Interim Results

2nd Sep 2009 07:00



HYDRO INTERNATIONAL plc 

Interim results for the six months to 30 June 2009

Key Performance Indicators

	6 months ended  30 June 2009	6 months ended  30 June 2008
Statutory:
Revenue	£14.1m	£14.9m
Profit before tax	£0.5m	£1.0m
Basic earnings per share	2.59p	4.93p
Non-Statutory:
Operating profit	£0.8m	£1.0m
Adjusted operating profit*	£0.7m	£1.1m
Adjusted basic earnings per share**	2. 52p	5.39p
Cash and cash equivalents	£4.4m	£3.7m
Closing order book	£9.4m	£10.1m

* excluding exceptional other operating income and amortisation of acquisition related intangible assets

** excluding exceptional other operating income and amortisation of acquisition related intangible assets and related corporation tax effect.

For further information, please contact:

Stephen Hides (Chief Executive Officer)
Tony Hollox (Chief Financial Officer)
Hydro International plc	Tel: +44 (0)12 7587 8371
Julian Blunt
KBC Peel Hunt Limited (Nominated Adviser & Broker)	Tel: +44 (0)20 7418 8990

  Interim Management Report to the members of Hydro International plc

Hydro International offers innovative products for the cost effective control of stormwater and wastewater.

The Group has developed a wide range of technologies to control urban run-off, treat stormwater, combined sewer overflows and municipal wastewater with the aim of providing cost effective solutions for controlling quantity and improving quality of water.

Key achievements

Group results

The first half of 2009 has delivered a financial result in line with our expectations as outlined in the AGM Trading Statement.

Group revenues reduced by 5% on the six months ended 30 June 2008 due principally to the impact of the wider economic recession. The effect has been greatest in our Stormwater business where revenues reduced by 25%, reflecting the exposure of this business to private housing and commercial development. There has been some mitigation of this effect provided by increased levels of public infrastructure work including the major contract, secured in 2008, to install Hydro Brake® flow control units as part of the Whitecart flood alleviation project in Glasgow.

The Group's Wastewater business has seen good order intake over the first half year, assisted in the US by government stimulus measures which have already brought forward a number of projects. However, in a few cases customers have applied for stimulus funding to subsidise retrospectively projects that were ordered previously, resulting in extended delivery timescales. While revenues in the first half year were affected, sales increased by 12% on 2008 levels due to the effect for the full period of the acquisition of Eutek Systems, Inc. The effect of delayed contracts in the US is expected to work through the system by the end of the financial year.

Group operating profit for the six months ended 30 June 2009 was down 28% at £753k (2008: £1,044k). Group operating profit excluding exceptional other operating income associated with the write back of a doubtful debt provision made on the acquisition of the Eutek business and amortisation of acquisition related intangible assets was down 36% on the 2008 level.

As stated in the AGM trading statement the 3 year Executive Incentive Scheme (EIS) set out in the Annual Report originally matured at the end of 2009. The substantial increase in profit already achieved over the first two years of the scheme period was expected to lead to the scheme paying out in full. However, in view of prevailing economic conditions the directors have elected to defer, for one year, half of the remaining bonus due and, in addition, to make payment of this deferred element conditional upon the achievement of a further profit target for 2010. The extension of the scheme over four years has also had the effect of reducing the profit impact of the bonus in the period to 30 June 2009 by £257k.

Losses were incurred on translation of foreign currency balances denominated in US dollars and euros as a result of the depreciation during the period of these currencies against sterling. The overall impact was to charge the profit and loss account with net losses totalling £145k (2008: £76k).

This impact was also felt in finance costs where the valuation of derivative financial instruments denominated in Swedish kronor and euros created a charge of £109k (2008: £48k).

Net assets decreased over the six month period by 3% to £9,555k (31 December 2008 - £9,832k). This decrease arises as a result of the final dividend, paid in respect of the year ended 31 December 2008, and the reduction in the foreign currency translation reserve exceeding the profit for the period. The £236k reduction in the foreign currency translation reserve, along with the other principal movements in the balance sheet, is driven by the weakening of the US dollar against sterling.

Net cash generated from operating activities for the six months ended 30 June 2009 was £nil, compared to a net cash outflow of £496k for the comparative period in 2008. The change in cash generation over the last six months has been caused by the timing of payments to suppliers and receipts from customers on large wastewater contracts in the UK and US. During the period the Group made capital repayments totalling £377k against borrowing facilities used to finance the acquisition of Eutek Systems, Inc. in 2008. A further £275k was paid as deferred consideration to the former shareholders of Eutek Systems, Inc. based on the performance of that business. Along with the payment of a final divided in respect of the year ended 31 December 2008 and adverse foreign exchange movements totalling £206k, these were the principal movements in cash balances, which reduced by £1,414k over the period.

Review of operations

In view of the difficult trading conditions affecting the Group's stormwater markets in the UK and the US, a formal review was conducted of operating resources and structures in the Stormwater businesses to ensure the most effective approach to each market. This resulted in a modest reduction in employee numbers. The costs of this restructuring have all been borne in the first half year and we expect moderate cost savings to accrue over the second half year.

On a more positive note, a review of our processes for introducing products to market led to the creation of a new Product Management function in order to co-ordinate market analysis and understanding across the Group, and to strengthen further the market focus of our product development and commercialisation activities.

The first quarter of 2009 saw a marked deterioration in activity in our UK Stormwater business derived principally from reduced levels of commercial development. The latter part of the second quarter has seen some stabilisation, albeit at a reduced level, and we continue to build our business by supporting larger public infrastructure projects. Hydro's technical ability in support of its products is a significant differentiator when discussing solutions for this type of project with customers and their consultant engineers.

While we have seen some growth in US Stormwater revenues, this remains a difficult market. The Group has continued to develop additional distributed routes to market to try and grow market share and ensure an effective reach to end customers. This programme continues and further progress is expected in the second half of the year.

In the UK, the fourth asset management programme (AMP4) entered its final year on 1 April 2009 and the UK Wastewater business saw improved trading over the previous year. The order book is at encouraging levels following a major strategic order for £2.6m received early in the period, representing a repeat order for Zickert Scraper technology which follows on from an order delivered in 2008. The business is looking to build on the success of the Zickert product with further significant orders over the coming years. This will assist in mitigating any impact of reduced AMP5 capital spending as the Zickert product is often sold into retrofit 'maintenance and remedial works' programmes rather than new process plant capital expenditure. In the recent OFWAT draft determinations these programmes are likely to be a focus for AMP5.

The US Wastewater business, incorporating the activities of Eutek Systems, Inc. acquired in 2008, has achieved a strong performance for the half year with order intake at very encouraging levels. This business is also building a solid presence in the market for Combined Sewer Overflow (CSO) treatment devices in the US by taking products that have already been established in the UK and European markets.

The Group has achieved notable progress in supplying international markets in the first half year. Demand for grit removal equipment in Egypt has been particularly buoyant and the Group has continued to expand distribution relationships with new or expanded agreements covering stormwater and wastewater solutions in Saudi Arabia, Singapore, Malaysia and Australia.

Key performance indicators

In addition to the statutory revenue and profit measures we monitor our performance in implementing our strategy with reference to progress in the key performance indicators listed on page 1.

Segmental results for the six months ended 30 June 2009

A summary of the key financial results by segment is disclosed in note 2 to the condensed financial statements.

Dividend and dividend policy

In line with current policy no interim dividend has been proposed or approved by the Board in this period or the period ended 30 June 2008.

A final dividend of 3.0p per share (£428k) in respect of the year ended 31 December 2008, as recommended by the directors subsequent to the year-end, was approved at the AGM and paid during the period.

Principal risks and uncertainties

The principal risks and uncertainties which could affect the Group for the remainder of the financial year remain those detailed on page 26 and 27 of the Annual Report 2008, a copy of which is available at www.hydro-international.biz. In addition, the Outlook section of this Interim Management Report provides a commentary concerning the remainder of the financial year.

Going concern

A full commentary on the risks affecting the Group's liquidity and details of the Group's borrowing facilities are outlined on page 28 of the Annual Report 2008. The facilities referred to in that report have not changed in the period to 30 June 2009 other than the £1.8m overdraft facility which, having been subject to review by the bank on 1 May 2009, was duly extended by a further period of 12 months.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current financial facilities. Accordingly, and after making enquiries, the directors have a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future.

Outlook

The result for the first half year demonstrates the benefit of diversification in the Group's activities, both in terms of business sector and geography. The effects of the economic downturn, whilst being very real and having put a brake on growth, have been significantly mitigated.

Whilst there are now encouraging signs that the deterioration in the Group's Stormwater revenues has stabilised, we are not anticipating a significant recovery until the second quarter of 2010 at the earliest. As a result we anticipate that full year Stormwater revenues are likely to be lower than in 2008.

Solid order intake in the Wastewater business is expected to compensate for the reduction in Stormwater revenues yielding total Group sales in line with 2008. Whilst we are now starting to see some signs of delays in order placement on Wastewater projects in the UK as we approach the start of the fifth asset management programme, we do not expect this to significantly affect the 2009 results. Looking forward to 2010 and beyond we are well positioned on a number of strategic wastewater projects which should help mitigate any continued delays in smaller projects.

The Group now expects to deliver sales revenues broadly in line with 2008 levels. In line with our normal trend we expect profitability to improve in the second half of the year, however, the impact of adverse foreign exchange movements on the translation of US dollar denominated amounts in the balance sheet in the first half year, as opposed to gains seen in the second half of last year, is expected to pull profitability for the full year below that reported in 2008.

The Board continues to focus on the implementation of the Group's long-term strategic plan. With a lean business model the scope for further cost reduction, whilst under constant review, is limited in the short term without jeopardising the ability of the Group to implement these plans. However, the Group is robust, with a developing range of products, a diverse spread of market sectors, and a strong balance sheet.

By order of the Board,

Stephen Hides

Chief Executive Officer

1 September 2009

  Hydro International plc

Condensed Group Income Statement unaudited

for the six months ended 30 June 2009

Continuing operations	Note	6 months ended 30 June 2009 £000	6 months ended 30 June 2008 £000	Year ended 31 December 2008 £000
Revenue		14,180	14,949	30,013
Cost of sales		(8,571)	(9,443)	(17,865)
Gross profit		5,609	5,506	12,148
Administrative expenses		(5,007)	(4,462)	(9,333)
Exceptional other operating income	(3)	151	-	-
Operating profit before exceptional other operating income and amortisation of acquired intangibles		733	1,149	3,208
Exceptional other operating income	(3)	151	-	-
Amortisation of acquired intangibles		(131)	(105)	(393)
Operating profit		753	1,044	2,815
Finance cost	(4)	(207)	(1)	(159)
Profit before tax		546	1,043	2,656
Tax	(5)	(176)	(341)	(908)
Profit for the period from continuing operations		370	702	1,748
Basic earnings per ordinary share Diluted earnings per ordinary share	(6) (6)	2.59p 2.58p	4.93p 4.89p	12.27p 12.17p

Condensed Group Statement of Comprehensive Income unaudited

for the six months ended 30 June 2009

	6 months ended 30 June 2009 £000	6 months ended 30 June 2008 £000	Year ended 31 December 2008 £000
Profit for the period Exchange differences on translation of foreign operations	370  (236)	702 34	1,748 527
Total comprehensive income for the period	134	736	2,275

  

Hydro International plc

Condensed Group Balance Sheet unaudited

30 June 2009

	30 June 2009 £000	30 June 2008 £000	31 December 2008 £000
ASSETS Non-current assets Intangible assets - Goodwill Intangible assets - Other Property, plant and equipment	5,271 2,422 1,913	4,588 2,361 1,913	5,619  2,825 2,027
Deferred tax assets	70	136	191
Trade receivables	338	329	64
	10,014	9,327	10,726
Current assets Inventories Trade and other receivables  Cash and cash equivalents Deferred tax assets Derivative financial assets	649 8,951 4,394 - -	658 10,825 3,678 139 1	687 9,427 5,808 - 24
	13,994	15,301	15,946
TOTAL ASSETS	24,008	24,628	26,672
LIABILITIES
Current liabilities
Trade and other payables	(8,177)	(10,258)	(9,193)
Current tax payable	(631)	(565)	(593)
Deferred tax liability	(97)	(184)	(391)
Borrowings	(727)	(129)	(819)
Obligations under finance leases	-	(2)	-
Derivative financial liabilities	(85)	-	-
	(9,717)	(11,138)	(10,996)
Non-current liabilities
Trade and other payables	(605)	(912)	(991)
Deferred tax liability	(996)	(934)	(915)
Borrowings	(3,135)	(3,363)	(3,938)
	(4,736)	(5,209)	(5,844)
TOTAL LIABILITIES	(14,453)	(16,347)	(16,840)
NET ASSETS	9,555	8,281	9,832
EQUITY Share capital Share premium account Foreign currency translation reserve Retained earnings	714 974 256 7,611	712 966 (1) 6,604	713 967 492 7,660
TOTAL EQUITY	9,555	8,281	9,832

  

Hydro International plc

Condensed Group Statement of Changes in Equity unaudited

for the six months ended 30 June 2009

	Issued capital	Share premium	Foreign currency reserve	Retained earnings	Total
	£000	£000	£000	£000	£000
1 January 2008	710	953	(35)	6,296	7,924
Currency translation difference	-	-	34	-	34
Profit for the period	-	-	-	702	702
Comprehensive income/(loss)	-	-	34	702	736
Equity shares issued	2	13	-	-	15
Share based payments	-	-	-	5	5
Dividends paid	-	-	-	(399)	(399)
30 June 2008 (unaudited)	712	966	(1)	6,604	8,281
Currency translation difference	-	-	493	-	493
Profit for the period	-	-	-	1,046	1,046
Comprehensive income/(loss)	-	-	493	1,046	1,539
Equity shares issued	1	1	-	-	2
Share based payments	-	-	-	10	10
Dividends paid					-
31 December 2008	713	967	492	7,660	9,832
Currency translation difference	-	-	(236)	-	(236)
Profit for the period	-	-	-	370	370
Comprehensive income/(loss)	-	-	(236)	370	134
Equity shares issued	1	7	-	-	8
Share based payments	-	-	-	9	9
Dividends paid	-	-	-	(428)	(428)
30 June 2009 (unaudited)	714	974	256	7,611	9,555

  Hydro International plc

Condensed Group Cash Flow Statement unaudited

for the six months ended 30 June 2009

	30 June 2009	30 June 2008	31 December 2008
	£000	£000	£000
Cash generated from operations	296	100	2,443
Interest paid	(110)	(73)	(260)
Corporation tax paid	(230)	(523)	(596)
Net cash generated from operating activities	(44)	(496)	1,587
Cash flows from investing activities
Purchases of property, plant and equipment	(29)	(90)	(320)
Proceeds from sale of property, plant and equipment	-	13	13
Purchases of patents and trademarks	(69)	(30)	(59)
Purchase of software assets	(8)	-	(25)
Expenditure on product development	-	(1)	(1)
Interest received Cash acquired with subsidiary	13 -	72 283	127 283
Acquisition of subsidiary	(275)	(3,162)	(3,376)
Net cash used in investing activities	(368)	(2,915)	(3,358)
Cash flows from financing activities
Proceeds from the issue of shares to shareholders	9	16	17
Repayment of borrowings	(377)	(860)	(860)
Finance lease capital payments	-	(2)	(4)
Dividends paid to shareholders	(428)	(399)	(399)
New bank loans raised	-	3,492	3,492
Net cash (expended)/generated from financing activities	(796)	2,247	2,246
Net (decrease)/increase in cash and bank overdrafts	(1,208)	(1,164)	475
Cash and bank overdrafts at the beginning of the period	5,808	4,848	4,848
Exchange (losses)/gains on cash and bank overdrafts	(206)	(6)	485
Cash and bank overdrafts at the end of the period	4,394	3,678	5,808

  

Hydro International plc

Reconciliation of profit to net cash flow from operating activities unaudited

for the six months ended 30 June 2009

	30 June 2009	30 June 2008	31 December 2008
	£000	£000	£000
Profit for the period	370	702	1,748
Finance costs	207	1	159
Corporation tax expense	176	341	908
Share based payment expense	8	-	15
Depreciation	107	97	326
Amortisation of intangibles	196	184	506
Decrease in inventories and work in progress	38	218	167
Decrease/(increase) in trade and other receivables	278	(1,596)	(239)
(Decrease)/increase in trade and other payables	(1,084)	158	(1,151)
(Profit)/loss on sales of fixed assets	-	(5)	4
Cash generated from operations	296	100	2,443

  

Hydro International plc

Notes to the condensed financial statements unaudited

for the six months ended 30 June 2009

1. Basis of preparation

The Condensed Interim Financial Statements were approved by the directors on 1 September 2009.

The comparative information for the year ended 31 December 2008 included in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by the way of emphasis and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

The annual financial statements of Hydro International plc are prepared in accordance with IFRSs as adopted by the European Union.

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS's). The same accounting policies, presentation and methods of computation are followed in the condensed set of financials as applied in the Group's latest annual audited financial statements. While the financial statements included in this half yearly report have been compiled in accordance with IFRS's applicable to interim periods this half yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

2.  Segmental analysis of results

The segmental analysis presented here differs from that which will be presented in the financial statements for the year ended 31 December 2009 when the group adopts IFRS 8 - Operating Segments.

The primary format used for segmental reporting is by business segment as this reflects the internal management structure and reporting of the Group. Segment results, assets and liabilities include only items directly attributable to a segment. 

Business segments

The Group comprises the following business segments:

Stormwater

The control of stormwater flows and the removal of trash, oil and sediment from these flows, largely for application in the existing urban environment and for new residential and commercial development.

Water and wastewater treatment

The full range of treatment products for screening, grit removal, primary, secondary and tertiary treatment, for application in the municipal and regulated water industry.

Geographic segments

Hydro International has a worldwide presence in both business segments through its subsidiary selling offices and through an agency network.

  

Hydro International plc

Notes to the condensed financial statements unaudited

for the six months ended 30 June 2009

2 Segment analysis of results (continued)

Analysis by business segment

	6 months to 30 June 2009	6 months to 30 June 2008	Year ended 31 December 2008
	£000	£000	£000
Segment revenue
Stormwater	5,356	7,168	13,580
Water and wastewater	8,824	7,781	16,433
Consolidated	14,180	14,949	30,013
Segment operating profit (excluding exceptional items and amortisation of acquisition related intangible assets)
Stormwater	152	945	1,514
Water and wastewater	1,020	722	2,407
Group costs	(439)	(518)	(713)
Consolidated	733	1,149	3,208
Exceptional other operating income	151	-	-
Amortisation of acquisition related intangible assets	(131)	(105)	(393)
Net finance cost	(207)	(1)	(159)
Taxation	(176)	(341)	(908)
Profit after tax	370	702	1,748

	6 months to 30 June 2009	6 months to 30 June 2008	Year ended 31 December 2008
	£000	£000	£000
Assets
Stormwater	6,437	7,371	6,138
Water and wastewater	15,867	14,191	17,432
Group and unallocated	9,893	11,750	12,710
Eliminations	(8,189)	(8,684)	(9,608)
Total	24,008	24,628	26,672
Liabilities
Stormwater	1,767	3,222	2,060
Water and wastewater	14,719	13,631	15,868
Group and unallocated	6,156	8,178	8,520
Eliminations	(8,189)	(8,684)	(9,608)
Total	14,453	16,347	16,840
Hydro International plc Notes to the condensed financial statements unaudited for the six months ended 30 June 2009
2 Segment analysis of results (continued)
Capital expenditure
Stormwater	39	4	20
Water and wastewater	161	64	54
Group and unallocated	56	53	285
Total	256	121	359
Depreciation and amortisation
Stormwater	19	26	29
Water and wastewater	150	130	440
Group and unallocated	134	125	363
Total	303	281	832

Items have been classed as unallocated when it is not possible to identify to which segment they should be allocated, it was considered this gave a truer representation than allocating the items on a relevant basis.

Analysis by geographical segment

	6 months to 30 June 2009	6 months to 30 June 2008	Year ended 31 December 2008
	£000	£000	£000
Revenue by destination
UK	8,620	10,562	16,988
Europe	467	263	1,440
North America	4,181	3,602	10,809
Rest of the world	912	522	776
Total	14,180	14,949	30,013
Revenue by origin
UK	9,347	10,848	17,998
Europe	192	389	990
North America	4,641	3,712	11,025
Total	14,180	14,949	30,013

  

Hydro International plc Notes to the condensed financial statements unaudited for the six months ended 30 June 2009
2 Segment analysis of results (continued)
Segment operating profit (excluding exceptional items and amortisation of acquisition related intangible assets)
UK	609	923	956
Europe	(57)	9	79
North America	181	217	2,173
Total	733	1,149	3,208
Exceptional other operating income	151	-	-
Amortisation of acquisition related intangible assets	(131)	(105)	(393)
Net finance cost	(207)	(1)	(159)
Profit before tax	546	1,043	2,656
Net assets by origin
UK	7,341	6,681	7,284
Europe	492	437	602
North America	1,722	1,163	1,946
Total	9,555	8,281	9,832

3. Exceptional other operating income

The exceptional other operating income received during the six months ended 30 June 2009 related to the reversal of a fair value adjustment made to the assets recognised on the acquisition of Eutek Systems, Inc. The circumstances giving rise to the reversal occurred more than 12 months after the date of the acquisition and as such could not be treated as an adjustment to restate the fair value of assets acquired.

  

Hydro International plc

Notes to the condensed financial statements unaudited

for the six months ended 30 June 2009

4. Net finance (cost)/revenue

	6 months ended	6 months ended	Year ended  31 December
	30 June 2009	30 June 2008	2008
	£000	£000	£000
Bank deposit interest receivable	7	66	120
Other interest receivable	5	6	6
Finance revenue	12	72	126
On bank loans and overdrafts	(44)	(25)	(139)
Derivative financial instruments	(109)	(48)	(26)
Unwinding of discount	(66)	-	(120)
Finance costs	(219)	(73)	(285)
Net finance cost	(207)	(1)	(159)

Copies of the interim results will be distributed to shareholders and made available to the general public at the Company's registered office, and on the company's website at www.hydro-international.biz.

  INDEPENDENT REVIEW REPORT TO HYDRO INTERNATIONAL 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 2009 which comprises the condensed group income statement, the condensed group balance sheet, the condensed group statement of changes in equity, the condensed group statement of recognised income and expense, the condensed group cash flow statement and related notes 1 to 7. 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 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 them 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 AIM Rules of the London Stock Exchange

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 the accounting policies the group intends to use in preparing its next annual financial statements.

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 2009 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Registered Auditors 

Bristol, United Kingdom

1 September 2009

ENDIR UAOVRKKRKRAR

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