Animalcare Group plc
("Animalcare" or the "Group" or the "Company")

Final Results for the year ended 31 December 2025

6 May 2026. Animalcare Group plc (AIM: ANCR), the international animal health business, announces its unaudited preliminary results for the year ended 31 December 2025 ("FY25").

Financial Highlights (All figures reported at actual exchange rates (AER) unless otherwise stated)

^* The Group presents a number of non-GAAP Alternative Performance Measures (APMs) which exclude non-underlying items. APMs are calculated in line with the Group's accounting policies and therefore may not be directly comparable with other companies.

Strategic and Operational Highlights

Flagship brands continuing to deliver strong double-digit growth, fuelled by new indications

Expanded presence in AsiaPac, with Randlab's strong performance ahead of initial expectations

Building our new product pipeline

Recommended offer by CCP Paw 2 Limited

On 16 April 2026, Animalcare's Board announced it had agreed the terms of a recommended acquisition by CCP Paw 2 Limited, an indirect subsidiary of funds managed by Charterhouse Capital Partners LLP.

Animalcare's Chief Executive Officer, Jenny Winter, commented: "2025 was a year of strategic execution and financial delivery, as we continue to build a more scalable and growth-oriented business. Our flagship brands experienced good momentum, supported by new product launches and commercial excellence and we strengthened our international footprint and team through the acquisition of Randlab and strategic investment in InVetro."

Enquiries

About Animalcare

Animalcare Group plc is a UK AIM-listed international veterinary sales and marketing organisation. Animalcare operates in seven European countries as well as Australia, New Zealand and the UAE and exports to approximately 40 countries in Europe and worldwide. The Group is focused on bringing new and innovative products to market through its own development pipeline, partnerships and via acquisition.

For more information about Animalcare, please visit www.animalcaregroup.com

Recommended offer by CCP Paw 2 Limited

On 16 April 2026, Animalcare's Board announced it had agreed the terms of a recommended acquisition by CCP Paw 2 Limited, an indirect subsidiary of funds managed by Charterhouse Capital Partners LLP ("Charterhouse"). 

For the full announcement, please visit https://www.animalcaregroup.com/investors/recommended-offer-by-ccp-paw-2-limited/

Cautionary statement regarding forward looking information

Where this announcement (including information incorporated by reference in this announcement) contains "forward-looking statements", they are based on the current expectations and assumptions, and speak only as of the date they are made. Such statements and forecasts involve risk and uncertainty because they are based on current expectations and assumptions but relate to events and depend upon circumstances in the future; you should not place reliance on them.

Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "expects", "is expected", "is subject to", "budget", "estimates", "forecasts", "intends", "anticipates", "sees", "believes", "aims", "confident", "will have", "will be", "will ensure", "likely", "foresee" or the negative of these terms or other similar terms are intended to identify such forward-looking statements. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this statement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Group cautions investors that a number of factors, known and unknown, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Neither the Group, nor any of its Directors, officers or employees, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. Undue reliance should not be placed on these forward-looking statements. Animalcare expressly disclaim any obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation.

Chair's Statement

2025 saw the Company take further strides in laying a solid foundation for sustainable growth.

A particular highlight has been the increase in expertise across our expanding team. Our Group culture and capabilities have greatly benefited from the integration and collaboration with new colleagues from Randlab and the addition of the InVetro team. A key focus has been investing in our people through training and development, enhancing our execution abilities.

The Group's sustained strategic execution delivered a positive financial performance, with strong revenue and underlying EBITDA growth, improved margins and strong cash generation, which combined with disciplined capital allocation, has maintained our balance sheet strength.

Of note in the period was the successful integration of Randlab following its acquisition at the start of the year, delivering significant contributions to both revenue and underlying EBITDA in line with our ambitions for the business. The acquisition has reinforced Animalcare's strong position in the high-growth Equine market, with Equine now representing 24% of Group revenues compared to 10% in 2024, while enhancing the Group's cash generation. The Board continued to assess further opportunities for inorganic growth, with the 25% strategic equity investment completed in June in InVetro Pty Ltd, an Australia-based Companion Animal business, further evidence of this, strengthening the Group's footprint in this region.

Meanwhile, the Group saw continued double-digit growth in our flagship brands, including Daxocox, Plaqtiv+ and Orozyme demonstrating the value of a differentiated product portfolio - and the importance of its development. 

With much of the growth in global animal health markets coming from new, differentiated products, notably biologics, the Group increased its annual R&D investment to 4.5% in 2025, up from 2.8% in 2024. The Group's new product development pipeline now comprises six key projects progressing through various development stages, encompassing life cycle management projects to extend the utility and reach of existing brands alongside new products with transformative potential. A key development in the year, which strengthened the R&D pipeline, was the acquisition of the VHH NGF antibody programme and related assets, advanced in collaboration with 272Bio, which also provides an opportunity to expand the programme into other species and indications. Additionally, the Group entered a licence agreement with 272Bio for the development of a treatment for Sweet Itch, a common allergic skin condition with a significant unmet need in the Equine market.  

Recommended Acquisition of Animalcare Group plc

On 16 April 2026, post period end, and following a comprehensive review supported by our advisers, the Animalcare Directors unanimously recommended the acquisition of the Group by a subsidiary of funds managed by Charterhouse Capital Partners LLP to shareholders (the "Acquisition").

As Chair, my priority is to ensure that Animalcare shareholders have the opportunity to realise fair value for their investment. As stated in the announcement on 16 April, the Board remains confident in the Group's standalone prospects and committed to the ambitious targets set at the March 2026 capital markets event, but recognises delivering these ambitions would require a sustained period of investment and execution over a number of years, against a backdrop of increasing macroeconomic uncertainty.

Having evaluated the Acquisition against the Group's growth strategy, the Board concluded unanimously that the Acquisition is in the best interests of Animalcare and Animalcare shareholders as a whole, and represents a superior outcome for stakeholders than remaining an independent AIM-listed entity and that the cash offer of 336 pence per share provides a premium to recent share trading and reflects Animalcare's future growth prospects.

On behalf of the Board, I want to recognise the hard work of the entire Animalcare team, whose commitment and shared vision have made the achievements of recent years possible.

Ed Torr

Independent Non-Executive Chair

6 May 2026

Chief Executive Officer's Statement

Continued positive trading performance

2025 has demonstrated the strength within the business, providing a strong springboard for growth acceleration in future years.

Group revenue increased 20.0% at AER to £89.1m, underlying EBITDA increased 52.6% to £17.7m, and the Group maintained high levels of cash generation, with leverage at 0.7x underlying EBITDA.

A standout of the year was the strong performance by Randlab, the Australian Equine business we acquired in early 2025 ahead of our initial expectations. We have been delighted to welcome Bruce and his team to the Group.

In Companion Animals, flagship brands, such as Daxocox and Plaqtiv+, delivered double-digit growth, fuelled by the launch of the Peri-Operative Pain indication in Europe, while the Production Animals' portfolio also contributed positively due to strong customer relationships. Equine performed very strongly, benefiting from the significant contribution from Randlab.

Our commercial team has continued to bring operational improvements and enhancements to the way in which we take our brands to market, demonstrated by the growth in our German operations. This is a model we will be taking to other regions in the year ahead, as we modestly increase our investment into sales and marketing to support further growth, particularly in our dental health ranges.

Over the last five years, we have made significant strategic progress. We have deliberately evolved from a business with fragmented portfolios,  limited scale and focus, high levels of 'distribution' products, limited M&A capacity and only one asset in the development pipeline, to a growing business with strong foundations to execute on our strategic priorities:

Organic growth

Building and nurturing a focused portfolio of attractive, profitable brands that offer sustainable revenues and strong margins is at the heart of our long-term strategy. In recent years, we have re-engineered our product lineup to place greater emphasis on brands that we can commercialise across all our markets. Combined with ongoing investment in sales and marketing excellence, this gives us important synergies that are hard to access from smaller, more local, products.

The value of that approach is evident in the continuing enthusiastic customer response to brands such as Daxocox and Plaqtiv+. Sales of Daxocox, our long-acting NSAID for the treatment of osteoarthritic pain, grew by 23% in 2025, while revenues generated by the Plaqtiv+ dental range were up 42%. Each of our product categories delivered growth over the 12 months. Companion Animals returned to normal growth, as expected. Production Animals returned to more normal demand patterns for the full year, following an exceptional first half, and Equine benefited from enhanced control over Danilon.

Looking ahead, we have identified an opportunity to accelerate growth in our key non-prescription brands, over and above the double-digit growth already being achieved, through opening up a new retail channel, providing us with access to the remaining 70% of buyers who do not purchase directly from a vet. Our focus in 2026 will be on achieving initial contracts with new digital stores, supported by investing in digital marketing capabilities and activities, alongside key account management, drawing on the expertise of our team, who have delivered digital retail growth in past roles.

Another initiative for the year ahead will be further refinement of our supply chain management. With the business having grown through acquisition in the past, we have already achieved a significant reduction in our portfolio complexity. We believe that through the further simplification of our supply chain we can increase resilience, increase revenue growth through availability of product and increase our EBITDA margin through strong relationships.

Inorganic growth

Animalcare is committed to pursuing value-creating external opportunities that have the potential to grow our business through M&A, in-licensing and partnerships. We have a healthy pipeline at various stages of assessment, undergoing our disciplined assessment process.

In early 2025, we achieved a significant milestone with the acquisition of Randlab, the Australia-based Equine health company. The integration of Randlab into the Group is progressing well and, in some cases, ahead of expectations, with the objective to preserve the absolute focus on the Equine market and entrepreneurial operating environment.

The progress and performance in the year are testament to the leadership team brought in to oversee the business and their strong collaboration with the highly experienced local team as well as their new Animalcare colleagues. Through working together, opportunities were identified to grow the business, enabling the acceleration of investment plans within Australia and into new markets to scale commercially, including the UAE, while, at the same time, nurturing the local entrepreneurial culture that defines Randlab and makes it a trusted choice with its loyal customer base. This expansion is supported by the key hires made in 2025 in the commercial team, which included a new Export Manager and additional sales roles in the Gulf Co-operation Countries, New Zealand and New South Wales.

We have continued to build scale internationally, notably via the 25% strategic equity investment in the Australian Companion Animal business, InVetro Pty Ltd, in June 2025, expanding our presence in the growing Asia-Pacific veterinary market.

Developing new products

Central to the Group's growth strategy is building a balanced pipeline of new products, to replicate and expand the success of our novel products, Daxocox and Plaqtiv+, and meet the needs of the animal health market. R&D activities and investment have accelerated across a range of opportunities (notably Sweet Itch, VHH NGF and E-6132), which the Board believes has the potential to drive transformative growth in the medium to long term. We were delighted to appoint Dr Hafid Benchaoui as Chief Strategy and Science Officer (CSSO), to strengthen the development of our new product pipeline. He will lead R&D at both a strategic and technical level and join the Senior Executive Team. Previously Head of Global Research and Development (R&D) at ECO Animal Health, Hafid brings extensive international animal health experience to the role.

In total, the Group now has six major projects in the pipeline at different stages with large market opportunities (in excess of c.£100m) and unmet need. These programmes have been selected due to their strong fit with the Group's strengths, expertise and commercial relationships across the Equine and Companion Animal markets. All are the Company's own IP, other than Sweet Itch which is in-licensed.

On 22 August 2025, the Group announced the acquisition of the VHH NGF antibody programme and related assets for a net cash consideration of €0.7m, which had previously been licensed from Orthros Medical in March 2022. This provides Animalcare full ownership and control of the intellectual property and associated assets, enabling independent development working alongside 272Bio and commercialisation of the technology to support the expansion of the Group's pain portfolio. The Group is advancing the lead Equine asset, with promising early results.

The Group has also entered into a licence agreement with 272Bio to develop a novel biological treatment for a common Equine skin condition (Sweet Itch), which affects an estimated c.8% of horses globally. The deal structure includes an initial commitment of c.£2.0m to fund preclinical research, which will be expensed over the next 18-24 months as we work towards achieving proof of concept.

Life cycle management activities of key brands are ongoing, expanding their market reach. In late July, Daxocox received European Union approval for use in a peri-operative setting, adding a new indication for the long-acting NSAID, enabling broader market access and reinforcing the Group's growth ambitions for the Daxocox franchise. Meanwhile, the Group continues to seek regulatory approval for the use of Daxocox in new territories, with approval granted in Japan, as well as exploring the opportunity to launch in the US within the next few years. 

Summary

Our expanding global presence, strong brands and attractive product lineup provide a solid platform as the Group entered 2026. I would like to thank colleagues across Animalcare for their continued dedication as we pursue our growth strategy, and to the Board members for their guidance and support.

Jennifer Winter

Chief Executive Officer

6 May 2026

Chief Financial Officer's Statement

Financial Review

2025 has been a strong year featuring significant revenue and EBITDA growth, while maintaining the Group's highly cash-generative profile and strong balance sheet. With leverage at 0.7X underlying EBITDA, this performance gives us the platform to accelerate our strategic priorities and deploy capital in a targeted, value-accretive way.

Underlying and Statutory Results

To provide comparability across reporting periods, the Group presents its results on both an underlying and statutory (IFRS) basis. The Directors believe that presenting our financial results on an underlying basis, which excludes non-underlying items, provides more useful and relevant information of business performance to stakeholders. IFRS results include these items to provide the statutory results.

All figures are reported at actual exchange rates (AER) unless otherwise stated. Commentary will include references to constant exchange rates (CER) to identify the impact of foreign exchange movements. A reconciliation between underlying and statutory results is provided at the end of this financial review.

Overview of underlying financial results

The financial year has been marked by strong execution and strategic progress. The acquisition of Randlab has proved transformational, accelerating our growth and enhancing profitability and operating leverage. With our growing international footprint, continued growth in our leading brands and an increasingly attractive product portfolio and pipeline, we are confident in our ability to build on this momentum into 2026.

Revenue - Randlab acquisition accelerates growth

Group revenue increased by 20.0% (20.1% at CER) to £89.1m, reflecting the marked beneficial effect of the successful integration of Randlab, underpinned by like-for-like organic growth of 1.7% at AER (0.7% at CER) with all three product category revenues increasing versus prior year in trading conditions, which were varied across our end markets.

Revenue performance by product category is shown in the table below:

Companion Animals

Revenue in Companion Animals increased by 1.0% to £50.3m, reflecting sustained and strong momentum across several of our flagship brands, including continued double-digit growth in Daxocox (+23%) and our dental range, with Orozyme (+30%) and Plaqtiv+ (+42%) performing particularly well. This solid performance was underpinned by ongoing focus and investment in sales and marketing excellence.

Growth in the category was tempered by two factors outside of our control: reduced Conofite sales, which, as reported at the half-year stage, resulted from the unexpected regulatory monitoring of topically applied antibiotics in Spain, and the cessation of distribution arrangements across a number of older, lower-margin brands. Taken together, these factors resulted in a c.8-9% sales impact. Notwithstanding this, our Companion Animals business delivered overall growth, underscoring the resilience and strength of our core portfolio and the robustness of demand for our key brands.

Production Animals

Production Animal revenue growth returned to more typical demand patterns, increasing by 4.0% to £17.7m during a period marked by changes within our distribution partner supply base and end markets. This follows a strong FY24, which saw sales rise by 7.8%. Growth was primarily supported by several larger-selling brands, including two owned brands within our Top 10 products.

Equine

Revenue within Equine increased by 185.1% to £21.1m, comprising revenue from the existing portfolio of £7.5m and acquired revenue from Randlab of £13.6m. Randlab delivered very strong like-for-like organic growth of, approximately, 12.0% at CER (c.6.0% at AER), above management expectations at CER set at the time of the acquisition on 3 January 2025. This strong performance was principally driven by significant growth and expansion of export market sales alongside growth within the core portfolio in Australia and New Zealand, including Ulcershield, which is now the Group's fifth-largest brand. Within the existing Animalcare portfolio, continued growth in Danilon (up 7.4%) helped to offset a decline in the Equine fluids range, which was affected by market changes and competition.

Underlying EBITDA and underlying earnings per share

Accelerating growth through R&D investment

The Group is committed to expanding and enhancing our product development pipeline. With this in mind, we are targeting investment of c.5% of revenue per annum to support future growth through an increased proportion of innovative products within the portfolio. As we move into a period of pipeline expansion and, with this, a step-up of investment in innovation to support our medium-to-long-term growth ambitions, we expect an increasing proportion of all overall R&D expenditure to be expensed in the income statement.

To aid  understanding on the performance of our core operations, underlying EBITDA before R&D expenditure is used to reflect the contribution from our commercial operations prior to the Group's investment in R&D and is the basis on which cash conversion is calculated, as described later in this review.

The Group's underlying EBITDA before R&D expenditure increased by 58.6% to £18.4m (2024: £11.6m). This growth was primarily driven by Randlab's significant contribution to EBITDA of £6.4m, underpinned by its high gross margins, further enhancing the Group's overall profitability and leading to a 500bps improvement in underlying EBITDA margin to 20.6%. 

Gross margins improved by 320bps to 58.8%, again predominantly reflecting the benefits of the acquired Randlab Equine portfolio, which delivered gross margins of 72.9%, in line with expectations after taking into account reclassification of certain costs from operating expenses to cost of goods to align with Group accounting policies. Excluding Randlab, like-for-like gross margins moderately improved versus the prior year to 56.3% (2024: 55.6%) with a positive sales mix largely offsetting input cost inflation (COGS). The Group's targeted pricing strategies mitigated a proportion of cost increases while maintaining competitiveness across key brands and geographies.

Underlying overheads, defined as gross profit less underlying EBITDA before R&D expenditure, increased to £34.0m (2024: £29.7m), of which £3.4m represents additional operating costs associated with Randlab. As we have progressed with our integration and engagement with the local management team, our confidence in the growth opportunity has been underpinned, leading to accelerated investment in our commercial infrastructure within Australia and the UAE. The balance of £0.9m principally encompasses organic investment in people costs alongside disciplined control of our overall SG&A costs.

Basic underlying continuing EPS increased by 44.0% to 15.7 pence (2024: 10.9 pence) primarily driven by the strong profit contribution from Randlab and higher net finance income largely resulting from unrealised foreign currency translation exchange gains, partially offset by a c.2.0p dilutive impact of the equity raise completed in December 2024. The underlying effective tax rate increased to 24% (2024: 18.9%), principally reflecting the shift in the Group profit mix towards higher tax jurisdictions, notably in relation to Randlab, partly mitigated by recognition of tax losses.

Overview of reported financial results

Reported Group profit after tax for the year (after accounting for the non-underlying items and discontinued operations shown in the table and discussed below) was £5.1m (2024: £18.5m), with reported earnings per share at 7.3 pence (2024: 30.3 pence per share).

Non-underlying items totalling £7.9m (2024: net income of £11.2m) relating to profit before tax have been incurred in the year, as further described in note 4. In summary, the principal items in 2025 are as follows:

Strong cash flow and balance sheet position

Operating cash flow and cash conversion

The Group continues to generate strong operating cash flows demonstrating the highly cash-generative qualities of our business. Underlying cash conversion was 79.7%, in line with our guidance.

As noted earlier, the Group assesses operating cash flow relative to Underlying EBITDA before R&D expenditure. This reflects the Group's decision to treat R&D as a growth investment rather than a core trading cost. In prior periods, cash conversion was calculated against Underlying EBITDA after R&D; the methodology has changed in 2025 to align with the Group's capital allocation framework as shown below:

Underlying net cash flow generated from our operations increased to £14.7m (2024: £12.2m). The net working capital outflow of £1.5m was primarily driven by a £2.1m decrease in payables, partially offset by a £1.0m reduction in inventories. These movements reflect trading and inventory purchasing patterns towards the year end. Cash taxes significantly increased compared to 2024, reflecting Randlab tax payments of £1.4m and a £1.0m increase in like-for-like cash taxes. The rise in tax outflows was mainly attributable to the geographic distribution of profits and a higher level of Animalcare balancing tax payments relating to previous years.

Net debt bridge

¹    Excluding IFRS 16 lease liabilities.

²    Excluding non-underlying M&A expenses

³    Prior to accounting for IFRS 16 leases.

Net capital expenditure of £4.3m (2024: £2.5m) largely comprised of investment in our product development pipeline with the balance of expenditure relating chiefly to our IT business systems and infrastructure.

The Group continued to advance its R&D pipeline of new products that address significant market opportunities and unmet needs within the veterinary sector. Total investment increased to £4.0m (2024: £2.1m) across the five key projects progressing through various stages within our pipeline, analysed as follows:

Total investment in our VHH NGF antibody programme was £1.9m, comprising:

The balance of investment in our pipeline of £2.1m primarily related to Sweet Itch, E-6132 and life cycle management activities across key brands, notably Daxocox. 

The Group delivered strong free cash generation before Randlab acquisition costs and after accounting for lease costs of £7.3m (2024: £7.9m, including £0.4m Identicare contribution). Net debt ended the year, pre IFRS 16 leases, at £9.1m (2024: £9.0m). Net debt, including IFRS 16 lease liabilities, was £12.3m (2024: £11.5m), representing a net debt: underlying EBITDA leverage ratio of 0.7 times. 

Borrowing facilities

As at 31 December 2025, the Group had total credit facilities of €54.0m, provided by a syndicate of four banks, with all facilities set to mature on 31 March 2029. These facilities include a committed €44.0m revolving credit facility (RCF) and a €10.0m acquisition line, which is restricted to acquisition purposes and cannot be used for operational funding.

The loans carry a variable, EURIBOR-based interest rate with an applicable margin of either 1.26% or 1.50%. The RCF features bullet repayment at maturity in March 2029, while the acquisition line is amortised through quarterly payments, also concluding in March 2029.

In early 2025, the Group finalised credit documentation with the remaining two of the four syndicate banks, bringing the total acquisition facility to the €10m committed in 2024. This completion ensures an equal allocation of the total credit facility across all four syndicate banks, with the maturity date for all facilities remaining at 31 March 2029. The Group centrally manages its banking arrangements through a cross-currency cash-pooling system, whereby funds are swept daily from various bank accounts into central accounts. This approach optimises the Group's overall net interest payable position.

The Group's credit facilities are subject to the following financial covenants, which are monitored and maintained at all times:

•    Net debt to underlying EBITDA ratio of no more than 3.5x

•    Underlying EBITDA to interest ratio of at least 4.0x

•    Solvency ratio (total assets less goodwill/total equity less goodwill) of more than 25%

At 31 December 2025, net debt (excluding IFRS 16 lease liabilities) was £9.1m (2024: £9.0m). Including net cash balances, total on headroom on the revolving credit facility (RCF) was £36.1m as at 31 December 2025.

As at 31 December 2025, and throughout the financial year, the Group was in full compliance with all covenant requirements, maintaining significant headroom across all three measures.

Going concern

Going concern is addressed in detail in note 3 to these preliminary unaudited financial statements.

Summary

The Group delivered a resilient trading performance in 2025, with strong execution across our core portfolio and material momentum from the Randlab acquisition. Randlab has performed ahead of expectations, contributing significantly to revenue growth in Equine and reinforcing our strategy of increasing exposure to higher growth, higher margin categories. We continue to see increasing commercial traction as we expand Randlab's reach across our geographies and integrate our portfolio into our broader commercial platform.

The Group ends 2025 in a position of strength with Animalcare in a more resilient, more scalable and more growth-focused business. The addition of Randlab has elevated our Equine leadership position and provides a platform for further international expansion, while our investment in InVetro offers a valuable entry point into the Australian Companion Animal market.

Chris Brewster

Chief Financial Officer

6 May 2026

Consolidated income statement
Year ended 31 December 2025
(unaudited)

In order to aid understanding of underlying business performance, the Directors have presented underlying results before the effect of exceptional and other items. These exceptional and other items are categorised as 'non-underlying' and are analysed in detail in note 4 to these financial statements. The accompanying notes form an integral part of these consolidated financial statements.

Consolidated statement of comprehensive income
Year ended 31 December 2025
(unaudited)

Consolidated statement of financial position
Year ended 31 December 2025
(unaudited)

Consolidated statement of changes in equity
Year ended 31 December 2025
(unaudited)

Reverse acquisition reserve
Reverse acquisition reserve represents the reserve that was created upon the reverse acquisition of Animalcare Group plc.

Other reserve
Other reserve relates to currency translation differences. These exchange differences arise on the translation of subsidiaries with a functional currency other than sterling. The increase in the charge through other comprehensive income compared to the prior period reflects exchange differences arising from monetary items that form part of the Group's net investment in a foreign operation.