Half Yearly Report

28 August 2015

Half yearly financial report

For the six months ended 30 June 2015

Strong performance in a challenging environment

Jimmy Choo PLC ("Jimmy Choo" or the "Group"), the luxury accessories company with shoes at its core, today announces its unaudited results for the six months ended 30 June 2015.

Pierre Denis, Chief Executive Officer, commented:

"We are pleased with our performance in H1, considering materially lower industry growth in the low single digits. Jimmy Choo continued to deliver well in this environment and ahead of the market, with net revenue growth of 6.5% for the half.

Our unique DNA and our collections have maintained their resonance with our clients. We have enjoyed particular success with the Cinderella shoe and capsule collections which have captured our clients' imagination. Our expansion in Asia and our performance in Japan have continued to contribute strongly to revenue growth. Our investment in the business has progressed, with five new stores, three conversions from franchise and seven renovations and relocations and significantly, the transition to a central Swiss warehouse and SAP all in the first half.

In line with our strategy, our retail business has led the way with double digit growth despite disruption from renovations, while our wholesale business performed broadly as expected. We have seen continued strength in the performance of our shoe business, and we are building upon the good progress in Men's.

Despite the lower industry revenue growth, we report Adjusted EBITDA up 0.5% and Adjusted consolidated net income and Adjusted EPS up 2.8% in the first half.

Within this lower growth luxury environment, the structural advantage of Jimmy Choo remains and we remain focused on executing our growth strategy and pursuing growth without compromising our brand or its luxury position despite the more challenging macroeconomic environment."

Highlights for H1 2015

Operational

· Five new directly operated stores ("DOS")

· Three franchise stores converted to Retail in Singapore and Malaysia

· Significant store development activity in H1 with rollout of new concept enjoying continued success

· Strong red carpet presence and positive reaction to Cinderella shoe and capsule collections

· Men's remains fastest growing category

· Licensee performance significantly ahead of last year

· One time shift in wholesale volumes as a result of delivery timing as we implement our new supply chain.

Financial

· Revenue +6.5% at constant currency to £158.5m (5.5% at reported rates)

· Retail revenue +10.3% at constant currency (9.6% at reported rates)

· Like for like +3.3%

· Wholesale revenue -3.9% at constant rates (-5.1% at reported rates)

· Adjusted EBITDA margin decreased to 17.5% (2013: 18.4%)

· Adjusted EBIT of £19.0m

· Adjusted Consolidated Net Income up 2.8% to £11.1m

· 70.0% EBITDA cash conversion

· Closing net debt of £118.4m

Enquiries

Jimmy Choo PLC will be hosting a presentation to analysts at 15:00 today via audio webcast and telephone conference. Please contact Will Smith or Sophie Arnold if you wish to participate.

Notes to Editors

Today, Jimmy Choo encompasses a complete luxury accessories brand. Women's shoes remain the core of the product offer, alongside handbags, small leather goods, scarves, sunglasses, eyewear, belts, fragrance and men's shoes. Pierre Denis was appointed CEO in July 2012 and the creative direction is overseen by Sandra Choi. Together, they share a vision to create one of the world's most treasured luxury brands. In October 2014 Jimmy Choo PLC was publicly listed on the London Stock Exchange with the ticker CHOO.

This announcement includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Directors' current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward looking terminology such as ''believe'', ''expects'', ''may'', ''will'', ''could'', ''should'', ''shall'', ''risk'', ''intends'', ''estimates'', ''aims'', ''plans'', ''predicts'', ''continues'', ''assumes'', ''positioned'' or 'anticipates'' or the negative thereof, other variations thereon or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Directors or the Company concerning, among other things, the results of operations, financial condition, prospects, growth, strategies (including continued store roll out plans) and the industry in which it operates. In particular, the statements regarding the Company's strategy and other future events or prospects are forward-looking statements.

1 Constant currency revenue growth is calculated by applying the exchange rates for the half year ended 30 June 2015 to the year ended 30 June 2014 on a month by month basis and calculating the growth percentage by reference to the total year.

2 Like for like sales growth ("LFL") is calculated by taking retail sales in all locations where trading occurred for a full financial year prior to the start of the period being measured and calculating sales growth for those locations at constant currency.

3 Adjusted EBITDA is defined as operating profit for the year adjusted for exceptional costs, loss on disposal of property, plant and equipment and intangible assets, depreciation and amortisation charges and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

4 Adjusted EBIT is defined as operating profit for the year adjusted for exceptional costs, share of the result of associates and joint ventures and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

5 Adjusted EPS is calculated as Adjusted consolidated net income divided by the average number of shares in issue during the period.

Chief Executive's statement

Our strategy as a luxury shoe specialist is for continued growth ahead of the market, which we will realise through the development of our collections, continued fashion leadership and expansion of our retail and wholesale channels. We have made good progress on these during the first half.

Product

The first half of the year saw continued growth from Ladies' Shoes and from Men's. One of the highlights was the reception of the Cinderella shoe worn by Lily James, which captured interest globally. We also enjoyed success with the quirky capsule collection with Jimmy Choo the bull terrier in collaboration with Brazilian artist Rafael Mantesso. Both were commercial successes which attracted much attention on social media. The brand continued to demonstrate its ability to capture the fashion zeitgeist with a cameo appearance in the opening section of the Oscars.

Shoes grew to 75.5% of net revenues with notable growth in Men's. Our licensees also performed well with strong underlying growth in licence income at constant currency, driven in particular by the launch of Jimmy Choo Man fragrance at this stage last year.

Distribution

We continued to roll out the New Store Concept across our store portfolio, with two renovations and five relocations and five new stores. We also converted three franchise doors to retail in Singapore and Malaysia which adversely affected wholesale sales. Having focused on renovations and relocations in the first half of the year, in stores such as Sloane Street, Shanghai Plaza 66 and Short Hills, the focus in the second half of the year is on new boutiques. We remain on track to renovate or relocate 10-15 stores and open 10-15 new stores in the year. In addition, we bought three franchise stores in Singapore and Malaysia, changing them from wholesale into retail stores. This brings the total number of directly operated stores to 133 and new store concept stores within that to 27 at the half year.

Our wholesale business reflected a one-time volume shift on the changeover to our new Swiss warehouse and the attendant changes in the supply chain.

Investment in systems and processes

The first half of the year saw a significant step in our continued investment in systems and processes. We made the transition to SAP centrally, a single client view platform and to a new global warehouse in Switzerland on 1 March this year. We are pleased with the performance of the business through this significant transformation process, which involved a planned suspension of deliveries to the retail network for a brief period and the one time change to our wholesale delivery phasing. We remain on track to begin initial trials of continuous replenishment in H2 2015 and regional trials of omnichannel later in 2016.

Revenue performance

Constant currency revenue growth of 6.5% (5.5% at reported rates) was driven by retail, which now represents 62.9% of revenues.

Retail

Retail growth of 10.3% at constant currency (9.6% at reported rates) was driven by a mix of like for like ("LFL") of 3.3% and new space growth, including new stores and the shift of the stores in Singapore and Malaysia into retail from wholesale.

LFL was impacted by the temporary closure of a number of stores for renovation in the first half, especially Sloane Street. Renovated stores in the new store concept continue to perform particularly strongly. The disruption caused by the renovation process is more than outweighed by the benefit to the brand perception of the in-store experience and the subsequent uplift in sales growth.

The relative valuations of key currencies, especially the US Dollar, Euro, Pound Sterling and Japanese Yen, continue to drive new patterns of client behaviour, with tourism growing in previously local-dominated markets such as Japan and tourism falling in places such as Hong Kong, UK and the USA.

Wholesale

First half wholesale revenue, which declined by 3.9% at constant currency (decline of 5.1% at reported rates), including the transfer of the franchise stores in Singapore and Malaysia to retail, as well as by the structural change in our supply chain as a result of the move to the central warehouse in Switzerland which caused a one-time shift in wholesale delivery timing.

The currency dynamic driving client travelling behaviour, in addition to the continuing economic and political issues in Greece, Eastern Europe and Russia impacted local demand in certain markets. While these phenomena impacted both retail and wholesale, the relative geographical positioning of the two networks resulted in a more pronounced impact in wholesale.

Licensing

Licensing grew by 50.5% at constant currency (45.3% at reported rates). Both Eyewear and Fragrance continued to grow strongly, with Jimmy Choo Man (which was launched in June 2014) a particular stand out performer.

Geographic performance

Asia ex-Japan remains the strongest growth region, with 2 store openings and 3 conversions complementing continued strong underlying growth. This growth of 34.5% was achieved despite Hong Kong revenue being broadly flat as tourist flows in the region were materially down year on year.

Japan grew by 20.5% with the strong performance of our store network benefitting from Chinese tourist traffic.

EMEA revenues were adversely impacted by the depreciation of the Euro against Sterling, however, underlying constant currency performance remains solid despite the decline in Russian tourist traffic seen since the early part of 2014 and the temporary closure of Sloane Street for renovation. EMEA benefitted from tourist inflows from China, which is now our largest tourist group.

Growth of 5.1% in the Americas benefits from a strong US dollar, with weaker underlying performance impacted by reduced tourism and increased competition.

Financial Highlights

Gross margin

Gross margin improved from 61.4% in the prior year to 62.7%, driven by increased buying volumes and the favourable shift in channel mix. The ongoing mix shift from wholesale to retail also reflected the structural shift in wholesale delivery timing. In addition, gross margin benefitted from the weakness of the Euro against other currencies during the period, with the effect more pronounced in wholesale than retail due to the longer selling window for retail.

Costs

Selling and distribution expenses increased during H1 2015, reflecting the impact of the addition of 13 new stores and the variable costs of revenue growth. Retail costs were also negatively impacted by the combination of faster sales growth in Japan, where retail costs are almost exclusively variable and relatively more modest growth in markets where retail costs are largely fixed, thereby reducing the operating leverage of the Group in the period. We also incurred costs during the closure of our Sloane Street flagship store for refurbishment and of our relocated Harbour City flagship and new Times Square store, ahead of their openings in the second half in Hong Kong.

In a busy first half for the Group, brand communication activities included significant PR and marketing activity to support the launch of the 'Choo Hound' capsule collection, with a particular focus on social media.

We continued to build a strong online presence with exceptional social media penetration, reaching in excess of five million followers across Facebook, Instagram and Twitter and more than 13 million views on YouTube. We continue to hold a number one global editorial ranking for ladies luxury shoes and have experienced exceptional success in Men's reaching a global ranking of sixth. To showcase the Men's SS16 collection, a rule breaking version of the traditional gentleman's sporting club was created, featuring some of Britain's premier league skateboarders and BMX riders putting the collection to the test on a purpose built Jimmy Choo Skate Park. Overall, during the first half we incurred brand communication costs of £6.8m, which was in line with prior year as a percentage of revenue.

Overheads grew from 12.6% of revenue in H1 2014 to 13.1% of revenue in H1 2015, reflecting the timing effect on wholesale revenue and the cost of the Group's share based payment schemes put in place at IPO and the addition of other public company costs. Excluding the PLC costs, overheads are flat year on year.

Exceptional costs of £0.8m (H1 2014: £3.8m) were incurred during the period, which largely represented replatforming costs. Following the transition to SAP at the centre in the first half, work continues on refining new systems and processes and the preparation for the rollout of omnichannel and SAP to our operations globally. The prior period included the initial costs associated with the IPO of the Group in October 2014.

Profits and earnings

H1 2015 Adjusted EBITDA grew modestly by £0.1m or 0.5% compared to the H1 2014.

H1 2015 Adjusted EBIT reduced by 6.3% compared to the prior year, as expected, due to the impact of additional depreciation and amortisation as a result of the investment in new stores, continued refurbishment of flagship stores and improvements to the Group's information systems.

Adjusted EBT for the first half was £15.1m (H1 2014: £14.9m), despite the reduction in Adjusted EBIT described above. During the first half we incurred a smaller net loss on realised and unrealised foreign exchange of £0.4m (H1 2014: net loss of £1.1m) and reduced financing charges of £3.5m (H1 2014: £4.2m). The prior period's financing charges included £1.1m of amortisation of capitalised debt costs which are now fully amortised. In the current period we also incurred reduced interest charges on our external banking facilities as a result of the depreciation of the Euro, the continued repayment of the term loans (which attract a higher interest rate) ahead of the revolving facilities and an absolute reduction in the interest rate through a combination of both lower EURIBOR and the interest margin applied thereon. These reductions in financing charges were partially offset in the current period by a £1.1m higher charge in respect of the fair value of the open currency swaps at the period end.

Adjusted consolidated net income for the year was £11.1m compared to £10.8m in the preceding period, generating Adjusted EPS of 3.0p per share in H1 2015 (H1 2014: 2.9p).

Cash flow

1Adjusted operating cash flow is defined as Adjusted EBITDA plus/minus non-cash charges in respect of share-based payments, realised and unrealised foreign exchange gains and losses on the revaluation of monetary items and working capital. Working capital is defined as the sum of changes in trade and other receivables, inventories, trade and other payables and provisions.

2Cash conversion is defined as Adjusted operating cash flow (as defined above) divided by Adjusted EBITDA.

Adjusted operating cash flow was £19.4m in H1 2015 resulting in cash conversion of 70.0% of Adjusted EBITDA in the first half. Following steps taken to manage inventory levels and lower first half wholesale shipments, reduced factory payments led to an outflow in trade and other payables compared to the prior period. These adverse working capital movements were partially offset by a reduced outflow from inventory and receivables in H1 2015 compared to H1 2014.

We incurred lower capital expenditure in the first half despite continued investment in the store portfolio due to timing of major projects, with the prior period including the major flagship refurbishments of New Bond Street and Beverly Hills. Exceptional costs were also lower in H1 2015. Offsetting these movements was a £3.0m increase in financing payments, attributable to payments to settle out of the money currency swaps in the first half. As a result of the foregoing, free operating cash flow decreased from an inflow of £1.4m in H1 2014 to an outflow of £1.7m in H1 2015.

Following the inventory management adjustments in H1 and the wholesale delivery timing shift, we expect cash flow conversion in H2 to return historical levels.

Net debt

Net debt reduced from £125.6m at 1 January 2015 to £118.4m at 30 June 2015, principally as a result of a £8.9m gain on the revaluation of the Euro and USD denominated external bank facilities. We made a £4.2m scheduled repayment against the capex facility during the first half of 2015 and made net drawings on the revolving cash flow facility of £7.9m.

Outlook

Our brand and collections continue to resonate with our clients, against the backdrop of uncertain and challenging markets. We expect the benefits of our store development to build in H2, while the impact of changes to tourism is expected to continue to affect our retail business as it has in H1.

The strength of the Cruise wholesale order book gives us confidence that the H2 wholesale performance will broadly offset the one-off effects seen in H1.

We continue to execute on our strategy, remaining on track to renovate or relocate 10-15 stores and open 10-15 new stores in the full year.

Board changes

On 1 August 2015 the Group appointed Meribeth Parker as an independent non-executive director. Meribeth Parker was formerly Group Publishing Director of Hearst Magazines until the end of June 2015 and previously held a variety of senior roles in Publishing.

On the same date, Anna-Lena Kamenetzky was appointed as a non-executive director replacing Bart Becht who informed the board of directors of the Group of his intention to step down following the announcement of his continued involvement as Chairman and interim CEO of Coty Inc. Anna-Lena Kamenetzky is a partner and head of corporate development of JAB Holding Company LLC.

Pierre Denis

Chief Executive Officer

Condensed consolidated income statement

For the period ended 30 June 2015 (Unaudited)

The accompanying notes form an integral part of these interim financial statements.Condensed consolidated statement of comprehensive income

For the period ended 30 June 2015 (Unaudited)

The accompanying notes form an integral part of these interim financial statements.

Condensed consolidated statement of financial position

As at 30 June 2015 (Unaudited)

The accompanying notes form an integral part of these interim financial statements.

Condensed consolidated statement of changes in equity

For the period ended 30 June 2015 (Unaudited)

The accompanying notes form an integral part of these interim financial statements.

Condensed consolidated statement of cash flows

For the period ended 30 June 2015 (Unaudited)

The accompanying notes form an integral part of these interim financial statements.

Notes to the financial statements

For the period ended 30 June 2015 (unaudited)

1. Basis of preparation and principal accounting policies

The condensed set of financial statements of Jimmy Choo PLC ("the Company") as at, and for, the six month period ended 30 June 2015 comprises the Company and its subsidiaries (together referred to as the "Group"). The Directors have a reasonable expectation that the Group has sufficient resources to continue in existence for the foreseeable future, being a period of not less than 12 months from the date of this report. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

The Group financial statements as at, and for, the year ended 31 December 2014 prepared in accordance with IFRSs as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, are available on the Company's website at www.jimmychooplc.com/investors/results-and-investors-presentations.

The comparative figures for the year ended 31 December 2014 are not the Company's statutory accounts for that year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified (ii) did not include any reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The condensed set of financial statements for the six months ended 30 June 2015 is unaudited but has been reviewed by the auditors. The Independent review report is set out at the end of this report.

Statement of compliance

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 EU. The condensed set of financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's financial statements as at, and for the year ended 31 December 2014.

This condensed set of financial statements was approved by the Board of Directors on 28 August 2015.

Adoption of new and revised standards

No changes to new or revised accounting standards have had a material impact on the consolidated financial statements of the Group.

Estimates and judgements

The preparation of a condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Refer to note 2 of the financial statements of the Group for the year ended 31 December 2014 for further detail.

2. Operating segments

The following is an analysis of the Group's revenue and results by reportable segment in the six months ended 30 June 2015:

2. Operating segments (continued)

The following is an analysis of the Group's revenue and results by reportable segment in the six months ended 30 June 2014:

The following is an analysis of the Group's revenue and results by reportable segment in the year ended 31 December 2014:

The following table provides an analysis of the Group's revenue by geographical destination, irrespective of the origin of the goods:

2. Operating segments (continued)

The following table provides an analysis of the Group's total assets by reportable segment:

3. Exceptional costs

The Group incurred the following costs during the periods presented that are considered to be exceptional:

Acquisition and integration costs relate to initiatives put in place following the acquisition of Passion Holdings Limited on 1 July 2011 and the subsequent costs incurred integrating the operations of the business into the wider JAB Luxury GmbH group. These costs include legal and other professional fees associated with the refinancing and integration of the Group and the restructuring of the senior management team, including severance, recruitment costs and retention bonuses. These initiatives came to an end on the IPO of the Group in October 2014.

Replatforming costs represent costs associated with strengthening product development (in the Florence facility), reinforcing the team in key functions, undertaking regional buyouts in Asia and scaling up the information systems capability and office infrastructure to support the growth strategy.

IPO costs represent costs directly associated with the listing of the Group on the London Stock Exchange in October 2014. 

4. Net financing expense

Interest incurred on the shareholder credit facility ceased on 3 October 2014 when the Group entered into a debt for equity swap agreement, which discharged the shareholder credit facility in exchange for the issue of ordinary shares in Choo Luxury Group Limited.

5. Income tax expense

Tax for the six month period is charged at 24.5% (six months ended 30 June 2014: 230.6%; year ended 31 December 2014: (30.8%)), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.

6. Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. There are no dilutive shares.

Weighted average number of ordinary shares

6. Earnings per share (continued)

In order to provide a measure of underlying performance, the Group has chosen to present an additional illustrative measure of adjusted earnings per share. Adjusted earnings per share has been calculated by taking adjusted consolidated net income (see note 11) and dividing by the number of ordinary shares outstanding as at 30 June 2015 for all periods to eliminate the impact of shares issued during 2014.

Earnings per share

7. Property, plant and equipment

During the period the Group made additions to property, plant and equipment of £10.8 million (six months ended 30 June 2014: £11.2 million, year ended 31 December 2014: £26.0 million).

8. Interest bearing loans and borrowings

On 3 October 2014 the Group entered into a debt for equity swap agreement, which discharged the shareholder credit facility in exchange for the issue of ordinary shares in Choo Luxury Group Limited.

During the current period, net drawings of £7.9 million were made against the Group's Revolving Cash Flow Facility to fund general corporate purposes.

Repayments of £4.2 million were made against the Group's Capex/Acquisition Facility during the current period in line with previously disclosed repayment terms.

As previously disclosed the Group's principal debt facilities (totalling £107.6 million) are provided by a syndicate of banks and expire on 27 June 2018.

9. Financial Instruments' fair value disclosures

Fair value disclosure

The carrying amount of financial assets and liabilities approximate their fair values. The majority of the financial assets are current. The majority of the current interest-bearing liabilities are at variable interest rate. The fair values of the non-current fixed rate interest-bearing liabilities are not materially different from their carrying amounts.

The fair value of non-current fixed rate interest-bearing liabilities is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

The fair value of derivative instruments (currency forwards and options) is determined based on current and available market data. Pricing models commonly used in the market are used, taking into account relevant parameters such as forward rates, spot rates, discount rates, yield curves and volatility.

Fair value hierarchy

Financial instruments carried at fair value are categorised into the below levels, reflecting the significance of the inputs used in estimating the fair values:

Level 1: Quoted prices (unadjusted) in active markets for identical instruments;

Level 2: Valuation techniques based on observable inputs, other than quoted prices included within level 1, that are observable either directly or indirectly from market data;

Level 3: Valuation techniques using significant unobservable inputs, this category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation.

The Group had the following financial instruments at 30 June 2015, all of which have been measured using a level 2 valuation method.

10. Related party transactions

There have been no changes in the nature of related party transactions to those described in the 2014 Annual Report that could have a material effect on the financial position or performance of the Group in the period to 30 June 2015.

11. Reconciliation of non-GAAP performance measures

Adjusted EBITDA

Adjusted EBIT

Adjusted profit before tax

11. Reconciliation of non-GAAP performance measures (continued)

Adjusted consolidated net income

Principal risks and uncertainties

The principal risks and uncertainties affecting the business activities of the Group for the next six months of 2015 remain those that are described on pages 38 to 40 of the Annual Report for the year ended 31 December 2014 (which can be found at www.jimmychooplc.com/investors/results-and-investors-presentations).

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

· the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being 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 year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

Pierre Denis 

Chief Executive Officer

28 August 2015

Independent review report to Jimmy Choo PLC

Introduction

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 2015 which comprises the Condensed consolidated income statement, Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of changes in equity, the Condensed consolidated statement of financial position, the Condensed consolidated statement of cash flows and the related explanatory notes. 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 the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 reached.

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 DTR of the UK FCA.

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. 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 EU.

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 UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and 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 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Graham Neale

Senior Statutory Auditor

for and on behalf of KPMG LLP

Statutory Auditor

Chartered Accountants

One Snowhill

Snow Hill Queensway

Birmingham

B4 6GH

28 August 2015