DNK.L Regulatory News (DNK)

4 Feb 2005 13:30

Danka Business Systems PLC04 February 2005 DANKA BUSINESS SYSTEMS PLC ("Danka", the "Company" or the "Group") Announcement of results for the nine months and third quarter ended 31st December 2004 Danka announces continued Vision 21 programme designed to save between £31 - £38 million annually Danka Business Systems PLC, a leading independent global provider of officeimaging systems and services, today announced its results for the nine monthsand quarter ended 31st December 2004. For the quarter ended 31st December 2004,turnover was £168.1 million, gross margins were 36.1%, operating losses were£2.9 million and the profit for the period before additional financial costs ofnon-equity shares was £1.9 million. The Group's profit for the period benefitedfrom a £10.7 million corporate tax credit resulting primarily from favourablesettlements of tax audits in Europe. "Our third-quarter results reflect steady performance in certain areas of ourbusiness, including our overall retail equipment and related turnover and totalmargins, which remain relatively stable," said Todd Mavis, Danka's ChiefExecutive Officer. "I am most pleased with the continuing validation of ourTechSource multi-vendor services strategy which continues to gain momentum inthe marketplace. I am also delighted to announce that this week, Danka enteredinto an agreement with a preeminent manufacturer of printers and related officeperipheral products to provide warranty, repair, maintenance and installationservices on its installed base of printers and related products worldwide. Underthis agreement, Danka becomes one of a select few of service companiesauthorised to provide such services. Our TechSource strategy was furtherenhanced during the quarter with the acquisition of Image One, a highly regardedprinter services business which provides us with strategic management andmarketing expertise and access to new products and services. Further, thisexpands our customer base and leverages our service infrastructure. Finally, wecontinued to refine our focus by divesting our non-strategic businesses inPortugal and Russia." The Group also unveiled the next phase of its Vision 21 programme which iscomprised of strategic growth investments and cost restructuring programmesdesigned to optimise business operations, improve customer relationships aroundthe world and achieve additional annualised savings of between £31 million and£38 million once fully implemented. "The worldwide Danka management team is excited about what this phase of Vision21 will mean for our future," continued Mavis. "Our progress continues to beimpacted, however, by inefficiencies in our business which contributes to a coststructure which remains too high. The launch of this new phase of our Vision 21programme represents definitive action to address these issues and willfundamentally strengthen our operating and financial performance. During thisphase, we will create a more customer-centric platform to improve our businessprocesses and product delivery capabilities by eradicating a whole series ofcomplexities in our business, from simplifying pricing and contracts toimproving billing systems. We are confident these actions will provide thefoundation to leverage our strategies and operations and enable us to investmore resources in our strategies by substantially reducing operating expensesand our cost of goods sold. We expect to begin seeing the impact of theseactions as early as next quarter." Danka estimates that this phase of its Vision 21 programme will reduce operatingexpenses and cost of goods sold by £31 million - £38 million annually when fullyimplemented. The process improvements will result in a 12% decrease in theworldwide work force, facility consolidations and related savings. The actionsneeded to achieve these savings will be taken in steps over the next 2 to 3quarters and will require approximately £19 million of cash. The expectedpayback on the cash usage is less than 12 months. The Group expects to recognisean exceptional charge of £10 to £18 million over the next several quarters.Key third-quarter financial metrics: • Total third-quarter turnover was £168.1 million, a 13% decline from the comparative prior year quarter but less than 1% lower than the second quarter. Retail equipment and related turnover was 11% and 5% lower than the comparative prior year quarter and sequentially respectively. Retail maintenance turnover was 11% lower from the year-ago period but 1% higher sequentially. Adjusting for currency exchange, total turnover declined by 9% year-over-year. • Consolidated gross margins were 36.1% of turnover, essentially flat with the comparative prior year quarter. Equipment and related margins remained steady at 35.6% and service margins were stable at 38.7%. • Recurring operating expenses (excluding exceptional administrative expenses) were £63.2 million, compared to £64.2 million in the comparative prior year quarter. The current quarter included increased Sarbanes-Oxley compliance costs and consulting costs related to the Vision 21 programme of over £2 million of incremental expense, as well as an unfavourable impact of currency exchange rates. The comparative prior year period includes a one-time favourable pension adjustment. As a percentage of revenue, recurring operating expenses were 37.6% in the third quarter. • The operating loss was £2.9 million, compared to a loss of £5.4 million in the comparative prior year quarter. The comparative prior year quarter included a £11.5 million restructuring charge, compared to £0.4 million in the current year third quarter. The profit for the quarter before additional financial costs of non-equity shares was £1.9 million, compared to a loss of £9.4 million in the comparative prior year quarter. The current quarter includes a one-time corporate tax benefit of £10.7 million resulting primarily from favourable settlements of tax liabilities in Europe. After additional financial costs of non-equity shares, basic and diluted losses were 0.3 pence per share, compared to losses of 4.9 pence per share in the comparative prior year period. Adjusted for the exceptional restructuring costs and the tax benefit noted above, adjusted basic and diluted losses were 4.4 pence per share, compared to losses of 1.4 pence per share in the comparative prior year period. • Free cash flow (net cash flow before use of liquid resources and financing less net cash flow from acquisitions and disposals) was a negative £9.0 million, compared to a positive £12.1 million in the second quarter. Cash usage in the current quarter included £7.1 million of investments in stock, £6.9 million of semi-annual interest payments on our outstanding notes and net capital expenditure was £3.0 million. The Group used a net £1.0 million for acquisitions and disposals, primarily in respect of the acquisition of Image One Corporation. The Group's cash balance at the end of the third quarter was £46.1 million. • For the nine months ended 31st December 2004, total turnover was £509.6 million, compared to £601.3 million in the comparative prior year period. Gross margins were steady at 36.9%, while recurring operating expenses declined by 13%. Operating profits improved to £3.1 million, compared to the comparative prior year operating loss of £2.0 million. Losses for the nine months before additional financial costs of non-equity shares improved to £0.9 million, compared to the loss for the nine months ended 31st December 2003 of £21.3 million. The current year loss included a tax benefit of £10.7 million primarily due to favourable audit settlements in Europe. The comparative prior year period loss included restructuring charges of £11.1 million and an exceptional loss on the refinancing of debt of £12.8 million. "Our overall liquidity levels remain solid even as we made strategic investmentsin inventory, capital expenditures and our acquisition of Image One during thequarter," noted Mark Wolfinger, Danka's Chief Financial Officer. "Although thetiming of our revenue, particularly in the U.S., increased our accountsreceivable balance, we would expect this to be an opportunity to createadditional liquidity in the future for our strategic initiatives." Conference Call and Webcast A conference call and Webcast to discuss Danka's third quarter results has beenscheduled for today, Friday, 4th February at 4:00 p.m. UK time. To access theWebcast, please go to www.danka.com. To participate in the conference call,callers in the United States and Canada may dial 800-309-1555; UK and otherinternational callers should dial 001-706-643-7754. No conference number isneeded. A recording of the call will be available from approximately two hoursafter the call ends until 10:00 p.m. UK time on 11 February 2005. To access thisrecording, callers in the United States and Canada may dial 800-642-1687 and UKand International callers may dial 001-706-645-9291 or visit Danka's Web site. About Danka Danka delivers value to clients worldwide by using its expert technical andprofessional services to implement effective document information solutions. Asone of the largest independent providers of enterprise imaging systems andservices, the Group enables choice, convenience and continuity. Danka's visionis to empower customers to benefit fully from the convergence of image anddocument technologies in a connected environment. This approach will strengthenthe Group's client relationships and expand its strategic value. For moreinformation, visit Danka at www.danka.com. - ends - For further information please contact: Danka Business Systems PLCDonald Thurman, Danka Investor Relations 001 770 280 3990Paul Dumond, Company Secretary 020 7605 0150 Weber Shandwick Square MileSarah Macleod/Helen Thomas 020 7067 0700 Certain statements contained herein, or otherwise made by the Group's officers,including statements related to Danka's future performance and the outlook forthe Group's businesses and respective markets, projections, statements of theGroup's plans or objectives, forecasts of market trends and other matters, areforward-looking statements, and contain information relating to Danka that isbased on management's beliefs as well as assumptions made by, and informationcurrently available to management. The words "goal", "anticipate", "expect","believe" and similar expressions as they relate to Danka are intended toidentify forward-looking statements, although not all forward-looking statementscontain such identifying words. No assurance can be given that the results inany forward-looking statement will be achieved. For the forward-lookingstatements, Danka claims the protection of the safe harbour for forward-lookingstatements provided for in the Private Securities Litigation Reform Act of 1995,Section 27A of the Securities Act of 1933 and Section 21E of the SecuritiesExchange Act of 1934, as amended. Such statements reflect management's currentviews with respect to future events and are subject to certain risks,uncertainties and assumptions that could cause actual results to differmaterially from those reflected in the forward-looking statements. Factors thatmight cause such actual results to differ materially from those reflected in anyforward-looking statements include, but are not limited to, the following: (i)any inability to implement Danka's strategy successfully; (ii) any inability tocomply with the financial or other covenants in the Group's debt instruments;(iii) any material adverse change in financial markets, the economy or in theGroup's financial position; (iv) increased competition in the industry and thediscounting of products by the Group's competitors; (v) new competition as theresult of evolving technology; (vi) any inability by Danka to procure or anyinability by Danka to continue to gain access to and distribute successfully newproducts, including digital products, colour products, multi-function productsand high-volume copiers, or to continue to bring current products to themarketplace at competitive costs and prices; (vii) any inability to arrangefinancing for Danka's customers' purchases of equipment from Danka; (viii) anyinability to enhance and unify the Group's management information systemssuccessfully; (ix) any inability to record and process key data due toineffective implementation of business processes and policies; (x) any negativeimpact from the loss of a key vendor or customer; (xi) any negative impact fromthe loss of any of the Group's senior or key management personnel; (xii) anychange in economic conditions in domestic or international markets where Dankaoperates or has material investments which may affect demand for the Group'sproducts or services; (xiii) any negative impact from the international scope ofthe Group's operations; (xiv) fluctuations in foreign currencies; (xv) anyinability to achieve or maintain cost savings; (xvi) any incurrence of taxliabilities beyond management's current expectations, which could adverselyaffect the Group's liquidity; (xvii) any delayed or lost sales and other impactsrelated to the commercial and economic disruption caused by past or futureterrorist attacks, the related war on terrorism, and the fear of additionalterrorist attacks; and (xviii) other risks including those risks identified inany of the Group's filings with the Securities and Exchange Commission, or theSEC. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which reflect management's analysis only as at the date they aremade. Except as required by applicable law, Danka undertakes no obligation anddoes not intend to update these forward-looking statements to reflect events orcircumstances that arise after the date they are made. Furthermore, as a matterof policy, Danka does not generally make any specific projections as to futureearnings, nor does Danka endorse any projections regarding future performance,which may be made by others outside the Company. The financial information for the quarters and nine month periods ended 31stDecember, 2004 and 2003 is unaudited and not reviewed and does not constitutefull accounts within the meaning of Section 240 of the Companies Act 1985.However, the financial information for such periods is prepared on the samebasis as the financial information for the year ended 31st March, 2004. Thefinancial information for the year ended 31st March, 2004 has been extractedfrom the audited accounts for that year which have been filed with the Registrarof Companies. The full accounts for the year ended 31st March, 2004 have beengiven an unqualified audit report, which did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. The comparative additionalfinancial costs of non-equity shares have been restated following the change infunctional currency of the parent company as discussed in the accounts for thefinancial year ended 31st March, 2004. This press release contains information regarding adjusted operating profit/(loss) which is computed as operating profit/(loss) before exceptional items,adjusted net profit/(loss) that is computed as net profit/(loss) beforeexceptional items and free cash flow that is computed as net cash flow beforeuse of resources and financing less net cash flow from acquisitions anddisposals. These measures are non-GAAP financial measures, defined as numericalmeasures of the Group's financial performance that exclude or include amounts soas to be different than the most directly comparable measure calculated andpresented in accordance with generally accepted accounting principles or GAAP inthe profit and loss account, balance sheet or cash flow statement. The notes tothis press release provide reconciliations of these non-GAAP financial measuresto the most directly comparable GAAP financial measures. Although adjusted operating profit/(loss), adjusted net profit/(loss) and freecash flow represent non-GAAP financial measures, we consider these measures tobe key operating metrics of the Group. We use these measures in our planning andbudgeting processes, to monitor and evaluate our financial and operating resultsand to measure performance of our separate divisions. We also believe thatadjusted operating profit/(loss), adjusted net profit/(loss) and free cash floware useful to investors because they provide an analysis of financial andoperating results using the same measures that we use in evaluating the Group.We expect that such measures provide investors with the means to evaluate theGroup's financial and operating results against other companies within theindustry. We believe that these measures are meaningful to investors inevaluating the Group's ability to meet future debt service requirements and tofund capital expenditures and working capital requirements. The calculation ofadjusted operating profit/(loss), adjusted net profit/(loss) and free cash flowmay not be consistent with the calculation of these measures by other companiesin the industry. Adjusted operating profit/(loss), adjusted net profit/(loss)and free cash flow are not measurements of financial performance under GAAP andshould not be considered as an alternative to the profit/(loss) for the periodas an indicator of operating performance or cash flows from operating activitiesas a measure of liquidity or any other measures of performance derived inaccordance with GAAP. Danka is a registered trademark and Danka @ the Desktop and TechSource aretrademarks of Danka Business Systems PLC. All other trademarks are the propertyof their respective owners. Group Profit and Loss Account For the Nine Months Ended 31st December, 2004 and 2003 31st December ----------------------- 2004 2003 ------------- ----------- Note £000 £000 (Unaudited) (Unaudited) ----- ------------- ----------- Turnover 2 509,627 601,308Cost of sales (321,382) (380,483) ------------- -----------Gross profit 2 188,245 220,825 Distribution costs (74,410) (78,611)Administrative expenses Recurring (109,616) (133,138) Exceptional (1,125) (11,107) ------------- ----------- (110,741) (144,245) ------------- -----------Operating profit/(loss) on ordinary activities before interest 3,094 (2,031) Interest receivable and similar income 236 566Interest payable and similar charges (13,692) (16,050)Exceptional loss on refinancing of debt - (12,807) ------------- -----------Loss on ordinary activities before taxation (10,362) (30,322) ------------- ----------- Tax (charge)/credit on loss on ordinary activities (1,228) 9,036 Exceptional tax credit 10,710 - ------------- -----------Tax credit 9,482 9,036 ------------- ----------- Loss for the financial period (880) (21,286)Additional financial costs of non-equity shares (8,254) (9,726) ------------- ----------- Retained loss for the financial period (9,134) (31,012) ============= =========== Loss per share: 4 Basic (3.6)p (12.4)p Diluted (3.6)p (12.4)p Adjusted basic (before exceptional items) (7.4)p (5.5)p Adjusted diluted (before exceptional items) (7.4)p (5.5)p Average exchange rate £1= $ 1.830 $ 1.643Average exchange rate £1= • 1.474 • 1.429 Group Profit and Loss Account For the Quarters Ended 31st December, 2004 and 2003 31st December ----------------------- 2004 2003 ------------- ----------- Note £000 £000 (Unaudited) (Unaudited) ------ ------------- ----------- Turnover 2 168,139 194,073Cost of sales (107,474) (123,771) ------------- -----------Gross profit 2 60,665 70,302 Distribution costs (25,721) (24,114)Administrative expenses Recurring (37,430) (40,110) Exceptional (390) (11,474) ------------- ----------- (37,820) (51,584) ------------- ----------- Operating loss on ordinary activities before interest (2,876) (5,396) Interest receivable and similar income 84 176Interest payable and similar charges (4,826) (4,637) ------------- -----------Loss on ordinary activities before taxation (7,618) (9,857) Tax (charge)/credit on loss on ordinary activities (1,228) 441 Exceptional tax credit 10,710 - Tax credit 9,482 441 ------------- ----------- Profit/(loss) for the financial period 1,864 (9,416)Additional financial costs of non-equity shares (2,739) (2,733) ------------- ----------- Retained loss for the financial period (875) (12,149) ============= =========== Loss per share: 4 Basic (0.3)p (4.9)p Diluted (0.3)p (4.9)p Adjusted basic (before exceptional items) (4.4)p (1.4)p Adjusted diluted (before exceptional items) (4.4)p (1.4)p Average exchange rate £1= $ 1.866 $ 1.703Average exchange rate £1= • 1.438 • 1.433 Group Balance Sheet 31st December 31st March 2004 2004 £000 £000 (Unaudited) (Audited) ----------- ---------- Fixed assetsIntangible assets 3,355 1,911Tangible assets 41,244 51,829 ----------- ---------- 44,599 53,740 Current assetsStocks - finished goods and goods for resale 61,963 50,704Debtors (of which £10,600,000 (March 2004 - £10,537,000) fall due after more than one year) 149,912 152,233Investments 487 355Cash at bank and in hand 46,097 60,943 258,459 264,235Creditors: amounts falling due within one yearBank and other loans (1,060) (630)Other creditors (178,777) (171,006) (179,837) (171,636) Net current assets 78,622 92,599-------------------------------------------------------------------- ----------Total assets less current liabilities 123,221 146,339 Creditors: amounts falling due after more than one year Bank and other loans (118,996) (122,564)Other creditors (4,542) (18,104) (123,538) (140,668)Provisions for liabilities and charges (24,126) (33,175)-------------------------------------------------------------------- ----------Net liabilities (24,443) (27,504)-------------------------------------------------------------------- ---------- Capital and reservesCalled up share capital 3,332 3,291Share premium account 308,531 310,536Profit and loss account (336,306) (341,331)-------------------------------------------------------------------- ----------Shareholders' deficit (24,443) (27,504)-------------------------------------------------------------------- ---------- Equity shareholders' deficit (187,609) (186,492)Non-equity shareholders' funds 163,166 158,988 -------------------------------------------------------------------- ---------- Closing exchange rate £1= $ 1.916 $ 1.840 ----------- ----------Closing exchange rate £1= • 1.415 • 1.497 ----------- ---------- Group Cash Flow Statement For the Nine Months Ended 31st December, 2004 and 2003 31st December ----------------- 2004 2003 £000 £000 Note (Unaudited) (Unaudited) --------- --------- Net cash inflow from operating activities 7 11,429 37,293 Net cash outflow from returns on investments and servicing of finance (14,991) (14,786) Total taxes paid (2,011) (388) Net cash outflow for capital expenditure (6,971) (19,708) Cash outflow from acquisitions and disposals (1,039) - --------- ---------Net cash (outflow)/inflow before use of liquid resources and financing (13,583) 2,411 Management of liquid resources (152) 3,356 Net cash (outflow)/inflow from financing (223) 1,827 --------- --------- (Decrease)/increase in cash (13,958) 7,594 ========= ========= Group Cash Flow Statement For the Quarters Ended 31st December, 2004 and 2003 31st December ----------------- 2004 2003 £000 £000 Note (Unaudited) (Unaudited) --------- --------- Net cash inflow from operating activities 7 3,285 10,932 Net cash outflow from returns on investments and servicing of finance (7,453) (8,311) Total taxes paid (1,904) (187) Net cash outflow for capital expenditure (2,963) (1,956) Cash outflow from acquisitions and disposals (1,039) - --------- ---------Net cash (outflow)/inflow before use of liquid resources and financing (10,074) 478 Management of liquid resources (50) 480 Net cash outflow from financing (358) (333) --------- --------- (Decrease)/increase in cash (10,482) 625 ========= ========= Notes to the Financial Information 1. The financial information for the quarters and nine months ended 31st December, 2004 and 2003 is unaudited and unreviewed and does not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. However, the financial information for such periods is prepared on the same basis as the financial information for the year ended 31st March, 2004. The financial information for the year ended 31st March, 2004 has been extracted from the audited accounts for that year which have been filed with the Registrar of Companies. The full accounts for the year ended 31st March, 2004 have been given an unqualified audit report, which did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. The comparative additional financial costs of non-equity shares have been restated following the change in functional currency of the parent company, as discussed in the accounts for the financial year ended 31st March, 2004. 2. Analysis of turnover and gross profit Quarters Ended 31st December ---------------- 2004 2003 £000 £000 (Unaudited) (Unaudited) -------- --------- TurnoverRetail equipment and related sales 59,958 67,173Retail maintenance 81,128 91,611Retail supplies and rental sales 13,439 20,605Wholesale sales 13,614 14,684 -------- --------- 168,139 194,073 -------- --------- Gross profitRetail equipment and related sales 21,352 23,627Retail maintenance 31,417 35,351Retail supplies and rental sales 5,795 8,478Wholesale sales 2,101 2,846 -------- --------- 60,665 70,302 -------- --------- Nine Months Ended 31st December ---------------- 2004 2003 £000 £000 (Unaudited) (Unaudited) -------- --------- TurnoverRetail equipment and related sales 178,174 208,551Retail maintenance 248,684 290,794Retail supplies and rental sales 44,513 59,153Wholesale sales 38,256 42,810 -------- --------- 509,627 601,308 -------- --------- Gross profitRetail equipment and related sales 62,392 70,823Retail maintenance 101,091 117,709Retail supplies and rental sales 18,036 24,078Wholesale sales 6,726 8,215 -------- --------- 188,245 220,825 -------- --------- 3. Reconciliation of the weighted average number of basic and diluted ordinary shares in issue Quarters Ended Nine Months Ended 31st December 31st December --------------- ---------------- 2004 2003 2004 2003 -------- -------- -------- -------- Average number of ordinary shares in issue - basic 252,740,946 250,125,962 251,752,389 249,896,327Average outstanding share options 6,803,654 6,029,759 8,437,942 6,834,584 --------- --------- --------- ---------Average number of ordinary shares in issue - diluted 259,544,600 256,155,721 260,190,331 256,730,911 ========= ========= ========= ========= 4. The calculations of the loss per share are based on the loss on ordinary activities after taxation and the finance costs on non-equity shares and the basic and diluted weighted average number of ordinary shares in issue during the period. In order to provide a trend measure of underlying performance, Group loss on ordinary activities after taxation and the finance costs on non-equity shares has been adjusted to exclude exceptional items and basic loss per share recalculated. Outstanding share options have not been considered in dilutive per share computations since the Group is in a loss position for the periods below and to include them would be anti-dilutive. Quarters Ended 31st December 2004 2003 ------------- -------------- Pence Pence £000 Per Share £000 Per Share ------- ------- ------- -------- Basic loss (875) (0.3) (12,149) (4.9)Exceptional items arising in respect of: Restructuring of worldwide operations 390 11,474 Tax effect - (2,776) ------- ------ Net of tax effect 390 0.1 8,698 3.5 Exceptional tax credit (10,710) (4.2) - - ------- ------- ------- --------Adjusted basic loss (11,195) (4.4) (3,451) (1.4) ------- ------- ------- -------- ------- ------- ------- --------Basic and diluted loss (875) (0.3) (12,149) (4.9) ------- ------- ------- -------- ------- ------- ------- --------Adjusted basic and diluted (before exceptional items) (11,195) (4.4) (3,451) (1.4) ------- ------- ------- -------- Nine Months Ended 31st December 2004 2003 ------------- -------------- Pence Pence £000 Per Share £000 Per Share ------- ------- ------- -------- Basic loss (9,134) (3.6) (31,012) (12.4)Exceptional items arising in respect of: Restructuring of worldwide operations 1,125 11,107 Tax effect - (2,776) ------- ------ Net of tax effect 1,125 0.4 8,331 3.3 Refinancing of debt - 12,807 Tax effect - (3,842) ------- ------ Net of tax effect - - 8,965 3.6 Exceptional tax credit (10,710) (4.2) - - ------- ------- ------- --------Adjusted basic loss (18,719) (7.4) (13,716) (5.5) ------- ------- ------- -------- ------- ------- ------- --------Basic and diluted loss (9,134) (3.6) (31,012) (12.4) ------- ------- ------- -------- ------- ------- ------- --------Adjusted basic and diluted (before exceptional items) (18,719) (7.4) (13,716) (5.5) ------- ------- ------- -------- 5. The following is a reconciliation of net cash flow before use of liquid resources and financing to free cash flow (net cash flow before use of liquid resources and financing less net cash flow from acquisitions and disposals): Quarters Ended 31st December Nine Months Ended 31st December ----------------- ----------------- 2004 2003 2004 2003 £000 £000 £000 £000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- Net cash (outflow)/ inflow before use of liquid resources and financing (10,074) 478 (13,583) 2,411Add back:Net cash outflow from acquisitions and disposals 1,039 - 1,039 - --------- --------- --------- --------- Free cash flow (9,035) 478 (12,544) 2,411 ========= ========= ========= ========= 6. The following is a reconciliation of net debt (bank and other loans falling due within one year and falling due after more than one year including finance leases less cash at bank and in hand and current asset investments): As at 31st December As at 31st March 2004 2004 £000 £000 (Unaudited) (Audited) ------------- ---------- Bank and other loans falling due within one year 1,060 630Bank and other loans falling due after more than one year 118,996 122,564Finance leases 2,767 3,483Less: cash at bank and in hand (46,097) (60,943) current asset investments (487) (355) ------------- ----------Net debt 76,239 65,379 ============= ========== 7. Net cash inflow from operating activities Quarters Ended Nine Months Ended 31st December 31st December ------------------ ------------------ 2004 2003 2004 2003 £000 £000 £000 £000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- Operating (loss)/profit (2,876) (5,396) 3,094 (2,031)Exceptional charges 390 11,474 1,125 11,107Cash paid in respect of prior year exceptional charges (1,725) - (8,537) (51)Cash paid in respect of current year exceptional charges (390) - (1,125) -Depreciation and amortisation 5,322 8,512 16,116 23,656(Profit)/loss on sale of fixed assets (401) (203) (762) 1,192(Increase)/decrease in stocks (7,126) (26) (13,747) 2,982Decrease in debtors 6,772 1,449 7,970 12,236Increase/(decrease) in creditors 3,319 (4,878) 7,295 (11,798) --------- --------- --------- --------- 3,285 10,932 11,429 37,293 ========= ========= ========= ========= 8. Copies of this report will be available from the Company's registered office at Masters House, 107 Hammersmith Road, London W14 0QH. This information is provided by RNS The company news service from the London Stock Exchange