Shore Capital Group Limited Final Results (8120A)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Shore Capital Group Limited	LSE:SGR	London	Ordinary Share	GG00BGCZJ741	ORD NPV

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	222.50	145.00	300.00				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

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RNS Number : 8120A

Shore Capital Group Limited

29 March 2017

Shore Capital Group Limited

("Shore Capital", the "Group", or the "Company")

Preliminary Results for the Year Ended 31 December 2016

Record Capital Markets performance defies year of geopolitical surprises

Shore Capital, the independent investment group specialising in capital markets, principal finance and asset management, today announces its preliminary results for the year ended 31 December 2016.

Financial highlights

 
 --             Revenue up 21% to GBP39.4 million (2015 Adjusted(1) 
                 : GBP32.6 million) 
            o     Capital Markets revenues up 21% to GBP28.3 
                   million 
            o     Asset Management revenues up 10% to GBP10.4 
                   million 
 --             Profit before tax and impairments of GBP5.1 
                 million(2) (2015 Adjusted(1) : GBP4.3 million) 
 --             Earnings per share before impairments of 13.4p(3) 
                 (2015 Adjusted(1) : 12.1p)

(1) 2015 Adjusted figures exclude the impact of Spectrum licence sales in 2015. (2015 Statutory Revenue: GBP42.0 million)

(2) Statutory profit before tax of GBP2.4 million (2015: GBP11.7 million)

(3) Statutory earnings per share of 6.0p (2015: 27.1p)

Operational highlights

 
 --   Capital Markets advised on four IPOs, the 
       largest AIM fundraise of 2016 for Sirius Minerals 
       plc and Poundland Group plc's GBP600 million 
       takeover by Steinhoff International 
 --   Won 11 new clients, including Dairy Crest 
       Group plc, Chesnara plc, Stride Gaming plc 
       and Earthport plc 
 --   Puma Investments again achieved the largest 
       limited life VCT fundraising of the tax year 
       (over half of the total raised in its category) 
 --   Puma AIM Inheritance Tax Service named Best 
       AIM Investment Manager at 2016's Growth Investor 
       Awards

Commenting on the results, Howard Shore, Chairman, said:

"Despite the market uncertainty immediately pre-and-post the Brexit vote, and the period leading up to the US Presidential election, I am delighted by the performance of our Capital Markets business and the strong progress made in our Asset Management division.

"We have seen companies wanting to get on with growing their businesses and institutions that want to buy into them. That cannot happen in a vacuum, demonstrating that markets are again open for business, focusing on the fundamentals of the deal, rather than market participants sitting on their hands and worrying about uncertainty.

"Having led the Group's growth and development for 32 years I am relinquishing my operational responsibilities as Group Chief Executive whilst remaining Chairman to focus on our international investment strategy, including developing new relationships as well as investment opportunities. Simon Fine and David Kaye have worked closely with me for many years and I am delighted that they have agreed to lead the Group's future development as Joint Chief Executives. Our independence puts us in an ideal place to make the most of the opportunities that will arise as market conditions improve."

Enquiries:

 
 
                              +44 (0) 20 7468 
 Shore Capital                           7911 
  Howard Shore, Chairman      +44 (0) 14 8172 
  Lynn Bruce, Director                   8902 
 Grant Thornton UK LLP 
  (Nominated Adviser) 
  Philip Secrett 
  Jamie Barklem               +44 (0) 20 7383 
  Carolyn Sansom                         5100 
 Bell Pottinger (Public 
  Relations) 
  James Henderson             +44 (0) 20 3772 
  Jonathan Hodgkinson                    2500

About Shore Capital

Shore Capital is an AIM quoted independent investment group. Founded and majority owned by entrepreneurs, for three decades Shore Capital has been helping entrepreneurial businesses reach their full potential, find committed long-term investors and develop into significant enterprises. The business offers innovative corporate advice; a leading market making business; some of the most respected investment research available in the UK; and a diverse range of high quality investment opportunities, including its hugely successful VCTs and principal finance activities.

The Group is based in Guernsey, London, Liverpool, Edinburgh and Berlin. Shore Capital Stockbrokers Limited, Shore Capital and Corporate Limited, Shore Capital Limited and Puma Investment Management Limited are each authorised and regulated by the Financial Conduct Authority. Shore Capital Stockbrokers Limited is a member of the London Stock Exchange.

www.shorecap.gg

Chairman's Statement

Introduction

Despite the market uncertainty immediately pre-and-post the Brexit vote, and the period leading up to the US Presidential election, I am delighted by the performance of our Capital Markets business and the strong progress made in our Asset Management division.

On a reported basis the Group's performance includes the year-on-year comparison of 2015, during which it sold German spectrum licences. Setting the licence sale to one side, Group revenues grew by 21% to GBP39.4 million.

Of particular note is the excellent performance in our Capital Markets business, where revenues grew 21% to GBP28.3 million; profits rose 45% to GBP6.8 million; and net margins increased to 24%. This performance was driven by the addition of 11 new retained corporate clients, including Dairy Crest Group plc; and the team's work on an array of capital markets transactions, including four IPOs, the largest AIM fundraise of 2016 for Sirius Minerals plc, and advising Poundland Group plc on its GBP600 million takeover by Steinhoff International.

The range and complexity of work our Capital Markets team has undertaken during the year results from its ability to exploit market opportunities arising in a challenging environment, as bigger banks focused on the implications of Brexit. Looking ahead, we believe there will continue to be high-quality opportunities where our service-orientated approach will prove to be attractive to more clients.

Having positioned our business to benefit from improving market conditions, we are continually exploring new ways to develop our proposition. As the quantity of equity capital markets research decreases in future, it is clear that the demand for high-quality investment opportunities and valuable ideas will only increase. Accordingly, during the year we committed additional resources to our research and distribution capabilities, enhancing our coverage across a number of industries.

In a year of significant market volatility driven by geopolitical events, the Group's market making operation performed strongly, providing significant liquidity in the immediate aftermath of the Brexit referendum and US election results. The team grew both revenues and profits by double-digit percentages, reinforcing our position as the third largest market maker on the London Stock Exchange.

Our Asset Management business grew revenues by 10% to GBP10.4 million and whilst our investment in the business led to lower profits of GBP2.0 million and a net margin of 19%, we have increased the team's capabilities and capacity, enabling the business to implement the next stage of its growth strategy.

The Private Client division increased funds under management to GBP200 million (2015: GBP155 million), again achieving a record-breaking GBP31 million fundraise for Puma VCT 12, as well as securing and allotting significant inflows to the Puma EIS Service, which is approaching GBP50 million under management. Puma Heritage and the Puma AIM Inheritance Tax Service celebrated their third and second anniversaries respectively, both continuing to deliver impressive returns for investors, with the latter being named Best AIM Investment Manager at 2016's Growth Investor Awards.

In Institutional Asset Management, Brandenburg Realty completed its second investment. Using Shore Capital's advisory services, it is focused on developing its existing portfolio and seeking new acquisition opportunities. At Puma Brandenburg, the Group assisted with a number of disposals and continued to look for new ways to optimise capital resources and actively manage its asset base.

In Principal Finance, we incurred a GBP2.7 million pre-tax write down of various assets during the year, which equated to GBP1.6 million after tax and minority interests. These impairments relate to reassessments of the fair value of various Group assets at the year end. Elsewhere in the division, DBD continues to hold its remaining 32 regional radio spectrum licences which cover many of Germany's largest metropolitan centres. An initial pilot utilising a temporary licence has commenced in Berlin.

Finally, as announced separately, I am relinquishing my operational responsibilities as Group Chief Executive and these will be taken over by Simon Fine and David Kaye as joint Chief Executive Officers. I will continue as Chairman of the Group, focusing on our international investment strategy, including developing new relationships as well as investment opportunities.

Having led the Group's growth and development for 32 years I am extremely excited by the favourable environment for our operating businesses. Simon and David have worked closely with me for many years and I am delighted that they have agreed to lead the Group's future development.

Financial Review

Income and expenditure

Revenue for the year decreased by 6.1% to GBP39.4 million (2015: GBP42.0 million) whilst administrative expenses increased by 13.5% to GBP34.2 million (2015: GBP30.1 million). The Group recorded balance sheet impairments of GBP2.7 million (2015: nil), leading to an operating profit of GBP2.6 million (2015: GBP11.8 million). Group profit before tax decreased by 79.4% to GBP2.4 million (2015: GBP11.7 million).

At the Group level, comparisons to the prior year were impacted by the sale of spectrum licences in the Principal Finance division in June 2015. Excluding this sale, revenue for the period increased 21% year-on-year.

Revenue from Capital Markets increased by 21% to GBP28.3 million (2015: GBP23.4 million). Profit before tax was up 44.6% to GBP6.8 million (2015: GBP4.7 million), with a net margin of 24.0% (2015: 20.1%).

Revenue from Asset Management was up 10% to GBP10.4 million (2015: GBP9.5 million), generating profit before tax of GBP2.0 million (down 25.4% from 2015: GBP2.7 million), representing a net margin of 19.0% (2015: 27.9%).

The Principal Finance division recorded a pre-tax loss of GBP4.2 million (2015: profit of GBP5.1 million, including the licence sales).

Basic Earnings per Share

The Group generated earnings per share of 6.0p (2015: 27.1p).

Comprehensive Earnings per Share

On a comprehensive basis, the Group generated earnings per share of 7.3p (2015: 27.7p).

Liquidity

As at the balance sheet date, available liquidity was GBP32.7 million (2015: GBP28.7 million) comprising GBP23.9 million (2015: GBP22.1 million) of cash and GBP8.8 million (2015: GBP6.6 million) of gilts and bonds. In addition, the Group has a GBP20 million working capital facility which was unused at the year end.

This liquidity demonstrates the Group's continuing ability to undertake a range of transactions as opportunities arise in the near term.

Balance sheet

The Group's balance sheet remains strong. Total equity at the year end was GBP67.1 million (2015: GBP67.0 million), reflecting the profit in the year offset by dividends paid to minority shareholders in 2016.

In addition to the GBP23.9 million of cash and GBP8.8 million of gilts and bonds referred to above, the Group held GBP4.0 million in various of its Puma funds, GBP3.5 million net in quoted equities and a further GBP3.6 million in other unquoted holdings. The licences held in the Group's Spectrum Investments were valued at GBP2.1 million (on a gross basis, before allowing for minority interests).

The remainder of the balance sheet was GBP21.2 million net, which included GBP15.1 million of net market and other debtors in the Company's stockbroking subsidiary.

During the year, the Group recorded a GBP2.7 million pre-tax write down in the Principal Finance division. The impact after tax and minority interests was GBP1.6 million. These impairments relate to reassessments of the fair value of various Group assets at the year end.

Net Asset Value per Share

Net asset value per share at the year end was 269.6p (2015: 268.7p).

Dividend

The Board proposes a final dividend of 5.0p (2015: nil). The dividend will be paid on Wednesday 26 April 2017 to shareholders on the register as at Friday 7 April 2017.

Operating Review

Capital Markets

Overview

Despite a turbulent geopolitical environment, the Capital Markets division performed strongly in 2016, increasing revenues by 21% to GBP28.3 million. The year saw the business grow its client base, develop its service offering and act on a significant number of high-profile transactions.

The team participated in four IPOs and a large number of transformational fundraisings for its growing client base, to which 11 new, retained corporate clients were added during the year. Particular highlights included acting on the largest AIM fundraise of 2016, for Sirius Minerals plc; and advising Poundland Group plc on its GBP600 million takeover by Steinhoff International.

Additional investment has been made to augment our research and distribution proposition, enhancing our sector coverage across a number of industries during the year. The high quality of our research product continued to gain recognition during the year, scoring strongly with clients and in external surveys, such as Extel and Starmine.

Our Market Making and Fixed Income businesses have performed very well in the face of substantial market uncertainty, delivering increased levels of revenue and profitability and providing key sources of liquidity in turbulent times.

The business remains alive to opportunities and will continue to invest in high calibre individuals and teams where the Company identifies opportunities for incremental growth.

Corporate Finance

During 2016, the team has continued to be very active and participated in four IPOs, 20 secondary fundraisings and a number of significant transactions including:

 
 --   Sole sponsor and joint bookrunner to Chesnara 
       plc on its GBP70 million placing and open 
       offer to fund the EUR160 million acquisition 
       of L&G Netherland; 
 --   Joint bookrunner to John Menzies plc on its 
       GBP75 million rights issue to fund the US$202 
       million acquisition of ASIG from BBA Aviation 
       plc; 
 --   Co-lead manager on the GBP370 million placing 
       and open offer equity element of Sirius Minerals 
       plc's US$1.2 billion stage one financing, 
       the largest fundraise on AIM in 2016; 
 --   Co-bookrunner on the Main Market IPO of Motorpoint 
       Group plc, raising GBP100 million; 
 --   Co-lead manager on a placing by Playtech plc, 
       raising GBP329 million; 
 --   Joint bookrunner on a placing by Vernalis 
       plc, raising GBP40 million; 
 --   Joint bookrunner on the GBP27 million placing 
       by Stride Gaming plc to fund the acquisition 
       of Tarco, Netboost Media and 8Ball; 
 --   Sponsor and joint bookrunner to two placings 
       by NextEnergy Solar Fund Limited, raising 
       GBP115 million and GBP42 million; 
 --   Joint bookrunner on the EUR23 million placing 
       of founder stock by Applegreen plc; and 
 --   Nominated adviser and sole broker on the IPOs 
       of Cerillion plc and Yü Group plc and 
       nominated adviser and joint broker on the 
       IPO of Amryt Pharma plc;

Our advisory work included acting as joint financial adviser and joint broker to Market Tech Holdings Limited in connection with its move from AIM to the Main Market and as corporate broker to Poundland Group plc in connection with its GBP600 million takeover by Steinhoff International.

We continue to attract high quality corporate clients, adding 11 new retained corporate clients in the year, including Dairy Crest Group plc, Chesnara plc, Motorpoint Group plc; Stride Gaming plc, and Earthport plc.

Research and Sales

Equity capital markets continue to evolve within the context of considerable macro-economic, political and industry-specific change, not least the forthcoming implementation of MiFID II. In these respects it is pleasing to see that the high calibre of our equity research retains its relevance to portfolio managers and the broader corporate community alike.

During the year we carefully grew the team, expanding our coverage and capabilities, adding stock coverage in building materials, healthcare, industrials, media and technology. The team's stability and experience continued to resonate with the asset management community, reflected in strong internal voting scores from our clients and continuing excellent positions in the Extel and Starmine surveys, where person-for-person we punch materially above our weight.

Looking to the future, we remain confident in our team's capabilities to compete and ultimately further expand our coverage, reach and corporate client base. In this respect, our stock execution function will evolve from its firm foundations so that it continues to offer value and relevance to clients, whilst focusing research coverage and capabilities where it can have the most beneficial impact.

Market Making

In a year of significant market volatility driven by geopolitical events, the Group's market making operation performed strongly, growing both revenues and profits by double-digit percentages. Trading volumes were 12% higher than in 2015, a commendable result considering the market uncertainty that prevailed throughout the year.

The team positioned its inventory prudently during the year, enabling us to provide significant liquidity in the immediate aftermath of the Brexit referendum and US election results. This approach, reflected in the wide variety of equities to which we provide access, enabled us to reinforce our position as the third largest market maker on the London Stock Exchange.

Although clearly sensitive to the overall market environment, Shore Capital remains focused and adaptable to changes in trading conditions and to the needs of clients. Market making operations continue to benefit from the team's wide stock coverage and its reputation as a strong and trusted counterparty. The market making team comprises highly experienced traders who are able to identify revenue opportunities despite challenging market conditions, whilst operating within a risk framework that ensures loss days are a rare occurrence.

Fixed Income

The fixed income team's extensive experience enables the Group to offer its clients a fuller range of financing options for mid-sized corporates, creating exciting opportunities for growth in the Capital Markets business. The team enjoyed its first full year within the Group, having joined from Edmond de Rothschild in late 2015, and made a positive contribution to the business in what has been a challenging environment, demonstrating its capability to grow primary capital opportunities for clients.

Asset Management

Overview

The Asset Management division enjoyed notable successes during the period across its institutional and private client businesses such that during the year total assets under management grew from GBP770 million to GBP825 million.

In the institutional business, our German advisory team assisted Brandenburg Realty in the completion of its second acquisition for EUR32 million; and helped Puma Brandenburg to complete a EUR90 million refinancing. The team also helped Puma Brandenburg to advance the implementation of its strategic objectives, particularly with the sale of its housing estate in Neukoelln and progress development works at its flagship Hyatt Regency Hotel in Cologne.

The Private Client division increased funds under management to GBP200 million (2015: GBP155 million), again achieving a record-breaking fundraise for its latest VCT, Puma VCT 12, as well as securing and allotting significant inflows to the Puma EIS Service, which is approaching GBP50 million under management. Puma Heritage and the Puma AIM Inheritance Tax Service celebrated their third and second anniversaries respectively, both continuing to deliver impressive returns for investors.

During the course of the year we continued our commitment to invest in the business, hiring several key personnel, particularly in the Private Client division, adding to its investment and business development teams as it continues implementing its growth strategy.

Institutional Asset Management

Brandenburg Realty

In line with its strategy to invest in German residential and commercial real estate, Brandenburg Realty (the "Fund") completed its second acquisition in May 2016 of a EUR32 million commercial and residential portfolio located in the city of Potsdam near Berlin. This portfolio benefits from high quality commercial tenants and the possibility to develop additional residential space. The asset advisory team continues to seek and recommend additional acquisition opportunities for the Fund, helping it to implement the agreed strategy for this asset and also for the Monumenten Strasse residential building, which was acquired in the prior period. At this asset, the team assisted in the sale of five apartments, achieving an average price per square metre significantly in excess of expectations.

Puma Brandenburg Limited ("PBL")

The Group has continued to assist PBL to achieve success across its portfolio, including:

 
 --   The sale of the Sonnensiedlung housing estate 
       located in Neukoelln, Berlin through a share 
       sale in July 2016; 
 --   The planning and execution of a capital project 
       to add and enlarge conference and food and 
       beverage facilities at the Hyatt Regency, 
       Cologne. These works, which are co-funded 
       by Hyatt, commenced in June 2016 and were 
       completed on schedule at the end of November 
       2016; 
 --   As previously reported, the successful drawdown 
       in June 2016 of an eight year, EUR90 million 
       loan facility for the refinancing of a commercial 
       portfolio. The portfolio includes the Hyatt 
       Regency Cologne and IBIS Nuremberg.

St Peter Port Capital ("SPPC")

SPPC announced its interim results for the six months ended 30 September 2016 on 26 October 2016. As at that date, excluding investments written off, it had investments in 17 companies and reported that it had generated GBP161,000 from realisations since 1 April 2016.

Prior to the release of its results, the company had announced that it was launching a review of the strategic options available to it, including a potential sale of the company. Accordingly, the company entered an offer period, enabling any potentially interested parties to approach it without having to make any formal announcement.

The strategic review was launched in order to stimulate liquidity in what remains a challenging market for its portfolio companies. It reported its view that any significant cash return is predicated on one or more of its top five holdings progressing to the next planned phase of growth, which for several of them relies on their raising significant further funds.

Private Client Investments

Overview

The Group's private client business, Puma Investments, continues to make strong progress. During the year the company invested in the next phase of its growth, hiring key personnel to expand its capabilities.

Of particular note was the launch of Puma VCT 12, which closed in 2016 having raised GBP31 million - accounting for more than half of the total funds raised in the limited-life VCT market in the 2015/16 tax year. In addition, we have seen continued expansion of Puma EIS, Puma Heritage and the Puma AIM Inheritance Tax Service. We were particularly proud that the strong performance of the AIM service was recognised by the industry and named Best AIM Investment Manager at 2016's Growth Investor Awards.

Puma Venture Capital Trusts ("VCTs")

The Group's Puma VCTs are each limited-life vehicles, aiming to distribute the initial capital and returns to their investors after five years. Since 2005 over GBP223 million has been raised for Puma VCTs and more than GBP89 million has been distributed back to shareholders.

Puma's strong VCT track record is reflected in the fact that each of the first five Puma VCTs have led their peer group for total returns, with Puma VCT V having returned 106.3p per share (on a net cost of investment of 70p) in cash distributions to shareholders over its life. The current stable of funds are all performing well and have paid out tax-free dividends of between 5p and 7p per annum to shareholders.

Puma VCT 12 closed for subscriptions during the period, raising GBP31 million which accounted for more than half of the total funds raised in the limited-life VCT market in the 2015/16 tax year. The Group considers this fundraising to be a considerable achievement and an endorsement of Puma's standing in the VCT sector.

In view of the many changes to VCT investment rules which have been introduced in recent months, the launch of our latest VCT, Puma VCT 13, has been delayed whilst we await clarification on the new rules in guidance notes which have not yet been issued by HMRC.

The Group considers that the responsible approach is to allow some time for these rules to bed in and to review the accompanying guidance notes before raising additional capital. We are making good progress in deploying the funds raised in previous VCTs and have sufficient capital to continue to back businesses that meet our stringent investment criteria.

Puma Heritage plc

Puma Heritage was launched in June 2013 to operate in a range of sectors, with a primary focus on secured lending. It focuses on capital preservation, whilst seeking to produce regular returns for shareholders intended to counter long-term inflationary pressures. An investment in Puma Heritage is intended to benefit from 100% relief from Inheritance Tax after two years.

The company celebrated its third anniversary in June 2016, having recorded a significant acceleration in its net asset value ("NAV") during the period. Subscriptions from new shareholders and good levels of return generated from its diversified loan book have increased the NAV of the company to over GBP28 million by 31 December 2016. Puma Heritage has participated in loans totalling GBP162 million to date. The business has a strong pipeline of loans to deploy current and future funds and remains optimistic about the prospects for further NAV growth over the coming months and years.

During the period, we advised Puma Heritage plc on the completion of several asset-backed loans across a number of sectors, all secured with a first charge over real estate at conservative lending ratios. As at 31 December 2016, Puma Heritage had made 384 loans of which 38 were live and 346 had been repaid in full. The team continues to assist the business, helping it to source and analyse new lending opportunities. Puma Heritage remains open for investment and having reached critical mass, is in a position to continue growing rapidly.

Puma EIS

The Puma EIS portfolio service (the "EIS Service") was launched in November 2013 to offer investors the opportunity to invest in asset-backed Enterprise Investment Scheme qualifying companies utilising the team's strong track record and expertise in asset-backed investing gained from their experience running the Puma VCTs. Fundraising continued successfully throughout 2016, raising the amount in the EIS Service to c.GBP47 million. To date the EIS Service has invested into seven portfolio companies and has a good pipeline of further deployment opportunities.

Puma AIM Inheritance Tax Service

The Puma AIM IHT Service (the "AIM Service") is a discretionary portfolio service that seeks to mitigate Inheritance Tax by investing in a carefully selected portfolio of AIM shares and is particularly attractive for those that wish to invest via an ISA. Since launch in July 2014 to the end of 2016 the AIM Service has delivered a 43.9% return, outperforming the FTSE AIM All Share Index by 36.3%.

Our strong performance has resulted in us winning the Best AIM Investment Manager award at the Growth Investor Awards for 2016. Additionally, we were Highly Commended in the Best AIM IHT Portfolio Service category at the Investment Week Tax Efficiency Awards 2016/17.

The AIM Service has continued to grow assets and investor numbers during the year and we are confident of growing the service in the future. At the end of June 2017 we will reach our three year track record; a key hurdle for many financial advisers. In early 2017 we announced that the service is available through the Ascentric and Standard Life Investment Platforms, enabling us to access a wider range of Financial Advisers.

Principal Finance

The Principal Finance division seeks to use the Group's strong balance to invest in attractive opportunities and seed new funds.

During the year, the division incurred a GBP2.7 million pre-tax write down relating to various assets held in the division, which equates to GBP1.6 million after tax and minority interests.

This division also holds the Group's investment in DBD, which holds, through a subsidiary, 32 regional radio spectrum licences in Germany of indefinite duration (the "Licences"). Shore Capital holds a 59.94% interest in Spectrum Investments Limited, the parent company of DBD.

DBD has been given consent by the German Telecoms Regulator ("BNetzA") to test the LTE TDD technology which will support its business plan for the future use of the Licences, premised upon a small radio cells network concept. An initial pilot scheme has commenced in Berlin and DBD plans to roll out additional pilots in other areas covered by the Licences.

For the initial Berlin trial, at the request of BNetzA, DBD is using a temporary test licence granted to it by BNetzA. However, DBD believes that, as a result of Article 9a of the EU Framework Directive (2002/21/EC, as amended), implemented in Germany by Sec. 150 para 8 of the German Telecommunications Act, it should be permitted to use its existing Licences to conduct the pilot schemes and to support the roll out of its services in the future. BNetzA has yet to confirm its agreement.

In correspondence with DBD, BNetzA has noted that its ongoing consideration of the status and use of the Licences should be taken in the context of its ongoing review of spectrum frequency planning for the years after 2021/2022 and in particular its frequency concept for the 3.5GHz band, into which the Licences fall.

Current Trading and Prospects

We have seen companies wanting to get on with growing their businesses and institutions that want to buy into them. That cannot happen in a vacuum, demonstrating that markets are again open for business, focusing on the fundamentals of the deal, rather than market participants sitting on their hands and worrying about uncertainty.

Our independence puts us in an ideal place to make the most of the opportunities that will arise as market conditions improve.

Howard Shore

Chairman

29 March 2017

Unaudited Consolidated Income Statement