RICS Deutschland Limited

RICS Deutschland Limited

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.08.2021 bis zum 31.12.2022

RICS INTERNATIONAL LIMITED
London/UK

Contents

Strategic Report

Directors' Report

Independent Auditor's Report to the Members of RICS International Limited

Profit and Loss Account and Other Comprehensive Income

Balance Sheet

Statement of Changes in Equity

Notes to the Financial Staements

Strategic Report

Business review

The Company reported an operating profit for the 17-month period of £811,000 (2021: £54,000 loss), and a profit before taxation of £780,000 (2021: £117,000 loss). Both of these results are inclusive of the service fee income of £8,870,000 (2021: £5,714,000) from The Royal Institution of Chartered Surveyors (‘RICS’), its ultimate parent company, for the provision of services to undertake overseas activities.

Looking ahead

The focus for RICS Internationa! Limited will be on extending recognition and adoption of RICS standards and qualification by governments and markets.

The Company will continue to respond to emerging opportunities and will seek to be a leader in terms of responsible business practice.

Performance will continue to be closely monitored and investment targeted in line with the RICS strategic objectives.

Key performance indicators

The Directors consider the following key performance indicators to effectively measure the development, performance and position of the Company:

Going concern

The financial statements have been prepared on a going concern basis, notwithstanding net liabilities of £880,000, as The Royal Institution of Chartered Surveyors has provided the Company with an undertaking that for at least 12 months from the date of approval of these financial statements, it will continue to make available such funds as are needed by the Company and in particular will not seek repayment of the amounts currently made available. This should enable the Company to continue in operational existence for the foreseeable future by meeting its liabilities as they fall due for payment. Consequently, the directors are satisfied that the company is a going concern.

Risk management policies

The Company regularly reviews its financial risk and the management of those risks. The company does not enter into speculative financial transactions. Appropriate terms are negotiated with suppliers and customers and our relationships with them are designed to manage exposure on normal trade terms.

Due to the geographical locations of the Company’s operations, the financial performance and position are exposed to fluctuations in the movement of foreign currency exchange rates. The Company does not hedge against such movements with resulting gains/(losses) on exchange being taken to the profit and loss account.

Signed by order of the board

Balance Sheet at 31 December 2022

These financial statements were approved by the board of directors on 15 September 2023 and were signed on its behalf by:

Company number: 03072915

The notes on pages 13 to 27 form part of the financial statements

Statement of Changes in Equity for the 17-month period ended 31 December 2022

The notes on pages 13 to 27 form part of the financial statements

Profit and Loss Account and Other Comprehensive Income for the 17-month period ended 31 December 2022

The notes on pages 13 to 27 form part of the financial statements

Notes to the Financial Statements

(forming part of the financial statements)

1 Accounting policies

RICS International Limited (the “Company”) is a company limited by shares and incorporated and domiciled in the UK.

The Company is exempt by virtue of S400 and s401 of the Companies Act 2006 from the requirement to prepare group financial statements.

These financial statements present information about the company as an individual undertaking and not about its group. These financial statements were prepared in £’000 and in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).

The Company’s ultimate parent undertaking, The Royal Institution of Chartered Surveyors includes the Company in its consolidated financial statements. The consolidated financial statements of The Royal Institution of Chartered Surveyors are prepared in accordance with International Financial Reporting Standards and are available to the public and may be obtained from 12 Great George Street, Parliament Square, London, SW1P 3AD.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

As the consolidated financial statements of the Royal Institution of Chartered Surveyors include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.

1.1 Measurement conversion

The financial statements are prepared on the historical cost basis.

1 Accounting policies (continued)

1.2 Going concern

The financial statements have been prepared on a going concern basis, notwithstanding net liabilities of £902,000, as The Royal Institution of Chartered Surveyors has provided the Company with an undertaking that for at least 12 months from the date of approval of these financial statements, it will continue to make available such funds as are needed by the Company and in particular will not seek repayment of the amounts currently made available. This should enable the Company to continue in operational existence for the foreseeable future by meeting its liabilities as they fall due for payment. Consequently, the directors are satisfied that the company is a going concern.

1.3 Foreign currency

Transactions in foreign currencies are translated to the Company’s functional currencies at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in the profit and loss account.

1.4 Classification of financial instruments issued by the Company

Following the adoption of IAS 32, financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:

(a) they include no contractual obligations upon the company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and

(b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

1.5 Non-derivative financial instruments

Non-derivative financlal instruments comprise investments in equity and debt securities, trade and other debtors, cash and cash equivalents, loans and borrowings, and trade and other creditors.

Trade and other debtors

Trade and other debtors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses.

Trade and other creditors

Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Investments in subsidiaries

Investments in subsidiaries are carried at cost less impairment.


1.6 Right of Use Assets

Leases are accounted for under IFRS 16 ‘Leases’ for all operating leases except for those identified as low- value or having a remaining lease term of less than 12 months from the date of initial application. Right of Use assets are measured at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition. The weighted average incremental borrowing rate applied to lease liabilities recognised under IFRS 16 was 2.22%.

Leased assets

The Group as a lessee

For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains, a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key evaluations, which are whether:

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.

Lease payments included in the measurement ofthe lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or ifthere are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

On the statement of financial position, right-of-use assets and lease liabilities have been included as separate items.

1.7 Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.

Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.

1.8 Impairment excluding deferred tax assets

Financial assets (including trade and other debtors)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

For financial instruments measured at cost less impairment, an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss.

In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.9 Turnover

Turnover comprises service fees, receipts from commercial activities such as training and events held for members, and membership income other than subscription fees.

1.10 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
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1.11 Expenses

Operating lease payments

Payments (excluding costs for services and insurance) made under operating leases are recognised in the profit and loss account on a straight-line basis over the term of the lease. Lease incentives received are recognised in the profit and loss account as an integral part of the total lease expense.

Interest receivable and Interest payable

Interest payable and similar charges include interest payable, recognised in profit or loss using the effective interest method. Other interest receivable and similar income include interest receivable on funds invested.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.

1.12 Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

1.13 Accounting estimates and judgements

To be able to prepare financial statements according to generally accepted accounting principles, the Institution must make estimates and assumptions that affect the recorded asset and liability items as well as other information. There are no judgements required to be made in the preparation of these financial statements

2 Turnover

* Europe, Middle East, and Africa (EMEA)

The service fee income relates to the provision of services to The Royal Institution of Chartered Surveyors in undertaking overseas activities.

3 Expenses and auditor’s remuneration

Included in the profit or loss are the following items:

4 Staff numbers and costs

The average number of persons employed by the Company (including directors) during the period, analysed by category, was as follows:

5 Directors’ remuneration

Remuneration for services provided to the company in respect of the current 17-month period or the prior year and prior year was borne by the Royal Institution of Chartered Surveyors.

6 Taxation

a) Recognised in the profit and loss account

b) Reconciliation of total tax

6 Taxation (continued)

In the Spring Budget 2021, the Government announced that the corporation tax rate would remain at 19% for the financial year beginning 1 April 2022 but would increase to 25% for the financial year beginning 1 April 2023.

7 Right of use assets

The Company has leases for its main offices. With the exception of short-term leases and leases of low- value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.

Leases of property generally have a lease term ranging from 0.3 years to 1.6 years however most leases of property are now generally expected to be limited to 5 years or less except in special circumstances. Lease payments are generally fixed.

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non- cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Company must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.

The table below describes the nature of the Company’s leasing activities by type of right-of-use asset recognised on balance sheet:

7 Right of use assets

The right-of-use assets are included in the same line item as where the corresponding underlying assets would be presented if they were owned.

Lease liabilities are presented in the balance sheet as follows:

7 Right of use assets

At 31 December 2022 the Company had no leases committed to which had not commenced. The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease liabilities at 31 December 2022 is as follows:

Lease payments not recognised as a liability. The company has elected not to recognise a lease liability for short term leases (leases of expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted to be recognised as lease liabilities and are expensed as incurred.

The expense relating to payments not included in the measurement of the lease liability is as follows:

At 31 December 2022 the Group was committed to short term leases and the total commitment at that date was £13,000.

8 Tangible fixed assets

^*. The Plant and Equipment category has been renamed to Office Furniture and Computer Equipment, to more accurately reflect the nature of the underlying assets.

9 Fixed asset investments

9 Fixed asset investments (continued)

The Company has the following investments in subsidiaries:

(1) Room 1008 10/F, IFC East Tower ‚, No. 8 Jianguomenwai Avenue ‚Chaoyang District ‚Beijing ‚China 100022

(2) 8F, Shinkawa Ohara Building, 1-27-8, Shinkawa, Chuo-ku, Tokyo

10 Debtors

11 Creditors

12 Deferred tax assets

Recognised deferred tax assets

Deferred tax liabilities/(assets) are attributable to the following:

Movement in deferred tax (asset) during the 17-month period

Movement in deferred tax during the prior year

13 Provisions

14 Capital and reserves Share capital

Share capital

The authorised share capital of the company consists of 1,000 (2021: 1,000) ordinary shares of £1 each. The allotted, called and fully paid up share capital of the company consists of 2 (2021: 2) ordinary shares of £1 each.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Translation reserves

The translation reserves comprises all foreign exchange differences arising from the translation of financial statements of foreign operations.

15 Defined contribution scheme

The Company operates a defined contribution scheme. The assets of the scheme are held separately from those of the Company in independently administered funds managed by third parties. The pension costs for the period amounted to £137,000 (2021: £176,000). Outstanding contributions at the period end were £Nil (2021: £Ni)).

16 Ultimate parent company and parent company of larger group

The Company’s immediate parent is RICS Holdings Limited, a company incorporated in England and Wales. The Company’s ultimate controlling party is the Royal Institution of Chartered Surveyors.

The largest group in which the results of the Company are consolidated is that headed by The Royal Institution of Chartered Surveyors, incorporated in England and Wales. The smallest group in which they are consolidated is that headed by RICS Holdings Limited.

The consolidated financial statements of these groups are available to the public and may be obtained from 12 Great George Street, Parliament Square, London, SW1P 3AD.

17 Subsequent events

There are no subsequent events to report.

Directors’ Report

The Directors present their report on the affairs ofthe Company, together with the financial statements and auditor’s report, for the 17-month period ended 31 December 2022.

Principal activities

The principal activities of the company during the period were the supply of information and other services for the surveying profession and to raise the profile and membership of The Royal Institution of Chartered Surveyors (‘RICS’) worldwide.

The company undertakes activities throughout Europe, Asia, the Middle East, and Africa through a network of branches and subsidiaries. The principal activities of these are the same as the parent company.

Change of Financial Year End

In July 2022, the decision was taken to extend the financial period for RICS and its subsidiaries to align with the membership year. This will provide greater transparency to RICS members and those wishing to understand how RICS is spending the subscriptions it receives.

Proposed dividend

No dividend has been paid or proposed in this 17-month period or the prior year.

Matters covered in the strategic report

The strategic report contains information on the business review, principal risks and uncertainties and key performance indicators.

Directors

The directors of the Company who served during the 17-month period, and to the date of signing these Financial Statements, were as follows:

Richard Collins (appointed 15 September 2021)
Luay Youssef Al-Khatib (appointed 15 July 2022)
Sean Tompkins (resigned 9 September 2021)
Matthew Harrison (resigned 15 July 2022)

Political contributions

The company made no political donations and incurred no political expenditure during the 17-month period.

Charitable contributions

During the period the company made charitable donations of £Nil (2021: £Ni)).

Directors’ responsibilities statement The directors are responsible for preparing the Strategic report, Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 101 ’Reduced Disclosure Framework').

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information to auditor

The directors confirm that:

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditor

The Company has elected to dispense with the obligation to appoint an auditor annually under s487 of the Companies Act 2006.

Signed by order of the board

Independent Auditor’s Report to the Members of RICS International Limited

Opinion

We have audited the financial statements of RICS International Limited (the 'company') for the 17-month period ended 31 December 2022, which comprise the Profit and Loss account and Other Comprehensive Income statement, the Balance Sheet, the Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework' (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent of the group and the parent institution, in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern

We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.

In our evaluation of the director’s conclusions, we considered the inherent risks associated with the group’s and the parent company’s business model including effects arising from macro-economic uncertainties such as cost of living crisis and increase in interest rates, we assessed and challenged the reasonableness of estimates made by the executives and the related disclosures and analysed how those risks might affect the group’s and the parent company’s financial resource or ability to continue operations over the going concern period.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties reliating to events or conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of directors for the financial statements’ section of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the directors’ report has been prepared in accordance with applicable legal requirements.

Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors for the financial statements

The directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’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 company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company'’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.