CAPRICORN ENERGY PLC ("Capricorn" or "the Company")

(Unless otherwise stated, all dollar amounts ($) refer to US dollars)

Half-Year Report Announcement

Randy Neely, Chief Executive, Capricorn Energy PLC said:

"Capricorn ended H1 2023 a very different business than at the start of the year. The Company is on its way to becoming a much leaner organisation, focused on tight cost control, shareholder returns and maximising value from our Egypt portfolio. I was appointed Chief Executive in June of this year and, while in the early stages of the role, it is clear to me that we have a robust and achievable strategy to maximise the value in our Company.

The strategic review introduced by the new Board in February has formed a clear roadmap to drive change; return excess capital to shareholders, right sizing the organisation, maximising the potential of our Egyptian assets and the rationalisation of non-core exploration assets. Progress has already been achieved, specifically on the return of capital of approximately $575 million to shareholders in 2023; I am delighted to confirm that in addition to approximately $450 million returned in May and an ongoing share buyback, of which approximately $15 million has already been repurchased, shareholders will receive an unconditional special dividend of approximately $100 million in October 2023, subject to shareholder approval. We have also achieved a material reduction in ongoing G&A, matching costs to the scale and priorities of the business and made significant progress in exiting all non-Egypt licences to focus capital and internal resources on the Egyptian portfolio.

Looking ahead, the Company will focus on maximising the value of our Egypt business. We have taken the decision to accelerate the transfer of operations of our exploration assets to our joint venture partner Cheiron to achieve operational synergies and alignment with field development activity. This will allow the Company to focus its limited internal technical resources on production and development. Our management team is also preparing for a detailed Operational Update in November, when we will outline our plan for Capricorn's future."

Tawfik Diab, Chairman, Cheiron said:

"Following the arrival of Randy, great progress has already been made in building a constructive partnership between Capricorn and Cheiron. There is alignment between us as we move forward with activities in the Western Desert for the benefit of the joint venture and Egypt."

H1 2023 Operational and Strategic Highlights

Ø Strategic:

o  ~$450m special dividend paid in May with a further payment of approximately $100m expected to be paid on 20 October 2023

o  General Meeting to be held on 5 October to approve return of cash to shareholders

o  Targeting completion of the ~$25m share buyback by end of year, with ~$15m repurchased to date

o  Prioritisation of Egypt development and production operations

o  Full exit of Mauritania exploration position

o  Commencement of exiting all non-Egypt licenses

o  80% overall reduction in UK headcount by year end

o  Targeting $20m run-rate G&A expenses once organisational restructuring complete

o  Appointment of Hesham Mekawi as non-executive Deputy Chairman

Ø Operational and Financial:

o  Revenue in Egypt of $98m with realised oil price of $78.56 per boe and gas price of $2.95 per mmscf

o  Accounts receivable from EGPC have increased from $97m to $144m over the course of H1, with $113m overdue

o  Operating cost per boe of $4.82 on WI basis

o  Balance sheet: Group net cash of $176m

o  $77m Capex and general exploration costs during H1; $49m in Egypt and $28m across legacy international portfolio

o  Eight wells drilled this year in Egypt oil-rich BED area with one flowing at initial rates of up to 4,600 bopd following testing in May

o  Egypt H1 2023 WI production averaged 31,500 boepd

Ø ESG:

o  MSCI classification upgraded from AA to AAA status

o  Leading our peers in ESG related practices

Outlook

Ø Full Year forecast net capital expenditure of $117-127m

·      Egypt Development & Production $75-85m

·      Egypt Exploration & Appraisal ~$12m

Ø Full Year production expected to be at the low end of guidance 32,000 to 36,000 boepd, exiting at ~ 34,000 boepd

Ø Non-core exits progressed: Mexico, Suriname & Mauritania

Ø Ultimate G&A target of $1.50/boe (<$20m annually)

Ø Transferring operatorship of Egypt exploration acreage to partner

Ø Teen field onstream

Ø Detailed Operational Update set for 30 November 2023 in London

Ø On track with our Net Zero pathway and supporting JV partners with decarbonisation initiatives

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.  

Enquiries to:

Webcast

There will be a live audio webcast of the results presentation available to view on the website (www.capricornenergy.com) at 9am BST. This can be accessed on PC, Mac, iPad, iPhone, and Android mobile devices.

An 'on demand' version of the webcast will be available on the website as soon as possible after the event. This can be viewed on PC, Mac, iPad, iPhone, and Android mobile devices.

Presentation

The results presentation slides will be available on the website from 7:00am BST.

Conference call

You can listen to the results presentation by dialling in to a conference call at 9am BST using the below dial-in-details. Analysts who wish to ask a question should use the conference call facility.

Dial-in Details:

United Kingdom (Local): +44 (0) 33 0551 0200

Access code: Quote 'Capricorn Half Year Results' when prompted by the operator.

Transcript

A transcript of the results presentation will be available on the website as soon as possible after the event.

Corporate Overview

In Q1, the proposed reverse takeover of NewMed Energy was terminated following strong shareholder opposition and campaign, which also resulted in a renewal of the Board, with all but two members resigning. Six new Board members were appointed at an extraordinary general meeting on 1 February. Following their appointment, the new Board, led by Craig van der Laan as Chair, immediately began a company-wide assessment, focusing particularly on the excessive legacy cost base. This strategic review was presented on 27 April at the Company's Full Year Results, with some goals already having been achieved. The five immediate priorities were:

·      The return of excess cash to shareholders

·      Cost cuts and cash preservation

·      Ceasing exploration activities outside of near field activity in Egypt

·      Improving the Egypt business

·      Culture change

In line with these priorities, the Board returned approximately $450 million to shareholders in May and expects to also return a further special dividend of approximately $100 million on 20 October 2023. It remains the Board's intention to return further surplus capital to shareholders. The special dividend, which will be accompanied by a share consolidation and is subject to shareholder approval, is expected to be paid on 20 October as a final cash dividend of 56 pence per share. The consolidation and special dividend record date is expected to be 5 October, with dealings in the consolidated shares (ex-dividend) expected to commence on 6 October.

By the end of the year the UK workforce will be reduced by ~80% to less than 30 people and a total staff level of approximately 50 people. This level of staffing better reflects the revised needs of the business, and the combination of lower staff levels, reduced office space, exiting the non-core exploration activities and a laser focus on costs will lead to material savings in G&A expenses. However, the full benefit of these reductions will not be realised until 2024 due to the transition costs of making those changes. Ultimately, the company is targeting G&A costs of below $20m annually (less than $1.50/boe).

The receivables position owing from EGPC at the end of June is $144m of which $113m is overdue. The increase in amounts outstanding from EGPC is a key concern for the Company and management will continue to work with EGPC to address this issue.

At the beginning of the year, Capricorn was involved in a number of high-risk exploration projects which were deemed by the new Board as non-core. To date, the Company has relinquished its Mauritanian position and continues to pursue the exit of its exploration positions in the UK, Mexico and Suriname.

In June, Randy Neely became the CEO of Capricorn, bringing with him extensive experience of running a low-cost, effective business in Egypt and creating value in country.

Egypt Production

Working interest production across the four main concession areas in the Western Desert averaged ~31,450 boepd during the first half of 2023, with ~44% of the production mix comprising oil and condensate, as liquids opportunities continued to offer the best returns in the current price environment.

The 2023 well programme is expected to deliver 40 wells. The joint venture is focused on continual optimisation of the programme to improve overall drilling, completion and hook-up performance. Fourteen wells have been completed in the BED area, a combination of producer, water injector and near field exploration following a number of successful wells drilled in the area in 2022, extending field limits and, potentially, reserves. The BED area comprises a series of stacked reservoirs with varying degrees of production maturity. Recent activity here has been stimulated by a developing view of the Abu Roash reservoir, positively impacted by wells early in 2023 that exceeded expectations in terms of reservoir development and hydrocarbon distribution. This field remains a focus in the second half of 2023 with nine further wells planned. In the Karam Field, located in the AESW concession, a well completed in May at initial rates of up to 4,600 bopd in the same Abu Roash reservoir producing at BED, the highest flowrates encountered in the joint venture to date.

Production has also been impacted by operational challenges with system constraints and wells impacted by ESP performance. In the second half of 2023, the Teen project came online from two wells, several months later than originally planned. This project will initially be focused on establishing the productivity from the two wells to support a future decision on full field development. Capricorn is working collaboratively with the operating partner to focus on production performance in the second half of 2023 with active high grading of new wells, in particular liquids rich opportunities and the appointment of production expertise in Cairo. We will continue to work with our partner to seek opportunities to enhance operational efficiency through the rig fleet to improve well delivery.

As a consequence of drilling fewer wells than planned and production performance of the asset in the first half of 2023, Capricorn now expects annual net working interest production to be at the low end of original guidance. This reflects our up-to-date views and plans, including; the reduction in well count for the year, higher than expected ESP failures, encountered facility / system constraints with new wells, uncertainty in performance and delayed timing of the Teen project, new well performance and our learned understanding of the existing well stock.

Capricorn remains committed to our net-zero roadmap with accelerated short and medium-term GHG equity emission reduction targets (15% by 2025/30% by 2030) on track. We continue to support decarbonisation initiatives relating to projects to reduce flaring, venting and fugitive emissions. Recent successes include the implementation of Phase 1 of identification and mitigation of fugitive emissions, with Phase 2 implementation planned within scheduled shutdowns.

Egypt Exploration

Egypt

Capricorn undertakes two exploration workstreams within its Western Desert portfolio, firstly on four exploration concessions and secondly on the Bapetco operated acreage. As a result, Capricorn is exposed to a variety of opportunity types from near field opportunities, established proven play types and unconventional resource opportunities. In July, Capricorn began taking steps to turn the operatorship of three exploration concessions over to Cheiron. This offers a number of synergistic and cost benefits to Capricorn, with operational benefits from rig schedule optimisation, while allowing Capricorn to make organisational changes to focus on delivering value from its producing position in the Western Desert basin.

In 2023 Capricorn began a campaign of operated exploration drilling, initially targeting the Abu Sennan licence in the South of the Western Desert. These two wells fulfilled the work commitments of the licence, and while they were delivered under budget and fully tested a number of play types on the fringe of the El Gharadig Basin, they were unfortunately dry. The block is now in the process of being relinquished.

In the first half of 2023 an additional well was drilled in the South East Horus licence, the first of a minimum of two planned wells. This well was also dry and the focus now turns to the new 3D data acquired on the licence in 2022 to mature further opportunities for drilling.

Following the transfer of operatorship to Cheiron, further drilling on the South East Horus licence and the commencement of drilling in West El Fayoum licences are currently scheduled in Q1 2024. In addition, in 2024 the joint venture will commence drilling in North Um Baraka where 3D was also acquired in 2022; two wells will be drilled here.

Non-core Portfolio

UK

Capricorn operates five UK Southern North Sea licences: P2428 and P2567 (Capricorn 60% WI) and P2560, P2561 and P2562 (Capricorn 70% WI) with partner Deltic Energy.

Across the five Mid North Sea High licences, the technical work programme has been concluded ahead of well investment decisions in H2 2023. There is no further capital commitment on the remaining UK licences and Capricorn has initiated steps to expediently exit the licences prior to the year-end by surrender or withdrawal.

Mexico

Capricorn has interests in four blocks in the Gulf of Mexico, two as Operator: Blocks 9 (Capricorn 50% WI) and 15 (Capricorn 50% WI), and two as non-Operator: Blocks 7 (Capricorn 30% WI) and 10 (Capricorn 15% WI).

Capricorn's final commitment exploration well in Mexico, Yatzil-1X in Block 7 (Eni Operator) was drilled in Q1 2023 and discovered hydrocarbons. According to preliminary Operator estimates, around 200 million barrels of oil may be in place. Capricorn internal analysis led to the decision not to participate in the forthcoming phases and the Company has therefore informed partners of its decision to withdraw from the Block 7 licence. Capricorn's withdrawal processes in Blocks 9 and 10 and the JV relinquishment process in Block 15 are ongoing with completion expected by Q1 2024.

Suriname

Capricorn operates Block 61 (100% WI), situated in the Guyana-Suriname basin where significant discoveries continue to be made. Capricorn marketed the licence to farm-down its position in HI 2023 and was unsuccessful in attracting interests in this block in advance of expiry in October 2023. As such, the block will be relinquished in Q4.

Senegal

On 18 June Capricorn noted Woodside Energy's announcement regarding its Sangomar Field Development in Senegal where the targeted first oil moved from late 2023 to mid-2024. Capricorn is entitled to a contingent payment of between $25m and $50m if first oil is achieved in the first half of 2024 and the average Brent oil price during the first six months of production exceeds the $55/bbl or $60/bbl thresholds contained in the sale and purchase agreement. There is no payment if first oil is achieved later than H1/2024. Capricorn is committed to return any proceeds of this contingent payment to its shareholders.

Principal risks and uncertainties

Managing Capricorn's key risks and associated opportunities is essential to the company's long-term success and sustainability. The Group endeavours to pursue investment opportunities which offer an appropriate level of return whilst ensuring the level of associated political, commercial and technical risk remains within the defined risk appetite of the company.

Capricorn's risk management framework provides a systematic process for the identification and management of the key risks and opportunities which may affect the delivery of the Group's strategic objectives. Key Performance Indicators are set annually and determining the level of risk the business is willing to accept in the pursuit of these objectives is a fundamental component of Capricorn's risk management framework.

Overall responsibility for the system of risk management and internal control and reviewing the effectiveness of such systems rests with the Board. Principal risks, as well as progress against key risk projects, are reviewed at each Board meeting and at least once a year the Board undertakes a risk workshop to review the Group's principal risks. This integrated approach to risk management has been and continues to be critical to the delivery of strategic objectives.

Responding to Changing Risks during H2 2023

Capricorn has assessed the risks and uncertainties at the end of H1 2023 and the principal risks are:

➢ Volatile oil and gas prices

➢ Failure to replace long-term reserves and resources

➢ Increasing EGPC receivables balance

➢ Reserves downgrade or impairment

➢ Failure to improve fiscal terms in Egypt

➢ Senegal project delay beyond June 2024

➢ Future challenges and costs to achieving pathway to Net Zero 2040

➢ Lack of adherence to health, safety, environment and security policies

➢ Failure to unlock value from strategic review

➢ Fraud, bribery and corruption

As part of the embedded risk management process, the Group actively considers emerging risks and opportunities which could negatively or positively impact on the business. Egypt continues to be the focus of the discussions and work continues to identify potential known and emerging threats and opportunities which could impact on the new Capricorn's ability to grow the Egypt business both organically and inorganically. 

Financial Review

Key production statistics

^{*excludes reduction in revenue due to expected credit loss charge}

Loss for the Period

Change in Accounting Policy - Intangible exploration/appraisal assets

Following completion of the Group's strategic review, Capricorn has changed its policy for accounting for non-well specific general exploration costs.  Previously such costs were capitalised and allocated to future exploration wells and would either remain capitalised or be charged to the Income Statement dependent upon the success of the well.  Now, all non-well specific exploration costs are charged to the Income Statement as they are incurred.

The directors believe that this policy provides a clearer understanding of the performance of the Group in any given period as Capricorn moves from an exploration-led business to one focussed on maximising value from its producing assets.

Egypt Operating Segment Results

In Egypt, total revenue was $98.3m.  $76.6m was generated on sale of liquids with an average price of $78.56 per bbl on net sales volumes of 1.0 mmbbls.  Gas revenue was $21.7m from volumes of 7.3 mmscf at the contracted rate of $2.95/mmscf.

Cost of sales in the first half of the year were $27.5m, including a $0.9m offset for inventory movements.  Production costs decreased slightly to $4.8 per boe, on working interest production over the six-month period, while depletion charges were $55.1m, at a weighted average rate of $20.74 per boe across the concessions.

Capricorn records other income on additional production that is notionally allocated to the Group to cover tax due on profits from the concessions.  This is offset by an equal and opposite tax charge.  In the current period, the value of this income and notional tax gross-up is $29.8m.

Net finance costs in Egypt of $7.5m, including loan interest and charges, and the Group recognised a fair value loss of $3.4m on deferred consideration payable on the 2021 business combination.

The total tax charge on Egypt operations for the period is $19.1m, being the tax gross-up charge of $29.8m offset by deferred tax credits on asset temporary differences.

Results from Other Continuing operations

The loss on other continuing operations of $58.3m includes unsuccessful exploration costs of $16.4m and general exploration costs of $11.4m.  $21.6m of this cost related to operations in Mexico where the Group concluded its exploration programme with the drilling of the Yatzil well.  Administration charges of $40.4m, include $12.0m of redundancy costs following the reduction of staff numbers based in Edinburgh and $6.9m of costs relating to the aborted corporate transactions proposed by the previous Board.  Net finance income of $9.5m includes interest earned on cash and cash equivalents of $15.6m offset by foreign exchange losses of $6.1m.

Discontinued Operations

Earn-out consideration on disposal of UK Producing assets

During the period the Group made a loss of $21.5m on the fair value of future earnout payments due on prior year disposals of UK producing assets. The loss was partially offset by a refund of production costs of $4.3m, following completion of joint venture audits, interest income of $2.3m on the 2022 contingent payment and a deferred tax credit of $4.1m.  

Cash received in March 2023 relating to the 2022 earnout was $136.7m, including the interest noted above.

Contingent consideration on Senegal asset sale

Capricorn disposed of its interests in Senegal in 2020. Under the sale agreement, Capricorn may be due a further consideration of up to $50m dependent on production starting before 30 June 2024 and the prevailing oil price. No revenue has been recognised for this possible payment to date.

Net cash inflow for the Period

¹ Earnout consideration of $136.7m including interest and working capital settlement of $4.3m

² Includes general exploration costs; Egypt $4.4m, other $11.4m

³ Cash outflows on business development activities of $4.8m are reallocated from administration costs

⁴ Share purchases for LTIP of $16.9m less $0.8m proceeds from issue of shares on exercise of options

⁵ Interest received of $18.4m less foreign exchange loss on cash and cash equivalents of $1.9m and other interest and charges of $9.5m

⁶ Closing cash of $301.0m less loans and borrowings of $126.4m excluding unamortised facility fees of $1.9m

Cash and cash equivalent balances at 30 June 2023 of $301.0m were offset by borrowings in Egypt of $126.4m.  Cash includes restricted cash balances of $35.1m which may not be distributed to shareholders.  Of this amount, $33.9m is available for use to fund non-operated concessions in Egypt.  Loan repayments in the period were $33.5m.

Cash inflows from operations in Egypt of U$22.7m can be reconciled to cash flows from operating activities per the statutory cash flow as follows:

Balance Sheet

The Group's net asset position at 30 June 2023 is summarised as follows:

Exploration assets

Following the change in accounting policy, exploration assets of $0.8m at 30 June 2023 relate wholly to planned exploration wells in Egypt. Costs associated with NFE wells are included within development/producing assets.

Development assets and goodwill

At the period end, the carrying value of the Group's producing assets in Egypt was $240.5m, after additions of $41.8m, and depletion charges of $55.1m for the period.

The Group reviewed its producing assets and goodwill in Egypt for indicators of impairment, however no indicators were identified, and no impairment tests have therefore been performed at the half-year. 

Other assets and liabilities

Financial assets at fair value through profit and loss include $68.1m of future earnout consideration receivable.  Deferred consideration payable on the Egypt business combination is also held at fair value with a total liability of $40.2m for payments due in 2024 and 2025.

Trade receivables at the period end were $144.2m, an increase of $47.3m across the period.  $113.3m of this amount was overdue.  Capricorn continue to work with partners and engage with EGPC in Egypt to address the receivables position.

Lease liabilities at the period end include amounts due for new office premises in Edinburgh originally planned to accommodate the Group's head office and the associated right-of-use asset is included in other non-current assets.  The move to the new office space has been aborted and Capricorn are working to sub-let this office space with alternative, smaller premises having been secured.

The Group's net deferred tax position at 30 June fully relates to assets in Egypt, with the UK deferred tax liability on earnout consideration receivable having reversed in full.

Equity movements

Shareholder returns and share premium cancellation

Capricorn returned $457.9 to shareholders by way of a dividend of $445.7m and $12.2m share re-purchase in H1 2023.  The Company undertook a share consolidation at the same time as paying the dividend.  This completed on 15 May 2023 where the existing 315,072,439 of ordinary shares of 21/13 pence each were replaced with 148,534,155 ordinary shares of 490/143 pence each.

In anticipation of returns to shareholders, Capricorn undertook a share premium cancellation which completed in 2023, following a shareholder vote on 15 December 2022.  The cancellation received the required confirmation for the Court of Session in late January 2023 and was registered with the Register of Companies on 31 January 2023, which is the effective date of the cancellation.  The full amount of the Company's share premium accounts transferred to retained earnings increasing distributable reserves available for future returns.

Statement of Directors' Responsibilities

The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and give a true and fair view of the assets, liabilities, financial position and loss for the period and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

Ø an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and

Ø a description of the principal risks and uncertainties for the remaining six months of the financial year.

There were no material related-party transactions in the first six months and no material changes in the related-party transactions described in the last annual report.

The directors of Capricorn Energy PLC are listed in the Capricorn Energy PLC Annual Report for 31 December 2022. A list of current directors is maintained on the Capricorn Energy PLC website: www.capricornenergy.com.

By order of the Board.

Randy Neely

Chief Executive

13 September 2023

About Capricorn Energy PLC

Capricorn is an Egypt-focused energy producer, with an attractive portfolio of onshore exploration, development and production assets in the Western Desert.

For further information on Capricorn please see: www.capricornenergy.com.

Independent review report to Capricorn Energy PLC

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Capricorn Energy PLC's condensed consolidated interim financial statements (the "interim financial statements") in the Financial Statements of Capricorn Energy PLC for the 6 month period ended 30 June 2023 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

·     the Group Balance Sheet as at 30 June 2023;

·     the Group Income Statement and Group Statement of Comprehensive Income for the period then ended;

·     the Group Statement of Cash Flows for the period then ended;

·     the Group Statement of Changes in Equity for the period then ended; and

·     the explanatory notes to the interim financial statements.

The interim financial statements included in the Financial Statements of Capricorn Energy PLC have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Financial Statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Financial Statements, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Financial Statements in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Financial Statements, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the Financial Statements based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

13 September 2023