XAAR plc 

2021 INTERIM RESULTS

CONTINUED STRONG PERFORMANCE WITH POSITIVE MOMENTUM IN THE BUSINESS

Xaar plc ("Xaar", the "Group" or the "Company"), the leading inkjet printing technology group, today announces its interim results for the six months ended 30 June 2021.

Summary of results for the six months ended the 30 June 2021:

1 - Restated results for June 2020. See note 11

2 - Excluding the impact of share-based payment charges, exchange differences relating to intra-group transactions, gain on derivative financial instruments, restructuring costs and investment expenses, research and development expenditure credit, other operating income and discontinued operations as reconciled in note 2

3 - Net cash at 30 June includes cash, cash equivalents and treasury deposits, excluding Xaar 3D

Figures and percentages included in this report are subject to rounding adjustments arising from conversion to £thousands or £millions from actual figures. Accordingly, figures shown for the same category presented in different tables may vary slightly, and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Financial highlights

·     First half revenue of £26.3 million in line with management expectations, representing an increase of 11% and 8% on H1 and H2 2020 respectively

·     Gross margin of 29%, up 2ppts on H1 and H2 2020

·     Printhead adjusted EBITDA improved from a £0.1 million loss in H1 2020 to a £0.8 million profit in H1 2021

·     25% increase in R&D spend in continuing operations to £2.6 million focused on the ImagineX platform and product roadmap

·     Strong closing balance sheet with net cash, excluding cash from the 3D business, of £17.1 million

Operational and strategic highlights

·   Printhead business continues to perform well, with a growing pipeline of new product development. Proactive measures are being implemented to mitigate the impact from COVID-19 related supply constraints which are being experienced across the industry

·     Successful roll out of the ImagineX platform is continuing;

o  April 2021 launch of the Xaar Nitrox printhead attracting new customers and increased opportunities

o  Official launch of Xaar Irix today, strengthening our product offering in the Coding & Marking sector

·    Engineered Printing Solutions ("EPS") underlying performance remains on track with progress made in the modular strategy, however H1 2021 results have been impacted by non-cash adjustments relating to slow moving and obsolete inventory. Operational changes are being made to ensure the business is best positioned to take advantage of the compelling growth opportunity in the market

·    Acquisition of FFEI Limited ("FFEI") on 11 July 2021, a leading integrator and manufacturer of industrial digital inkjet systems and digital life science technology, as part of the vertical integration strategy to grow Xaar's capability and help accelerate customer adoption of our printhead technology

·   New corporate headquarters in Cambridge, UK expected to deliver £0.7 million of annual cost savings. New Customer Service Centre opened in Shenzhen, China

·     Expect to announce details of planned divestment of Xaar 3D investment soon

·    Established an ESG Committee with a view to announcing the Sustainability Roadmap to 2030 with the full-year  results

John Mills, Chief Executive Officer, commented:

"We are pleased with our continued strong performance which, despite challenging market conditions, demonstrates the success of our strategy and underlying strength of the business. These results reflect the positive momentum we have generated across the business. Our foundations remain strong, as we continue to gain new customers and positively re-engage in our core markets. The COVID-19 pandemic continues to cause disruption for business, however we are determined to minimise interruption to the supply of printheads, and we are well-positioned to withstand further volatility caused by the pandemic.

Launching the Xaar Irix today further demonstrates our drive and ability to deliver new products from our ImagineX platform. Continued investment in capability and capacity, together with the addition of FFEI will drive future growth and accelerate strong performance."

Enquiries:

A presentation for analysts and investors will be held via webcast and conference call at 09:00am today. For further details, please contact Xaar@tulchangroup.com. The results webcast and presentation will be made available on the website (www.xaar.com) at 10:00am (BST).

Strategy Review

We are pleased with our continued strong performance which, despite challenging market conditions, demonstrates the positive momentum our strategy is driving across the business, as we continue to attract new customers and see positive re-engagement with the Group. Investment in capability and capacity will provide us with further opportunities to accelerate our strategy and future growth, and the success we have experienced in the first half of the year positions us to return the overall business to profitability in the medium term.

Business Units

Printhead

Customer-centric business model

We have OEMs and UDIs across multiple applications developing machines using a range of our products. Customer engagement has remained strong in 2021, with new accounts driving revenue growth and providing visibility of future revenue growth. We have a growing pipeline of new machine development as a result of the demonstrable technology advantages of Xaar's printheads. During 2021 we have seen increased activity in the glass printing, Printed Circuit Board ("PCB") manufacture and 3D printing applications. FFEI was acquired in July 2021 as a first step to widen the product portfolio on offer to further engage UDIs.

As part of the customer-centric focus, our end-to-end customer journey management is providing an enhanced level of service and support over the entire product lifecycle. This service enables the reduction of customer development times, and therefore time to market, and also provides the customer with improved aftersales support.

With sales in Asia having grown by 30% in H1 2021 compared to H1 2020, and most significantly in China where the growth was 45%, customers continue to re-engage and our sales pipeline is increasing. The new Customer Service Centre in Shenzhen, China is now open and focused on providing both our existing and potential customers across the region with a higher level of service, including enhanced technical support and training through a demonstration centre, waveform development and RMA facilities.

The Printhead business has seen some COVID-19 related supply constraints causing global component shortages in the market in H1 2021. Actions have been taken to mitigate their impact and maintain continuity of supply for the remainder of 2021 and into 2022, incurring increased costs. This will have a modest adverse impact on gross margins continuing into 2022. Due to ongoing uncertainty in relation to the COVID-19 Delta variant impact in Asia, we continue to be cautious with regards to our H2 2021 trading outlook.

Product roadmap and ImagineX platform

The ImagineX platform, which builds upon several technology and development programmes from our legacy Bulk and Thin Film investment, is driving the next phase of Xaar's success by enabling the business to increase its addressable market whilst establishing market leading products across all sectors.

The ImagineX platform is delivering new features and performance, and will carry on doing so over future years, providing significant enhancements to the current product portfolio; these include substantially improved speed and throughput, aqueous compatibility, increased throw distance to improve image quality on curved surfaces, increased robustness to improve the life of the printhead and maintain image quality, capability to operate at higher viscosities enabling a broader range of fluids to be printed, and higher resolutions. These features will help strengthen our position in markets where we are already well represented and will drive improved use in several markets where adoption levels of Xaar technology are lower, such as Wide Format Graphics ("WFG"), Labels, Packaging and Textiles. The performance enhancements in our product roadmap give a clear path for OEMs to upgrade their products and maintain their product differentiation.

In April 2021 Xaar Nitrox was launched, delivering improved print uniformity, capable of running at higher frequencies which increase printhead speed and productivity by 40%. These enhancements make it ideal for Ceramics, Labels, and Advanced Manufacturing applications. The product has been well received by the market and is being adopted by both current and new customers alike. 

Xaar Irix is the latest product from our ImagineX platform and is officially launched today, strengthening our product offering in the Coding & Marking sector. The Xaar Irix delivers improved drop placement accuracy ensuring great image quality at longer print distances, guaranteeing reliable printing every time. The printhead is simple to use, easy to integrate, and designed as a non-disposable technology with a long life for minimal environmental impact.

We are engaged with OEM partners on several programmes related to our ImagineX platform, with products at alpha and beta trial stages. Development of an aqueous compatible printhead is progressing well, and is currently in alpha build test phase on track for product launch at the end of 2022. Aqueous compatibility, which enables the use of water based conductive inks and fluids, will open significant new markets for Xaar.

Xaar's Bulk Printhead Technology offers several benefits over the competition, principally with TF Technology™ (ink recirculation) and ability to print with the widest range of fluids. Benefits of Ultra High Viscosity Technology capability, as provided by most of Xaar's printheads, including the Xaar 2002 launched in 2020, are now more apparent to end users and so driving an increased interest in the technological advantages available from our printheads.

Over the longer term Xaar will increasingly vertically integrate in order to provide a more complete solution for printers in certain markets, whilst continuing its primary business model of selling printheads to OEMs and UDIs. The additional capabilities required to achieve this will be added through either partnership, development of existing capabilities or acquisition. The acquisition of FFEI allows Xaar to widen the product portfolio on offer to further engage UDIs, and will provide additional opportunities for vertical integration.

Operational leverage

The efforts made by the Printhead business to focus on and reduce its cost base, to drive improved profitability and scalability, are reflected in improved gross margins achieved for H1 2021 of 35%, up from 23% in H1 2020 (and 32% in H2 2020) for continuing operations. This has been realised through increased revenues through 2020 and in H1 2021, and increased factory throughput, allowing us to leverage the high operational gearing in the factory and wider business. The operational gearing and the absorption of operating costs into inventory have seen the Printhead business unit adjusted EBITDA improve from a £0.1 million loss in H1 2020 to a £0.8 million profit in H1 2021, despite cost increases on certain components in short supply.

We are pleased with the progress being made in 2021 following the implementation of efficiency programmes across operations and IT, two areas in which we have strengthened the senior leadership team.

Beyond the factory we continue to review our cost base, and in June 2021 we relocated the Xaar corporate offices from the Cambridge Science Park to the nearby Cambridge Research Park, which will generate savings of £0.7 million per annum from the start of the second half of 2021. The new global headquarters houses Xaar's finance, HR, legal and marketing functions, as well as a new purpose-built R&D laboratory. Specifically configured to enhance the working environment for the team, the new offices also embrace Xaar's commitment to flexible working for employees. The offices also provide a significantly reduced carbon footprint for Xaar as we focus on sustainability objectives across the business.

EPS

Our engineering teams at EPS, Xaar's Product Print Systems business, have continued to work on delivering standardised modular systems, however delays in the execution of the modular strategy led to a change in leadership of the business during H1 2021. This new leadership has identified key areas where significant improvements were required to address operational deficiencies, cut project overruns and shorten lead times. As a consequence, further restructuring of the business and consolidation of the product range has taken place.

Revenues achieved in H1 2021 for EPS were in line with management expectations, being below that achieved in H1 2020. Few interruptions to the EPS manufacturing operations have been experienced as a result of the COVID-19 pandemic. EPS has experienced increasing lead times for certain key system components, which is a risk we continue to manage. As an OEM and supplier to end users, the EPS sales from Pad Printing machines and consumables were affected throughout the second half of 2020 and into 2021, as end user markets continued to be impacted by the pandemic. Underlying profitability of the business is strong, and with a healthy pipeline we see good growth potential as COVID-19 eases in the US.

Whilst the underlying performance for the EPS business remains on track and continues to be profitable, actions taken to refocus the business on future growth opportunities mean H1 2021 results have been impacted by certain non-cash write down adjustments. These are largely related to inventory we now consider to be slow moving or obsolete inventory, and amount to $1.4 million (£1.0 million). Further work will continue in 2021 to enable delivery of improved operational processes across the business addressing concerns raised around operational and reporting controls in the 2020 audit. We expect the beneficial impact of these actions to be reflected in the financial performance of the business from H2 2021.

3D

The 3D business unit, with operations in Nottingham, UK, and Copenhagen, Denmark, has continued to experience some delays in the beta programme, testing and commercialisation of the 3D printers in the first half of 2021 as a result of COVID-19 restrictions. The more significant restrictions causing these delays were in Denmark, which limited the number of individuals who were allowed in the Copenhagen facility, restricting testing capacity and the ability to travel and resolve issues face to face with the sub-contract manufacturer.

Negotiations to divest Xaar's interest in Xaar 3D are at an advanced stage, and although have taken longer than expected, we believe we are close to conclusion. In line with this intended divestment, Xaar 3D continues to be classified as a discontinued operation held for sale. The terms of the final agreement will be subject to Xaar shareholder approval. The sale of the remaining stake in Xaar 3D would provide the business with the best opportunity to complete the commercialisation of the HSS product range in the shortest time. Additionally, any immediate divestment of Xaar 3D would lead to an immediate injection of cash into Xaar, allowing the ongoing business to fully focus on its strategy.

Operating sustainably

Xaar strongly believes that operating responsibly is integral to business success. We uphold the highest of standards across our business and comply with all relevant regulations in the territories in which we operate whilst enhancing the working environment for our employees and minimising the environmental impact of our products and operations. During the reporting year, Xaar has established an ESG Committee and a Sustainability Team which is comprised of colleagues from across our business operations, chaired by the Head of Sustainability; each bringing a different skill set and perspective to support our sustainability journey. Backed by full Board support, sponsored by Alison Littley, Senior Independent Director, this group will initially focus its efforts on defining and developing our overarching sustainability ambitions and ESG strategy, with its first objective to establish its Sustainability Roadmap to 2030. Once in place and agreed by all stakeholders by the end of 2021, this Sustainability Roadmap will be a principal driver for positive change and investment within the business, and we aim to disclose the Sustainability Roadmap in our 2021 Annual Report.

The benefits evident in Xaar's printhead technologies, including delivery of quality, reliability, uniformity, productivity and performance, in turn contributes to a reduction in material and energy wastage. Digital inkjet printing is a far more sustainable option with a smaller carbon footprint overall for users, as it reduces and prevents excessive waste and uses less energy, versus traditional analogue printing techniques, due to the ability to print short runs or print direct-to-shape, and with TF Technology™ in Xaar printheads, print more viscous fluids reducing the need for energy intensive drying processes.

It has been a year since Xaar introduced new packaging across our printhead portfolio, whereby all Xaar's printheads are shipped in fully recyclable and biodegradable cardboard packs. Plastic consumption is expected to reduce by more than our targeted 1.2 tonnes per year reduction in 2021.

Xaar offset all of the UK regulatory Scope 1 and 2 carbon impact that we made and reported in 2020, making Xaar a carbon neutral inkjet manufacturer in 2020, which we expect to continue in future years. We still need to understand the full carbon impact from our operations and are committed to continue reducing this impact on the environment and maintaining our drive to achieve complete carbon neutrality in line with the UK's 2030 goal. Scope 3 emissions across the Xaar value chain are currently under review, with the aim to fully disclose our entire impact in the 2021 Annual Report. The Printhead business moved electricity supply to a green energy supply in 2020, supplementing measures that are already being taken to improve energy efficiency across the business. The Xaar Energy Efficiency Team has continued efforts to drive further initiatives to minimise energy usage across the Printhead business.

In support of our local community, we started a program of work to establish apprenticeship and graduate schemes which we are in the process of rolling out over 2021 and 2022. This is aligned with our sponsorship of local charities and organisations where, amongst other things, we continue to drive interest in STEM subjects among school students, are sponsoring Cambridgeshire Live Environmental Hero Awards 2021, and are hosting the closing event for Cows around Cambridge in support of Break. In 2021, Xaar launched its Volunteering Policy aimed at promoting volunteering across the organisation, and we are working with local agencies to identify environmental projects that employees can get involved in.

Outlook

Whilst the COVID-19 pandemic continues to cause business disruption, the Group is concentrated on securing continuity of supply of components to eliminate any interruption to the supply of printheads in 2022. The ongoing pandemic makes it difficult to provide reliable guidance on the outlook for the remainder of 2021 and beyond, however the short-term outlook remains positive with a healthy order book across the business. The success we have had in the first half of 2021, and the strength of the Group's balance sheet and cash position, means the business is well-positioned to withstand further volatility caused by the pandemic. We remain confident our full year 2021 results will be in line with expectations.

The acquisition in July 2021 of FFEI, a leading integrator and manufacturer of industrial digital inkjet systems and digital life science technology, strengthens Xaar's capabilities and skills and will accelerate Xaar's existing growth strategy. We continue to focus on implementing our strategy by laying the foundations to enable future growth, are committed to the delivery of the product roadmap, and remain on-track to return to profitability in the medium-term.

Business Performance

Due to the advanced stage negotiations to divest the remaining shares in Xaar 3D, the business was classified as an asset held for sale from 31 December 2020 and the business is no longer classified as a continuing operation. Xaar's continuing operations, therefore, consist of the Printhead and EPS businesses.

Continuing Operations

Trading for the six months ended 30 June 2021 has been in line with management's expectations. Revenues for the period were £26.3 million, representing an increase of 11% and 8% relative to H1 2020 (£23.7 million) and H2 2020 (£24.3 million) respectively.

Printhead revenues continue to recover half-on-half, representing an increase of 20% and 9% relative to H1 2020 (£16.8 million) and H2 2020 (£18.5 million) respectively, representing a steady return to growth. Revenue growth has been driven by stronger performances in Asia and EMEA.

The growth in Printhead revenues half-on-half since H1 2020 can be attributed to the Ceramics and Glass sector, with additional growth improvement in the WFG and Labels sector since H1 2020. This is partially offset by the fall in Packaging and Textiles revenues, and a slight decline in Coding & Marking (C&M) and Direct to Shape (DTS) sector revenues, with all other sectors remaining relatively flat over the last three halves.

The strong performances in both Asia and EMEA mainly relates to the Ceramics and Glass sector growing 56% H1 2020 to H1 2021, and 23% H2 2020 to H1 2021. This largely relates to the re-engagement of customers who have started to develop or manufacture new machines using the Xaar 2001+ and Xaar 2002 products, coupled with the launch of the Xaar Nitrox printhead in April 2021. We have significant increases in the number of new machines specifying our printheads.

WFG and Labels revenue was up 21% at £3.5 million compared to H1 2020 at £2.9 million, maintaining the improvement experienced in H2 2020 driven by labels revenues in EMEA.

Packaging and Textiles revenues approximately halved in H1 2021 to £0.2 million, when compared to H1 and H2 2020. Our ability to target this sector effectively is somewhat limited by our current product range. Advancements in the product portfolio driven by the ImagineX platform, such as aqueous compatibility, should make this significant sector more accessible in the future.

1 - Figures and percentages are subject to rounding arising from conversion to £m from actual figures

Revenues from the EPS business declined in line with management's expectations by £0.8 million H1 2020 to H1 2021, but improved by £0.3 million relative to H2 2020, principally as a result of the timing of COVID-19 related lockdowns and general economic activity in the sector.

Sales of digital inkjet lines improved in H1 2021 from H2 2020 by £0.4 million, having declined H2 2020 from H1 2020 by £0.8 million. Sales of machines accounted for the majority of the improvement on H2 2020, with consumables sales remaining flat.

Sales of analogue pad printing lines declined £0.2 million H1 2020 to H1 2021, but stayed flat on H2 2020, with the slight decline in sales of machines offset by an increase in sales of consumables.

1 - Figures and percentages are subject to rounding arising from conversion to £m from actual figures

Gross profit for the period has continued to improve over the last three half year reporting periods, having improved by £1.3 million to £7.6 million when compared to H1 2020 (H1 2020: £6.3 million), and by £0.9 million relative to the second half of 2020 (H2 2020: £6.7 million). Gross margin has also improved overall to 29%, up from 27% for H1 and H2 2020, however, gross margins across the Group have been impacted differently. Gross margins for the Printhead business have improved since H1 2020, increasing from 23% to 35% for H1 2021. This reflects the increased volumes and operational leverage in the business, in addition, the margin in H1 2020 was depressed by a £1.0 million provision for critical spares. Gross margins for the EPS business decreased from 37% for H1 2020 to 8% for H1 2021. Excluding the non-cash adjustments in H1 2021 mainly relating to slow moving and obsolete inventory, the underlying gross margin had reduced to 28%, largely due to the resetting of the modular strategy by new management. Excluding the £1.2 million of adjustments recorded by EPS in H1 2021, the gross profit for the Group would have improved to £8.8 million, with a gross margin of 33%.

R&D spend increased £0.5 million (25%) on H1 2020 (H1 2021: £2.6 million; H1 2020: £2.1 million). This reflects the investment in the ImagineX platform, which will be central to our long-term growth and delivery of the product roadmap.

Sales and marketing spend is in line with H2 2020, which reflects the continuation of travel restrictions into 2021 due to COVID-19, which limited our ability to visit customers and led to the cancellation of the majority of tradeshows.

General and administrative expenses on an adjusted basis, increased by £1.1 million compared to H1 2020, from £3.0 million to £4.1 million in H1 2021. Of this increase, £0.6 million related to trading foreign exchange gains in H1 2020, as a result of the exchange rate volatility response to COVID-19. The remainder of the increase largely related to planned investment in key areas of the business and infrastructure, including IT and Finance. IFRS General and administrative expenses increased from £2.3 million in the first half of 2020 to £4.5 million in the first half of 2021. In addition to the £1.1 million increase on an adjusted basis, the additional increase of £1.1 million is largely driven by a £1.0 million swing in foreign exchange from a gain to a loss in the period on intra-company balances.

Impairment gains on financial assets were £14,000 for H1 2021, compared to £0.4 million for H1 2020 and £0.6 million for H2 2020.

Other operating income in 2020 of £0.8 million related to the PPP loan taken out by the EPS business in the US which has met all qualifying criteria to be forgiven.

Restructuring and investment expenses of £0.9 million in H1 2021 relate to costs associated with re-organisations made in the business, and investment and divestment related transactional costs.

The adjusted EBITDA from continuing operations for the period was a £0.4 million loss (H1 2020: £0.7 million profit). The Printhead business unit adjusted EBITDA improved from a £0.1 million loss in H1 2020 to a £0.8 million profit in H1 2021, with the EPS business declining from a £0.8 million profit in H1 2020 to a £1.2 million loss in H1 2021, as a result of the non-cash adjustments in H1 2021 relating to slow moving and obsolete inventory. Excluding the adjustments recorded by EPS in H1 2021, the adjusted EBITDA for the EPS business would have been a £0.1 million profit, and the adjusted EBITDA for the Group would have improved to a £0.9 million profit.

The adjusted loss before tax for continuing operations in the period was £2.3 million (H1 2020: £1.3 million). Excluding the adjustments recorded by EPS in H1 2021, the loss before tax for continuing operations would have been £1.0 million. The loss before tax under IFRS for continuing operations was £2.1 million (H1 2020: profit of £1.3 million) with a tax credit of £0.2 million (H1 2020: charge of £0.4 million) taking the loss for the period to £1.8 million (H1 2020: profit of £1.0 million).

Discontinued Operations

A £3.4 million loss was recorded in relation to discontinued operations for H1 2021 (H1 2020: £6.2 million) with cash outflows for the period of £1.2 million (H1 2020: £6.4 million).

As a result of the intended sale of Xaar 3D, it was classified as a discontinued operation held for sale as at 31 December 2020. The 3D business recorded a loss of £3.5 million (of which £0.2 million is eliminated at Group level, relating to intra-group charges) for H1 2021 (H1 2020: £2.9 million). The increased level of losses in the business primarily relate to R&D expenses recognised in the period, which increased by £0.5 million compared to H1 2020. 

The Thin Film business, which was classified as discontinued in 2019, recorded a loss of £0.2 million for H1 2021, which primarily relates to inventory commitments.

Balance sheet

The Group retains a strong balance sheet and cash position. Net cash at 30 June 2021, excluding cash from the 3D business (which is classified as an asset held for sale) was £17.1 million. This represents a decline of £1.0 million in net cash for continuing operations since 31 December 2020, which has been primarily driven by planned capital investment, including the relocation of Xaar's Cambridge office which will generate £0.7 million of annual cost savings going forward. The Group maintains a strong cash focus and disciplined cost controls.

Non-current assets increased slightly from £24.7 million at 31 December 2020, to £25.0 million in the first half of the year. Property, plant and equipment reduced overall by £0.7 million, driven primarily by the depreciation of assets (£1.7 million) and £1.0 million of capital additions. The right of use asset increased overall by £0.8 million since 31 December 2020, principally due to the inception of the new lease for the corporate headquarters in Cambridge.

Current assets, excluding the disposal group assets held for sale, increased overall by £1.8 million. Overall inventory value has increased by £2.7 million, all of which relates to an increase in inventory held by the Printhead business, whilst the inventory value at EPS has remained flat. Trade and other receivables reduced by £0.2 million driven by a strong focus on cash collection in the Printhead business.

Current liabilities, excluding liabilities associated with Xaar 3D (held for sale), increased overall by £3.0 million due to an decrease in derivative financial liabilities of £1.3 million and an increase in trade and other payables of £4.0 million, relating mainly to improvement of payment terms with suppliers, the timing of the payment run processed over half year, offsetting a reduction in the bonus accrual since year end reflecting the payment made in H1 2021.

The 3D business is classified as held for sale, with £9.0 million of assets and £4.1 million of liabilities associated with the disposal group as at 30 June 2021.

Non-current liabilities, mainly relating to lease liabilities recorded under IFRS 16, increased by £0.7 million in the first half of 2021, due to the relocation of the corporate headquarters Cambridge offices.

Dividend

No interim dividend has been declared for 2021. The Board recognises the importance of regular income to many investors, but believes that it would be inappropriate to reinstate payment of dividends before sustainable profits are restored.

14 September 2021

Directors' responsibilities statement

We confirm that to the best of our knowledge:

·    the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting as adopted by the UK

·     the interim management report includes a fair review of the information required by:

o  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and 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

o  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By Order of the Board

John Mills

Chief Executive Officer

14 September 2021

No dividends were paid in the current or prior period.