Phoenix Spree D Regulatory News (PSDL)

Phoenix Spree Deutschland Limited(the "Company" or "PSD")

Interim Results for the half-year to 30 June 2022

Phoenix Spree Deutschland (LSE: PSDL.LN), the specialist investor in Berlin residential real estate, announces its Interim Results for the six months ended 30 June 2022.

Financial Summary

1-GBP:EUR FX rate locked in at 1:1.124 as at 28 September 2022.

2 -Portfolio valuation includes investment properties under construction.

3-GBP:EUR FX rate 1:1.162 as at 30 June 2022.

4- Net LTV uses nominal loan balances as per note 17 rather than the loan balance on the Consolidated Statement of Financial Position which consider Capitalised Finance Arrangement Fees in the balance.

Further increase in rental and portfolio values during H1 2022

· EPRA NTA per share up 1.2 per cent in H1 2022 to €5.72; EPRA NTA per share total return of 2.2 per cent.

· Including investment properties under construction worth €7.7m, the Portfolio was valued at €820.1 million, a 2.3 per cent increase versus 31 December 2021.

· Like-for-like Portfolio value, adjusted for acquisitions and disposals, increased by 2.2 per cent in H1 2022.

· Like-for-like rental income per sqm increased by 3.7 per cent versus prior year, down from 4.6 per cent in H1 2021, mainly reflecting re-letting mix effects, which have subsequently normalised.

Strong Balance Sheet, completion of new loan facility and refinancing

· Net LTV remains conservative at 36.0 per cent (31 December 2021: 34.7 per cent).

· New €60 million loan facility agreed with Natixis and announced on 25 January 2022.

· Successful refinancing of €49.7 million of Berliner Sparkasse debt, with €13.7 million of cash released at 28 September 2022.

· Company's interest rate hedging policy has seen cash borrowing costs decline, despite rising long term rates.

· Company's first loan maturity is not due until September 2026.

Continued strong demand for Berlin residential rental property

· 148 new leases in Berlin signed during H1 2022 at an average rent of €13.2 per sqm and 33.7 per cent premium to passing rents.

· €6.2 million invested across the Portfolio (30 June 2021: €2.7million), continuing to improve the quality of accommodation for tenants and supporting reversionary rental strategy.

· EPRA vacancy of 2.5 per cent remains at historically low level, reflecting ongoing structural undersupply of available rental property.

· All furnished apartments made available for refugees impacted by the Ukraine crisis for a rent-free period have now been fully let.

Actively managing the Portfolio

· Forward purchase in H1 of 17 new-build, semi-detached, residential properties (34 houses) for a total agreed purchase price of €18.5 million, four multi-family houses consisting of 24 residential units for a purchase price of €6.3million.

· Post-period end, acquisition of 25 residential units for a purchase price of €4.9million.

· All acquisitions fully financed using Natixis acquisition facility.

· Since period-end, contracts notarised to sell two non-core properties for an aggregate consideration of €8.6 million.

Condominium sales at a premium to book value

· Condominium sales notarised during H1 2022 of €3.0 million, (H1 2021 €4.3million).

· Average achieved value per sqm of €5,257 for residential units, a gross premium of 19.2 per cent to the 31 December 2021 book value of each property.

· 75.8 per cent of Portfolio assets legally split into condominiums as at 30 June 2022.

· Sales slowdown reflects increases in the cost of living, higher borrowing costs and economic uncertainty.

Further value delivered through share buy-backs and dividend

· Unchanged interim dividend of €2.35 cents per share.

· During the half year ended 30 June 2022, the Company bought back a further 930,509 ordinary shares, representing 0.9 per cent of the ordinary shares in issue, for a total consideration of £3.3 million.

· Since share buybacks commenced in 2019, including the interim dividend for 2022 and bought-back shares held in treasury, €63.4 million has been returned to shareholders.

Outlook

· Supply-demand imbalances within the Berlin PRS provide support to rental values:

o  Rising cost of home ownership forcing potential buyers to remain within the rental system for longer.

o  Urban housing shortage further exacerbated by anticipated net inward migration of almost one million from Ukraine to Germany.

o  Rising cost of construction further limiting new-build completions.

· Reversionary potential within Portfolio underpins future rental growth:

o  New letting rental values expected to remain at a significant premium to average in-place rents across the Portfolio.

· Disposals and balance sheet

o  The Company will continue to review its portfolio of assets to ascertain the potential for disposals of condominiums and other buildings that are deemed to be non-core.

o  The Board considers the current level of gearing and cash balances to be appropriate at this stage in the real estate cycle and does not intend to materially increase debt levels until such time as the market outlook becomes more stable.

o  The Company will continue to keep its cash commitments under close review, and will prioritise continued investment in the existing Portfolio, where appropriate, and dividend payments to shareholders.

o  To the extent that the Board considers it prudent to do so, any excess proceeds from disposals will be made available for share buybacks. 

Robert Hingley, Chairman of Phoenix Spree Deutschland commented:

"The first six months of the financial year were characterised by significant market disruption caused by the combined effects of global inflationary pressures, rising interest rates and the ongoing conflict in Ukraine. Against this backdrop, it is pleasing that the Portfolio was able to deliver further valuation gains during the first half of the financial year.

Although financial market conditions have become significantly more challenging, demographic trends within the Berlin market remain positive, with a significant undersupply of private rental property. Affordability comparisons with other German cities remain favourable and the reversionary potential that exists within the Portfolio should continue to support rental values."

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CHAIRMAN'S STATEMENT

I am pleased to report that, during the first half of the financial year, PSD has delivered further increases in property and rental values. As at 30 June 2022, the Portfolio, excluding investment property under construction, was valued at €812.4 million by Jones Lang LaSalle GmbH, a like-for-like increase of 2.2 per cent since 31 December 2021. The Euro EPRA NTA total return per share stood at 2.2 per cent with the sterling return at 4.8 per cent.

The Board is pleased to declare an unchanged interim dividend of 2.35 cents per share (2.09 pence per share) for the first half of the year (six months to 30 June 2021: 2.35 cents, 2.02 pence). The dividend is expected to be paid on or around 28 October 2022 to shareholders on the register at the close of business on 7 October 2022, with an ex-dividend date of 6 October 2022.

Working with our tenants

At times of economic stress, it is even more important that we work closely with our tenants, just as we did during the dual challenges presented by the COVID-19 pandemic and the Mietendeckel. Now, with inflationary pressures and a rising cost of living impacting most European economies, the health and wellbeing of our tenants remains foremost in our minds.

Our thoughts remain with those impacted by war in Ukraine. In response to the humanitarian crisis the war has caused, PSD has made available a number of furnished apartments on a rent-free basis for refugees and I am pleased to report that these have now been fully let. We will continue to work constructively with those in greatest need wherever we can.

Investing in our tenanted accommodation

Following the removal of the Mietendeckel, which specified rent levels well below free market levels, the Company resumed its programme of investment to improve the overall standard of our tenanted accommodation. During the first half of the financial year 48.1 per cent of the Company's gross revenues were reinvested into the Portfolio and it is anticipated that this high level of investment will continue.

Protecting our environment

The Board recognises that the nature of our business has environmental and social impacts and that we have a responsibility to consider and minimise these impacts, where possible. As a member of EPRA, we want to contribute to greater transparency in reporting. To this end, we have strengthened our commitment to delivering against our environmental and social impacts by introducing EPRA's Sustainability Best Practices Recommendations and capturing our ESG measurements within their framework.

I am therefore delighted to report that this commitment has been recognised in the EPRA Sustainability Awards 2022, with PSD receiving a Gold award in recognition of the Company's commitment to best practice in its reporting. This recognition further encourages us to continue to approach the future in a consistent, ethical, safe and environmentally friendly way.

Our charitable initiatives

The Company has continued with its programme of financial support to two Berlin focussed charities, The Intercultural Initiative and Laughing Hearts. The Intercultural Initiative is a Berlin refuge that helps women and children affected by domestic violence. Laughing Hearts supports children living in children's homes and social care.

QSix, our Property Advisor, has also continued to support two charities in London, SPEAR and SHP, both working with homeless people. Funding is given to SPEAR to run an outreach service, providing accommodation to rough sleepers and helping with their health and wider social care problems. SHP supports an employability programme that assists homeless people or those at high risk of becoming homeless with finding a job and securing a sustainable income.

Our Board

We are all deeply saddened by the recent death of Greg Branch, and I would like to reiterate our sincere thanks for his exemplary service during his time in office. Greg had served on the Company Board since 2020, bringing a wealth of experience from a distinguished career spanning over 30 years in the financial services and real estate sectors. He will be sorely missed as a colleague and friend to the current and previous Directors of the Company, investment professionals at QSix, and by those in the wider business community who were privileged to work with him.

As previously announced, Isabel Robins joined the Board of PSD as a non-executive Director with effect from 14 March 2022. Mrs Robins has over 23 years' experience of complex offshore real estate structures, encompassing a broad range of property funds, investments, and developments. Her real estate experience and insight will add a valuable perspective to complement and enhance the skill set of the Board. Mrs Robins replaces Monique O'Keefe, who stepped down as a Senior Independent Director to take up a senior executive position at another company.

The Board is in the process of commissioning a search for a new Non-Executive Director.

Disposals and balance sheet

With its strong balance sheet and conservative debt financing, PSD is well positioned to withstand more challenging economic and financial market conditions. Demographic trends within the Berlin market remain positive and will continue to support future rental values. This, combined with a high level of investment into our buildings, underpins the future reversionary potential that exists within the Portfolio.

The Company recognises that PSD's share price remains at a material discount to EPRA NTA and, since the commencement of the Company's share buyback programme in October 2019, 8.9 per cent of ordinary shares in issue have been repurchased. The Board considers the current level of gearing and cash balances to be appropriate at this stage in the real estate cycle and will not look to increase debt levels until such time as the market outlook becomes more stable. The Company will continue to keep its cash commitments under close review, and will prioritise continued investment in the existing Portfolio, where appropriate, and dividend payments to shareholders. To the extent that the Board considers it prudent to do so, any excess proceeds from disposals will be made available for share buybacks. 

REPORT OF THE PROPERTY ADVISOR

Financial results

Table: Financial highlights for the six-month period to 30 June 2022

1 - Net LTV and net debt uses nominal loan balances as per note 17 rather than the loan balances on the Consolidated Statement of Financial Position which consider Capitalised Finance Arrangement Fees in the balance as per IAS 23.

2 - GBP:EUR FX rate 1:1.162 as at 30 June 2022

3 - GBP:EUR FX rate locked in at 1:1.124 as at 28 September 2022.

Revenue for the six-month period was €13.0 million (six months to 30 June 2021: €12.9 million). Profit before taxation was €17.0 million (six months to 30 June 2021: €20.4 million), the principal component of which was a revaluation gain of €11.4 million (30 June 2021: €16.0 million).

Reported earnings per share for the period were 15 cents (six months to 30 June 2021: 17 cents).

Reported EPRA NTA per share rose by 1.2 per cent in the first half of 2022 to €5.72 (£4.92) (31 December 2021: €5.65 (£4.74)). After taking into account the 2021 final dividend of 5.15 cents (4.36 pence), which was paid in June 2022, the € EPRA NTA total return in the first half of 2022 was 2.2 per cent (H1 2021: 3.6 per cent). The £ EPRA NTA total return for the same period was 4.8 per cent, reflecting the weakening of the £ against the € in the first six months of the year.

Like-for-like portfolio value increase of 2.2 per cent

Pricing in the Berlin residential property market has remained broadly stable in the first half of the financial year. The second half to date has seen a material deterioration in buyer sentiment and, consequently, transaction volumes. With financial markets experiencing record volatility, the outlook for the German property market in the second half is uncertain.

As at 30 June 2022, the Portfolio, including investment properties under construction, was valued at €820.1 million (31 December 2021: €801.5 million). This represents a 2.3 per cent increase over the six-month period. On a like-for-like basis, excluding the impact of acquisitions and disposals, the Portfolio value increased by 2.2 per cent during the first half of the financial year and 6.0 per cent versus the first half of the prior year. This reflects an increase in rental values, improvements in the micro locations of certain Portfolio assets, investments in the Brandenburg asset and completion of the condominium splitting process in one building.

Table: Portfolio valuation and breakdown

1 - Excludes Investment property under construction.

The valuation represents an average value per square metre of €4,318 (31 December 2021: €4,225), at a gross fully occupied yield of 2.8 per cent (31 December 2021: 2.8 per cent). Included within the Portfolio valuation are six properties valued as condominiums, with an aggregate value of €32.8 million (31 December 2021: eight properties, aggregate value €38.8 million).

Like-for-like rental income per square metre growth of 3.7 per cent

After considering the impact of acquisitions and disposals, like-for-like rental income per square metre grew 3.7 per cent compared with 30 June 2021. Gross in-place rent was €9.8 per sqm as at 30 June 2022, an increase of 3.5 per cent compared with 30 June 2021 and an increase of 1.9 per cent on 31 December 2021.

Table: Rental income and vacancy rate

EPRA vacancy remains at historically low levels

Reported vacancy as at 30 June 2022 was 7.0 per cent (30 June 2021: 7.7 per cent). On an EPRA basis, which adjusts for units undergoing development and made available for sale, the vacancy rate was 2.5 per cent (30 June 2021: 1.3 per cent). The rise in vacancy was due to an increased number of newly modernised apartments being made available for rental following the removal of the Mietendeckel. Notwithstanding this increase, EPRA vacancy remains low from a historical perspective and is likely to remain so given the ongoing supply demand imbalance for rental property in Berlin.

Berlin reversionary re-letting premium of 33.7 per cent

During the six months to 30 June 2022, 174 new leases were signed, representing a letting rate of approximately 7.3 per cent of occupied units. The average rent achieved on all new lettings was €12.7 per sqm, an 8.5 per cent increase on the prior year, and an average premium of 28.4 per cent to passing rents. This compares to a 23.5 per cent premium in the six month period to 30 June 2021.

The reversionary premium is negatively impacted by the inclusion of re-lettings from the acquisition in Brandenburg in 2020, where rents are lower than those achieved in central Berlin. Looking solely at the Berlin portfolio, which represents 90.7 per cent of total residential lettable space, the reversionary premium achieved was 33.7 per cent, down from 35.8 per cent in the prior period.

Limited impact from COVID-19 on rent collection

The prolonged duration of the COVID-19 outbreak and the further restrictions it has caused in early 2022 have had a limited impact on rent collection levels with over 98.4 per cent of rents due collected during the first six months of the financial year.

Where appropriate, PSD continues to support its tenants, both residential and commercial, by agreeing, on a case-by-case basis, the payment of monthly rents or deferring rental payments. In addition, PSD has in place a Vulnerable Tenant Policy which it will continue to monitor and apply to relevant tenants.

Investment in the Portfolio

During the first half of 2022, a total of €6.2 million was invested across the Portfolio (H1 2021: €2.7 million). These items are recorded as capital expenditure in the Financial Statements. A further €0.9 million was spent on maintaining the assets and is expensed through the profit and loss account.

The increase in capital expenditure reflects the ruling against the Mietendeckel as projects which had been postponed or cancelled pending a final ruling on the legality of the Mietendeckel are reinstated.

Table: EPRA Capital Expenditure

All figures in €'000 unless otherwise stated

Acquisitions and disposals

On 21 March 2022, the Company announced that it has exchanged contracts to forward fund 17 new-build, semi-detached, residential properties (34 units) for a total agreed purchase price of €18.5 million, with construction expected to complete in the second half of 2024. The price paid of €4,323 per sqm represents an estimated prospective gross yield of 3.5 per cent and the projected fully occupied rental income generated by the property is €652,670 per annum, equivalent to 3.2 per cent of the Portfolio gross in-place rent as at 31 December 2021.

On 5 May 2022, the Company exchanged contracts to acquire four multi-family houses consisting of 24 residential units for a purchase price of €6.3million. These properties are located in Hoppegarten and Neuenhagen, Berlin. Built in 1995 and 1998, they are in good technical condition and offer significant reversionary potential, having benefited from recent positive demographic changes.

On 22 September 2022, the Company exchanged contracts to acquire a multi-family house with 22 residential units and 3 commercial units for €4.9million. This property is located in Berlin-Neukölln, is well maintained, and offers significant reversionary and attic potential.

All three acquisitions will be fully financed using the new loan facility recently agreed with Natixis, announced in January 2022.

Since the beginning of the financial year, the Company has been actively exploring options for the disposal of buildings deemed to be non-core. Typically, these buildings will have a mature tenant structure with limited scope for further capital expenditure and subsequent reversionary re-letting.

Since the half-year end, the Company has exchanged contracts to sell two non-core properties for an aggregate consideration of €8.6million, a narrow discount to last JLL valuation of €8.8million as at 30 June 2022. These buildings were acquired in 2008 and 2017 respectively, for an aggregate purchase price of €3.9million.

The first of the two properties is an existing Altbau building combined with an ongoing construction project of an additional apartment block located within its footprint. The existing building, which was fully split in the land register, is located in a Milieuschutzgebiet area. The second property is a smaller building, with a significant commercial component and mature residential tenant structure.

Condominium sales at a 19.2 per cent premium to book value

PSD's condominium strategy involves the division and resale of selected properties as single apartments. This is subject to full regulatory approval and involves the legal splitting of the freeholds in properties that have been identified as being suitable for condominium conversion.

During the first half of 2022, nine condominiums units were notarised for sale for an aggregate value of €3.0 million (H1 2021: €4.3 million).

Condominium notarisations during the second quarter of 2022 have been negatively impacted by concerns over increases in the cost of living, higher borrowing costs and uncertainty surrounding the macro-economic environment, including the impact of the crisis in Ukraine. These factors have led to a deterioration in buyer sentiment and reduced investment volumes.

The average achieved notarised value per sqm for the residential units was €5,257, representing a gross premium of 19.2 per cent to book value and 21.8 per cent to PSD's average Berlin residential portfolio value as at 30 June 2022.

Since the half year reporting date, the Company has notarised for sale a further 2 condominium units with total value €1.0 million and at a price per square metre of €6,236. This represents a gross premium of 33.0 per cent to book value and 44.4 per cent to the average residential portfolio value as at 30 June 2022.

As at 28 September 2022, 75.8 per cent of the Portfolio had been registered as condominiums, providing opportunities for the implementation of further sales projects where appropriate. A further 9.5 per cent are in application, over half of which are in the final stages of the process. This provides PSD with additional strategic flexibility to respond to changes in market conditions.

Recent Federal Government legislation has placed significant restrictions on the ability of landlords to split their properties into condominiums in the future. Reflecting this, there can be no guarantee that applications which are currently in process will complete. The legislation is, however, not retrospective and does not impact assets that have already been split into condominiums. Moreover, these measures will inevitably increase the scarcity of condominiums available for sale in the future, further exacerbating the supply-demand imbalance which currently exists.

Condominium construction

After the overturning of the Mietendeckel, a condominium construction project commenced in an existing asset bought in 2007. The project involves building out the attic and renovating existing commercial units to create seven new residential units. Construction on this project started in the second half of 2021, and the first units are projected to be available in the second half of 2022. The total construction budget for this project is €3.8 million.

The Company also has building permits to renovate attics in 19 existing assets to create a further 45 units for sale as condominiums or as rental stock.

Debt and gearing

As at 30 June 2022, PSD had nominal borrowings of €305.1 million (31 December 2021: €288.4 million) and cash balances of €9.6 million (31 December 2021: €10.4 million), resulting in net debt of €295.5 million (31 December 2021: €278.0 million) and a net loan to value on the Portfolio of 36.0 per cent (31 December 2021: 34.7 per cent).

The change in gross debt in the period results from the additional drawdown of debt, including borrowings for further capex on existing and development buildings plus a tranche of the new build acquisition, offset partly by repayments of debt on the sale of condominiums alongside amortisation of debt held with Berliner Sparkasse.

Nearly all PSD's debt effectively has a fixed interest rate through hedging. As at 30 June 2022, the blended interest rate of PSD's loan book was 2.1 per cent (31 December 2021: 2.0 per cent). The average remaining duration of the loan book at 31 December 2021 had decreased to 4.3 years (31 December 2021: 4.9 years). 

Outlook

During recent months there has been a significant change in investor and consumer confidence in reaction to inflationary pressures, consequential interest rate rises, expectations for future global central bank monetary policy and economic growth. This has further been impacted by the ongoing conflict in Ukraine. Although PSD's share price has significantly outperformed its listed German residential peers during the first half of the financial year, these circumstances have created a degree of uncertainty across global equity markets from which PSD has not been immune. 

Whilst rental values should continue to be supported by industry fundamentals, there has been a material deterioration in buyer sentiment since the beginning of the year. For PSD, this has been evident in condominium sales and, to the extent that the key drivers of weaker buyer sentiment (higher mortgage rates, and a higher cost of living) are unlikely to reverse during the second half of the year, it is anticipated that condominium sales for the full year 2022 will be materially lower than 2021.

At the institutional level, investor appetite for real assets has also weakened. A higher cost of funding has seen a reduction in investor demand for larger portfolio transactions, and there is sufficient anecdotal evidence to suggest that pricing has weakened. In parallel with this, a number of larger market participants are now net sellers of assets as they seek to reduce leverage from levels that are currently significantly higher than at PSD.

Against this backdrop, PSD is well positioned to withstand more challenging market conditions. With a net LTV of 36.0 per cent, the Company's balance sheet remains strong, with an average remaining duration of the loan book exceeding four years. None of the Company's debt reaches maturity until September 2026. Moreover, following a transition away from negative rates, the Company's interest rate hedging policy has seen cash borrowing costs decline, despite rising long term rates.

The Company will continue to review the portfolio of assets to ascertain the potential for disposals of buildings that are deemed to be non-core. Two buildings have already been notarised for sale, and further potential non-core disposals are currently under consideration.

Whilst there is now evidence of yields rising in certain segments of the German residential market, supply-demand imbalances within the Berlin PRS market should continue to support rental values. An increase in the cost of home ownership is likely to place further pressure on the significant shortage of housing that already exists in Berlin, as potential buyers remain within the rental system for longer. This shortage has been further exacerbated by the migration of almost one million refugees into Germany from Ukraine.

Additionally, higher funding, labour and construction costs present significant headwinds to large-scale new-build construction, a trend which is likely to further limit the future supply of rental accommodation. Future rent growth should therefore continue to be underpinned, and there remains significant future reversionary rental potential across PSD's portfolio of buildings.

The Company recognises the challenges that its customers are facing as a direct consequence of inflation. Notwithstanding current cost-of-living pressures, year-to-date rent collection levels have remained stable. The Company has always managed rent-to-income multiples for new tenants conservatively and this customer demographic, combined with recent Federal support initiatives to help mitigate the financial impact of rising fuel costs, should ensure rent collection levels remain resilient.

Although the current economic backdrop presents near-term headwinds for the German residential real estate industry, the Property Advisor remains confident in the long-term outlook for PSD. Since its inception in 2006, PSD has successfully adapted its business model to accommodate significant changes to the economic and regulatory environment and will continue to respond to the challenges presented by the current economic downturn.

Key Performance Indicators

PSD has chosen a number of Key Performance Indicators (KPIs), which the Board believes will help investors understand the performance of PSD and the underlying property Portfolio.

· The value of the Portfolio grew by 2.2 per cent on a like-for-like for basis for the first half of the year (H1 2021: 2.5 per cent). This increase was driven a like-for-like average rent per let sqm of 3.7 per cent (H1 2021: 4.6 per cent).

· The EPRA vacancy of the Portfolio stood at 2.5 per cent (31 December 2021: 1.3 per cent).

· The Group continued with its targeted condominium programme, notarising sales of €3.0 million in the half year to 30 June 2022 (H1 2021: €4.3 million).

· EPRA NTA per share increased by 1.2 per cent to €5.72 as at 30 June 2022 (31 December 2021: €5.65).

· The declared dividend for the half year 2022 was €2.35 cents (£2.09 pence) per share.

Statement of Directors' responsibilities

The important events that have occurred during the period under review, the key factors influencing the condensed consolidated financial statements and the principal factors that could impact the remaining six months of the financial year are set out in the Chairman's Statement and the Property Advisor Report.

Since the date of the Annual Report for the year ended 31 December 2021, capital and investment markets have reacted negatively to inflationary pressures, rising interest rates and economic uncertainty more generally. 

As stated above, there has been a material deterioration in sentiment in the Berlin real estate market. Other principal risks considered are substantially unchanged since the date of the Annual Report for the year ended 31 December 2021, and continue to be as set out in that report. These include, but are not limited to:

· Financial and economic risk

· Market risk

· Inflationary risk

· Tenant, letting and political risk

· Outsourcing risk

· IT and Cyber Security risk

· Regulatory risk

The Directors confirm that, to the best of their knowledge:

· The condensed set of financial statements contained within this half yearly financial report have been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and profit of the Group; and

· The half yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.7R being disclosure of important events that have occurred during the first six months of the financial year, their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and

· The half yearly financial report includes a fair review of the information required by the Disclosure and Transparency Rule 4.2.8R being disclosure of related party transactions during the first six months of the financial year, how they have materially affected the financial position of the Group during the period and any changes therein.

The half yearly financial report was approved by the Board on 28 September 2022 and the above responsibility statement was signed on its behalf by:

Director

28 September 2022