group's latest annual audited financial statements.

The interim report was approved by the Board on 28 August 2013.

The principal exchange rates used to translate foreign currency denominated amounts are:

Balance sheet: £1 = €1.1668 (31 December 2012: £1 = €1.2263)

Income statement: £1 = €1.1759 (30 June 2012: £1 = €1.2159)

3. Principal risks and uncertainties

Risk management is an important part of the Group's system of internal controls. Senior management staff and the Board regularly consider the significant risks, which it believes are facing the Group, identify appropriate controls and if necessary instigate action to improve those controls. There will always be some risk when undertaking property investments but the control process is aimed at mitigating and minimising these risks where possible. The key risks identified by the Board, the steps taken to mitigate them and additional commentary is as follows:

· Changes in the general economic environment exposes the Group to a number of risks including falls in the value of its property investments, loss of rental income and increased vacant property costs due to the failure of tenants to renew or extend leases as well as the increased potential for tenants to become bankrupt. The Board believes these risks are reduced due to its policy of assembling a portfolio with a wide spread of different tenancies in terms of actual tenants, industry type and geographical location as well as undertaking thorough due diligence on acquisitions. The level of exposure to individual tenants is regularly monitored to ensure they are within manageable limits. Rent deposits or bank guarantees are requested where appropriate to mitigate against the effect of tenant defaults. Where possible, purchases are achieved at low capital values and with due investigation of tenant finances.

· Over-borrowing by the Group, insufficient credit facilities, significant interest rate increases or facility covenant breaches could represent a significant risk to the Group. In response to these risks Hansteen maintains a prudent approach to its borrowing levels by seeking to maintain sufficient headroom within its debt facilities. The Board actively monitors current debt and equity levels as well as considering the future levels of debt and equity required to sustain the business. Loan covenants are monitored and compliance certificates are prepared on a regular basis. For all money borrowed consideration is given to procuring the appropriate hedging instruments to protect against increases in interest rates.

· By investing in property in mainland Europe the Group is exposed to a foreign currency exchange rate risk. In response to this risk the Group's borrowings are in Euro denominated loan facilities and therefore, to the extent that investments are financed by debt, a self hedging mechanism is in place. In relation to the equity element of the Group's Euro investments the Board monitors the level of exposure on a regular basis and considers the level and timing of when to take out the appropriate hedging instruments to cover this exposure. There is a risk that one or more of the countries that the Group operates in leaves the Euro which may affect the nature of the Group's loans and derivatives or introduce new volatility and currency exposures for the Group to manage

· In addition to the need to act as a responsible landlord there may, in some circumstances, be occasions when pollution on a site owned by a property investment company becomes its responsibility. Each acquisition undertaken by the Group includes an environmental report from a specialist consultancy. These reports may highlight the need for further investigation and in some cases remediation. The Group's policy is then to either undertake such investigations or remediation or potentially reject the purchase as no longer viable.

· Loss of REIT status and payment of additional corporation tax as a risk to the Group. Loss of REIT status and payment of additional corporation tax would arise from a breach of REIT compliance requirements. Breach of certain limits imposed by REIT legislation may be mitigated through regular review of the Group's actual and forecast performance against REIT regime requirements. Management have sufficient discretion to manage and meet the REIT requirements and apply mitigating actions where required.

4. Going concern

The Group's principal risks and uncertainties are detailed above. The Directors believe that the Group is well placed to manage its business risks successfully despite the potential impact of the current uncertain economic outlook on the Group's operating cash flows and the possibility of tenancy failures and increased vacancies. After consideration of the Group's forecast cash flows and covenant compliance, including evaluation of the impact of potential reductions in property valuations, rental income and increases in interest rates, the Directors have a reasonable expectation that the Group will continue to have adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing these condensed financial statements.

Information on the Group's performance and its risk management is included in the Interim Statement, including sections on the finance, hedging and outlook of the Group. The Group's debt maturity profile and principal covenants are disclosed in note 14 to these condensed financial statements.

5. Related party transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed. There have been no other material transactions with related parties in the first six months of 2013 and there have been no material changes in the related party transactions described in the Annual Report and Accounts for the year ended 31 December 2012.

6. Operating segments

The following is an analysis of the Group's revenue and results by reportable segment:

Administrative expenses and net finance costs are managed as central costs and are not allocated to segments.

The following is an analysis of the Group's assets by reportable segment:

*Investment properties includes those classified as held for sale on the balance sheet.

7. Other operating income

Other operating income of £nil (2012: £1.1 million) comprises an insurance receipt relating to an investment property damaged by fire in a previous period.

8. Gain on sale of subsidiary

On 24 May 2013, the Group disposed of two thirds of a subsidiary which resulted in a gain of £1,357,000. The Group retains one third of the subsidiary and has accounted for this share as an associate.

9. Tax on profit on ordinary activities

10. Dividends

As a REIT, the Company is required to pay Property Income Distributions ('PIDs') equal to at least 90% of the Group's exempted net income after deduction of withholding tax at the basic rate (currently 20%). £1,877,000 of the cash dividend paid in the period ended 30 June 2013 is attributable to PIDs (2012: £nil).

11. Normalised Income Profit and Normalised Total Profit

Normalised Income Profit and Normalised Total Profit are adjusted measures intended to show the underlying earnings of the Group before fair value movements and other non-recurring or otherwise non-cash one-off items. A reconciliation of the Normalised Income Profit and Normalised Total Profit reconciled to profit before tax prepared in accordance with IFRS is set out below.

12. Earnings per share and net asset value per share

The European Public Real Estate Association ('EPRA') has issued recommended bases for the calculation of certain per share information. Diluted EPRA EPS and Diluted EPRA NAV are included in the following tables.

13. Investment property

14. Borrowings

Security for secured borrowings at 30 June 2013 is provided by charges on property with an aggregate carrying value of £752 million (31 December 2012: £705 million).

*On the €231 million facility the loan to value covenant reduces to 75% in 2014. On the £36 million facility the loan to value covenant reduces to 65% at the end of 2013 and further reduces to 55% at the end of 2014. On the €90 million facility the loan to value covenant reduces by 2% per year from July 2013.

Reconciliation of movement in net debt in the period

15. Share capital

The share capital comprises one class of ordinary shares carrying no right to fixed income. There are no restrictions on the size of a shareholding or the transfer of shares, except for UK REIT restrictions.

16. Notes to the cash flow statement

17. Financial instruments fair value disclosures

The table below sets out the categorisation of the financial instruments held by the Group at 30 June 2013. Where the financial instruments are held at fair value the valuation level indicates the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Valuations categorised as level 2 are obtained from third parties. If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.

18. Events after the balance sheet date

On 3 July 2013, the Group issued €100 million five year unsecured convertible bonds at a coupon rate of 4% per annum.

On 28 August 2013, the Group announced its intention to take a 26.3% stake in the Ashtenne Industrial Fund ('the Fund') and to be appointed asset manager to the Fund. The Company has agreed to purchase the holdings in the Fund previously owned by Warner Estates Holdings PLC, agreed to invest in a placing of new units and potentially acquire additional holdings from other investors in the Fund. On completion of these investments, the total cost to the Group is expected to be approximately £52 million.

INDEPENDENT REVIEW REPORT TO HANSTEEN HOLDINGS PLC

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 2013 which comprises the income statement, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the cash flow statement and related notes 1 to 18. 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 2, 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 Ireland) 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 2013 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

Chartered Accountants and Statutory Auditor

Southampton, UK

28 August 2013