MIRA.L Regulatory News (MIRA)

4 Apr 2005 07:01

Yoomedia PLC04 April 2005 Embargoed until 07:00 4 April 2005 YooMedia Plc Preliminary Results for the year ended 31 December 2004 YooMedia plc, the UK's biggest independent interactive media company, todayannounces preliminary results for the year ended 31 December 2004. The groupspecialises in gaming, dating and the public sector, delivering its content andservices across all digital platforms. It is the market leader in real-timeinteractivity - and through its mobile arm, it can deliver interactivity toevery TV home in the country. Key points •DITG acquisition successfully integrated •Acquisition of ViaVision •On target for operating break-even by 31 March 2005 •Turnover of £21.3m (2003: £0.7m) •Operating loss of £24.0m (2003: loss £5.4m) after operating exceptionals of £5.9m, and depreciation, amortisation and impairment charges of £11.0m •Current monthly revenues of c.£8.0m Commenting on the results, Michael Sinclair, chairman, said: "2004 was the year in which YooMedia made the greatest strides yet in creatingthe UK's biggest independent interactive media company. Each of our businessunits has performed well during the year and all of them are strongly poised forgrowth. The leap forward we made by merging with DITG has taken YooMedia to a new level,building on the progress we had already made over the past couple of years. Themerger has lived up to our expectations and the two businesses are alreadyintegrated, resulting in benefits in terms of scale and synergy. We look forwardwith relish to the opportunities ahead. Since the year-end, the company has entered into an agreement to acquire thebalance of the shares in ViaVision Limited, having already acquired 15% with theacquisition of DITG. As a result of this acquisition, YooMedia will operatePokerzone TV, the new name for the existing Game-In TV channel. YooMedia willprovide interactive services for this channel through the red button on Sky andvia mobile devices." For further information please contact: YooMediaDavid Docherty, chief executive 020 7462 0870 Powerscourt PRJohn Murray 020 7236 5630Kirsty Black 020 7236 5631 Chairman's Statement 2004 was the year in which YooMedia made the greatest strides yet in creatingthe UK's biggest independent interactive media company. Your company now has acritical mass of proprietary interactive TV and mobile technology and creativecontent skills, enabling it to grow rapidly on all digital platforms,particularly in its core areas of gaming and dating. It also now providesinteractive solutions for blue-chip broadcasters (including the BBC and ITV),brands (Nestle and William Hill) and public sector institutions (the NHS and theNorthern Ireland Office). It has become a market leader in real-timeinteractivity, not least through its mobile phone time-stamping technology,which gives it the capacity to make television interactive in every home in theUK. During the course of last year, YooMedia underwent the transformation from asmall pay-per-play games and chat business on the Telewest cable platform, withan annual turnover of approximately £750,000, to becoming the only interactivecompany providing services on all four UK digital platforms - Sky, ntl, Telewestand Freeview - with 250 employees and monthly revenues in excess of £8m. TheGroup also extended the reach of its services onto PCs and mobile phones,allowing our consumers access to our content and services wherever they are andwhenever they wish. YooMedia now runs three gaming TV channels, including Avago, the world's firstinteractive gambling channel, as well as a major gaming portal on the satelliteplatform that supports ten TV channels and offers games such as roulette andpoker (play for fun). YooMedia has leveraged its TV strengths by launching Fancya Flutter as a fixed-odds betting website, and Avago fixed odds gaming on themobile network 3. The Group intends to launch Avago-branded casino and pokerservices online in the summer of 2005. YooMedia has entered into a long-term agreement with William Hill, the UK'sleading bookmaker, to operate Channel 425, a sports and fixed odds gamingtelevision channel. The channel has recently expanded its programming scheduleto include poker content, which is supported by an interactive play for funpoker game provided by YooMedia. The company also runs YooPlay, a games channelthat uniquely operates across all digital television platforms. In the period since 30 September 2004 our gaming division has seen 50% growth inmonthly revenues on a like-for-like basis and a substantially improved gross margin. The Group owns and operates the UK's biggest dating company, which includesDateline - Britain's best-known and oldest computer-dating brand. Our datingbrands have been successfully relaunched online and will be developed as mobileservices in the summer of 2005. In the next twelve months, the Group intends tolaunch dating TV services, both in the UK and in the US. The dating division has shown good growth in both revenues and margin since 30September 2004 on a monthly basis. In addition, on the internet, Dateline hasincreased revenues by 50% between the fourth quarter 2004 and the first quarter2005. The Group is by far the biggest independent interactive solutions provider fordigital television. It currently provides technology and software services forthirty-three TV channels, some of the UK's biggest television shows ('Who Wantsto Be a Millionaire', 'Come and Have a Go If You Think You're Smart Enough'),interactive advertisers, such as Honda, and interactive public servicestelevision with NHS Direct Interactive and the Learning and Skills Council. Within the Digital Solutions Division revenues have doubled since September 2004whilst margin has grown by some 400%. YooMedia's transformation was the result of organic growth and successfulstrategic acquisitions, the most important of which were the purchases of theDigital Interactive Television Group and The Gaming Channel (together - DITG).At the time of the acquisitions, YooMedia also raised further funds to advancethe group and we were pleased to welcome as shareholders a number of new largeinstitutional investors. Prior to the acquisition, the combined group would have reported pro-formalosses of more than £700,000 for November (as measured by earnings beforeinterest, tax, depreciation and amortisation - EBITDA) and at the time ofwriting, we believe we have met our target of EBITDA break-even by 31 March, andthat we will continue to grow organically throughout the rest of 2005. Thisturnaround has been achieved by a mixture of cost savings - the combined grouphas already implemented annualised cost synergies of £3.6 million for 2005 - andmargin growth. Since the year-end, the company has entered into an agreement to acquire thebalance of the shares of ViaVision Limited, having already acquired 15% with theacquisition of DITG. ViaVision is an interactive broadcasting company operatingGame-In TV and Exchange and Mart TV. As a result of this acquisition, YooMediawill operate PokerzoneTV, the new name for the existing Game-In TV channel.YooMedia will provide interactive services for this channel through the redbutton on Sky and via mobile devices. The group also strengthened its Mobile division in July, through the acquisitionof Whoosh Group Ltd, an award-winning mobile phone marketing and technologycompany, with patent-protected and proprietary solutions. Whoosh has brought astrong and growing reputation in the innovative use of the mobile phone as areturn path for television. As well as the BBC and ITV, YooMedia mobile hasrecently won contracts from Sky One and Sky Travel, and soon will enable viewerswatching Sky Sports in more than 30,000 licensed premises to interact with theprogramming. We are also expanding our mobile portfolio with video and text dating via mobilephones, and by increasing our SMS and next generation mobile gaming presence. Each of our business units has performed well during the year and all of themare strongly poised for growth. YooMedia is now well positioned to exploitdevelopments in broadband TV technology, which allows for a much richerinteractive experience on digital television platforms, not least through ourjoint venture with ICTV, which is trialling broadband television on ntl's cablenetwork. Our board was strengthened by the arrival of John Swingewood, the guiding lightof DITG, as deputy chairman, and his colleague Jeremy Fenn, as a non-executivedirector. On the management front, we gained the expertise of Neil MacDonald,who has become deputy chief executive of the enlarged group. As a result of the merger with DITG, a number of your directors stepped downfrom the board and I would like to thank Bernard Fairman, Lord Evans, AndrewFearon, Eddie Abrams and Paul Stacey (as secretary) for the great contributionthey have each made to the growth and development of YooMedia. Eddie Abrams, ofcourse, remains a key figure in the senior management of the group. I would alsolike to note, with immense regret, the tragic, untimely death of MartinGraham-Scott in a car accident during the summer of 2004. He came to the groupupon the acquisition of Fancy a Flutter and I'm pleased to report that thebusiness which he created is now prospering within our gambling division. In summary, the leap forward we made by merging with DITG has taken YooMedia toa new level, building on the progress we had already made over the past coupleof years. The merger has lived up to our expectations and the two businesses arealready integrated, resulting in benefits in terms of scale and synergy. We lookforward with relish to the opportunities ahead. Michael SinclairChairman 4 April 2005 Operating and Financial Review Operating Results As stated in the Directors' Report, the Company acquired a number of businessesduring the year to 31 December 2004, completing its transformation from apay-per-play games and chat service company on the Telewest platform to a Groupwith strong dating, gaming, mobile business and digital solutions units on allfour digital TV platforms in the UK. Revenue for the Group grew from £0.7 million in 2003 to £21.3 million in 2004. The operating loss amounted to £24.0 million including amortisation ofintangible assets and depreciation of £2.3 million. Operating exceptional itemsamounted to £5.9 million and comprised redundancy costs, professional fees,exceptional bonus payments, write-down of assets relating to onerous contracts,provision for losses on onerous contracts, write-off of deferred developmentcosts and a UITF 17 charge. Additionally, a goodwill impairment charge of £8.7million was recognised in the year. Consequently, operating loss before goodwillimpairment, amortisation, depreciation and exceptional items amounted to £7.1million. Management had originally identified £2.0 million of annualised synergiesresulting from the acquisition of DITG. This estimate has now been revised to£4.2 million. Of this amount, annualised cost savings of £3.6 million had beenrealised by the end of the first quarter of 2005. The headcount increased from 45 to 253 full-time equivalent as a result of theacquisitions made during the year, giving the Group significant scale. Goodwill Goodwill is amortised over its useful economic life (generally 20 years) andreviewed for impairment when required under the provisions of FRS 11. Thistreatment has resulted in a goodwill impairment charge of £8.7 million. Balance Sheet Shareholders' funds totalled £43.2 million at the year end. The Group reportednet current liabilities of £0.6 million at the end of the year which is coveredby the Group's banking facilities of £4.0 million. Liquidity The Group had net cash and cash equivalent balances of £6.4 million at the yearend.Taxation During the year, the Company made a trading loss, resulting in cumulative taxlosses in excess of £25 million for the enlarged Group by the year end. Treasury Policy The Group's policy with regard to cash balances is to monitor short andmedium-term interest rates and to place cash on deposit for periods thatoptimise interest earned whilst maintaining access to sufficient funds to meetday-to-day cash requirements. Jonathan AppsChief Financial Officer4 April 2005 Group Profit and Loss Account for the year ended 31 December 2004 Ongoing Acquisitions Total 2003 2004 2004 Note £ £ £ £ ----------------- ----- --------- --------- --------- ---------Turnover 3 865,049 20,402,429 21,267,478 743,150Cost of sales (1,199,399) (20,320,398) (21,519,797) (1,393,701)----------------- ----- --------- --------- --------- ---------Gross (loss)/profit (334,350) 82,031 (252,319) (650,551) --------- --------- --------- ---------Administrativeexpenses beforeexceptional itemsand impairment ofgoodwill (5,688,086) (3,559,535) (9,247,621) (4,708,327)Exceptional items 4 (2,347,532) (3,512,899) (5,860,431) -Impairment ofgoodwill 4 (450,045) (8,234,303) (8,684,348) - --------- --------- --------- ---------Administrativeexpenses (8,485,663) (15,306,737) (23,792,400) (4,708,327)----------------- --------- --------- --------- ---------Operating loss (8,820,013) (15,224,706) (24,044,719) (5,358,878)----------------- --------- --------- --------- ---------Interestreceivable andsimilar income 108,665 40,709Interest payableand similarcharges (81,232) (59,923)----------------- --------- --------- --------- ---------Loss on ordinaryactivities beforetaxation (24,017,286) (5,378,092)----------------- --------- --------- --------- ---------Tax recoverableon ordinaryactivities 5 27,264 528,785----------------- --------- --------- --------- ---------Loss on ordinaryactivities aftertaxation (23,990,022) (4,849,307)----------------- --------- --------- --------- ---------Equity minorityinterests 198,957 227,445----------------- --------- --------- --------- ---------Loss for thefinancial year (23,791,065) (4,621,862)----------------- --------- --------- --------- --------- Loss per share- basic anddiluted 6 (15.14p) (5.56p) The above results are derived entirely from continuing operations. There is no difference between the loss on ordinary activities before taxationand the loss for the financial years stated above and their historical costequivalents. Group Statement of Total Recognised Gains and Losses for the year ended 31December 2004 2004 2003 £ £ ---------- -----------Loss for the year (23,791,065) (4,621,862)Gain on deemed disposal of share in subsidiary 507,268 -undertaking----------------------- ---------- -----------Total losses recognised (23,283,797) (4,621,862)----------------------- ---------- ----------- Group Balance Sheet as at 31 December 2004 2004 2003 £ £ ---------- -----------Fixed assetsIntangible assets 46,036,348 246,056Tangible assets 3,044,029 336,136---------------------- ---------- ----------- 49,080,377 582,192Current assetsDebtors 6,015,898 700,905Cash and cash equivalents 7,770,287 1,720,349---------------------- ---------- ----------- 13,786,185 2,421,254Creditors - amounts falling due within one year (14,421,579) (1,010,616)---------------------- ---------- -----------Net current (liabilities)/ assets (635,394) 1,410,638---------------------- ---------- -----------Total assets less current liabilities 48,444,983 1,992,830---------------------- ---------- -----------Creditors - amounts falling due greater than oneyear (1,421,126) -Provisions for liabilities and charges (2,025,123) (154,546)Deferred income (1,407,029) -Equity minority interest (379,976) 76,301---------------------- ---------- -----------Net assets 43,211,729 1,914,585---------------------- ---------- -----------Capital and reservesCalled up share capital 11,418,970 8,035,007Share premium account 69,011,512 11,440,701Shares to be issued 3,047,000 -Capital redemption reserve 455,331 455,331Profit and loss account (40,721,084) (18,016,454)---------------------- ---------- -----------Equity shareholders' funds 43,211,729 1,914,585---------------------- ---------- ----------- Group Cash Flow Statement for the year ended 31 December 2004 2004 2003 Note £ £ -------- ---------- -----------Net cash outflow from operating activities 8 (10,902,176) (5,608,981)------------------------ -------- ---------- -----------Returns on investments and servicing offinanceInterest received 108,665 35,697Interest paid (63,542) (59,923)Interest element of finance lease rentalpayments (17,689) ------------------------- -------- ---------- -----------Net cash inflow/(outflow) from returns oninvestments and servicing of finance 27,434 (24,226)------------------------ -------- ---------- -----------Taxation - 528,785------------------------ -------- ---------- -----------Capital expenditure and financialinvestmentPayments to acquire intangible assets (791,901) -Payments to acquire tangible fixed assets (383,764) (133,576)------------------------ -------- ---------- -----------Net cash outflow from capital expenditureand financial investment (1,175,665) (133,576)------------------------ -------- ---------- -----------Acquisitions and disposals (6,656,431) (44,180)Purchase of subsidiary undertakingsPurchase of trade and assets of a business (627,118) -Net cash received with subsidiary 641,124 6,109undertakings ------------------------ -------- ---------- ----------- 5555Net cash outflow from acquisitions and (6,642,425) (38,071) disposals -------- ---------- -----------Net cash outflow before management of liquidresources and financing (18,692,832) (5,276,069)------------------------ -------- ---------- -----------Management of liquid resources(Increase) in short-term deposits with banks 9 (4,896,404) (1,521,018)------------------------ -------- ---------- -----------Financing------------------------ -------- ---------- -----------Issue of ordinary share capital 32,027,461 2,766,730Costs associated with issue of share capital (1,682,564) -Issue of convertible loan notes - 2,000,000Repayment of loans (6,920,766) -Repayment of capital element of financeleases and hire purchase contracts (59,663) ------------------------- -------- ---------- -----------Net cash inflow from financing 23,364,468 4,766,730------------------------ -------- ---------- -----------(Decrease) in cash in the year 9 (224,768) (2,030,357)------------------------ -------- ---------- ----------- Notes to the Financial Statements for theyear ended 31 December 2004 1 Basis of Preparation The financial information presented within this preliminary announcement for theyears ended 31 December 2004 and 31 December 2003 does not constitute statutoryaccounts. The 2004 statutory accounts have yet to be delivered to the Registrar,but include the auditors' report which was unqualified and did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The auditors'report was modified to include an explanatory paragraph relating to thefundamental uncertainty over the Group's ability to realise future profitabilityand positive cash flows, and the going concern basis of preparation. The 2003statutory accounts have been delivered to the Registrar and include theauditors' report which was unqualified and did not contain a statement undersection 237(2) or (3) of the Companies Act 1985. The financial statements have been prepared under the historical costconvention, in accordance with applicable Accounting Standards in the UnitedKingdom. The financial statements have been prepared on a basis consistent withprior years, except for the capitalisation of certain development costs inaccordance with SSAP 13, due to a greater certainty of revenues being generatedfrom the assets. Previously, the Group wrote off all such expenditure asincurred. There is no impact on opening reserves. This preliminary announcement was approved by the Board of Directors on 4 April2005. 2 Going Concern During the year ended 31 December 2004, the Group recorded a loss of £23.8million and at 31 December 2004, the Group had net current liabilities of £0.6million. Net cash outflow from operating activities in 2004 was £10.9 million.The Directors consider that the acquisition of DITG and TGC in December 2004 wasa significant milestone for the Group. The acquisition has enabled management torealise significant synergies and cost savings in the combined Group and, as aresult, based on the Group's working capital projections, the Directors considerthat the Group will become profitable and cash flow positive during 2005. TheGroup's working capital projections assume revenue growth from its existingservices. In the light of existing facilities available to the Group, the Directorsconsider there will be sufficient resources available to enable the Group toachieve the profitability and positive cash flow necessary for the Group tocontinue as a going concern. Consequently, the directors consider that it isappropriate to prepare the accounts on the going concern basis. However, incommon with similar businesses at this stage of their development, the Directorsrecognise that there will remain a fundamental uncertainty over the Group'sability to realise future profitability and positive cash flows until the Grouphas established a track record of profitable trading, cash generation andmeeting its working capital projections. The financial statements do not reflect any adjustments that would be requiredif the Group were unable to achieve profitability and positive cash flow withits current resources, or if further available sources of finance wereinsufficient to fund the Group through to profitability and positive cash flow,such that the going concern basis of preparation ceased to be appropriate. 3 Accounting policies These financial statements have been prepared under the historical costconvention and are in accordance with applicable accounting standards. Basis of consolidationThe Group financial statements consolidate the financial statements of YooMediaplc and its subsidiary undertakings drawn up to 31 December each year. No profitand loss account is presented for YooMedia plc as permitted by section 230 ofthe Companies Act 1985. The subsidiaries have been included within the Group financial statements usingthe acquisition method of accounting. Accordingly the Group profit and lossaccount and Group cash flow statement includes the results and cash flows of thesubsidiaries from the dates of acquisition up to 31 December 2004. The Directors consider that effective control was gained over the DigitalInteractive Television Group and The Gaming Channel Group on 26 November 2004and therefore the Group profit and loss account and Group cash flow statementinclude the results and cash flows from this point rather than the legal date ofacquisition of 20 December 2004. Goodwill Goodwill arises on the excess of the consideration over the fair value of theidentifiable assets acquired. Goodwill is amortised through the profit and lossaccount over its useful economic life. Positive goodwill arising on acquisitions is capitalised, classified as an asseton the balance sheet and amortised on a straight line basis over its usefuleconomic life up to a presumed maximum of 20 years. It is reviewed at the end ofthe first full financial year following the acquisition and in other periods ifevents or changes in circumstances indicate that the carrying value may not berecoverable. Turnover Turnover, which excludes value added tax, comprises revenue from interactivemedia services and dating services and is recognised as these services areprovided. Gaming revenues, where the Company holds a gaming licence, arerecognised on a gross basis and winnings are recognised as a cost of sale. Allturnover is generated in the United Kingdom. 4 Exceptional items Exceptional items, within administrative expenses, relate mainly to thesignificant strategic redirection that the Group undertook during the yearevidenced by the number of acquisitions. These items are detailed below: Year ended 31 Year ended 31 December 2004 December 2003 £ £ ------------------------ ----------- ---------Recognised in arriving at operating loss:Redundancy costs 1 1,242,798 -Provision forlosses on onerouscontracts 1,638,373 -Write-down ofassets related toonerous contracts 713,000 -Exceptional bonuspayments 2 1,096,873 -Exceptionalprofessional fees 253,935 -UITF 17 charge 3 579,167 -Write-off ofdeferreddevelopment costs 336,285------------------------ ----------- --------- 5,860,431 - ----------- --------- 1 Including all relevant taxes and other related costs of redundancy.2 Including all relevant taxes.3 As described in note 2, under Urgent Issue Task Force abstract 17 (UITF 17),the Company is required to recognise as a charge in the profit and loss account,the amount by which the fair market value of any share options issued toemployees exceeds their respective exercise prices at the date of grant. Thecharge is notional in that there is no underlying cash flow or other financialliability associated with the charge, nor does it give rise to a reduction innet assets or shareholders' funds. In addition there is no impact ondistributable profits. A goodwill impairment provision of £8,684,348 was also charged in the year. Thisis in accordance with Financial Reporting Standard 11: Impairment of fixedassets and goodwill. The impairment has been made following the historicallosses and loss during the period of a number of the subsidiary undertakings. 5 Tax on loss on ordinary activities There was a tax credit of £27,264 (2003 - £528,785 credit) in the year. The 2004and 2003 tax recoverable related to research and development tax credits. The tax assessed on the loss on ordinary activities for the year differs fromthe standard rate of tax of 30% (2003 - 19%). The differences are reconciledbelow: Year ended 31 Year ended 31 December 2004 December 2003 £ £Loss on ordinaryactivities beforetaxation (24,017,286) (5,378,092)------------------------------ ---------- ----------Loss on ordinaryactivitiesmultiplied by 30%(2003 - 19%) (7,205,186) (1,021,837)Effect of expensesnot deductible fortax purposes 3,210,322 43,650Depreciation inexcess of capitalallowances 129,205 66,008Other timingdifferences 173,750 1,988Adjustments inrespect ofprevious periods (27,264) (528,785)Losses notrecognised 3,691,909 910,191------------------------------ ---------- ----------Current year taxcredit (27,264) (528,785)------------------------------ ---------- ---------- Deferred taxationDeferred taxation provided in the financial statements is £nil (2003 - £nil) andthe amounts not recognised are as follows: Group and Company Year ended 31 Year ended 31 December 2003 December 2004 £ £------------------------------ ---------- -----------Acceleratedcapital allowances (1,272,266) (125,213)Other timingdifferences (221,635) (963)Losses (13,179,011) (2,452,959) ---------- ----------- (14,672,912) (2,579,135) ---------- ----------- Deferred taxationThe deferred tax asset has not been recognised on the grounds that there isinsufficient evidence at the balance sheet date that it will be recoverable. Theasset would start to become potentially recoverable if, and to the extent that,the Group were to become profitable. 6 Loss per share The basic loss per share has been calculated by dividing the net loss of£23,791,065 for the year (2003 - £4,621,862) by the weighted average number of157,173,278 shares in issue during the year (2003 - 83,119,331). The Company haspotentially dilutive ordinary shares being share options issued to staff andshares contracted to be issued. The diluted loss per share has been calculated in accordance with FinancialReporting Standard 14: Earnings per share, using 170,947,901 shares in issueduring the year (2003 - 83,119,331). As per Financial Reporting Standard 14:Earnings per share, the diluted loss per share calculation is without referenceto adjustments in respect of certain share options that are considered to beanti-dilutive. The deferred shares are not included in the earnings per share or dilutedearnings per share. These shares have no voting rights and are non-convertibleand therefore do not form part of the ordinary share capital used for the lossper share calculation in accordance with Financial Reporting Standard 14:Earnings per share. 7 Reconciliation of movements in shareholders' funds Year ended 31 Year ended 31 December 2004 December 2003 £ £ ---------- -----------Loss for the year (23,791,065) (4,621,862)New shares issued 60,954,774 4,766,730Shares to beissued 3,047,000 -Gain on deemeddisposal of sharein subsidiaryundertaking 507,268 -UITF 17 credit 579,617 3,000 ---------- -----------Net addition toshareholders'funds 41,297,144 147,868Openingshareholders'funds 1,914,585 1,766,717 ---------- -----------Closingshareholders'funds 43,211,729 1,914,585 ---------- ----------- 8 Net cash outflow from operating activities Reconciliation of operating loss to net cash outflow from operating activities: Year ended 31 Year ended 31 December 2004 December 2003Continuing operations £ £------------------------------ ---------- -----------Operating loss (24,044,719) (5,358,878)Depreciationcharge 567,918 350,874Amortisation andimpairment ofgoodwill 9,920,922 4,620Amortisation andimpairment ofdeferreddevelopment costs 496,247 -UITF 25 provisionfor NationalInsurance on shareoptions (62,461) 154,546UITF 17 charge ongrant of shareoptions 579,167 -Movement inrestructuringprovision 1,755,538 -Movement indilapidationsprovision 65,000 -Loss on disposalof fixed assets 1,290 3,465Increase indebtors (1,492,536) (121,483)Increase/(decrease) increditors 1,311,458 (642,125)------------------------------ ---------- -----------Net cash outflowfrom continuingoperations (10,902,176) (5,608,981)------------------------------ ---------- ----------- Net cash outflow from operating activities include cash outflows from operatingexceptional items such as £1,199,013 for redundancy costs, £590,299 for onerouscontracts, £483,241 for exceptional bonus payments and £179,535 for exceptionalprofessional fees. 9 Reconciliation of net cash flow to movement in net funds Year ended 31 Year ended 31 December 2004 December 2003 £ £ ---------- ----------Decrease in cashin the year (224,768) (2,030,357)Increase in shortterm deposits withbanks 4,896,404 1,521,018Loans and financeleases acquiredwith subsidiaryundertakings (8,327,582) -Repayment ofcapital element onfinance leases 59,663 -Repayment of loans 6,920,766 --------------------- ---------- ----------Movement in netfunds in the year 3,324,483 (509,339)Net funds atbeginning of theyear 1,720,349 2,229,688-------------------- ---------- ----------Net funds at endof the year 5,044,832 1,720,349-------------------- ---------- ---------- This information is provided by RNS The company news service from the London Stock Exchange