Bioquell Regulatory News (BQE)

11 Apr 2005 07:00

Bioquell PLC11 April 2005 TO: CITY EDITORSFOR IMMEDIATE RELEASE 11 April, 2005 BIOQUELL PLC Preliminary results 2004 BIOQUELL PLC, the UK developer of a unique and patent-protected range ofbio-decontamination technology, today announces its preliminary results for theyear ended 31 December 2004. The highlights are: FINANCIALS * Significant improvement in turnover and bottom line performance * Turnover £15.5 million (2003: £12.6 million) * Gross margin 37% (2003: 35%) * R&D expenditure £0.9 million (2003: £1.4 million) * Loss before tax £0.3 million (2003: £2.1 million) * Cash inflow before capex and acquisitions £0.5 million (2003: cash outflow £1.3 million) * Net debt £0.7 million (2003: £0.3 million) OPERATIONAL HIGHLIGHTS * BIOQUELL's unique Room Bio-Decontamination Service (RBDS) is seeing growth in revenues from emergency "superbug" outbreaks in hospitals in the UK and continental Europe * A leading US hospital is planning to start shortly a permanent on-site BIOQUELL RBDS "implant" trial to reduce "superbug" infection, including MRSA * Significant growth in RBDS was also seen in the pharmaceutical / biotechnology sector * A novel treatment for chronic wounds using the Group's unique bio-decontamination technology is undergoing clinical trials and preliminary results look encouraging - the Group is starting the engineering development to bring this new technology to market * Strong growth in the year for the Group's bio-decontamination equipment sales, particularly in North America * Cape, the Group's specialist testing service business, showed continued top line growth with further blue-chip clients signing up for long term outsourcing contracts Commenting on the preliminary results, John Salkeld, Chairman of BIOQUELL said:"BIOQUELL made real progress last year both technologically and commercially. Iam not only delighted to see the marked improvement in the financial results ofthe Group but the prospects for "superbug" eradication from hospitals areexciting. In particular, the fact that a leading US hospital is planning tostart shortly a permanent onsite RBDS trial to eradicate "superbugs" issignificant. We are also enthusiastic about the prospects of applying theGroup's unique technology to wound healing - which is another substantial globalmarket and one which is complementary to our "superbug" eradication technology." Enquiries John Salkeld BIOQUELL PLC 01264 835 900Nick AdamsMark Bodeker Emma Kane Redleaf Communications 020 7955 1410 CHAIRMAN'S STATEMENT Overview BIOQUELL made significant progress in 2004 in the commercialisation of its newbio-decontamination products and services. This progress can be seen in thefinancial results which demonstrate a substantial year-on-year improvement. Results and finance Turnover increased by 23% to £15.5 million (2003: £12.6 million). This increasewas largely attributable to sales of Clarus bio-decontamination equipment, witha particularly strong performance in the North American market. In addition,RBDS, the Group's flagship room bio-decontamination service, and Cape, theGroup's specialist testing service business, also showed strong revenue growthin the year, with Cape benefiting from the acquisition of EMC Projects Limited. The gross margin increased two points to 37% (2003: 35%). This improvementreflects the increasing proportion of sales of sophisticated bio-decontaminationequipment and revenues from the Group's specialist service businesses. Research and development costs were £0.9 million (2003: £1.4 million). The Groupcontinues to invest in technological innovation and the upgrading of itsexisting product range. Loss before tax was £0.3 million (2003: £2.1 million). Cash inflow before capital expenditure and acquisitions was £0.5 million (2003:outflow of £1.3 million). Capital expenditure was £0.7 million (2003: £1.0million), principally relating to investment in bio-decontamination equipmentfor the Group's service businesses and Cape. During the year £0.2 million (2003:£nil) was paid as the initial tranche of consideration for the acquisition ofEMC Projects Limited. The Group is in a good financial state. The specialist service businesses arecash generative and the balance sheet is sound. Net debt at the year end was£0.7 million (2003: £0.3 million) and net assets were £6.2 million (2003: £6.3million). The Group has an overdraft facility and other debt funding of £2.7million. Activities Good progress was made on the selling of RBDS into the pharmaceutical andbio-technology sectors. Publication in the well respected Journal of HospitalInfection of the successful bio-decontamination of MRSA in St. Thomas' Hospital,London has been helpful in generating interest in the RBDS technology which iscurrently focussed on emergency "superbug" outbreak eradication. In order to generate substantial revenues from this technology it will beimportant to sell permanent on-site RBDS "implant" teams to hospitals who willprovide an ongoing bio-decontamination service to help ensure that "superbugs"such as MRSA, Acinetobacter, VRE and Clostridium difficile, are eradicated fromthe hospital environment. We are pleased that a leading US hospital is planningto start shortly an RBDS "implant" trial in order to assess the level of"superbug" reduction that is achieved in the hospital. In contrast, we aredisappointed by the slow take up of this technology in the NHS. The preliminary results of clinical trials relating to the Group's novel woundhealing technology are encouraging. Wound healing is a large global market. Oneestimate of the annual current treatment costs in the United States exceedsUS$9.5 billion. Chronic wounds can become infected with antibiotic resistantbacteria, including MRSA, and this new technology fits well with BIOQUELL's RBDS"superbug" eradication services for hospitals. Sales of the Clarus range of bio-decontamination equipment showed strong year onyear growth and BIOQUELL's market share continues to increase in a number ofterritories. We are continuing to develop this product range and anticipate goodongoing demand for these products, particularly in North America. In the second half we began to see renewed demand for the Group's laboratoryequipment products which previously had been experiencing decline in the face ofcheaper overseas imports. In spite of this improvement this market remainsextremely competitive and commoditised. Cape continues to expand with increasing levels of outsourced testing contractsincluding with Rolls-Royce and Flight Refuelling (part of the Cobham Group). EMCProjects, acquired in June 2004, has been fully integrated into Cape and therehave been notable successes in terms of cross sales of both environmentaltesting and EMC testing to the enlarged client base. Dividends The Board is proposing the payment of the dividend for the year on thepreference shares of 7.5p per preference share, representing a total payment of£11,250. The Board is not recommending the payment of an ordinary dividend. Prospects The size of the opportunities for the Group in relation to "superbug"eradication in hospitals and wound healing are both very large andinternational. The Group's existing bio-decontamination and specialist servicebusinesses provide a sound platform from which to develop the Group into thesesubstantially larger markets. The Group also has the management teams needed toexecute this strategy. Since the beginning of the year there have been somesigns of weakness in the supply of equipment to the pharmaceutical sector and itis clear that we will need to invest further to achieve widespread adoption ofthe Group's RBDS technology in hospitals. However, the Board is confident of theprospects for BIOQUELL in 2005 which we anticipate will be an exciting year. John SalkeldChairman11 April 2005 REVIEW OF ACTIVITIES RBDS RBDS - the Group's Room Bio-Decontamination Service - continues to grow. RBDShas now been deployed in nine countries in Western Europe, as well as Singaporeand North America. Over the last twelve months significant progress has been made in demonstratingthe effectiveness of the technology to eradicate problematic micro-organisms -bacteria, viruses and fungi - from the hospital environment. At the same timethe scale of the problem facing hospitals from these micro-organisms, includingincreased levels of antibiotic resistance, continues to increase. Although theUK public is well aware of the issues in hospitals relating to MRSA, hospitalsare also facing significant problems from other organisms such as Acinetobacterand Clostridium difficile. BIOQUELL has demonstrated on a number of occasions inhospitals in the UK and in Europe that its technology can be used to stop a"superbug" outbreak and we are seeing increasing levels of interest in the RBDStechnology from hospitals trying to combat such outbreaks. We are seeking tomigrate the hospitals from a reactive to preventative approach to "superbug"eradication and are in discussions with a number of UK hospitals about deployingthe technology via a permanent on-site RBDS team, a so-called "implant" model.Unfortunately, notwithstanding the positive report from the Department ofHealth's Rapid Review Panel in December 2004, take up by NHS hospitals has beenslower than we could have reasonably anticipated and we are having to investfurther to secure adoption of the technology. We have also started to promotethis technology overseas and are pleased that a leading US hospital is planningto start shortly a trial of the RBDS implant model. The application of the RBDStechnology against "superbugs" represents a substantial global market which,once established, BIOQUELL intends to license, as appropriate, internationallyto ensure that the technology takes market share rapidly. The importance of contamination control has long been accepted by thepharmaceutical sector and its regulators. During the year we saw good levels ofdemand for RBDS in the pharmaceutical sector and allied sectors such as medicaldevices, biomedical and biotechnology. We have made some progress migratingclients from an occasional to a scheduled service. We believe that there isconsiderable scope to extend the number of contract RBDS clients in thepharmaceutical sector. We have also invested significant resources in developing the military andcivilian defence market for RBDS. The United States Environmental ProtectionAgency published data generated from research undertaken with BIOQUELL'stechnology which demonstrated rapid bio-deactivation of anthrax on a range ofsubstrates. Data also exist which suggest that BIOQUELL's technology will beeffective against certain chemical weapons and we anticipate running chemicalweapon and toxin deactivation trials later this year. This market is potentiallylarge and BIOQUELL is talking to a number of government agencies; however, thedecision making process tends to be slow and, in the absence of an unforeseencrisis involving biological, chemical or toxin agents, it will take time togenerate substantial revenues in this market. Clarus bio-decontamination equipment Although the Clarus range of bio-decontamination equipment is not as highprofile as the RBDS service, it had an excellent year with strong revenue growthand continues to take market share. Moreover, the pharmaceutical market isbecoming much more aware of the technology and its benefits. BIOQUELL has anincreasing international reputation for its expertise in this market segment. BIOQUELL has a team of specialist consultants who advise clients on the optimalway to fulfil their bio-decontamination and regulatory requirements. There is adeveloping trend for these experts to be contacted by clients at the beginningof large investment programmes and accordingly BIOQUELL is able to ensure thatthe client gets an optimised solution using the Group's technology. The launch in the UK market of the Clarus PORT generated revenues in thehospital pharmacy market which we anticipate will continue in 2005. The PORT isa rapid hydrogen peroxide vapour bio-decontamination device used by clients witha requirement for fast bio-decontamination of product or equipment. EBDS and Service During the year we launched EBDS - an Equipment Bio-Decontamination Service -principally for the laboratory equipment and research market. There isincreasing demand for this service from users of specialist equipment such asresearch robots as well as ubiquitous laboratory equipment including biologicalsafety cabinets and incubators. One of the principal benefits of EBDS is thatformaldehyde, a confirmed human carcinogen with persistent residues, is nolonger needed to decontaminate laboratory equipment. We invested significant time during the year working with our service clients toestablish how best to integrate EBDS with the conventional preventativemaintenance service required on laboratory equipment. We are seeing increasingsuccess at selling this combined service to a range of users in the laboratorymarket. We are also working with a number of service partners internationally whotypically buy the EBDS equipment, initially on an exclusive basis, and work withus to generate leads for RBDS. The conventional laboratory equipment preventative maintenance service businessremains highly commoditised and price sensitive; however, EBDS gives BIOQUELL anunique service offering, which we expect will support and expand theconventional service business over the coming years. Laboratory equipment We are beginning to see an improvement in the sales of the Group's HEPA andactivated carbon filtered products sold into the laboratory sector. Although thelaboratory equipment market remains highly commoditised and price sensitive,with large volumes of equipment manufactured in the Far East, there are signsthat many clients are prepared to pay a premium for expertise and associatedservice in the UK market. We have also been successful in winning large buildcontracts which combine the requirement for BIOQUELL's laboratory equipment,Clarus technology and service provision. Further, the other large Britishmanufacturers of biological safety cabinets have changed ownership or ceased toexist during the year, creating further opportunities for us to take marketshare. We do not anticipate substantial growth in this market but it appears that thedecline in revenues has been arrested and its day to day operations arerequiring less senior management time. Further, it gives BIOQUELL anotherconduit into its core markets and customers. Defence The Group's NBC (nuclear, biological and chemical) filtration defence businessdeclined during the year. In the UK the Ministry of Defence is not currentlybuying any appreciable number of new military vehicles hence demand for NBC islow. Demand from the overseas market is also subdued. However, during the year asmall contract was won in the US market and we are proactively seeking to expandour market share in the United States. We also anticipate an increase in thespares market as vehicles are used in Iraq and other locations, and repairs aswell as spare parts will inevitably be needed. United States BIOQUELL Inc had its first full year of trading in 2004 and showed stronggrowth. The business is winning market share and the US market forpharmaceutical research and production appears to be appreciably better fundedthan in Europe. We now have a high quality team of professionals in place andanticipate expanding this team further in 2005. France The French market remains challenging. During the year the business increasedits turnover significantly although costs also increased. It is noteworthy thatthe first "superbug" RBDS bio-decontamination happened in a large Frenchhospital. Notwithstanding the challenges of operating in France, we believe thatit is worth persevering with this market as ultimately the potential size of themarket is substantial and we have recruited a good team. Sales and marketing In addition to the investment in sales and marketing in the United Kingdom, theUnited States and France , the Group is considering means of expanding itsroutes to market principally in Europe and Asia. In Europe we are intending toput in place a network of agents to ensure that BIOQUELL's technology becomeswidely available and takes market share. In Asia we intend to emulate thesuccess of BIOQUELL Inc and are examining the feasibility and financialviability of setting up an operation in the Far East. We are also starting to invest further in marketing and business development toensure that BIOQUELL exploits the "first mover" advantage which it has in manysectors. Research and development The Group continues to invest in research and development as it believes thatinnovation is critical to its future success and there are a number ofsignificant commercial applications for its low temperature, residue-free,bio-decontamination technology. In addition to research and development relatingto the Group's hydrogen peroxide vapour technology, work continues on aqueousoxygen peroxide based equipment. Careful analysis of any market, particularlymarket size, is undertaken prior to any R&D taking place. Significant time andresources are spent in filing appropriate patent protection for the Group'stechnology and innovations. Wound healing The Group has been carrying out innovative research and development into novelwound healing technology for over three years exploiting its expertise inperoxide-based bio-decontamination. Patent protection has been filed on thetechnology. Regulatory approval for clinical trials in the UK was received atthe end of last year. Clinical trials started earlier this year on venous legulcers at the Wound Healing Research Unit, at the University of Wales College ofMedicine. The initial results are encouraging. BIOQUELL is now undertaking thenecessary product development engineering to bring a product to this substantialworldwide market. Cape Cape enjoyed strong revenue and order intake growth during the year. It alsoundertook a number of key steps, including acquisition, equipment purchase andthe provision of outsourced testing services, in order to position itself forgrowth in 2005 and beyond. Cape's senior management team is taking a number of actions to strengthen andmake more predictable the revenues from the core environmental testing businesswhere profitability was below the level we were expecting. These have includedfocussing on securing long-term preferred supplier agreements or outsourcepartnerships. Examples include Rolls-Royce for whom Cape has established adedicated testing facility at its Warwick site which is now undertaking a rangeof specialist tests on Rolls-Royce components. In addition Cape has establisheda testing facility in Wimborne for Flight Refuelling (and other Southcoast-based aerospace companies) and signed a five year testing contract whichis expected to generate revenues in excess of £1.25 million over the period.Cape has also taken over the specialist testing requirements for Areva, theFrench nuclear engineering group, in the UK. Cape intends to expand itsprovision of specialist outsource testing services in 2005. Cape has also expanded Cape-on-call, whereby specialist testing engineersundertake work at clients' facilities. Clients typically comprise blue-chipcompanies including, for example, Hewlett Packard. Mindful of the trend of consolidation of suppliers and the opportunitiesavailable to Cape in other specialist testing fields, Cape acquired EMC ProjectsLimited at the beginning of June 2004. Cape has worked closely with EMC Projectsfor some 15 years and had previously subcontracted high levels ofelectromagnetic compatibility testing to this company. The acquisition has beenwell received by Cape's clients and a significant level of incremental work hasbeen placed with EMC Projects from Cape's client base. Cape believes that there are further opportunities to consolidate the provisionof specialist testing services to large blue chip UK corporates and has signedmarketing agreements and made strategic investments in specialist assets inorder to optimise its position in any further consolidation in this sector. Cape's software-based consultancy has started to show strong growth,particularly in the petro-chemical field. Further investment is planned in 2005in expanding this consultancy business, which undertakes finite element analysisand other structural stress related software modelling for clients. We believe that Cape has the opportunity and management team to develop asignificant and profitable specialist testing business. We intend to continue toinvest in the business and are expecting higher returns from Cape in the future. Nick AdamsChief Executive OPERATIONS AND FINANCEOperations The increase in turnover at the Group's Andover and Warwick sites required highquality execution by the operations teams during the year. This was made morechallenging by the increasing levels of service activities, including theprovision at short notice of emergency RBDS contracts. At the same time BIOQUELLcontinues to focus on initiatives to reduce its input, assembly and distributioncosts. It is a credit to the operations personnel throughout the Group that theywere able to cope with the fluctuating demands placed upon them, often at veryshort notice. It is notable that the core operations team based at Andover ishigh quality and multi-skilled and can assemble the full range of products, aswell as provide service support for RBDS contracts. During the year BIOQUELL Inc, based just north of Philadelphia, continued toexpand. This has required investment in the development of a service team to,among other things, service Clarus equipment sold into the North Americanmarket. Recruitment of high quality individuals has been challenging and timeconsuming; however, the core team now in place at BIOQUELL Inc is competent andthe business continues to grow. Finance and controls The Group is becoming increasingly complex notwithstanding its relatively smallsize. It is also expanding technologically and internationally. AccordinglyBIOQUELL takes considerable care putting in place appropriate means to manageand monitor all its activities, in order to be able to manage the growth of theGroup. During the year a number of changes were made to the structure of the financeteam at Andover. There has been a notable improvement in working capital levelsnotwithstanding the increase in turnover. The Group anticipates extractingfurther efficiencies and achieving improvements in customer service levels byinvesting in systems during 2005. The increased margins and cash generative nature of the specialist servicebusinesses started to affect the financial results of the Group positively in2004. The balance sheet is sound and appropriate levels of overdraft facilitiesare in place. BIOQUELL's detailed management information helps to ensure that there is arigorous control of costs and detailed financial data across all parts of thebusiness. This helps the management teams make informed and appropriateinvestments in capital equipment and acquisitions, which totalled £0.9 millionduring 2004. The Group generated positive cashflow during the year, beforeacquisitions and capital expenditure, of £0.5 million (2003: cash outflow of£1.3 million). At the end of 2004 the significant fall in the dollar against sterling caused anotable reduction in our sterling denominated results. As BIOQUELL Inc continuesto grow - and with many Asian currencies currently pegged to the dollar - theGroup has started to hedge a significant proportion of its anticipated dollarreceipts on an annual basis. International Financial Reporting Standards BIOQUELL will be adopting International Financial Reporting Standards (IFRS)from 1 January 2005. This will affect the reporting of its future financialresults in a number of ways. For example, IFRS 2 "Share based payment" requires companies to expense via theProfit and Loss account the option value intrinsic in share options awarded toemployees under the Group's Share Option Schemes. Currently no charges for theaward of options arise under UK GAAP. Goodwill arising on acquisition will also be frozen and a test for impairmentundertaken annually. As a result goodwill amortisation charges previously madeto the Profit and Loss account will no longer occur. All development expenditure, previously written off in the year in which it wasincurred, now has to be capitalised and amortised over an anticipated 10-yearperiod under IAS 38 providing that the costs meet certain criteria. IAS 39 introduces more stringent criteria for the accounting for hedging inrespect of forward foreign exchange cover and the "marking to market" of suchhedges and taking any gains or losses to the Profit and Loss Account. The above is not intended to reflect the full impact of IFRS and theinterpretation of IFRS, both in industry and the accounting profession,continues to develop in a number of areas. BIOQUELL's 2005 interim and preliminary results will include information on theimpact of IFRS on the Group's financial statements and a reconciliation of thenecessary adjustments arising from the adoption of IFRS. Mark BodekerChief Operating Officer and Finance Director Consolidated Profit and Loss Accountfor the year ended 31 December 2004 --------- --------- 2004 2003 £'000s £'000s --------- ---------TurnoverExisting operations 14,939 12,575Acquisitions 555 - --------- ---------Continuing operations 15,494 12,575 --------- ---------Cost of sales (9,782) (8,235)Gross profit 5,712 4,340 37% 35% --------- ---------Operating profit/(loss) before R&D and exceptional items 660 (269)R&D (936) (1,421)Exceptional items - (360) --------- ---------Net operating expenses (5,988) (6,390) --------- ---------Operating (loss)/profitExisting operations (388) (2,050)Acquisitions 112 - --------- ---------Continuing operations (276) (2,050) --------- ---------Net interest payable and similar charges (61) (11) --------- ---------Loss on ordinary activities before tax (337) (2,061)Tax on loss on ordinary activities 173 222 --------- ---------Loss on ordinary activities after tax (164) (1,839)Dividends on non equity shares (11) (11) --------- ---------Retained loss for the year (175) (1,850) --------- --------- Loss per share - basic and diluted (0.4p) (4.7p) --------- --------- Group and Company Balance Sheetsat 31 December 2004 Group Company 2004 2003 2004 2003 £'000s £'000s £'000s £'000sFixed assets: Intangible assets 550 265 - -Tangible assets 2,849 2,721 12 13 Investments - - 7,454 7,453 -------- -------- -------- -------- 3,399 2,986 7,466 7,466 -------- -------- -------- --------Current assets: Stocks 2,534 2,599 - -Debtors 4,646 3,504 1,263 1,149 Cash at bank and in hand 430 269 9,974 9,703 -------- -------- -------- -------- 7, 610 6,372 11,237 10,852Creditors: Amounts falling due within one year (4,038) (2,393) (1,995) (2,335) -------- -------- -------- --------Net current assets 3,572 3,979 9,242 8,517 -------- -------- -------- --------Total assets less current liabilities 6,971 6,965 16,708 15,983 -------- -------- -------- --------Creditors: Amounts falling due after more than one year (570) (543) (413) (411)Provisions for liabilities and charges (179) (77) - - -------- -------- -------- --------Net assets 6,222 6,345 16,295 15,572 -------- -------- -------- --------Capital and reserves: Called up share capital 4,166 4,124 4,166 4,124Share premium 10,285 10,139 10,285 10,139 Capital reserve 255 255 255 255Profit and loss account (8,484) (8,173) 1,589 1,054 -------- -------- -------- --------Shareholders' funds 6,222 6,345 16,295 15,572 -------- -------- -------- --------Shareholders' funds may be analysed as: Equity interests 6,072 6,195 16,145 15,422 Non equity interests 150 150 150 150 -------- -------- -------- -------- 6,222 6,345 16,295 15,572 -------- -------- -------- -------- Consolidated Cash Flow Statementfor the year ended 31 December 2004 2004 2003 £'000s £'000s --------- ---------Net cash in / (out) flow from operating activities 412 (1,323)Returns on investments and servicing of finance (72) (22)Capital expenditure and financial investment (649) (989)Acquisitions: EMC Projects Ltd (222) -Financing 123 9 --------- ---------Decrease in cash in the year (408) (2,325) --------- --------- Reconciliation of net cash flow to movement in net debtDecrease in cash in the year (408) (2,325)Cash outflow from decrease in debt financing 65 32 --------- ---------Change in net debt resulting from cash flows (343) (2,293)New finance leases - (174)Acquisitions: EMC Projects Ltd (88) -Exchange difference (3) (34) --------- ---------Movement in net debt in the year (434) (2,501) --------- ---------Net (debt) / cash at 1 January (305) 2,196 --------- ---------Net debt at 31 December (739) (305) --------- --------- Consolidated Statement of Total Recognised Gains and lossesfor the year ended 31 December 2004 2004 2003 £'000s £'000s --------- ---------Loss for the financial year (164) (1,839)Currency translation difference on foreign currency netinvestments (136) (36) --------- ---------Total recognised loss relating to the year (300) (1,875) --------- --------- Reconciliation of Movements in Consolidated Shareholders' Fundsfor the year ended 31 December 2004 Group Company 2004 2003 2004 2003 £'000s £'000s £'000s £'000s -------- -------- -------- --------(Loss) / profit on ordinary activities aftertax (164) (1,839) 546 58Dividends on non equity shares (11) (11) (11) (11) -------- -------- -------- -------- (175) (1,850) 535 47Currency translation difference on foreigncurrency net investments (136) (36) - -Shares issued and associated share premium 188 41 188 41 -------- -------- -------- --------Net (decrease) / increase (123) (1,845) 723 88Opening shareholders' funds 6,345 8,190 15,572 15,484 -------- -------- -------- --------Closing shareholders' funds 6,222 6,345 16,295 15,572 -------- -------- -------- -------- The total amount of non equity interests in shareholders' funds is as follows: 2004 2003 £'000s £'000s -------- --------7.5% redeemable cumulative preference shares of £1 each 150 150(First Preference Shares) -------- -------- Notes: 1. The financial information set out above in respect of the years ended 31 December 2004 and 31 December 2003 does not constitute the Company's statutory financial statements for those periods but has been derived from the audited Statutory Accounts for those years. Statutory financial statements for the period ended 31 December 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial statements for the year ended 31 December 2004 will be posted to shareholders shortly. 2. The financial information set out above has been prepared using accounting policies which are consistent with those adopted in the full financial statements of the Company. 3. The directors are proposing payment of the dividend for the year on the First Preference Shares of 7.5p per share (a total payment of £11,250). 4. Payment of the second instalment of the dividend on the non-equity share (preference shares) of £5,625 will be made on 30 August 2005. 5. In the year ended 31 December 2004, amortisation of intangible assets and tangible fixed assets totalled £870,000 (2003: £799,000) This information is provided by RNS The company news service from the London Stock Exchange