PMR.L Regulatory News (PMR)

19 Aug 2005 07:00

Panmure Gordon & Co. plc19 August 2005 PANMURE GORDON & CO. PLC ("PANMURE GORDON" OR THE "GROUP") Interim Results for the Six Months ended 30 June 2005 Panmure Gordon & Co. plc today announces interim results for the six monthsended 30 June 2005. During this period Durlacher Corporation Plc ("Durlacher")acquired Panmure Gordon & Co. and subsequently changed its name to PanmureGordon & Co. plc ("Panmure Gordon"). The acquisition was completed on 26 April2005 and these results therefore include the results of Durlacher for the periodof 1 January 2005 to 26 April 2005 and for the combined business for the period 27 April 2005 to 30 June 2005. Operational Highlights • Acquisition of Panmure Gordon & Co. transforming the business through the creation of a leading UK corporate and institutional stockbroker. • Successful combination of the businesses driving the underlying cost base down to that targeted for the end of the year. • Business fully integrated and acting as a single firm under the Panmure Gordon name. Business Highlights • Business is now balanced between institutional equities and corporate finance. • Continuing to invest in high quality staff. • Corporate client list continuing to grow. Currently act for some 105 companies and investment trusts. • Registered market maker in 490 stocks and providing liquidity in a further 430 stocks. • Writing research on more than 560 companies and investment trusts. • Voted the most improved small and mid cap broker in the Extel 2005 Survey. • Participated in raising more than £340m on behalf of corporate clients since the combination of the business. As most of these transactions completed after the end of June the majority of the corporate finance fees relating to these fundraisings will not be recognised until the second half of the year. Financial Highlights • Revenue of £7.6m (6 months to 30 June 2004: £4.4m) of which more than £5m realised in the two month period from 26 April 2005, the date of the combination of the business. June showed strong growth over May. • Small underlying operating profit (pre FRS 20 option charges) for first six months. Combined business generated encouraging underlying profits in the two months post completion. These profits were offset by the losses incurred by Durlacher in the prior four months. • Second half of the year started strongly with encouraging corporate pipeline and the institutional equities business making good progress. The financial performance reflects only two months of the combined business andfour months of Durlacher for the period before the acquisition. All of the costsof combining the businesses have been taken in the first half numbers. The numbers are complicated by the adoption of the provisions of FRS 20 which isexplained more fully in the Chief Executive's Review. This is a notional chargeand has no impact on reserves and represents no cash transfer or valuediminution. Because the numbers presented only cover two months of the combined business,include all the expenses of combining the business and the FRS 20 chargereferred to above, the financial result presented is not indicative of theunderlying performance which should be expected from the combined business goingforward. For further information, please contact Timothy Linacre, Chief ExecutivePanmure Gordon & Co. plc 0207 614 8300 Charlotte Kirkham/Chris HamiltonBell Pottinger Corporate & Financial 0207 861 3232 CHAIRMAN'S STATEMENT This is the first set of results announced since the reverse by Panmure Gordoninto Durlacher Corporation and reflects only two months of the combination ofthese businesses, the period of their integration and the costs associatedtherewith. I would like to thank all those involved in this speedy and efficientintegration, which has produced a reduced cost base, with minimal businessinterruption, which is the basis for our sustainable profitability. Panmure Gordon is a UK securities business balanced between secondary research,sales and trading, where we operate across the market capitalisation range andcorporate issuance where we specialise more in small and mid cap business.Whilst this balance gives us a robust basic business it is, of course,influenced by the general health of the UK stock market. We view the economicbackground as broadly benign, aided by the recent easing of monetary policy, andbelieve that UK equity market valuations are not expensive. We therefore see thegeneral conditions for the Institutional and Corporate business remainingfavourable. We are also seeing good secular trends for both sides of our business. Followinga period of substantial investment in high quality research, sales and tradingpersonnel, our institutional business is seeing higher client recognition andimproving business flows; we were pleased to be awarded the most improved Smalland Mid cap broker in the 2005 Extel Survey. Our corporate business hasparticipated in more than £340m of fundraisings since the businesses werecombined and our corporate pipeline is strong and growing. We now act for 105companies and expect that number to increase in the second half. Richard WyattChairman18 August 2005 CHIEF EXECUTIVE'S REVIEW FINANCIAL RESULTS AND OPERATIONAL REVIEW Introduction During the period under review Durlacher Corporation acquired Panmure Gordon &Co and subsequently changed its name to Panmure Gordon & Co. plc. Theacquisition was completed on 26 April 2005 and these results therefore includethe results of Durlacher for the period of 1 January 2005 to 26 April 2005 andfor the combined business for the period 27 April 2005 to 30 June 2005. The Group is now positioned as a corporate and institutional stockbroker,focused very clearly on the UK market. We are fortunate in having excellentclients, and have won several new clients since the combination of thebusinesses. We are also fortunate in having a very strong team of employeeswhich has been strengthened significantly in recent months. The businesses were integrated quickly and with limited business interruption.While, inevitably, both companies found it difficult to win new corporatefinance mandates prior to the completion of the transaction, the combined firmhas been very successful in winning new business since completion. Revenue Revenue of £7.6m was earned in the period of which more than £5m was earnedsince 27 April 2005, with June showing very strong growth over May. The secondhalf of the year has also started strongly. Costs and business integration Following the swift integration of the businesses on 26 April 2005, theadministrative expenses for the business, on a monthly basis, are now at thelevel originally targeted to be achieved before the end of 2005, being not morethan £21m per annum before bonuses and exceptional items. Despite the need toreduce the combined headcount by some 20% to eliminate duplication and to createan efficient business, there was very little business disruption. We intend to keep a firm control on costs and to build a business that cansurvive in difficult markets and prosper in better markets. The combined business is now located in what were Durlacher's offices (where theinstitutional equities business and meeting rooms are based) and in aneighbouring property (where corporate finance is located). The lease on theproperty at Chiswell Street has been sub-let. Appropriate Compliance procedures and quality controls were implementedimmediately on completion of the transaction. Corporate Finance In the period from 27 April 2005 to 30 June 2005 Panmure Gordon led five IPOs,was involved in three secondary fundraisings and undertook a number of othercorporate deals on behalf of clients. In total, the amount of money raised onbehalf of corporate clients in the period since 27 April 2005 to the date ofthis Statement, in transactions in which Panmure Gordon was involved, exceeded£340m. As most of these transactions completed after the end of June themajority of the corporate finance fees relating to these fundraisings will notbe recognised until the second half of the year. The corporate client list currently stands at 105 companies and investmenttrusts. This has shown growth despite losing some clients, primarily as a resultof resigning from a number of brokerships or retained clients where the economicrelationship was unfavourable. We expect to see continued change, and somegrowth, in the client list over the second half of the year. Institutional Equities and Research Panmure Gordon now writes research on more than 240 companies and 320 investmenttrusts and is a registered market maker in 490 stocks and provides liquidity ina further 430 UK stocks. Our trading philosophy is one of client facilitationrather than proprietary trading. In the Extel survey published in June 2005 Panmure Gordon was voted the mostimproved broker in the mid and small cap market. While this is due to a numberof factors the principal one is the quality of our research. We have seen asignificant increase in the number of institutional clients we deal with. International Reach Panmure Gordon is a corporate and institutional broker focused on the UK market.However, increasingly the companies that want to list in London, and theinstitutions that want to invest in London, are international. We havepositioned the business to address these clients. We have members of theinstitutional equities team who service the needs of European and other overseasinstitutions. We led the first ever listing of a New Zealand company on AIM aswell as completing a listing for an Israeli company. We also announced in July a co-operation agreement with a New York based firm C.E. Unterberg, Towbin, which we believe will be a major enhancement to ourbusiness giving us increased exposure to US institutions and corporates. Shareholders Approximately one third of the equity of the company is held by an ESOP onbehalf of the employees of the company, one third by an affiliate of Lazard (theprevious owner of Panmure Gordon) and one-third by external shareholders. YourBoard believes that the alignment of interest between employees and shareholdersthat this arrangement provides has been a major reason behind the performance ofthe business since the combination of Durlacher and Panmure Gordon. Therelationship with Lazard continues to be strong, however we have also beensuccessful in re-establishing productive relationships with other independentinvestment banks. FRS 20 After discussion with our auditors, we have adopted in advance the provisions ofFRS 20 (which derive from International Financial Reporting Standards), asregards the expensing of share options. The effect of this is to increase costsby a total of £2.8m in the current period. We have also restated comparatives asset out in note 3. The majority of this charge, £2.4m, which we have treated as exceptional,derives from the options granted to employees on shares issued to the ESOP atthe time of the acquisition. The establishment of the ESOP was an integral partof the transaction as set out in the Circular dated 30 March 2005. In thatCircular the background to the creation of the ESOP was explained; in particularit was explained that in 2004 Lazard reached an understanding with Richard Wyattand myself to create a scheme whereby one half of the equity of Panmure Gordonwould be transferred from Lazard to existing and future employees. The establishment of the ESOP and the issuance of 18.5m shares to it reflectsthis understanding. It is important, therefore, to recognise that although wehave taken a notional charge of £2.4m under FRS 20 (other than in respect ofemployers national insurance which would only be payable if the Group achievedequivalent tax saving), no cash transfer or value diminution arises for past,existing or future public shareholders as a result. Shareholders should also be aware that the notional charge has no impact on netassets, since the charge in the profit and loss account is balanced by apositive movement on reserves. We have also taken a charge of £370,000 which we have shown on the face of theprofit and loss account which derives from the current period charge under FRS20 for options granted in prior periods under the Durlacher option scheme. Based on the assumptions made, we expect to take an additional charge under FRS20 in the second half of 2005 of £7.1m. The adoption of FRS 20 will impact onthe next three years reporting as more fully explained in note 3. Outlook We are grateful to everyone at Panmure Gordon for their efforts during a periodof such change. The business is now well balanced between institutional equitiesand corporate finance. We entered the second half of the year with a number of transactions launchedbut not invoiced and with a significant pipeline which continues to strengthen.The institutional equities business has also continued to make progress. Our market remains very competitive and we are dependent on the general healthof the UK stock market, however the period since the completion of theacquisition has been one of increasing momentum across the business and webelieve that market conditions are currently favourable for both our Corporateand Institutional Equities activities. The principal challenges we face in thesecond half of the year are to execute the corporate finance pipeline and tocontinue the momentum in institutional equities. We view the second half of theyear with confidence. Timothy LinacreChief Executive18 August 2005 CONSOLIDATED PROFIT & LOSS ACCOUNTfor the six months ended 30 June 2005 Notes Restated Restated 6 months 6 months 18 months 30 30 31 June June December 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover 2 7,606 4,403 15,574 Costs of sales (496) (541) (2,037) --------- --------- ---------Gross profit 7,110 3,862 13,537 Administrative expenses (6,953) (4,617) (17,529) --------- --------- ---------Operating profit/(loss) before FRS 20option charges and exceptional items 157 (755) (3,992) FRS 20 option charges deemed notexceptional 3 (370) (226) (713) --------- --------- ---------Operating loss before exceptionalitems (213) (981) (4,705) Exceptional costs 4 (5,144) (1,516) (2,704) --------- --------- --------- Total administrative expenses (12,467) (6,359) (20,946) --------- --------- --------- Operating loss after exceptionalitems (5,357) (2,497) (7,409) Profit on disposal of fixed assetinvestments - 17 111Net (costs)/income on termination ofdiscontinued activities (162) 383 726Net interest receivable and similaritems 194 176 442 --------- --------- ---------Loss on ordinary activities beforetaxation (5,325) (1,921) (6,130) Taxation on profit/loss on ordinaryactivities - - (77) --------- --------- ---------Loss on ordinary activities aftertaxation (5,325) (1,921) (6,207) --------- --------- --------- Basic loss per ordinary share 5 (16.39)p (11.41)p (39.70)p Profit per ordinary share oncontinuing activities beforeexceptional items and FRS 20 optioncharges (see note 5) The Group has no recognised gains or losses other than the results for theperiod. CONSOLIDATED BALANCE SHEETAs at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 Notes Unaudited Unaudited Audited £'000 £'000 £'000Fixed assetsIntangible assets 13,201 - -Tangible assets 1,958 1,333 1,423 -------- --------- ---------Total fixed assets 15,159 1,333 1,423 -------- --------- --------- Current assetsInvestments 7,190 3,522 2,712Debtors 130,290 6,185 8,055Cash at bank and in hand 5,531 8,305 8,557 -------- --------- --------- 143,011 18,012 19,324 Creditors - amounts falling duewithin one year (124,955) (7,167) (8,674) -------- --------- ---------Net current assets 18,056 10,845 10,650 -------- --------- --------- Total assets less currentliabilities 33,215 12,178 12,073 Creditors - amounts falling dueafter one year - - (69)Subordinated loan (3,000) - -Provision for liabilities andcharges (1,446) (1,960) (1,544) -------- --------- ---------Net assets 28,769 10,218 10,460 -------- --------- --------- Share capital & reservesOrdinary shares 6 2,257 776 776Deferred shares 28,330 28,330 28,330 -------- --------- ---------Called up share capital 30,587 29,106 29,106Share premium account 27,473 27,473 27,473Merger reserve 21,809 1,714 1,715Other reserve (741) - -Profit and loss account (50,359) (48,075) (47,834) -------- --------- ---------Equity Shareholders' funds 7 28,769 10,218 10,460 -------- --------- --------- Approved for and on behalf of the Board on 18 August 2005 by Timothy LinacreChief Executive CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2005 6 months 6 months 18 months 30 30 31 June June Dec 2005 2004 2004 Notes £'000 £'000 £'000 Net cash flow from operating activities 8 (2,029) (2,357) (4,506) Returns on investments and servicing offinance 9 198 198 477 Capital expenditure and financialinvestment 9 (751) (1,136) (1,329) Acquisitions and disposals 9 (444) (769) 58 -------- -------- --------Cash outflow before financing (3,026) (4,064) (5,300) FinancingProceeds from issue of ordinary sharecapital 9 - 9,751 11,566Decrease in short term loans - (375) (750) -------- -------- --------Net cash inflow from financing activities - 9,376 10,816 -------- -------- --------(Decrease)/increase in cash in the period (3,026) 5,312 5,516 -------- -------- -------- Reconciliation of cash outflow to movementin net debt(Decrease)/increase in cash for theperiod (3,026) 5,312 5,516Subordinated debt acquired withsubsidiary (3,000) - -Decrease in short term loans - 375 750 -------- -------- --------Change in net debt resulting from cashflows (6,026) 5,687 6,266 Net funds brought forward 8,557 2,618 2,291 -------- -------- --------Net funds 10 2,531 8,305 8,557 -------- -------- -------- NOTES TO THE INTERIM REPORT 1. Basis of preparation Turnover represents the amount invoiced, excluding value added tax, in respectof brokerage commissions, fees and charges and corporate finance fees, togetherwith profits and losses on market making and dealing. The interim results have been prepared on a basis consistent with the accountingpolicies set out on pages 23 to 25 of the Annual Report for the 18 months ended31 December 2004, other than in respect of the adoption of FRS 20. 2. Segmental and analysis The Directors consider that the Group operates in one segment, being stockbroking. The following provides an analysis of turnover by major activity: 6 months 6 months 18 months 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Institutional Equities and other commission 3,115 179 4,408Corporate Finance and other fees 4,491 4,224 11,166 --------- -------- --------- Total 7,606 4,403 15,574 --------- -------- --------- All activities are performed in the UK. The 18 months period ended 31 December2004 includes commissions of £1,422,000 in respect of discontinued activities. Prior period continuing and discontinued analysis: Restated 18 months to 31 December 2004 Continuing Discontinued Total £'000 £'000 £'000Turnover 14,152 1,422 15,574Cost of sales (782) (1,255) (2,037) ---------- --------- --------Gross Profit 13,370 167 13,537Administrative expenses (19,003) (1,943) (20,946) ---------- --------- --------Operating loss (5,633) (1,776) (7,409) ---------- --------- -------- Prior periods discontinued operations include the results of the private clientbusiness and nothingventured.com. All exceptional expenses are for restructuring, redundancy and reorganisation. 3. FRS 20 The provisions of FRS 20 have been applied to share options granted to membersof the Board and to staff in this and prior periods. The Circular toshareholders dated 30 March 2005 contained details of options granted up to thattime. Since then further options have been granted to staff over shares issuedto the ESOP. The charges taken to the profit and loss account represent a notional charge,being the estimated value of the options on their date of grant written off overthe expected vesting periods of those options. The charge for those optionswhich were granted in association with the acquisition of Panmure Gordon(including all options over shares issued to the ESOP) has been treated asexceptional; the balance of the charge has been shown as a separate line in theprofit and loss account. Management have used a Black Scholes model to estimate the value of optionsgranted in the current and prior periods. The key input to the model was theassumed share price volatility which management estimated to be in the range 34%to 49%, based on a basket of comparable companies. The expected vesting period of the options varies between two months and threeyears from the date of grant. Based on the assumptions made there will be further charges in respect of FRS 20of approximately £8m, £3.2m and £700,000 in 2006, 2007 and 2008 respectively.These FRS 20 charges are management's best estimate using the Black Scholesmodel, but a formal assessment will be made by a competent qualified externalvaluer in conjunction with the 2005 year end audit. Comparative figures for the six months ended 30 June 2004 and the 18 monthsended 31 December 2004 have been restated to apply the provisions of FRS 20,increasing expenses and, consequently, the loss for the period by £226,000 and£713,000 respectively. 4. Exceptionals Restated Restated 6 months 6 months 18 months 30 June 30 June 31 Dec 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Redundancy and reorganisation 2,714 274 1,362Compensation costs in lieu of commission onshare issue - 392 392Property costs - 850 950Expensing of share options under FRS 20 2,430 - - --------- --------- --------Total 5,144 1,516 2,704 --------- --------- -------- 5. Earnings per share Earnings per share (EPS) are calculated on a net basis using the profit onordinary activities after taxation divided by the weighted average number ofshares detailed below. FRS 22 requires presentation of diluted EPS when a company would be called uponto issue shares that would decrease net profit or increase net loss per share.For a loss-making company with outstanding options, net loss per share wouldonly be decreased by the exercise of these share options therefore no adjustmenthas been made to the weighted average number of shares in issue. Restated Restated 6 months 6 months 18 months 30 June 30 June 31 Dec 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Loss on ordinary activities aftertaxation (5,325) (1,921) (6,207)Add back exceptional items oncontinuing activities 5,144 1,516 2,704Other FRS 20 charges 370 226 713Add back loss on discontinuedactivities - 477 1,776Add/less costs/(income) on terminationof discontinued activities 162 (383) (726)Profit/(Loss) on continuing activitiesbefore exceptional items and FRS 20charges 351 (85) (1,740) --------- --------- -------- Weighted average number of shares inissue 32,491,958 16,830,373 15,636,079Adjusted weighted average number ofshares in issue 36,687,741 n/a n/a Earnings/(loss) per share on continuingactivities before exceptional items andFRS 20 charges 1.08p (0.51)p (11.13)p Diluted Earnings per share oncontinuing activities beforeexceptional items and FRS 20 charges 0.96p n/a n/a 6. Share capital On 26 April 2005, Durlacher Corporation Plc issued shares to acquire the entireshare capital of Panmure Gordon (UK) Limited, previously Panmure Gordon & Co.Limited. The number of shares issued to the Lazard Group in respect of thisacquisition was 18,521,295. The market price of the shares on the day ofcompletion was £1.125 and, therefore, the transaction has resulted in anincrease in the Merger Reserve of approximately £20.1m, being the market valueof the shares issued, less their nominal value (see note 11). At the same timethe Company issued a further 18,521,295 shares to the Panmure Gordon & Co. plcNo.2 Employee Benefit Trust at the par value of 4p. Further details of thesetransactions are set out in the Circular dated 30 March 2005. 7. Reconciliation of movements in equity shareholders' funds Restated estated As at As at At at 30 June 30 June 31 Dec 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Loss for the period after taxation (5,325) (1,921) (6,207)Shares issued re Web-Angel PLC - - 1,715Shares issued in share placing - 9,851 9,851Shares issued re Panmure Gordon (UK) Limited 20,834 - -FRS 20 Share Option Charges 2,800 226 713Opening shareholders' funds 10,460 2,062 4,388 --------- --------- --------Closing shareholders' funds 28,769 10,218 10,460 --------- --------- -------- 8. Reconciliation of operating loss to net cash outflow from operating activities Restated Restated 6 Months 6 Months 18 months 30 June 30 June 31 Dec 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Operating loss (5,357) (2,497) (7,409)Depreciation and amortisation 215 207 687Movement in current asset investments 1,961 (1,510) 471Increase in debtors (12,319) (1,830) (4,325)Increase in creditors and provisions 10,671 3,047 5,357FRS 20 share option charge 2,800 226 713 --------- -------- --------Net cash outflow from operating activities (2,029) (2,357) (4,506) --------- -------- -------- 9. Analysis of cash flow for headings netted in the cash flow statement 6 Months 6 Months 18 months 30 June 30 June 31 Dec 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Returns on investment and servicing offinanceInterest received 246 198 525Interest paid (48) - (48) --------- --------- --------Net cash inflow for returns on investment and servicing of finance 198 198 477 --------- --------- --------Capital expenditure and financialinvestmentPurchase of tangible fixed assets (751) (1,147) (1,446)Proceeds from sale of investments - 11 117 --------- --------- --------Net cash outflow from capital expenditure and financial investment (751) (1,136) (1,329) --------- --------- --------Acquisitions and disposal(Costs)/proceeds in respect of terminationof discontinued activities (393) (769) 58Acquisition costs (1,569) - -Cash acquired 1,518 - - --------- --------- --------Net cash (outflow)/inflow from acquisitions (444) (769) 58 --------- --------- --------Proceeds from the issue of ordinary sharecapitalProceeds from share issue - 10,031 12,053Acquisition and share issue costs - (280) (487) --------- --------- --------Net cash inflow from the issue of ordinaryshare capital - 9,751 11,566 --------- --------- -------- 10. Analysis of changes in net funds At 31 At 30 Dec Acquisition of June 2004 Cash flow Subsidiary 2005 £'000 £'000 £'000 £'000Cash in hand and at bank 8,557 (3,026) - 5,531Subordinated loans - - (3,000) (3,000) ------- -------- --------- ------Net funds 8,557 (3,026) (3,000) 2,531 ------- -------- --------- ------ 11. Purchase of Subsidiary Undertakings On 26 April 2005 the Group completed the acquisition of Panmure Gordon (UK)Limited (previously Panmure Gordon & Co. Limited). The net assets acquired wereas follows: £'000Net Long Positions 1,125Debtors 109,842Cash 1,518Creditors (100,281)Subordinated loan (3,000) --------Net assets 9,204 -------- Direct costs of acquisition (1,569) Add goodwill on consolidation 13,201 -------- 20,836 --------Satisfied by --------Issue of 18,521,294 shares (market price of £1.125) 20,836 -------- This acquisition, which has been accounted for under acquisition accounting, hasresulted in an increase in the merger reserve created on consolidation of£20,095,000 being the difference between the market value of the shares issuedand their nominal value of £741,000 (4p per share). 12. General The interim report was approved by the Board of Directors on 18 August 2005. This report has been sent to shareholders and will be made available to thepublic, upon request, at the registered office of Panmure Gordon & Co. plc,Moorgate Hall, 155 Moorgate, London EC2M 6XB or from the company's websitewww.panmure.com. INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO PANMURE GORDON & CO. PLC Introduction We have been engaged by the company to review the financial information set outon pages 7 to 14 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state in this report and for no other purpose.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. Review work performed We conducted our review having regard to guidance contained in Bulletin 1999/4:Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. KPMG Audit PlcChartered AccountantsLondon18 August 2005 This information is provided by RNS The company news service from the London Stock Exchange