Design Group Regulatory News (IGR)

28 Jun 2005 07:01

International Greetings PLC28 June 2005 INTERNATIONAL GREETINGS PLC International expansion drives record results International Greetings PLC ("the Company" or "the Group") (AIM: IGR), theleading designer and manufacturer of private label greetings products, wrappingpaper and film and television character based licensed stationery, todayannounces preliminary results for the year ended 31 March 2005. Financial Highlights:• Turnover improved 13% to £143.7m (2004: £126.7m)• Adjusted profit before tax* increased 14% to £13.8m (2004: £12.1m)• European turnover grew 69% to £17.6m (2004: £10.4m), aided by a significant contribution from Dutch subsidiary Hoomark• US sales increased 51% to £35.1m (2004: £23.3m) and now represents 24% (2004: 18%) of Group turnover• Total overseas sales rose 53% and now comprise 38% (2004: 28%) of Group turnover• Adjusted earnings per share* increased 18% to 24.5p (2004: 20.7p)• Final dividend per share of 5.75p, increases the year's total dividend 15% to 7.5p (2004 total dividend: 6.5p) Operational Highlights:• European operations moved to a new 400,000 sq ft facility in Hoogeveen, providing increased capacity for future growth• Continued expansion of product sourcing and manufacturing in the Far East• Following the acquisitions of Krakajack and Napier, International Greetings now established as the No. 1 global cracker manufacturer• Stationery range launched to coincide with the release of Batman Begins Post Period Events• Anker International acquired in May 2005 for £35.5m• Paul Fineman, CEO of Anker International, joined the Group's board Commenting on the results, Nick Fisher, Joint Chief Executive, said: "Theseresults clearly reflect the investments we have made in our overseas markets,with significant progress made in Europe since the acquisition of Hoomark, andthe US, where the emphasis on developing sales to the mass market has succeeded.We will continue to pursue opportunities to organically grow our business andalso make acquisitions which will provide us with new products, new markets andnew customers." For further information:Nick Fisher, Joint Chief Executive, International Greetings plc: 01707 630 630Richard Sunderland/Rachel Drysdale, Tavistock Communications: 020 7920 3150 *figure excludes goodwill amortisation of £443,000 (2004: £233,000) andexceptional item of £738,000 (2004: £684,000) CHAIRMAN'S STATEMENT Once again, I am pleased to report another successful year for InternationalGreetings. Growth in both turnover and profit of the existing businesses,together with a number of important strategic acquisitions, has significantlystrengthened the Group and its future prospects. Adjusted profit before tax* for the year ended 31st March 2005 increased by 14%to £13.8m with turnover increasing by 13% to £143.7m. In recent years we have,and continue to, focus on international expansion, which is clearly reflected inthese figures. Hoomark, the Dutch gift wrap division we acquired in November2003, has performed well and has been primarily responsible for a 69% increasein European turnover to £17.6m, which now represents 12% of Group turnover. OurUS division also experienced another successful year, and contributed to animpressive 51% increase in total US sales to £35.1m, representing 24% of Groupturnover. Total overseas sales now account for 38% of turnover compared to 28%last year. Adjusted earnings per share* increased by 18% to 24.5p and in line with ourpolicy of increasing shareholder returns and our continued confidence in theGroup, we are recommending a final dividend of 5.75p per share. This makes atotal for the year of 7.5p, an increase of 15% over last year. Our industry continues to consolidate and International Greetings has played asignificant part in this process. Last year's acquisition of the Irish crackermanufacturer Krakajack was followed by the acquisition in January this year ofNapier Industries, our major competitor in the cracker market. Both thesebusinesses have now been successfully integrated with our existing division,creating the world's largest cracker manufacturer and strengthening our marketposition. In May this year, we announced the acquisition of Anker International PLC, amajor step forward for the Group. Anker is an international design, import anddistribution business which supplies a wide assortment of greetings, festive,stationery and photographic gifts products. As well as being immediatelyearnings enhancing, we expect Anker to provide synergy benefits, as we explorethe many integration opportunities available. I am delighted to welcome Anker's Chief Executive, Paul Fineman, to the Board asan Executive Director. Paul has a wealth of experience of sourcing and tradingin the Far East, which is a major complement to our long standing manufacturingskills. Paul's contribution will be invaluable to the Group during our nextimportant period of corporate growth. This year represents the Group's 10th anniversary as an AIM listed company andthe 10th anniversary of the establishment of the Alternative Investment Market.During this period the Company's performance has been recognised with aneight-fold increase in our share price and we are delighted to have been part ofAIM's success. Out of over 1,200 companies now listed, we are one of theconstituent companies making up the FTSE AIM 100 index of leading AIM companies. Finally, I would like to take this opportunity once again to thank all thededicated employees of International Greetings, who together ensure that weachieve our objectives. I also welcome to the Group all those new employeeswithin the acquired businesses. John Elfed Jones CBE DLChairman * figure excludes goodwill amortisation of £443,000 (2004: £233,000) andexceptional item of £738,000 (2004: £684,000). REVIEW OF OPERATIONS The last year has been extremely busy for the Group and has seen our range ofoperations significantly expand as a result of the acquisitions made. These haveextended our existing product categories into new market sectors and introducednew categories for the Group, such as photo frames and albums. UKFollowing our acquisition of two cracker companies in the last year, Krakajackand Napier, we are now the world's largest cracker manufacturer. Napier'sautomated manufacturing plant and customer base have given us a major presencein the catering and hospitality sector of the cracker market. In addition, itsdesign expertise is renowned in the industry and, together with our existingstrengths in this category, now enables us to offer our major retail customersan unparalleled product offering. The acquisition of Napier has also brought theTom Smith cracker brand into the Group, together with the Royal Warrants whichhave been held by the brand since 1906. As a result, we will now be producingcrackers for the Royal Household this Christmas. The acquisition of Anker has also further strengthened the Group's UKoperations. The fit with our current business activities is excellent andAnker's products both complement and extend the Group's existing ranges. We havealready identified areas where cost-saving opportunities exist and will continueto pursue these vigorously. EuropeThe acquisition of Hoomark in November 2003 has been the main driver behind the69% increase in European turnover during the last year. In addition to its coregift wrap products, we are utilising this division to expand sales of theGroup's other product categories, such as bows, ribbons, bags and tags, intothis significant marketplace. The business has also benefited from theopportunity to offer the Group's licensed portfolio of products, particularlyDisney, to its existing customer base. In February, as part of our future European expansion plans, we purchased afreehold building of 400,000 square feet in Hoogeveen, Holland. Hoomark recentlytransferred its manufacturing and distribution operations into this new facilitywhich will provide capacity for future growth and is intended for use as amainland European distribution hub for our globally-sourced products. The re-location of our cards and tags manufacturing facility from the UK toLatvia has now been successfully completed, and we have been delighted with theavailability of a highly-motivated workforce committed to our development plans.We believe this will play an important future role in both maintainingcompetitiveness in our home market and providing further opportunities acrossmainland Europe. USOur US division has had a particularly successful year, with like-for-like US$sales increasing by 38% to $41.6m and operating profit increasing by 30% to$2.6m. We have invested significant management resources in developing thismarket in recent years, and the benefits, as previously forecast, are visible inthis year's results. Economies of scale from increased production levels andgrowth in sales of stationery products have been significant factors inachieving these figures. The Tom Smith cracker brand, and its associated Royal Warrants, together withadditional products from the Anker portfolio will provide further opportunitiesin this market, and we are optimistic about the future prospects for the Groupin the US. Far EastOur Far East operations fall into two distinct areas, product sourcing andmanufacturing. Product sourcing takes place in our Hong Kong office, where a staff of 35create, design and source products from a diverse supply base throughout the FarEast region. A key focus for this office is product quality assurance as it isparamount to ensure that the exacting quality standards required by ourworldwide multiple retail customer base are achieved. The recent acquisition ofAnker, which sources most of its products from the Far East, further improvesthe Group's expertise and experience in this important area. We are thereforeworking together with Anker's management to identify and maximise cost savingsin all areas of the Group. Manufacturing in our own production facility in China continues to expand asproducts previously out-sourced are now brought in-house. The operation has beenextended to include warehousing and direct distribution to our customers, and weanticipate this expansion will continue. Design and LicensingWe cannot overstate how important design is to our business. We are continuallypushing the boundaries, not only of the images and patterns that we create, butalso the use of available raw materials to enhance our consumer products. Licensed properties form a key part of our design strategy, being eitherperennial characters or blockbuster film launches. This announcement coincideswith the recent release of Batman Begins from Warner Bros Studios, for which wehave launched a full range of children's stationery. The acquisition of Napier has further strengthened our design and licenceportfolio, with the addition of the Tom Smith brand, the prestigious RoyalWarrants and the "Bratz" girls fashion licence for crackers and Christmasdecorations. In August 2004, we were delighted to receive an award for "Licensee of the Year"from Fox Studios for the creative work and sales success of our Simpsons rangeof products. We have seen Simpsons' sales grow substantially and we expect thisto continue for the foreseeable future. ConclusionThis year saw us celebrate 10 years as an AIM quoted company. The business ishighly focused on its core strengths and we will continue to pursue oursuccessful strategy of organic growth, complemented by acquisitions that meetour strict criteria and create added value. We are confident that this willmaintain the consistent pattern of growth that has characterised the Companysince it was founded in 1979. Anders Hedlund and Nick FisherJoint Chief Executives FINANCIAL REVIEW 2005 1 Group Performance Turnover for the year to 31st March 2005 increased to £143.7m, an increase of13% over last year. Group sales in the US increased by 51% to £35.1m whilstEuropean turnover rose 69% to £17.6m. With overseas sales now representing 38%of total turnover, the Group's previous dependence on the UK has beensignificantly reduced as a result of diversification into new markets overrecent years. Gross profit amounted to £44.5m, and represented a gross margin of 30.9%, up0.9% from last year. Adjusted profit before tax* for the year increased 14% to£13.8m. These figures include two months of post-acquisition overhead andinterest costs of the Napier Christmas cracker business amounting to £588,000.Due to Napier's seasonality, in common with several other divisions in theGroup, there were no sales during this period. Excluding these costs, adjustedprofit before tax* increased by 19% to £14.4m, and represented a net profitmargin of 10%. The exceptional item of £0.7m represents the costs, primarily redundancy andmachinery re-location, associated with the transfer of production of greetingscards and tags from Hatfield to a new location in Latvia in January this year. 2 Earnings Per Share and Dividend Adjusted basic earnings per share* for the year ended 31st March 2005 were24.5p, an increase of 18%. Excluding the loss per share attributable to Napiersince acquisition, adjusted basic earnings per share* for the year ended 31stMarch 2005 increased by 23% to 25.5p. Basic earnings per share were 22.4p, anincrease of 17%. The final dividend for the year of 5.75p makes a total dividend for the year of7.5p, an increase of 15% and is covered three times by basic earnings per share. 3 Cash Flow and Balance Sheet Capital expenditure during the year was higher than in recent years, dueprimarily to the purchase of a new freehold building in Hoogeveen, Holland whichaccounted for £5.1m of the Group's total capital expenditure (net of disposals)of £11.1m. Grants of £2.3m were received during the year, resulting in netcapital expenditure of £8.8m. The cost of the Napier and Krakajack acquisitionsamounted to £6m. Both the capital expenditure and the cost of acquisitions havebeen met from the Group's own funds which, notwithstanding these significantoutflows, amounted to £3.8m at 31 March 2005. Shareholders' funds increased by£7m to £51.1m. 4 Treasury Operations The Board continues to assess and manage the risks associated with the treasuryfunction as the business develops. The Group's business has a strong seasonalfocus, resulting in large variations in working capital, with net funds forcertain periods of the year and net borrowings in other periods. As a result,the Board considers that long term reduction of exposure to fluctuations ininterest rates on working capital is unlikely to be economically viable. A significant proportion of the Group's purchases are denominated in US$. Theeffect of exchange rate fluctuations is reduced through a combination ofmeasures including hedging and forward exchange contracts. Mark ColliniFinance Director * figure excludes goodwill amortisation of £443,000 (2004 : £233,000) andexceptional item of £738,000 (2004 : £684,000). Consolidated profit and loss accountfor the year ended 31 March 2005 Note Continuing operations Pre-exceptional Exceptional Acquisition Total Total item item 2005 2005 2005 2005 2004 £000 £000 £000 £000 £000 Turnover 2 143,689 - - 143,689 126,689Cost of sales (99,144) - (76) (99,220) (88,673) -------- -------- -------- -------- -------- Gross profit 44,545 - (76) 44,469 38,016Distribution expenses (13,907) - (110) (14,017) (11,854)Administrative expenses (16,693) (738) (368) (17,799) (14,825) -------- -------- -------- -------- --------Operating profit 2 13,945 (738) (554) 12,653 11,337Net interest payable (2) - (34) (36) (137) -------- -------- -------- -------- --------Profit onordinaryactivitiesbeforetaxation 2-3 13,943 (738) (588) 12,617 11,200 -------- -------- -------- Tax on profit on ordinaryactivities 4 (3,098) (3,142) -------- -------- Profit for thefinancial year 9,519 8,058Dividends - equity 5 (3,221) (2,774) -------- --------Retainedprofit for the financial year 6,298 5,284 ======== ========Earnings per share 7 Basic 22.4p 19.2p Adjusted basicexcluding goodwill and exceptional item 24.5p 20.7p Diluted 22.1p 19.1p ======== ======== Consolidated statement of total recognised gains and lossesfor the year ended 31 March 2005 2005 2004 £000 £000 Profit for the financial year 9,519 8,058Currency translation differencesarising on foreign currency net investments (160) (835) -------- -------- Total recognised gains and losses relating to the financial year 9,359 7,223 ======== ======== Consolidated balance sheetat 31 March 2005 Note 2005 2004 £000 £000 £000 £000 Fixed assetsIntangible assets - goodwill 5,113 2,737Tangible assets 30,853 23,271 ------- ------ 35,966 26,008Current assetsStocks 24,178 22,069Debtors 16,477 11,492Cash at bank and in hand 6,490 16,233 ------- ------ 47,145 49,794 Creditors: amounts falling duewithin one year (25,417) (25,583) ------- ------ Net current assets 21,728 24,211 ------ ------ Total assets less current liabilities 57,694 50,219 Creditors: amounts falling dueafter more than one year (1,611) (3,059)Provisions for liabilities and charges (380) (243)Deferred income (4,575) (2,802) ------- ------- Net assets 51,128 44,115 ====== ====== Capital and reservesCalled up share capital 2,140 2,112Share premium account 2,704 1,703Potential issue of shares 6(a) 926 1,080Other reserves 21 181Profit and loss account 45,337 39,039 ------ ------ Equity shareholders' funds 8 51,128 44,115 ====== ====== Consolidated cash flow statementfor the year ended 31 March 2005 Note 2005 2004 £000 £000 Net cash inflow from operating activities 10 14,398 23,695Returns on investments and servicing of finance 11 (54) (191)Taxation (3,600) (3,175)Capital expenditure 11 (8,793) (4,842)Acquisitions and disposals 11 (5,984) (7,777)Equity dividends paid (2,872) (2,511) ------- ------- Cash (outflow)/inflow before financing (6,905) 5,199 Financing 11 (1,180) 1,440 ------- ----- (Decrease)/increase in cash (8,085) 6,639 ======= ===== Reconciliation of net cash flow to movement in net fundsfor the year ended 31 March 2005 Note 2005 2004 £000 £000 (Decrease)/increase in cash inthe year (8,085) 6,639 Cash outflow/(inflow) from debtand lease financing 12 1,541 (783) ------ ------ Change in net funds resulting from cash flows (6,544) 5,856 New finance leases - (180)Finance leases acquired withsubsidiary - (393)Translation differences 12 66 1,552 ------ ------- Movement in net funds in the year (6,478) 6,835Net funds at beginning of year 10,268 3,433 ------ -------Net funds at end of year 12 3,790 10,268 ======= ======= Notes 1. Basis of preparation The financial information set out above does not constitute the Company'sstatutory financial statements for the years ended 31 March 2005 or 2004.Statutory financial statements for 2004 have been delivered to the registrar ofcompanies, and those for 2005 will be delivered following the company's annualgeneral meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985. 2. Segmental analysis (a) Geographical area of operation UK, Europe & Far East USA Group 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 Turnover 121,675 110,338 22,014 16,351 143,689 126,689 ======= ======= ====== ====== ======= ======= Operatingprofit beforeexceptionalitem 12,003 10,944 1,388 1,077 13,391 12,021 Exceptionalitem (seebelow) (738) (684) - - (738) (684) ------- ------- ------ ------ ------- ------- Operatingprofit afterexceptionalitem 11,265 10,260 1,388 1,077 12,653 11,337 ------- ------- ------ ------ Net interest (36) (137) ------- ------- Profit onordinaryactivitiesbeforetaxation 12,617 11,200 ======= ======= Net assets 44,844 38,408 6,284 5,707 51,128 44,115 ======= ======= ====== ====== ======= ======= The above results relate entirely to continuing operations. Exceptional itemDuring the year ended 31 March 2005 the Group transferred the manufacturing ofgreetings cards and tags from Hatfield to a new facility in Latvia. Theexceptional item of £738,000 represents the costs, primarily redundancy andmachinery re-location, associated with this transfer. The exceptional item of£684,000 during the year ended 31 March 2004 represented the one-off start-upcosts associated with the establishment of a new product category involving thedesign and sale of licensed decorations. (b) Geographical analysis of turnover by destination 2005 2004 £000 £000 UK 89,004 90,986USA 35,132 23,287Europe 17,637 10,427Rest of world 1,916 1,989 ----- ----- 143,689 126,689 ======= ======= 3. Profit on ordinary activities before taxation 2005 2004 £000 £000 Profit on ordinary activities before taxation isstated after charging/(crediting) Auditors' remuneration - audit fees paid to the Company's auditor and its associates 86 73 - non audit fees paid to the Company's auditor and its associates 36 52 Hire of plant and machinery - rentals payable under operating leases 343 309 Hire of other assets - operating leases 746 741Release of deferred grant income (554) (299)Depreciation - owned 4,217 4,327 - leased 255 139Amortisation of goodwill 443 233 ======= ======= 4. Taxation 2005 2004 £000 £000 £000 £000Current taxUK corporation tax onprofits of the year 2,240 3,414 Adjustments in respect ofprevious periods (235) (63) ------- ------- 2,005 3,351 Foreign taxOn profits of the year 1,237 166Adjustments in respect of previous periods (51) (205) ------- ------- 1,186 (39) ------- ------- Total current tax 3,191 3,312 Deferred taxationOrigination and reversal oftiming differences (95) (190) Adjustments in respect of previous periods 2 20 ------- ------- Total deferred tax (93) (170) ------- -------Tax on profits on ordinary activities 3,098 3,142 ======== ======= Factors affecting tax charge for period 2005 2004 £000 £000 Profit on ordinary activities before tax 12,617 11,200 ======= ======= Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% 3,785 3,360 Effects of:Expenses not deductible for corporation tax purposes 232 239Tax deductions for gains on employee share options (155) -Release of grant (161) (86)Capital allowances for the year lower than depreciation 167 221Provisions not deductible until paid 1 (4)Other timing differences 32 (52)Difference between UK and overseas tax rates (424) (98)Adjustments in respect of previous periods (286) (268) ------- -------Current year tax charge 3,191 3,312 ======= ======= 5. Dividends 2005 2004 £000 £000 Interim paid - 1.75p per share (2004: 1.5p) 760 662Final proposed - 5.75p per share (2004: 5.0p) 2,461 2,112 ------- ------- 3,221 2,774 ======= ======= The final dividend, if approved, will be paid on 23 September 2005 toshareholders on the register on 2 September 2005. 6. Acquisitions (a) On 19 November 2003, the Group acquired 100% of the issued share capital ofHoomark Giftwrap Partners BV. The purchase agreement provided for futurepayments of deferred consideration, based on Hoomark's profits for the 3 yearsended 31 March 2007. At 31 March 2004, the total future consideration wasestimated at £1,217,000 of which up to £1,080,000 was payable by the issuance ofnew ordinary shares at the company's option. During the year ended 31 March2004, £668,000 of this amount was paid by the issuance of new ordinary shares.Based on Hoomark's results for the year ended 31 March 2005, and futureprojections, the estimated total consideration has been increased by £377,000 to£926,000. It has also been agreed with the vendors that up to 100% of the totalunpaid consideration at 31 March 2005 may be payable by the issue of newordinary shares, at the company's option. (b) On 1 June 2004, the Group purchased certain assets and the business ofKrakajack Limited, a supplier of Christmas crackers to the catering market foran initial consideration of £1,520,000. In addition to this amount, an agreedpercentage of sales made to customers in 2004 and 2005 will be payable to thevendors. This amount is expected to amount to £100,000. Assets acquired compriseapproximately £800,000 each in respect of plant and machinery and stock. Nogoodwill arose on this acquisition. During the year to 31 March 2005, sales to Krakajack customers totalled £2.1m.Following Krakajack's integration into the Group's Christmas cracker operations,it is not possible to separately identify the operating profit attributable tothese sales. (c) On 25 January 2005 the Group purchased the business and certain assets ofNapier Industries Limited (in administrative receivership) from the receivers.The book value and provisional fair value of assets purchased were as follows: Book value Provisional Provisional fair of acquired fair value value at date assets/(liabilities) adjustments of acquisition £000 £000 £000 Fixed assets 200 - 200Stock 570 (365) 205Debtors 1,488 317 1,805Creditors (100) (90) (190) ------- ------- -------Net assets acquired 2,158 (138) 2,020 ======= ======= Goodwill (estimated useful life of 20 years) 2,438 -------Total consideration, satisfied entirely by cash 4,458 ======= The latest available audited accounts of Napier Industries Limited were preparedas at 31 August 2002. The latest available unaudited management accounts werefor the 11 months to 30 November 2004 and reflect turnover of £12.1m, operatingprofit of £0.1m and interest payable of £2.0m, resulting in a loss beforetaxation of £1.9m. The provisional fair value adjustments to stocks and debtors representadjustments to bring provisioning into line with group policies and amountssubsequently received. 7. Earnings per share 2005 2004 Adjusted basic earnings per share excluding goodwill and exceptional item 24.5p 20.7pLoss per share on goodwill (0.9p) (0.4p)Loss per share on exceptional item (1.2p) (1.1p) ------- ------- Basic earnings per share 22.4p 19.2p ======= ======= Diluted earnings per share 22.1p 19.1p ======= ======= The basic earnings per share is based on the earnings of £9,519,000 (2004:£8,058,000) and the weighted average number of ordinary shares in issue of42,529,155 (2004: 41,995,174). The calculation of diluted earnings per share isbased on 43,165,480 (2004: 42,180,513) ordinary shares. The difference of636,325 (2004: 530,830) represents the dilutive effect of outstanding employeeshare options which has been calculated in accordance with FRS 14. Adjusted basic earnings per share excluding goodwill and exceptional item iscalculated after adjusting for amortisation of goodwill of £443,000 (2004:£233,000) with attributable tax relief of £48,000 (2004: £44,000) and theexceptional item of £738,000 (2004: £684,000) with attributable tax relief of£221,000 (2004: £205,000). 8. Reconciliation of movements in shareholders' funds 2005 2004 £000 £000 Profit for the financial year 9,519 8,058Dividends (3,221) (2,774) ------- ------- 6,298 5,284 Other recognised gains and losses relating to the year (net) (160) (835) New share capital subscribed 1,029 657Potential issue of shares (note 6 (a)) (154) 1,080 ------- ------- Net addition to shareholders' funds 7,013 6,186Opening shareholders' funds 44,115 37,929 ------- -------Closing shareholders' funds 51,128 44,115 ======= ======= 9. Post balance sheet event On 26 May 2005 the company acquired 100% of the issued share capital of AnkerInternational PLC, an international design, import and distribution business,for a total consideration of up to £35.5m. £25m was paid on completion, of which£12.5m was represented by the issue of 3,294,242 new ordinary shares and £12.5min cash. The remaining £10.5m is payable in cash on 26 May 2006, of which £0.5mis dependent on Anker achieving a certain level of profitability. 10. Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £000 £000 Operating profit before exceptional item 13,391 12,021Exceptional costs (738) (684)Depreciation charge 4,472 4,466(Increase)/decrease in stocks (1,251) 1,454(Increase)/decrease in debtors (3,366) 2,073Increase in creditors 2,001 4,431Grant income (554) (299)Goodwill amortisation 443 233 ------- -------Net cash inflow from operating activities 14,398 23,695 ======= ======= 11. Gross cash flows Cash inflow/(outflow) 2005 2004 £000 £000Returns on investment and servicing of financeInterest paid (662) (501)Interest received 649 348Interest element of finance lease repayments (41) (38) ------- ------- (54) (191) ======= ======= Capital expenditurePurchase of tangible fixed assets (11,262) (5,016)Disposal of tangible fixed assets 146 174Grants received in relation to capital expenditure 2,323 - ------- ------- (8,793) (4,842) ======= ======= Acquisition and disposalsAcquisition of businesses (note 6) (5,978) -Acquisition of subsidiary (6) (1,226)Net overdraft acquired with subsidiary - (6,551) ------- ------- (5,984) (7,777) ======= ======= FinancingNew shares issued 361 657New loans - 1,158Repayment of amounts borrowed (1,256) (188)Capital element of finance lease payments (285) (187) ------- ------- (1,180) 1,440 ======= ======= 12. Analysis of changes in net funds At 1 April Cash flow Exchange Other At 31 March 2004 movement changes 2005 £000 £000 £000 £000 £000 Cash at bank and in hand 16,233 (9,743) - - 6,490 Overdrafts (2,324) 1,658 (6) - (672) ------- ------- ------- ------- ------- 13,909 (8,085) (6) - 5,818 Debt due after one year (2,118) 785 56 134 (1,143)Debt due within one year (439) 471 12 (134) (90)Finance leases (1,084) 285 4 - (795) ------- ------- ------- ------- ------- (3,641) 1,541 72 - (2,028) ------- ------- ------- ------- -------Total net funds 10,268 (6,544) 66 - 3,790 ======= ======= ======= ======= ======= This information is provided by RNS The company news service from the London Stock Exchange