RNS Number:9899V
Capital Radio PLC
16 May 2002
16 May 2002
CAPITAL RADIO PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2002
Capital Radio plc, the UK's leading commercial radio Group, today announces
interim results for the half year ended 31 March 2002.
Key Highlights
• Radio like for like revenue: £59.6 million (-7%)
• Radio operating profit: £15.6 million (-16%)
• Underlying Group profit before tax: £14.2 million (-20%)
• Dividend per share maintained at 6 pence
• Interest cover of 17x
• Strong balance sheet - net debt of £35.6 million
• Group audience of 8.1 million up 2% year on year
• Revenue from recently acquired stations up 29%
• Strategy of building national presence enhanced by Capital/Disney
alliance and Capital Gold Manchester acquisition.
David Mansfield, Chief Executive of Capital Radio, commented:
"Today's results demonstrate a resilient performance in a tough advertising
marketplace. In the last six months we have continued to invest in and develop
our radio brands whilst carefully managing costs. We broadly welcome the draft
Communications Bill and will seek to take advantage of any appropriate value
creating opportunities."
Enquiries:
Capital Radio plc
David Mansfield, Chief Executive 020-7766-6240
Peter Harris, Finance Director 020-7766-6257
Dorothy Colling, Head of Corporate Communications 020-7766-6194
Finsbury Group
Rupert Younger 020-7251-3801
James Leviton
Introduction
The last six months have continued to be challenging for Capital Radio. Our
revenues have been under pressure as the media industry faced difficult trading
conditions resulting from the advertising slowdown. We have maintained a
rigorous control over our cost base, which, together with our strong brands and
healthy balance sheet, has ensured that we continue to weather the downturn.
We welcome the Government's draft Communications Bill, but do not believe that
it goes far enough where radio de-regulation is concerned. Accordingly we,
together with our trade body the CRCA, will be pressing the Government
vigorously for further de-regulation of radio ownership during the consultation
period of the Bill.
Current trading
Our combined April and May 2002 radio revenues are likely to show a year on year
decline of approximately 3%. We continue to manage the cost base of our
business on the assumption that the advertising market remains under pressure
for the rest of our financial year.
Financial Review of Six Months Results to 31st March 2002
Group revenue from continuing operations for the first six months decreased by
8% to £60.0 million (2001: £65.4 million). Like for like radio revenue was
£59.6 million (2001: £64.0 million), a decrease of 7%, which is in line with the
guidance we gave shareholders on 20th March 2002. Radio operating profit fell
16% to £15.6 million (2001: £18.5 million).
Revenue from our established stations was £50.6 million, down 11%, which
resulted in the operating profit falling 22% to £17.1 million. This reflects
the very tough national advertising market experienced in the first half. Our
rigorous cost control has lessened the financial impact of the reduction in
revenues. However, we have continued to invest to enhance the long term value
of our radio brands with the result that the margin for our established stations
has fallen to 34% (2001: 38%).
We have achieved operational savings of £1.5 million in the first half from a 5%
reduction in head count, a reduction in capital expenditure and content and
production efficiency savings.
Our portfolio of development stations (Beat, the Century network and Xfm)
achieved very strong like for like revenue growth of 29% to £9.0 million and,
aided by operational efficiencies, these stations approached break-even in the
first half of the financial year.
We invested £1.4 million (2001: £1.3 million) in our digital radio operations -
predominantly transmission costs - and £1.2 million (2001: £1.9 million) in our
interactive activities.
Our associated companies, principally Wildstar and IRN, contributed £0.7 million
(2001: £2.8 million) to the Group's profits. We benefited significantly in the
prior year from the release of Craig David's highly successful first album on
our joint venture record label, Wildstar.
The interest charge was £0.9 million (2001: £1.6 million). With net Group debt
at the end of March 2002 of £35.6 million and interest cover in the first half
of 17x, we continue to be well placed to take advantage of any appropriate
acquisition and investment opportunities.
Underlying Group profit before tax fell 20% to £14.2 million (2001: £17.8
million). The tax charge on underlying profits was 30% (2001: 28%) and
underlying Group earnings per share were down 23% to 12.1p (2001:15.7p).
Investment costs
We have reduced the anticipated full year investment in our digital radio and
interactive activities to £5.8 million from the £6.5 million that we outlined
last November. We were able to negotiate better than expected carriage
contracts for our digital radio licences and have reduced headcount in our
Interactive department to reflect the re-focusing of the business around our
radio brands.
1st Half 1st Half 2nd Half Full Year
2001 2002 2002 2002
Digital radio £1.3m £1.4m £2.1m £3.5m
Interactive £1.9m £1.2m £1.1m £2.3m
Total £3.2m £2.6m £3.2m £5.8m
Dividend
Our healthy cashflow position allows us to maintain our dividend level despite
uncertain operating conditions. The Directors have declared an interim dividend
of 6.0p per share (2001: 6.0p) to be paid on 21 June 2002 to shareholders on the
register on 24 May 2002 (ex-dividend date: 22 May 2002).
Operating Review
Analogue Radio - Audiences
The Group achieved the following audience data by quarter over the last twelve
months:
Jan to April to July to Oct to Jan to
March June Sept Dec March
2001 2001 2001 2001 2002
Weekly listeners (m) 7.9 8.2 8.3 8.1 8.1
Proportion of potential listeners (%) 28 29 29 29 28
Total hours listened (m) 80 84 85 81 79
Market share (%) 13 14 13 13 12
Share of commercial listening (%) 26 26 26 25 25
Source: RAJAR
Last year, we began the process of re-organising the business along the lines of
our four branded radio networks: the Capital FM Network, the umbrella brand for
our FM contemporary hit music stations; the Capital Gold Network (classic hits);
the Century Network (music, fun and football) and Xfm (new music).
Analogue Radio - Revenue
In spite of the difficult radio advertising market, our development stations
have shown significant revenue growth. The average number of brands advertising
on our recently acquired Century Group increased by 23% in the first half,
reflecting the benefit of being sold by Capital Radio Advertising our national
sales organisation. Our radio revenues compared to the radio industry have
shown the following improving trend:
Capital Radio Industry Radio
Revenue Revenue
Apr-Sept 2001 -13% -11%
Oct 2001 - Mar 2002 -7% -6%
We have seen the following performance in revenues from our main advertising
categories:
Category Year on year growth % of total
Food 43.3% 5.4%
Motors 19.4% 13.0%
Household Equipment 14.4% 4.5%
Travel and Transport 5.5% 7.6%
Government/Social/Political Org'ns 1.2% 10.4%
Entertainment -8.5% 6.4%
Entertainment and the Media -12.1% 11.3%
Business & Industrial -13.8% 11.8%
Retail -18.0% 15.6%
Pharmaceutical -24.2% 2.7%
Finance -34.2% 3.4%
Computers -63.0% 2.3%
Source: Capital Radio Advertising October 2001-March 2002
Wildstar
Wildstar's most successful act is Craig David whose first album "Born To Do It"
has sold in excess of 6m copies world-wide.
Wildstar's agreement with Warner Music Group for the exploitation of its content
outside the UK has been successful and, to date, Craig David has sold 1.1m
copies of his album in the US. His second album will be released world-wide in
the run-up to Christmas 2002.
Managing the business for growth
As previously highlighted, our key strategic objective is to increase our
exposure to the fast-growing national radio advertising market. We have made
strong progress on this by building a national presence for our business,
growing our development stations, investing in our established radio brands,
acquiring strategically important licences and exploiting the development of
digital radio.
Strong brands for commercially attractive audiences
The Group's strategic aim is to develop a complementary portfolio of radio
brands that are compelling to national advertisers. To do this, our key brands
must offer our customers a commercially attractive audience within a consistent
environment. This will ensure that as a Group we remain the first port of call
for national advertisers.
Over the last 10 years the number of stations in the UK market has grown from 40
to 250. These new entrants have benefited from deregulation of music formats,
enabling more direct competition with established heritage stations.
Capital Radio has expanded its business through acquisition from one station in
1973 to 20 analogue stations in 2002 and has historically operated each
geographic location as a separate business unit. Whilst this has established a
strong business, it has limited our ability to maximize the leverage of the
Group's scale and skill base.
Our future strategy will focus on our radio brands, with efficiencies being
achieved through the lack of duplication. We are introducing new technology,
which will allow more content to be shared across our branded networks, thereby
enabling us to attract more high profile talent.
We are also leveraging the power of our brands, content and our 8 million
listeners by developing new revenue streams. The success that we have achieved
in extending the Capital Gold brand in the CD compilations market where we have
sold over 1.1 million Capital Gold compilation CDs, for example, leads us to
believe we have many opportunities in this area.
Digital radio
On 10th May we were awarded the local digital multiplex licence for the South
Hampshire area in a highly competitive licence process. We now own 38 digital
radio licences, with a coverage of 79% of the UK population, which will increase
to approximately 85% by the end of 2002.
Digital radio spectrum provides us with the ability to transmit data, with
internet and mobile phone links providing a back-channel for two-way
communication. We have recently formed a joint venture with UBC Media Group to
develop digital radio data services in the UK under which Capital and UBC have
pooled and will jointly manage our respective digital data capacity. This
service could be used to transmit pictures, video, graphics and information to
portable digital devices.
In January 2002 we announced an exclusive arrangement with Disney to create a
children's radio network in the UK branded 'Capital Disney', which will
broadcast to a potential audience of about 25 million. It will also use other
media platforms such as mobile phones and the Internet to create an innovative
multi-media service. The target audience for the network, the under 16s, is
highly technology-literate and keen to embrace new technological developments.
Capital Radio and Disney believe that this age group will be a major force in
driving the take-up of digital radio in the UK.
Impact of Draft Communications Bill
We broadly welcome the Draft Bill, which overhauls the legal framework for the
Communications Industry. However, we believe that the proposed changes to local
radio ownership do not go far enough. Accordingly, we will, together with our
trade body, the CRCA, be pressing the Government for further de-regulation in
relation to the ownership of radio licences in a local market.
There are still some issues to be clarified but we believe that the Draft Bill,
if implemented, would allow any radio operator to own up to 45% of the licences
in a local market, subject to competition regulations. This, for example, would
allow us to own up to 7 FM licences in London and 3 FM licences in Manchester.
In anticipation of the proposed changes in legislation, we are positioning the
Group to ensure that it will play a key role in the changing market. In October
2001 we acquired a 19% share in Choice FM, a London based urban music station,
in a deal that allows us to acquire the remaining 81%, if the ownership rules
permit it.
In February 2002 we acquired an AM analogue licence and a digital licence for
Greater Manchester. These licences have been re-branded as Capital Gold and
increase the potential audience of the Capital Gold network from 15.8 million to
18.1 million adults.
We continue to evaluate radio licences in the UK that would fit strategically
with our portfolio of complementary radio brands. We still have headroom, under
the current broadcasting ownership points system, which would enable us to own
the equivalent of one further regional licence.
Capital Radio is the UK's leading commercial radio group. With our
market-leading brands, focused strategy and strong balance sheet, we are ideally
positioned to take advantage of any appropriate acquisition or investment
opportunities which may arise in UK radio in the de-regulatory environment.
16 May 2002
Peter Cawdron, Chairman
David Mansfield, Chief Executive
Peter Harris, Finance Director
Unaudited Group Profit and Loss Account
For the Half Year to 31st March 2002 Unaudited Unaudited Audited Year
Half Year Half Year Ended
NOTE to 31st March to 31st March 30th September
2002 2001 2001
(Restated)
£000 £000 £000
Turnover: Continuing operations 2 60,027 65,396 123,201
Discontinued operations 2 - 7,191 11,386
60,027 72,587 134,587
Operating profit
Continuing operations
Before goodwill and exceptional operating costs 2 14,401 16,658 29,980
Exceptional operating costs 2 - - (2,712)
Amortisation of goodwill (4,766) (4,484) (9,622)
9,635 12,174 17,646
Discontinued operations 3 - 2,126 2,689
Operating profit 3 9,635 14,300 20,335
Share of operating profit of associated companies 672 2,765 2,612
Exceptional gain on disposal of investments and - 7,394 10,215
stations
Profit on ordinary activities before interest 2 10,307 24,459 33,162
Net interest payable and similar income
Continuing operations (889) (1,613) (2,535)
Discontinued operations - (1,672) (2,775)
Net interest payable and similar income (889) (3,285) (5,310)
Underlying profit before taxation from continuing 14,184 17,810 30,057
operations
Exceptional items, goodwill and discontinued (4,766) 3,364 (2,205)
operations
Profit on ordinary activities before taxation 9,418 21,174 27,852
Taxation on profit on ordinary activities 4 (4,255) (5,109) (8,381)
Profit on ordinary activities after taxation 5,163 16,065 19,471
Dividends 5 (4,931) (4,903) (15,114)
Retained profit for the period and its share of 232 11,162 4,357
associates
Earnings per share 6 6.3p 19.7p 23.8p
Loss/(profit) per share on exceptional items, goodwill 5.8p (4.0p) 2.5p
and discontinued operations after taxation
Underlying earnings per share from continuing 6 12.1p 15.7p 26.3p
operations
Diluted earnings per share 6 6.3p 19.6p 23.8p
Unaudited Group Balance Sheet
Unaudited as Unaudited as at Audited as at
at 31st March 31st March 30th September
NOTE 2002 2001 2001
£000 £000 £000
Fixed assets
Intangible assets - goodwill 169,246 216,870 170,488
Tangible fixed assets 17,648 26,877 18,463
Investments (including associated undertakings) 2,782 3,923 2,060
189,676 247,670 191,011
Current assets
Stock - 358 -
Debtors 8 18,759 21,674 16,548
Cash at bank and in hand - 1,364 1,608
18,759 23,396 18,156
Creditors: amounts falling due within one year 9 (51,886) (65,275) (54,862)
Net current liabilities (33,127) (41,879) (36,706)
Total assets less current liabilities 156,549 205,791 154,305
Creditors: amounts falling due after more than one 10 (7,000) (53,136) (8,037)
year
Net assets 149,549 152,655 146,268
Capital and reserves
Called up share capital 12 2,055 2,043 2,044
Share premium account 12 75,627 72,857 72,589
Merger reserve 12 23,767 31,856 23,767
Profit and loss account 12 48,100 45,899 47,868
Equity shareholders' funds 11 149,549 152,655 146,268
Unaudited Group Cash Flow Statement
For the Half Year to 31st March 2002 Unaudited Half Unaudited Audited
Year to 31st Half Year to Year Ended
March 31st March 30th September
NOTE 2002 2001 2001
£000 £000 £000
Net cash inflow from operating activities 13 15,300 19,116 34,816
Dividends from associated undertakings 550 838 1,309
Returns on investments and servicing of finance
Interest received and similar income 21 52 243
Interest paid (1,118) (2,850) (6,182)
Repayment of associate loan - 1,930 -
Returns on investments and servicing of finance (1,097) (868) (5,939)
Taxation paid (3,658) (4,298) (8,920)
Capital expenditure
Proceeds from sale of tangible fixed assets 53 - 107
Purchase of tangible fixed assets (1,396) (3,466) (3,922)
Purchase of fixed asset investments - - (215)
Cash outflow on capital expenditure (1,343) (3,466) (4,030)
Acquisitions and disposals 14 (2,353) 7,608 65,124
Cash outflow from equity dividends paid (10,232) (10,151) (15,045)
Cash (outflow)/inflow before financing (2,833) 8,779 67,315
Cash outflow from financing (175) (1,011) (59,303)
(Decrease)/increase in cash in the period (3,008) 7,768 8,012
Reconciliation of net cash flow to movement in net
debt
(Decrease)/increase in cash in the period (3,008) 7,768 8,012
Cash flow from decrease in debt - - 44,000
Change in net debt arising from cash flows (3,008) 7,768 52,012
Repayment of finance leases 21 302 557
Repayment of loan notes 244 807 15,253
Movement in net debt in the period (2,743) 8,877 67,822
Net debt at start of period (32,901) (100,723) (100,723)
Net debt at end of period 15 (35,644) (91,846) (32,901)
Notes to the Interim Statement
1. Accounting Policies
The statement has been prepared under the historical cost accounting
rules, modified to include the revaluation of certain fixed assets, and in
accordance with applicable accounting standards, consistent with those used for
the year ended 30th September 2001, including for the first time Financial
Reporting Standard 19. Tangible fixed assets are stated at cost less accumulated
depreciation. Fixed asset investments are stated at cost less provisions.
Stock is stated at the lower of cost and net realisable value.
The profit and loss account for the half year ended 31st March 2001 has
been restated to reclassify as discontinued the results of Border Television
Limited which was disposed of on 31st July 2001.
2. Segmental Information Unaudited Half Unaudited Half Audited Year Ended
Year to Year to 30th September
31st March 2002 31st March 2001 2001
(Restated)
£000 £000 £000
Turnover - continuing operations:
Commercial radio, all from UK:
Analogue 59,447 64,866 122,170
Digital 178 68 169
Total commercial radio, all from UK 59,625 64,934 122,339
Interactive, all from UK 402 462 862
Total - continuing operations 60,027 65,396 123,201
Turnover - discontinued operations:
Television - 7,191 11,386
Total - discontinued operations - 7,191 11,386
60,027 72,587 134,587
Profit before interest and taxation
Commercial radio, all from UK:
Analogue 17,037 19,808 36,526
Digital (1,464) (1,279) (2,959)
Total commercial radio, all from UK 15,573 18,529 33,567
Interactive, all from UK (1,172) (1,871) (3,587)
Continuing operations before goodwill and exceptional 14,401 16,658 29,980
operating costs
Exceptional operating costs - - (2,712)
Amortisation of goodwill - radio (4,766) (4,484) (9,622)
Television (discontinued) - 2,126 2,689
Share of operating profit of associated undertakings 672 2,765 2,612
Exceptional gain on sale of investments and stations - 7,394 10,215
10,307 24,459 33,162
3. Operating Profit Continuing Discontinued
Operations Operations Total
£000 £000 £000
Unaudited Half Year to 31st March 2002
Turnover 60,027 - 60,027
Direct cost of sales (7,345) - (7,345)
Gross profit 52,682 - 52,682
Staff costs (13,613) - (13,613)
Other operating charges (22,835) - (22,835)
Depreciation and amortisation of goodwill (6,599) - (6,599)
Operating profit 9,635 - 9,635
Unaudited Half Year to 31st March 2001 (Restated)
Turnover 65,396 7,191 72,587
Direct cost of sales (7,688) (1,962) (9,650)
Gross profit 57,708 5,229 62,937
Staff costs (13,893) (1,517) (15,410)
Other operating charges (25,106) (1,115) (26,221)
Depreciation and amortisation of goodwill (6,535) (471) (7,006)
Operating profit 12,174 2,126 14,300
Audited Year to 30th September 2001
Turnover 123,201 11,386 134,587
Direct cost of sales (14,930) (3,292) (18,222)
Gross profit 108,271 8,094 116,365
Staff costs (27,302) (2,648) (29,950)
Other operating charges (46,766) (1,959) (48,725)
Exceptional operating costs (2,712) - (2,712)
Depreciation and amortisation of goodwill (13,845) (798) (14,643)
Operating profit 17,646 2,689 20,335
4. Taxation
UK corporation tax has been provided at 30% (2001: 30%) on the taxable
profits for the period. After allowing for adjustments related to prior
years the effective rate of corporation tax is 30% (2001: 28%).
5. Dividends
The Directors propose to pay an interim dividend of 6.0p per share (2001:
Interim dividend of 6.0p per share, full year dividend of 18.5p per share)
on 21st June 2002 to all shareholders on the register on 24th May 2002 (ex-
dividend date: 22nd May 2002).
6. Earnings Per Share
Earnings per share is based on the profit after tax of £5,163,000 (2001:
£16,065,000) divided by the weighted average number of Ordinary Shares in
issue in each of the relevant periods; 2002: 81,912,728 (2001: 81,473,810).
Dilution increases the weighted average number of shares to 82,263,486 (2001:
81,930,016).
7. Acquisition of Choice FM
On the 25th October 2001 Capital Radio plc acquired 19% of Choice FM which
has been accounted for as an associate. On the same date the Group also
signed a "Put and Call Option" to acquire the remaining 81% of Choice FM. The
options can potentially be exercised between 30th September 2004 and 29th
September 2006. The current best estimate of the possible additional
consideration is in the range of £15m - £20m which will be settled predominantly
in shares.
8. Debtors - amounts falling due within one year Unaudited as at Unaudited as at Audited as at
31st March 31st March 30th September
2002 2001 2001
£000 £000 £000
Trade debtors 13,027 16,417 11,893
Other debtors 1,424 1,238 391
Assets awaiting disposal - 729 -
Prepayments and accrued income 4,308 3,290 4,264
18,759 21,674 16,548
9. Creditors - amounts falling due within one year Unaudited as at Unaudited as at Audited as at
31st March 31st March 30th September
2002 2001 2001
£000 £000 £000
Bank loans and overdrafts 18,900 15,500 16,500
Loan notes 9,507 24,197 9,751
Finance leases 237 377 221
Trade creditors 3,741 4,741 4,572
Other creditors 5,693 3,164 4,840
Corporation tax payable 4,495 7,032 3,684
Proposed dividend 4,931 4,903 10,220
Other taxation and social security 2,910 2,455 2,372
Accruals and deferred income 1,472 2,906 2,702
51,886 65,275 54,862
10. Creditors - amounts falling due after more than Unaudited as at Unaudited as at Audited as at
one year 31st March 31st March 30th September
2002 2001 2001
£000 £000 £000
Bank loans and overdrafts 7,000 53,000 8,000
Finance leases - 136 37
7,000 53,136 8,037
11. Reconciliation of Movement in Shareholders' Funds
Unaudited Half Unaudited Half Audited
Year to 31st Year to 31st Year Ended 30th
March March September
2002 2001 2001
£000 £000 £000
Profit for the financial period 5,163 16,065 19,471
Dividends (4,931) (4,903) (15,114)
Retained profit for the period 232 11,162 4,357
New share capital issued 3,049 776 509
Merger reserve movement - - 685
Net movement in shareholders' funds 3,281 11,938 5,551
Equity shareholders' funds at beginning of period 146,268 140,717 140,717
Equity shareholders' funds at end of period 149,549 152,655 146,268
12. Reserves
The movement on reserves during the period was as follows:
Share Share Merger Profit and Loss
Capital Premium Reserve Account
£000 £000 £000 £000
Beginning of period 2,044 72,589 23,767 47,868
Retained profit for the period - - - 232
New share capital issued 11 3,038 - -
End of period 2,055 75,627 23,767 48,100
13. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Unaudited Half Unaudited Half Audited
Year to 31st Year to 31st Year Ended 30th
March March September
2002 2001 2001
£000 £000 £000
Operating profit 9,635 14,300 20,335
Depreciation 1,833 2,522 5,021
Amortisation and impairment of goodwill 4,766 4,484 9,622
(Profit)/loss on disposal of fixed tangible assets (29) (81) 26
(Increase)/decrease in debtors (2,212) 1,358 2,745
Decrease in stock - 25 -
Increase/(decrease) in creditors 1,307 (3,492) (2,933)
Net cash inflow from operating activities 15,300 19,116 34,816
14. Cash Flows from Acquisitions and Disposals
Unaudited Half Unaudited Half Audited
Year to 31st Year to 31st Year Ended 30th
March March September
2002 2001 2001
£000 £000 £000
Acquisition of Bucks Broadcasting Limited - (572) -
Net (cost)/proceeds from sale of Border Television Plc (297) - 50,500
Net proceeds from sale of other investments - - 12,471
Purchase of fixed asset investments (2,056) (290) -
Net cash acquired with subsidiary - 455 456
Net cash sold with subsidiary - (406) (233)
Proceeds from sale of radio stations - 8,421 -
Repayment of loan to investment - - 1,930
(2,353) 7,608 65,124
Net Debt at Cash Net Debt at
15. Analysis of Net Debt 30th September Flow 31st March
2001 2002
£000 £000 £000
Cash at bank 1,608 (1,608) -
Bank loans & overdrafts - (1,400) (1,400)
1,608 (3,008) (1,400)
Bank loans falling due in less than one year (16,500) (1,000) (17,500)
Bank loans falling due in more than one year (8,000) 1,000 (7,000)
Loan notes (9,751) 244 (9,507)
Finance leases (258) 21 (237)
(34,509) 265 (34,244)
(32,901) (2,743) (35,644)
16. Full Accounts
The comparative figures for the financial year ended 30th September 2001
are not the Company's statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
Independent review report by KPMG Audit Plc to Capital Radio plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 7 to 14 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the UK Listing Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where they are to be
changed in the next annual accounts in which case any changes, and the reasons
for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 2001/
4: Review of interim financial information issued by the Auditing Practices
Board. A review consists principally of making enquiries of group management
and applying analytical procedures to the financial information and underlying
financial data and based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A
review is substantially less in scope than an audit performed in accordance with
Auditing Standards and therefore provides a lower level of assurance than an
audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31st March 2002.
KPMG Audit Plc
Chartered Accountants
16th May 2002
London
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