Chair's statement

 

I am pleased to present the unaudited results for the six months ended 30 June 2022.

 

Overview of results

 

Group revenue for the six months ended 30 June 2022 increased by £17.3m to £234.7m (H1 2021: £217.4m) an increase of 8% on the prior year. Profit before tax for the period was £38.4m, an increase of 19% (H1 2021: £32.4m). Adjusted EBITDA for the Group increased by £5.9m or 13% to £51.9m (H1 2021: £46.0m). Adjusted items are explained and reconciled in the Financial Review and note 2. Fully diluted earnings per share for the half increased by 18% to 31.9p (H1 2021: 27.0p). Adjusted earnings per share (fully diluted) for the year increased by 16% to 35.6p (H1 2021: 30.6p).

 

The cash generated by operations for the half year was £49.5m compared to £43.1m in H1 2021. The closing net cash balance for the period was £72.6m compared to £49.5m at the end of December 2021. The cash balance has increased despite investing £7.8m on capital expenditure, £1.6m of contingent consideration for acquisitions and paying £8.5m in dividends.

 

The first half of 2022 saw the positive impact from the lifting of COVID restrictions offset by the increasing global macroeconomic headwinds we all face going into 2023. Although not totally immune to these headwinds, Gamma's commercial model with its high recurring revenue stream and cash conversion leaves us well placed to both navigate those challenges ourselves and continue to support our customers through the challenging times ahead.

 

Our markets

 

As we approach the UK PSTN switch off in 2025 many businesses still need to migrate their ISDN lines to SIP meaning there is still growth in the SIP market. Cloud Communications is a growing market across Europe, with short, medium and long-term opportunities. The European market is under-penetrated with these technologies which presents us with an opportunity to grow our European revenues and profits as those markets evolve.

 

Board and governance

 

On 3 May 2022, Andrew Belshaw was promoted from Chief Financial Officer to Deputy Chief Executive Officer as part of a structured plan to strengthen and broaden the scope and capacity of Gamma's management team. To fill the role of Chief Financial Officer, Bill Castell joined the Company and the Board on 1 May 2022 having previously been Chief Financial Officer at Ovo Energy. Prior to this Bill has held senior finance roles at Virgin Media, Barclays Corporate Bank and Barclaycard Europe, and he also serves as a Non-Executive Director for the Financial Ombudsman Service.

 

On 4 July 2022, Andrew Belshaw took on the role of Interim Chief Executive Officer after Andrew Taylor notified the Board of his intention to retire from his role as Chief Executive Officer and the Board. I would like to take the opportunity to thank Andrew Taylor formally for his leadership over the past four years. He has played a key role in shaping Gamma's strategy and he leaves the business in an excellent position to further develop and grow.

 

At the AGM on 19 May 2022, Wu Long Peng retired from the Board as a Non-Independent Non-Executive Director. I am grateful to Wu Long Peng for his substantial input and support, particularly since the IPO almost eight years ago.

 

I was delighted to welcome Shaun Gregory to the Board on 1 July 2022 as an Independent Non-Executive Director. Shaun has had an extensive career across media and advertising spanning over 30 years. More recently, he has been the Chief Executive Officer of Exterion Media and IYUNO Media Group and is currently the Chief Executive Officer of EMG Group.

 

Employees

 

At 30 June 2022, we had 1,783 employees in the Group based in seven countries (30 June 2021: 1,686). We encourage all employees to own shares in the Company. For our UK based employees, we offered a Sharesave scheme for the sixth year in a row. Once again, it was pleasing to see the high take-up, with 360 staff choosing to participate in the scheme (2021: 402). This brought the total number of employees in the SAYE scheme to 711. We also have 174 employees who are buying shares monthly through our Share Incentive Plan and 703 in total who hold shares through the Share Incentive Plan Trust.

 

Environmental

 

Gamma remains committed to developing from a Carbon Neutral business to a Carbon Net-Zero business by 2042. Gamma expects to reduce Scope 1 and 2 emissions (those made directly and indirectly) by 90% by 2030 from a baseline year of 2021. In H1 2022 we committed to set near and long-term Company-wide emission reductions in line with the Science-Based Target initiative (SBTi) and we will seek validation of our target within the 24-month SBTi timeframe.

 

Dividend

 

Gamma remains committed to a progressive dividend policy which has seen the dividend increase by between 10 - 15% every year since our IPO in 2014. Gamma has paid one third of the dividend as an interim dividend with the final two thirds paid as a final dividend once the results for the full year are known.

 

The Board is pleased to declare an interim dividend, in respect of the six months ended 30 June 2022, of 5.0 pence per share (2021: 4.4 pence). This is an increase of 14%. It will be payable on Thursday 20 October 2022 to shareholders on the register on Friday 23 September 2022.

 

Current Trading and Outlook

 

The Board remains positive about the prospects for Gamma. Having successfully navigated and continued to grow through the COVID pandemic, we now face increasing global economic and geopolitical headwinds. The Group continues to deliver against its long-term growth strategy. Gamma will continue to concentrate its efforts and investment to develop a product and solution set which facilitates flexible working for businesses of all sizes, building on an already strong reputation for operational excellence and service quality. The business is in a strong financial position, which enables it to continue to invest in its product portfolio across its European footprint.

 

As we said in our trading update on 2 August 2022, the Board expects Adjusted EBITDA and Adjusted EPS for the year ending 31 December 2022 to be in the upper half of the range of market forecasts at that time. Company compiled analyst market expectations based on known sell side analyst estimates have not changed since 2 August with an Adjusted EBITDA range of £102.3m - £106.8m and Adjusted range of EPS of 67.1p - 74.6p.

 

Richard Last

Chair

Interim Chief Executive Review

I am pleased to have taken on the role of Gamma's Interim CEO. I must start by thanking Andrew Taylor for the platform he has established that will enable us to continue to grow.

 

As the Chair has already explained, the first half of 2022 was strong and Gamma is in a good position to maximise the opportunities which exist in our market. Our new CFO, Bill Castell, will explain the drivers for the first half's growth in his report.

 

The evolution of communications presents many opportunities for Gamma and we have the strength to be able to take on each of these opportunities. I set out below the changing market characteristics which we expect to help continue to drive our growth over the coming years.

 

Areas of historical strength remain healthy and growing; outlook for long term growth exciting

 

·      Cloud Communications remains a growing market in the UK.

 

The majority of businesses in the UK still have a physical hardware PBX rather than a Cloud based software PBX solution. Therefore, the UK market for our products will continue to expand and we are well positioned to capture this significant opportunity. We believe that we not only have a product set which can satisfy that market today but we also have the technology development capabilities and resources to continue to build new software modules which will meet customer requirements in the future.

 

·      The European market is under-penetrated which presents us with an opportunity to grow our European revenues and profits as the market evolves.

 

Through our targeted European acquisition strategy, we have developed a network capability and channel relationships in Spain, the Netherlands and Germany. Between them, these countries have more than twice as many UCaaS business users as the UK. The average penetration rate for Cloud PBX across those three countries is much lower than the UK which means there is scope for higher growth in future.

 

Despite the low market penetration, the growth rate of Cloud PBX adoption in our European markets is stubbornly lower than we would like but we are pleased to report that we continue to grow our UCaaS products in line with those markets, with 7% growth in this period.

 

Over the coming periods, Gamma's strategy is to take our product developed for the UK market into those European territories where we have a competitive advantage in a fuller feature set than any local competition.

 

We have already begun to assemble cross-border teams who are working together to successfully launch products developed in the UK overseas (for example MS Operator Connect in the Netherlands) and I am confident we will be able to launch additional products across Europe in the second half of this year.

 

We continue to evaluate opportunities to grow by acquisition either into new geographies or to augment the sales channels and scale we have in the countries in which we already operate. In late August we agreed to acquire NeoTel, another UCaaS / CCaaS business, in Spain for a maximum of €5.5m in cash with potentially a further €3.5m of contingent cash consideration depending on the performance of NeoTel in 2023; the growth targets required for the vendor to receive the additional consideration are challenging. Completion of the acquisition is still subject to regulatory approval and closing conditions being met which we expect to follow shortly. We believe that our existing Spanish business will be in a much better position to focus on the growing UCaaS and CCaaS markets in Spain following this acquisition.

 

The growth of our Spanish business had historically been held back by the performance of ComyMedia, its subsidiary which specialised in IT solutions and had little fit with the rest of our European business. ComyMedia had been contributing around £1.6m in yearly revenues but generated a negligible Adjusted EBITDA contribution. We disposed of ComyMedia in August 2022.

 

·      Favourable customer trends and behaviours present us with an opportunity to improve Average Revenue Per User ("ARPU").

 

Since 2006, Gamma has sold a core Cloud PBX solution called Horizon - a product which now has 716,000 users in the UK. Over the course of the last three years our in-house team has developed a number of additional modules that are fully integrated with that core Cloud PBX. These are -

·      Call recording - launched in 2019 using our own technology, it now has 83,000 users.

·      Horizon Collaborate - was originally launched in 2020 but has now been re-architected using software which we have developed ourselves - it has 69,000 users.

·      MS Teams integration - some users prefer to use MS Teams as a Collaboration product (as opposed to Horizon Collaborate) and hence we launched an option to integrate our Cloud PBX (Horizon) with Teams (for an additional charge) in July 2021.  We now have 5,000 users who take this option.

·      Multi-Channel Communications (Contact Centre functionality) - was launched in April 2021 (using technology obtained through our Telsis acquisition).  It now has 8,000 users.

 

Each of the above modules were built by our own in-house development team; each is sold on a "per month / per seat" basis and provides us with a recurring revenue stream. 

 

When we are able to sell these additional modules alongside the core Horizon product, it increases the ARPU of a Horizon seat.

 

·      Technology changes also present an opportunity for growth. For example, SIP continues to evolve and improve as a product and that gives us an opportunity to improve our ARPUs as customers move to higher value solutions or new variants.

 

SIP is a substitution product for ISDN that Gamma has been selling in the UK and Germany for over fifteen years; in both markets we are a market leader.

 

As we approach the UK PSTN switch off in 2025 there is still growth in the UK SIP market. There are still ISDN users who will convert to SIP over the next three years and we are well placed to win our share of that business.  As we have not been a provider of ISDN historically this migration generates new revenue for Gamma.

 

The SIP market has evolved and we now sell different variants of SIP.

 

We had a UK base of 1.60m of SIP trunks as at 30 June 2022 (31 December 2021: 1.43m). We are seeing users beginning to change how they use SIP as a product. Because we have been planning for this evolution of the market for some time, Gamma already has a strong product set to meet the changing demand.

·      1.01m trunks are being used by owners of traditional hardware PBX products (31 December 2021: 1.01m).  Our units of traditional SIP are static.  We continue to win new business but long time SIP customers are now moving to other solutions such as Cloud PBX.  As customers move from a combination of SIP (which we sell) plus a hardware PBX (which we don't sell) to Gamma's own Cloud PBX solution we have an opportunity to take the share of spend which was originally taken by the hardware provider. This can see our ARPUs increase by up to five-fold.

·      0.32m trunks are being used by users of a Cloud PBX product other than Gamma's Horizon product (31 December 2021: 0.30m).  Some end users move to other providers of Cloud PBX and many of these (unlike Gamma) do not have their own carrier capability.  Because Gamma is a traditional telecoms carrier in each country in which we operate we are able to support other providers of Cloud PBX who provide only an "over the top" software service. Our preference is clearly always for our customers to buy our own Horizon Cloud PBX product but where they choose not to and prefer to buy from a competitor who does not have their own carrier capability then Gamma can provide that service. In this instance, the alternative provider buys SIP capability from Gamma.

·      0.27m are being used to support users of Microsoft Teams (31 December 2021: 0.12m).  Some customers are migrating from a hardware PBX to a solution which includes MS Teams and this is our fastest growing driver of SIP sales. Microsoft does not have any carrier capability but Gamma is able to provide connectivity into the servers that run MS Teams - this is explained in more detail below. This additional technical capability typically allows us to double ARPU compared to the SIP product which is being replaced.  We therefore see the rise of Teams as a generator of additional revenue for Gamma.

 

Collectively, this variety of offer means that Gamma continues to have a revenue opportunity on whatever route businesses take on their forced migration from ISDN.

 

·      MS Teams adoption is growing in the Enterprise space, as more organisations "voice enable" their solution, we have the opportunity to gain revenue.

 

MS Teams is a software tool which facilitates collaborative working. It allows users to contact others in their own network and to schedule video calls but without support from a carrier such as Gamma it does not allow users to make and receive external calls from the PSTN and nor does it have normal PBX functionality (for example, voicemail, hunt groups, call forwarding etc).

 

The growth of deployment of MS Teams provides Gamma with a number of opportunities to grow revenue.

 

Currently we believe that fewer than 5% of MS Teams users have their Teams instance "voice enabled" but that percentage will increase and Teams voice usage is predicted to rise by more than 3.5m users in the UK by 2026. Gamma can provide a range of services to support and benefit from this opportunity to sell a number of complementary services -

·      As mentioned above, we are able to provide a SIP service to Teams users to enable them to make and receive calls to and from the PSTN. We call this service Microsoft Teams Direct Routing or "Operator Connect" when it is sold through Microsoft's accredited portal.  We include sales of these products within our SIP volumes as explained above.

·      Through our acquisition of Exactive we are able to perform complex integrations of Teams with other platforms.

·      Where customers want Teams with a fully integrated PBX capability we are able to integrate our Horizon Cloud PBX product with Teams. At present we find relatively few customers taking this capability as we find that Teams appeals more to Enterprise customers and our Horizon product is primarily aimed at the SME market.

 

Outlook

 

I look forward to working with our customers, partners and staff as we continue to grow the business through both our existing portfolio of products and the development of more products and solutions in the future. Our products are designed to meet the communications challenges which businesses are facing today and in the future.

 

Most commentators expect a tightening of the UK and European economies in the remainder of this year and into 2023 but we have a robust business model based on recurring revenue from products and solutions that are critical to the businesses which use them. Whilst economic headwinds may slow the rate of our revenue growth if the markets in which operate enter a recession, we would still expect to deliver growth (but perhaps more slowly) and revenues from our existing business to remain robust due to our monthly recurring revenue model.  We have seen that historically businesses do not cut back on communication spend in a recession. Our continued profitability, strength in cash generation and healthy net cash balance leave us competitively placed to maximise the opportunity even in challenging macro-economic times.

 

Like every other business we have challenges around salary inflation which we do not expect to materially impact 2022 but these may slow the growth in our Adjusted EBITDA for a short time.

 

Irrespective of these short-term challenges we continue to invest in organic growth, new product development and acquisitions to further build scale and capability. I believe that the business is in a good position to continue to grow.

 

Andrew Belshaw

Interim Chief Executive Officer

Financial review

 

Revenue and gross profit

 

Gamma has performed well during the six months ended 30 June 2022, increasing revenue by 8% to £234.7m (H1 2021: £217.4m) and gross profit by 8% to £120.4m (H1 2021: £111.7m). The UK businesses have seen growth in revenue of £17.1m (+9%) and gross profit of £8.6m (+9%). Adjusted EBITDA increased by 13% to £51.9m (H1 2021: £46.0m). Adjusted EPS (FD) increased by 16% to 35.6p (H1 2021: 30.6p).

 

UK Indirect

 

 

Overall, the growth in the UK Indirect Business unit has been strong. The growth has been driven by UCaaS and data product growth. ARPU has been supported through the successful up-sell of additional modules to UCaaS customers. Gross Margin has been broadly consistent with previous periods, which is in line with expectations, as the mix of UCaaS and connectivity products is now reasonably constant.

 

UK Direct

 

 

The significant levels of sales activity in late 2021 has started to flow through in H1 2022 leading to a 7% growth in revenue and 6% growth in gross profit. The UK Direct business has seen a number of significant MS Teams user contract wins, including the Home Office and the Department for Work and Pensions in the public sector. The strong contracted pipeline, significantly ahead when compared to this time last year, across the Direct channel gives comfort on the growth we expect for the full year. Minimal impact from the well-publicised supply chain shortage has been seen in H1 2022 but we are seeing supply squeezes for some items of hardware begin to increase in H2. The gross margin decrease is due to mix as a result of higher installations and hardware sales which are lower margin as previously expected.

 

Europe

 

 

The revenue and gross profit growth have been negatively impacted by exchange rates (£1.3m and £0.6m respectively). In local currency, the growth was 4% on both revenue and gross profit. Growth in UCaaS supported a good first half financial performance from our German business which counterbalanced some headwinds in our smaller Spanish business. The growth of our Spanish business has historically been impacted by a small subsidiary, ComyMedia, which generated a negligible Adjusted EBITDA contribution. We disposed of ComyMedia in August 2022.

 

Europe gross margins have remained consistent with the prior year. The gross margin is lower than for the UK business as a result of "high revenue/low margin" business within the Epsilon business which offers mobile connections in Germany.

 

Operating expenses

 

Operating expenses grew from £78.8m in H1 2021 to £81.7m. We break these down as follows:

 

	H1 2022	H1 2021	Change
	£m	£m
Expenses included within cash generated from operations	68.5	65.7	+4%
Depreciation and amortisation	13.2	13.1	+1%
Total Operating Expenses	81.7	78.8	+4%

 

Movements in expenses were driven by:

 

·    The UK Businesses' operating expenses grew by 5% (compared to gross profit growth of 9%). This growth has been tightly managed whilst inflationary pressures have been monitored.

·    Drivers of the increase in the overhead include increased staff costs offset in part by lower share-based payments costs driven by the lower share price which has made the costs of employers NI for share grants lower than in previous years.

·    The decrease in European costs is as a result of exchange rate movements giving a £0.4m benefit. In local currency the cost growth was 2%, reflecting tight cost control.

·    Central costs have increased from the prior period which is due to continued growth in the Group function required to support the businesses we have acquired around Europe as well as an increase in governance costs.

 

Depreciation and amortisation on tangible and intangible assets remained constant at £7.2m. This level has been maintained as the increase in capitalised labour has not resulted in current period amortisation. The annual depreciation and amortisation charge is below the annual capital expenditure spend but is expected to increase in future.

 

Exceptional Items

 

There were no exceptional items in the period or in H1 2021.

 

Alternative performance measures

 

Our policy for alternative performance measures is set out in note 2. The tables below reconcile the alternative performance measures used in this document:

 

* PAT is the amount attributable to the ordinary equity holders of the Company

 

We believe that these measures provide a user of the accounts with important additional information by providing the following alternative performance metrics:

 

·      Profit before tax is adjusted for the amortisation of intangibles which were created on acquisition. This enables a user of the accounts to compare performance irrespective of whether the Group has grown by acquisition or organically.

·      Profit after tax is adjusted in the same way as Profit before tax but it also considers the tax impact of these items. To exclude the items without excluding the tax impact would not give a complete picture.

·      Adjusted earnings per share takes into account all of the factors above and gives users of the accounts information on the performance of the business that management is more directly able to influence and on a basis comparable from year to year.

 

In addition to the above we add back the depreciation and amortisation charged in the period to Profit from Operations (H1 2022: £38.7m; 2021: £32.9m) to calculate a figure for Adjusted EBITDA (H1 2022: £51.9m; 2021: £46.0m) which is commonly quoted by our peer group internationally and allows users of the accounts to compare our performance with those of our peers.

 

EBITDA (being also "Adjusted EBITDA")

 

Adjusted EBITDA grew from £46.0m to £51.9m (13%).

 

Taxation

 

The effective tax rate for the first half of 2022 was 19% (2021: 19%). The rate in the current year is consistent with the statutory UK rate of 19%. The tax rate in future years will increase as a result of the UK tax rate increasing to 25% and the higher rates in the main European countries that we operate.

 

Net cash and cash flows

 

The Group has net cash of £72.6m. The gross cash balance at the end of the period was £75.6m and the Group had borrowings of £3.0m which are held by trading subsidiaries outside of the UK and pre-date their acquisition by Gamma.

 

In addition, we estimate that we will have to pay an additional £10.0m in the future in relation to acquisitions made (this is a mix of contingent consideration and the exercise of options over shares not yet acquired); these payments will be between 2022 and 2024. We do not class contingent consideration as debt for the purposes of quoting a net cash figure.

 

Cash conversion from trading during the year increased from previous years. The ratio of Adjusted EBITDA to cash generated from operations was 95% (2021: 94%).

 

Items which are not directly related to trading were:

·      Capital spend (including intangible assets) was £7.8m (H1 2021: £6.1m). The increase was driven by capitalised development costs, as the Group continues to invest in its product set, but in part offset by lower tangible asset purchases and software licence purchases.

·      £1.6m was paid in contingent consideration relating to Mission Labs. In H1 2021 £6.5m was paid in deferred consideration and option exercises of which £1.5m was for Exactive and £5.0m was for Gamma Holding GmbH (formerly HFO Holding AG).

·      There were no acquisitions in H1 2022 (2021: £40.8m - Mission Labs).

·      £0.3m was received from the issue of shares (2021: £4.6m). The high prior year number was as a result of reinvestment in Gamma by former shareholders of Missions Labs (£2.8m) and Gamma Holding GmbH (£0.7m) as well as part payment of deferred consideration for Exactive in shares (£0.3m). The other shares issues relate to exercise of options held by employees.

·      £8.5m was paid as dividends (2021: £7.5m).

 

 

Adjusted EPS (FD) and Statutory EPS (FD)

 

Adjusted EPS (FD) increased from 30.6p to 35.6p (16%). Adjusted EPS is EPS as adjusted for exceptional items (if any, there are none in the current and prior period) and other items as defined in note 2 and a reconciliation to the statutory measure is shown in the table above.

 

EPS (FD) grew from 27.0p to 31.9p (18%). The growth is higher than the adjusted metric because, in the current period, the amortisation relating to business combinations has grown at a slower rate.

 

Going Concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position, are consistent with those set out in the Annual Report for the year ended 31 December 2021. In assessing going concern management and the Board has considered:

·      The principal risks faced by the Group are set out in note 1 to the interim financial statements

and are consistent with those found in the Annual Report for the year ended 31 December 2021.

·      The macroeconomic environment.

·      The financial position of the Group including budgets and financial plans.

·      The strong cash position - at 30 June 2022 the Group had cash and cash equivalents of £75.6m. Net cash (being cash and cash equivalents less borrowings) was £72.6m. All borrowings were acquired with acquisitions made in previous years.

·      Future cashflows including committed M&A cash outflows, liquidity and borrowings.

·      Sensitivity analysis, which has shown that Adjusted EBITDA would need to be nil for the Group to need additional borrowing (assuming no mitigating actions had been taken). Possible mitigating actions would include a review of capital expenditure, variable and semi-fixed overheads. We consider this to be highly unlikely.

 

The Directors are satisfied that the Group has adequate financial resources to continue in operational existence for the foreseeable future, a period of at least twelve months from the date of this report. Accordingly, the going concern basis of accounting continues to be used in the preparation of the condensed consolidated financial statements.

 

Dividends

 

The Board has declared an interim dividend of 5.0p (2021: 4.4p). This is an increase of 14% and is in line with our progressive dividend policy. The interim dividend is payable on Thursday 20 October 2022 to shareholders on the register as at Friday 23 September 2022.

 

Bill Castell
Chief Financial Officer

 

 

MANAGEMENT STATEMENT

 

This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

 

The IMR contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

 

·      the condensed set of interim financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

·      the Interim Management Report includes a fair review of the information required by DTR 4.27R (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

·      the Interim Management Report includes a fair review of the information required by DTR 4.28R (disclosure of related party transactions and changes therein).

 

 

 

 

By the order of the board

5 September 2022

 

 

 

INDEPENDENT REVIEW REPORT TO GAMMA COMMUNICATIONS PLC

 

 

Conclusion

 

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 2022 which comprises the condensed consolidated statement of profit or loss, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of cash flows, the condensed consolidated statement of changes in equity and related notes 1 to 11.

 

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 2022 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the AIM Rules of the London Stock Exchange.

 

 

Basis for Conclusion 

 

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".

 

 

Conclusion Relating to Going Concern

 

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

 

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

 

Responsibilities of the directors

 

The directors are responsible for preparing the half-yearly financial report in accordance with the AIM rules of the London Stock Exchange.

 

In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's Responsibilities for the review of the financial information

 

In reviewing the half-yearly financial report, we are responsible for expressing to the group a conclusion on the condensed set of financial statement in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of our report

 

This report is made solely to the company in accordance with ISRE (UK) 2410. 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.

 

 

 

Deloitte LLP

Statutory Auditor

Reading, United Kingdom

5 September 2022

Condensed consolidated statement of profit or loss

For the six months ended 30 June 2022

 

 

 

 

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2022