TIDMASBE

RNS Number : 0774N

Associated British Engineering PLC

27 May 2022

ASSOCIATED BRITISH ENGINEERING PLC

INTERIM REPORT

FOR THE SIX MONTHSED

31 MARCH 2022

ASSOCIATED BRITISH ENGINEERING PLC

INTERIM REPORT

FOR THE SIX MONTHSED 31 MARCH 2022

 
 CONTENTS                                                PAGE 
 
 
 Chairman's statement                                     1 
 
 
 Responsibility statement                                 2 
 
 
 Group income statement                                   3 
 
 
 Group statement of comprehensive income                  4 
 
 
 Group interim balance sheet                              5 
 
 
 Group interim statement of changes in shareholders' 
  equity                                                  6 
 
 
 Group interim cash flow statement                      7 - 8 
 
 
 Notes to the interim report                            9 - 15 
 

ASSOCIATED BRITISH ENGINEERING PLC

CHAIRMAN'S STATEMENT

INTERIM REPORT FOR THE SIX MONTHSED 31 MARCH 2022

 
 SUMMARY OF RESULTS      Six months   Six months to 
                                 to        31 March 
                           31 March            2021 
                               2022         GBP'000 
                            GBP'000 
 
 Revenue                          -               - 
 Loss before tax               (14)            (49) 
 
 Earnings per share 
 Basic                       (0.7p)          (2.3p) 
 Diluted                     (0.7p)          (2.3p) 
 

You will see from our financial numbers and balance sheet that in the period there was a loss of GBP29k that covered company expenses before an unrealised foreign exchange gain on US dollar cash balances held of GBP15k.

The investments had gained in value during the first six months of 2021, but fell back in the seconds half of 2021 and the beginning of 2022. The Company started the process of realising its investments in early 2021. It is expected that these and any future capital gains will be tax free due to inherited capital gains tax losses so no provision has been made for any tax payments. The Board will take the opportunity to liquidate investments and invest for future growth when suitable opportunities occur.

Your Company is now in a position to talk to potential acquisitions without having to consider the impact of the pension fund and related historical deficits. The Board is now committed to using all its efforts to identifying and acquiring a new business with growth potential and hopefully showing profits for our group and a financial return for our patient shareholders.

The Board continues to review options for the future development of the Group.

Rupert Pearce Gould and Colin Weinberg

Chairmen

26 May 2022

1

ASSOCIATED BRITISH ENGINEERING PLC

RESPONSIBILITY STATEMENT

INTERIM REPORT FOR THE SIX MONTHSED 31 MARCH 2022

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

   a)   the Interim Report has been prepared in accordance with IAS 34; 

b) the Interim Report includes a fair view of the information required by DTR 4.2.7R, being an indication of the important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the year; and

c) the Interim Report includes a fair review of the information required by DTR 4.2.8R, being disclosure of 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 group during that period; and any changes in the related party transactions described in the latest annual financial statements that could do so.

By order of the Board

Rupert Pearce Gould and Colin Weinberg

Chairmen

26 May 2022

2

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INCOME STATEMENT

FOR THE SIX MONTHSED 31 MARCH 2022

 
                                          Six months                 Six months 
                                                  to                         to 
                                            31 March                   31 March 
                                                2022                       2021 
                                             GBP'000                    GBP'000 
 
 REVENUE                                           -                          - 
 
 Operating costs                                (29)                       (50) 
 
 OPERATING LOSS                                 (29)                       (50) 
 Other income                                      -                          1 
 Unrealised gain in value of                      15                          - 
  US dollar balance 
                                         -----------  ------------------------- 
 
 LOSS BEFORE TAXATION                           (14)                       (49) 
 Taxation                                          -                          - 
                                         -----------  ------------------------- 
 
 LOSS FOR THE PERIOD FROM CONTINUOUS 
  OPERATIONS                                    (14)                       (49) 
                                         ===========  ========================= 
 
 
 TOTAL LOSS FOR THE PERIOD                      (14)                       (49) 
                                         ===========  ========================= 
 
 LOSS PER SHARE ON LOSS FOR 
  THE PERIOD ATTRIBUATABLE TO 
  EQUITY HOLDERS OF THE PARENT 
  COMPANY                                     (0.7p)                     (2.3p) 
 
 Loss for the period attributable 
  to: 
 Owners of the company                          (14)                       (49) 
 
 
 
                                                (14)                       (49) 
                                         ===========  ========================= 
 

3

ASSOCIATED BRITISH ENGINEERING PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 31 MARCH 2022

 
                                              Six months   Six months 
                                                      to           to 
                                                31 March     31 March 
                                                    2022         2021 
                                                 GBP'000      GBP'000 
 
                        Loss for the period         (14)         (49) 
                                             -----------  ----------- 
 
               Other comprehensive income 
     Gain on available for sale financial 
                                    asset 
        Gains released to Retained Earnings        (265)          143 
                       Unrealised gains (*)            -          373 
 
         Other comprehensive income for the 
                                     period        (265)          516 
                                             -----------  ----------- 
 
         TOTAL COMPREHENSIVE INCOME FOR THE 
                                       YEAR        (279)          467 
                                             ===========  =========== 
 
  Total comprehensive income attributable 
                                      to: 
                      Owners of the Company        (279)          467 
                Non-controlling interests              -            - 
                                             -----------  ----------- 
 
                                                   (279)          467 
                                             ===========  =========== 
 

(*) = Items which may subsequently be reclassified to the Income Statement.

All activities are classified as continuing.

4

ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663

GROUP INTERIM BALANCE SHEET

AS AT 31 MARCH 2022

 
                                                  At          At 
                                            31 March    31 March 
                                                2022        2021 
                                             GBP'000     GBP'000 
 ASSETS 
 Non-current assets 
 Available for sale financial assets             154         622 
                                          ----------  ---------- 
                                                 154         622 
 
 Current assets 
 Trade and other receivables                      21          99 
 Cash and cash equivalents                       470         383 
                                          ----------  ---------- 
                                                 491         482 
                                          ----------  ---------- 
 Total assets                                    645       1,104 
                                          ==========  ========== 
 
 EQUITY AND LIABILITIES 
 Called up share capital                          51          51 
 Deferred shares                               2,594       2,594 
 Share premium account                         5,370       5,370 
 Other components of equity                       11          11 
 Fair value reserve                               95         558 
 Revaluation reserve                              15           - 
 Retained earnings                           (7,526)     (7,526) 
                                          ----------  ---------- 
 
 Equity attributable to the Company's 
  Equity Shareholders                            610       1,058 
 
 Non-controlling interests                         -           - 
                                          ----------  ---------- 
                                                 610       1,058 
                                          ----------  ---------- 
 
 LIABILITIES 
 Non-current liabilities                           -           - 
                                                   -           - 
                                          ----------  ---------- 
 
 Current liabilities 
 Trade and other payables                         35          46 
                                                  35          46 
                                          ----------  ---------- 
 
 Total liabilities                                35          46 
                                          ----------  ---------- 
 
 Total equity and liabilities                    645       1,104 
                                          ==========  ========== 
 

5

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 31 MARCH 2022

 
                                                                      Available 
                                                                       for sale    Unrealised                Attributable 
                           Share       Share    Deferred      Other   Financial      exchange    Retained       to owners 
                         Capital     Premium      Shares    Reserve      assets          rate    Earnings       of parent     Total 
                                                                                      reserve 
                         GBP'000     GBP'000     GBP'000    GBP'000     GBP'000       GBP'000     GBP'000         GBP'000   GBP'000 
 
 
 Balance at 1 
  April 2021                  51       5,370       2,594         11         558             -     (7,526)           1,058     1,058 
                  --------------  ----------  ----------  ---------  ----------  ------------  ----------  --------------  -------- 
 Profit for the 
  period                       -           -           -          -           -             -        (38)            (38)      (38) 
 
 Other 
 comprehensive 
 income 
 Unrealised gain 
  on Available 
  For Sale 
  Financial 
  Assets (*) 
  Realised gain 
  on Available 
  For Sale                     -           -           -          -       (131)                         -           (131)     (131) 
  Financial 
  Assets                       -           -           -          -        (67)                        67               -         - 
                  --------------  ----------  ----------  ---------  ----------                ----------  --------------  -------- 
 Balance at 1 
  October 2021                51       5,370       2,594         11         360             -     (7,497)             889       889 
                  --------------  ----------  ----------  ---------  ----------                ----------  --------------  -------- 
 Loss for the 
  period                       -           -           -          -           -             -        (29)            (29)      (29) 
 
  Other 
  comprehensive 
  income 
 Realised gain 
 on Available 
 For Sale 
 Financial 
 Assets 
    Fair Value 
     adjustments               -           -           -          -       (265)                                     (265)     (265) 
    Realised                   -           -           -          -                                                     -         - 
    gains 
 Exchange rate 
  gain on US $                 -           -           -          -           -            15        -                 15        15 
 
 Balance at 31 
  March 2022                  51       5,370       2,594         11          95            15     (7,526)             610       610 
                  ==============  ==========  ==========  =========  ==========  ------------  ==========  ==============  ======== 
 
 
 
 
 

6

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHSED 31 MARCH 2022

 
                                             Six months   Six months 
                                                     to           to 
                                               31 March     31 March 
                                                   2022         2021 
                                                GBP'000      GBP'000 
 
 Cash flows from operating activities 
 Cash used in operations                           (19)        (110) 
 Taxation                                             -            - 
                                            -----------  ----------- 
 Net cash used in operating activities             (19)        (110) 
                                            -----------  ----------- 
 
 Cash flows from investing activities 
 Sale proceeds of investments held 
  for sale                                            -          307 
 
 Net cash used in investing activities                -          307 
                                            -----------  ----------- 
 
 
 Net (decrease)/increase in cash and 
  cash equivalents                                 (19)          197 
 Cash and cash equivalents at beginning 
  of period                                         489          186 
                                            -----------  ----------- 
 
 Cash and cash equivalents at end 
  of period                                         470          383 
                                            ===========  =========== 
 

7

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM CASH FLOW STATEMENT (continued)

FOR THE SIX MONTHSED 31 MARCH 2022

 
 CASH FLOW FROM OPERATING ACTIVITIES            Six months   Six months 
                                                        to           to 
                                                  31 March     31 March 
                                                      2022         2021 
                                                   GBP'000      GBP'000 
 
   Loss before taxation                               (29)         (49) 
 
 Adjustments for: 
  Unrealised foreign exchange gain                      15            - 
 
 Changes in working capital: 
 
   Increase in trade and other receivables               -         (75) 
  (Decrease)/increase in payables                      (5)           14 
                                               -----------  ----------- 
                                                      (19)        (110) 
 Taxes paid                                              -            - 
 
 Cash used in operations                              (19)        (110) 
                                               ===========  =========== 
 

8

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT

FOR THE SIX MONTHSED 31 MARCH 2022

   1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

BASIS OF PREPARATION

The Company is incorporated in the United Kingdom under the Companies Act 2006.

This unaudited Group Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the disclosure requirements of the Listing Rules. The policies set out below have been consistently applied to all periods presented.

This Group Interim Report is not audited.

These financial statements are for the period 1 October 2021 to 31 March 2022.

The results for the period ended 30 September 2021 have been extracted from the statutory consolidated financial statements of Associated British Engineering Plc, which are prepared in accordance with IFRS, as adopted by the EU.

NEW AND AMED STANDARDS ADOPTED BY THE GROUP

The following standards and amendments to existing standards became effective from 1 January 2021 and are applicable for the current reporting period:

-- Amendments to IAS 1, Presentation of Financial Statements. The amendments clarify the basis used for the classification of current and non-current liabilities.

-- Amendments to IAS 8, Accounting policies, Changes in Accounting Estimates and Errors. The amendments introduce the definition of an accounting estimate and include other amendments to IAS 8 to distinguish changes in accounting estimates from changes in accounting policies.

-- Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The amendments clarify the costs that should be included when assessing whether a contract is onerous.

The adoption of the above new and revised standards had no impact on the financial statements of the Group for the period ended 31 March 2022.

The following amendments to existing standards have been issued, but will become effective for annual periods beginning on or after 1 January 2022.

   --      IFRS 1, IFRS 9, IFRS 16 and IAS 41   Annual Improvements to IFRS Standards 2018-2020 
   --      IAS 1     Disclosure of Accounting policies 
   --      IAS 8     Definition of Accounting Estimates 
   --      IAS 12   Deferred Tax related to Assets and Liabilities arising 

from a single transaction

9

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

GOING CONCERN

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairmen's statement on page 1. The financial position of the Group, its cash flows and liquidity position are described in the financial statements.

The Company has sufficient financial resources. As a consequence, the Directors believe the Company is well placed to manage its business risks successfully, including the impact of Covid-19 and Brexit. The Directors regularly review the forecasts.

In accordance with their responsibilities, the Directors of the company have considered the appropriateness of the going concern basis, which has been used in the preparation of these financial statements. The Directors have prepared trading and cash flow forecasts for the Company, which takes into account the future performance of the Company and consider the impact of the Covid-19 pandemic. The forecasts, including allowance for reasonable changes in trading performance indicate that the Company should be able to operate for at least 12 months from the approval of these financial statements.

The forecasts for the 12 months from approval of these financial statements have been considered. As a result of the above assessment, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a minimum period of 12 months from the date of signing these financial statements. Thus, they are adopting the going concern basis in preparing the annual financial statements.

BASIS OF CONSOLIDATION

The Group Interim Report incorporates the financial statements of Associated British Engineering Plc and its subsidiary undertakings for the six months to 31 March 2022. All inter-company balances and transactions have been eliminated in full. The Group Interim Report includes the results of subsidiaries acquired or disposed of during the year from or to the effective date of acquisition or disposal.

A subsidiary is an entity controlled, either directly or indirectly, by the Company, where control is the power to govern the financial and operating policies of the entity so as to obtain benefit from its activities. The acquisition method of accounting is used to account for acquisition of subsidiaries by the Group. The cost on an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Acquisition costs are expensed in the consolidated income statement for the period in which they are incurred.

The consolidated financial statements consist of the results of the following entities:

       Entity                                                                          Summary Description 
       Associated British Engineering Plc (ABE)                  Holding Company 
       Akoris Trading Ltd (AT)                                                Trading Company 

REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration receivable by the Group for goods supplied and services provided, excluding value added tax and trade discounts.

10

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ACCOUNTING ESTIMATES AND JUDGEMENTS

Management are required, in accordance with IFRS, to exercise judgement and to make estimates and assumptions regarding the application of accounting policies and the resulting effect on reported amounts of assets, liabilities, income, and expenses. These estimates and assumptions are based on historical experience and a review of current conditions prevailing at the time but actual results may differ from these estimates. Any such revision is recognised in the financial statements in the period in which the change in circumstance is detected.

Accounting Judgements

The key areas where management have exercised judgement in the period, and the thought process undertaken, are as follows:

Deferred taxation

Judgement is applied by management in determining the extent to which the recovery of carried forward tax losses is probable for the purpose of meeting the criteria for recognition as deferred tax assets.

TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax payable is based on the taxable profit or loss for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

FOREIGN CURRENCIES

The functional and presentational currency of the parent company and its subsidiaries is UK Pound Sterling, rounded to the nearest thousand. Transactions in currencies other than the functional currency are translated at the rate ruling at the date of the transaction. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Any gains or losses arising are taken to the income statement.

11

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments that have maturities of three months or less from inception, are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

FINANCIAL INSTRUMENTS

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities and are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the income statement. Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability. Where none of the contractual terms of share capital meet the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

Trade and other receivables

Trade and other receivables are originally recognised at fair value. Subsequent measurement is at amortised cost using the effective interest rate method. A provision against trade receivables is made when there is objective evidence that the group will not be able to collect all amounts due to it in accordance with the original terms of those receivables.

Trade and other payables

Trade and other payables are originally recognised at fair value, net of transaction costs. Subsequent measurement is at amortised cost using the effective interest rate method.

Investments in securities

Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, with all transaction costs being written off to the income statement as incurred. Investments are classified as available for sale and are measured at subsequent reporting dates at fair value. Gains and losses arising from changes in fair value of available for sale financial assets are included in other comprehensive income for the period. When the asset is disposed of or deemed to be impaired, the cumulative gain or loss is

reclassified from equity reserve to income statement.

EQUITY AND RESERVES

Share capital represents the nominal value of shares that have been issued except for the preference shares classified as debt. Deferred shares represent shares arising from the sub-division of ordinary shares of GBP2.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period retained profits and losses. Available for sale reserve includes all gains and losses relating to Available for Sale financial assets. Other reserves relate to movements not classified in any of the reserves detailed above. Revaluation reserve includes all gains and losses relating to Property, Plant and Equipment. All transactions with owners of the parent are recorded separately within equity.

12

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLOICIES (continued)

SEGMENTAL REPORTING

The standard requires financial information to be disclosed in the financial statements in the same format in which it is disclosed to the chief operating decision-maker. The chief decision-maker has been identified as the Board, at which level strategic decisions are made.

2. SEGMENTAL ANALYSIS

 
                      Six months     Six months 
                              to             to 
                        31 March       31 March 
                            2022           2021 
                         GBP'000        GBP'000 
 
 United Kingdom                -              - 
 
                               -              - 
                     ===========    =========== 
 

All revenue originates in the United Kingdom.

In the periods ended 31 March 2022 and 31 March 2021, save for dollar bank accounts, all of the assets held by the Group were located in the United Kingdom and all capital expenditure was incurred within the United Kingdom

Operating segments

The following segment information has been prepared in accordance with IFRS 8, "Operating Segments", which defines requirements for the disclosure of financial information of an entity's operating segments.

The Board consider the Group on an individual company basis. Reports by individual companies are used by the chief decision-maker in the Group. Significant operating segments are Associated British Engineering Plc and Akoris Trading Limited.

The Group's operations are located in the United Kingdom. Any transactions between business units are on normal commercial terms and conditions.

Akoris Trading Limited is a commodity and natural resource trading, finance and investment company. Associated British Engineering Plc is the Group's holding company.

13

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHS ENDED 31 MARCH 2022

2. SEGMENTAL ANALYSIS (continued)

 
                                     Associated 
                                        British 
                                    Engineering           Akoris 
                                            Plc          Trading     Consolidated 
                                                             Ltd 
                                        GBP'000          GBP'000 
 Six months to 31 March 
  2022 
 External sales                               -                -                - 
 
 Segment result (LBIT)                     (14)                -             (14) 
                                  -------------  ---------------  --------------- 
 
 Net finance expense                                                            - 
 Taxation                                                                       - 
 
 Loss after tax                                                              (14) 
                                                                  =============== 
 
 Other information 
 Capital additions                            -                -                - 
 
 Balance sheet 
 Segment assets                             617               28              645 
                                  =============  ===============  =============== 
 
 
   Six months to 30 September 
   2021 
 External sales                               -                -                - 
 
 Segment result (LBIT)                     (37)              (1)             (38) 
                                  -------------  ---------------  --------------- 
 
 Net finance expenses                                                           - 
 Taxation                                                                       - 
 
 Loss after tax                                                              (38) 
                                                                  =============== 
 
 Other information 
 Capital additions                            -                -                - 
 
 Balance sheet 
 Segment assets                             900               29              929 
                                  =============  ===============  =============== 
 

14

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHS ENDED 31 MARCH 2022

   3.         PRINCIPAL RISKS AND UNCERTAINTIES 

The main risks arising from the Group's financial instruments are market risk, liquidity risk and credit risk. Market risk includes price commodity risk, foreign exchange risk and interest rate risk. The Group has an exposure to foreign exchange risk to the extent that investments may be priced in US dollars or other currencies and has no loans, therefore limited exposure to interest rate risk.

Cash and cash equivalents held at floating rates expose the entity to cash flow risk. Interest rate risk is limited to the cash and cash equivalents.

Based on the balance sheet value of cash and cash equivalents, a 1% change in interest base rates would unlikely lead to any material increase or decrease in income or equity.

The Board reviews and agrees policies for managing each of the above risks and they are summarised below and in the accounting policies to the Group financial statements. These policies have been consistently applied throughout the period.

COMMODITY PRICE RISK

The Group holds no stock and as such has no exposure to commodities.

LIQUIDITY RISK

The Group's liquidity is dependent on the cash balances available and it is the Group's policy to place surplus cash on deposit to ensure it has an appropriate rate of return. The Board reviews an annual 12 month financial projection as well as information regarding cash balances.

CREDIT RISK

The Group's principal financial assets are cash deposits, available for sale financial assets and trade and other receivables. The credit risk associated with the cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from its trade and other receivables and available for sale financial assets.

15

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