Paypoint Regulatory News (PAY)

13 Jun 2005 07:00

PayPoint PLC13 June 2005 PRESS RELEASE PayPoint plc Preliminary results for the year ended 31 March 2005 Year ended 31 March 2005 2004______________________________________________________________________________Turnover £89.1m £67.1mNet revenue (1, 4) £36.9m £28.6mOperating profit before exceptional items (4) £12.0m £6.2mOperating profit £7.5m £6.2mAdjusted earnings per share (2, 4) 15.5p 9.1pBasic earnings per share 8.7p 9.1pProposed dividend per share 5.2p 1.6p Key highlights: • Turnover of £89.1 million up 33% • Transactions processed up 27% to 259 million with strong growth in all sectors • Net revenues (1, 4) up 29% with operating margins (3, 4) increased to 33% • Operating profit before exceptional items nearly doubled to £12 million • Adjusted earnings per share (2, 4) of 15.5p up 70% • PayPoint terminal outlets have increased to over 13,000 up 15% on March 2004 • 4,700 second generation terminals rolled out to agents David Newlands, Chairman of PayPoint, said "We are pleased to report stronggrowth in all sectors, generating improved margins and excellent cash flow. Weare confident of continued growth, bringing on new revenue streams and expandingthe existing trade in the coming year." (1) Net revenue is turnover net of the deduction of commissions paid to retail agents and the cost of e-vouchers for mobile top-ups where PayPoint is the principal.(2) Adjusted earnings per share are based on profits before exceptional items after taxation.(3) Operating margins are calculated as operating profit before exceptional items as a percentage of net revenue.(4) Net revenue, operating profit before exceptional items (£4.6 million, mainly the costs of the flotation), adjusted earnings per share and operating margins are measures which the directors believe assist with a better understanding of the underlying performance of the Group. The reconciliation to statutory amounts can be found in notes 2 and 6 and on the face of the profit and loss account. Enquiries: PayPoint plc 01707 600 300Dominic Taylor, Chief ExecutiveGeorge Earle, Finance Director Finsbury 020 7251 3801Rollo HeadJames LevitonDon Hunter This announcement is available on the PayPoint plc website: www.paypoint.co.uk. About PayPoint PayPoint is a leading branded payment collection network used, primarily, forthe cash payment of bills and services and prepayments for mobile telephones andenergy meters. There are over 13,000 retail outlets using PayPoints paymentterminals. PayPoint began trading in 1996 and initially collected payments through itsnetwork of retail agents for its founder client investors, who included BritishGas, BT, BBC TV Licensing, London Electricity (now part of EDF Energy) and fourwater companies. It now has more than 500 clients including many of the UK and Irelands majorenergy, cable, mobile and fixed line telephony companies. Its blue chip clientlist also extends to numerous water companies, local authorities and housingassociations and a growing transport and travel base. Operational and financial review Growth has been achieved through the success of our strategy to: increase andoptimise network coverage; increase throughput per agent; and grow the range ofpayments through our network. Operational overview During the financial year, PayPoint processed 259 million consumer transactions(2004: 205 million) an increase of 27%, with a value of £2.9 billion (2004: £2.3billion) up 30%. Agent commission charges of £50.3 million were up 33%,reflecting increased volumes and new products carrying higher agent commission,in particular the heavier mix of e-top up and ATM volumes. There has been strong growth in transaction volumes across all sectors: Transactions by sector 2005 2004 Increase millions millions %______________________________________________________________________________Bill and general payments 166.0 137.6 21Mobile top-ups 87.9 66.2 33ATMs 4.6 0.7 593______________________________________________________________________________Total 258.5 204.5 27______________________________________________________________________________ Bill and general payments This sector has benefited from continued transaction volume growth helped by amigration away from the Post Office following its branch closure programme, inparticular with respect to TV licence payments, BT and British Gas billpayments. In the case of the latter, gas consumer price increases have alsocontinued to have a beneficial effect on PayPoints transaction volume. Transportticketing remains an important area for growth and whilst current volumes arerelatively modest, there is considerable potential for long term growth. Mobile top-ups Mobile growth has been strong as the migration to electronic top-ups from papervouchers nears completion, accelerated by the introduction of an e-voucherproduct by all but one network operator. Once this migration is complete, futuregrowth in mobile volumes is expected to be in line with mobile operatorsrevenues. Margins have also continued ahead of expectations as a result of aslower migration of volume away from terminals to multiple retailers ownelectronic point of sale (EPOS) till systems, which we expect to take placeduring the current financial year, which will reduce revenue by £1.5 million. ATMs The ATM business has performed in line with expectations, with new machinesrolling out at an average of 50 new sites per month. Transaction volumes andrevenue are in line with expectations for the year as a whole. Our currentintention is to continue to roll out ATMs until 2,000 machines have been placedat a total cost of £6 million, which will be recovered, either by the sale orrental of the ATMs, to agents. Network growth PayPoint terminal outlets have grown to over 13,000 sites at 31 March 2005(2004: 11,400) an increase of 15%. Installed ATMs have grown to 957 (31 March2004: 358). New terminal The second generation terminal is proving to be popular with retailers. The newterminal offers much faster processing, better reliability and new functionalitythrough a touch screen and a contactless smartcard reader. These functions helpnew products, including the new transport ticketing schemes, to be introducedrapidly and efficiently. The new terminal design is also chip and PIN compliant.The replacement of the old terminals commenced in October last year, with some6,000 new terminals now in operation. It is anticipated that the old terminalestate will have been substantially replaced by the end of the current financialyear at a total cost of approximately £6 million. Financial overview Turnover for the financial year was £89.1 million (2004: £67.1 million) up 33%driven by a 27% increase in transaction volumes. Cost of sales was £61.3 million(2004: £47.3 million) an increase of 30%. Cost of sales comprises commissionpaid to agents, depreciation and other items including telecommunications.Agents' commission increased to £50.3 million (2004: £37.7 million) up 33%,slightly ahead of volume growth as a result of the heavier mix of higher agentcommission schemes, in particular mobile top-ups and ATM volumes. Depreciationhas reduced to £1.8 million (2004: £2.0 million) because the first generationterminal estate has been completely written off and the new terminal deploymentwill not be completed until the end of the current financial year. Other costs of sales increased overall, but mainly as a consequence of thegrowth in the Irish mobile top-up business where PayPoint acts as principal andso the cost of the top-up is included in cost of sales (1). Gross profit improved to £27.7 million (2004: £19.8 million), 40% ahead of last year, with a gross margin of 31% (2004: 29%). Net revenue of £36.9 million (2004: £28.6 million) was up 29%, driven primarilyby volume growth. Operating margins (2) were 33% (2004: 22%), benefiting fromoperational gearing and also from a delay in the migration of mobile top-ups, insome of our multiple retailers, from our terminals to the retailers' own tillsystems. Operating costs (administrative expenses) before exceptional items have risen to£15.7 million (2004: £13.6 million), an increase of 15%, driven largely byincreased marketing expense in rolling out the new point of sale materials toindependent retailers and investment in providing retailers with the ability totop-up mobile telephones using their own EPOS systems on PayPoint's network.Operating profit before exceptional charges was £12.0 million (2004: £6.2million) with a corresponding increase in operating margins (2) as noted above. We incurred exceptional costs of £4.6 million of which £4.2 million related tothe listing of the Company's shares on The London Stock Exchange and £0.4million related to bid defence costs. Profit before tax after exceptional items was £8.1 million (2004: profit beforetax £6.0million). The tax charge of £2.2 million results from the partialrelease of the brought forward deferred tax asset of £3.6 million. The remainingdeferred tax asset of £1.4 million relates to capital allowances in excess ofdepreciation. Operating cash flow was £17.4 million (2004: £12.5 million), reflecting strongconversion of profit to cash and the impact of the Easter bank holiday weekendat the end of our financial year, which increased cash held for mobile operators to which PayPoint has legal title, but for which an equal amount is included in creditors (client cash). Net capital expenditure of £4.2 million (2004: £1.1 million) reflected spend onnew terminals, ATMs and infrastructure assets. Net interest received of £0.6million compared to a net interest paid of £0.1 million in 2004, as a result ofthe repayment of finance leases and increased net funds in 2005. Equitydividends paid were £0.8 million (2004: £0.3 million). The net financing outflowof £0.9 million was the repayment of leases and compares to a net outflow of£1.5 million last year, being £1.9 million of lease repayments, offset by £0.4million of new lease finance. Net funds were £25.7 million including client cash of £11.1 million, up £13.1million from £12.6 million, including client cash of £4.7 million at 31 March2004. (1) In Ireland, PayPoint purchases the e-voucher and holds it in stock prior to its sale to the consumer. The full market value of the sale is included in turnover and the cost of the e-voucher and agents commission is included in cost of sales. This contrasts with the UK where, for mobile top-ups, turnover includes the commission only.(2) Operating margins are calculated as operating profit before exceptional items as a percentage of net revenue. Dividend We propose to pay a final dividend of 5.2 pence per share to shareholders inJuly, subject to approval of the shareholders at the annual general meeting. Thedividend will be payable to shareholders on the register on 24 June 2005. Nointerim dividend was paid, as stated in the listing particulars. International Financial Reporting Standards (IFRS) Under European Union legislation, all listed groups will be required to reportunder IFRS for accounting periods commencing on or after 1 January 2005. Thefirst annual report for PayPoint under IFRS will be in respect of the yearending 31 March 2006. The interim results for the six months ending 30 September2005 will also be prepared in accordance with IFRS principles, with allcomparative figures being restated as appropriate. As no substantial change isexpected to the reported results, other than the reversal of the accrual fordividends payable, we do not currently expect to make a separate announcementconcerning the impact of IFRS. Employees We would like to take this opportunity to thank PayPoints staff for theircommitment and energy in achieving these results. Outlook There are many opportunites to grow the business in the UK and Ireland with goodprospects in all markets, in particular through broadening the range of paymentsacross the PayPoint retail network. Retail network growth and optimisation willcontinue to be priorities and we will review the potential for internationalexpansion. Strong cash generation should continue, although capital expenditurefor new terminals and ATMs, the reversal of the exceptional level of clientcash, tax and dividend payments will deplete cash balances this year. In thefirst two months of the current year, trading has started well and we areconfident of continuing growth. David Newlands Dominic TaylorChairman Chief Executive13 June 2005 CONSOLIDATED PROFIT & LOSS ACCOUNT Note Year ended Year ended 31 March 31 March 2005 2004 £000 £000_____________________________________________________________________________Turnover 2 89,054 67,132Cost of sales 2 (61,332) (47,331)_____________________________________________________________________________Gross profit 2 27,722 19,801 Administrative expenses (20,257) (13,629)Add back exceptional items 3 4,572 -_____________________________________________________________________________Administrative expenses excluding exceptionalitems (15,685) (13,629)_____________________________________________________________________________Operating profit before exceptional items 12,037 6,172Exceptional items 3 (4,572) -_____________________________________________________________________________Operating profit 7,465 6,172Interest receivable and similar income 937 240Interest payable and similar charges (339) (388)_____________________________________________________________________________Profit on ordinary activities before taxation 8,063 6,024Tax charge on profit on ordinary activities 4 (2,215) (4)_____________________________________________________________________________Profit on ordinary activities after taxation 5,848 6,020Dividend 5 (3,473) (1,055)_____________________________________________________________________________Retained profit for the year 10 2,375 4,965_____________________________________________________________________________Earnings per shareBasic 6 8.7p 9.1pDiluted 6 8.7p 9.0pAdjusted basic 6 15.5p 9.1p Dividend per share 5 5.2p 1.6p All turnover and operating profit is derived from continuing operations. There have been no recognised gains and losses attributable to the shareholdersother than the profit for the current and preceding financial year, andaccordingly no Statement of Total Recognised Gains and Losses is presented. CONSOLIDATED BALANCE SHEET Note 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Fixed assetsTangible assets 4,617 2,217______________________________________________________________________________Current assetsStocks 472 32______________________________________________________________________________Debtors: amounts falling due within one year 7 9,137 10,246Debtors: amounts falling due after more thanone year 7 - 375______________________________________________________________________________Debtors 9,137 10,621Cash at bank and in hand 8 25,950 13,832______________________________________________________________________________ 35,559 24,485 Creditors: amounts falling due within one year 9 (26,640) (15,645)______________________________________________________________________________Net current assets 8,919 8,840______________________________________________________________________________ Total assets less current liabilities 13,536 11,057Creditors: amounts falling due after more thanone year 9 (301) (304)______________________________________________________________________________Net assets 13,235 10,753______________________________________________________________________________Capital and reservesCalled up share capital 10 226 14,418Share premium account 10 23,976 23,894Capital redemption reserve 10 14,193 -Investment in own shares 10 (1) (25)Profit & loss account 10 (25,159) (27,534)______________________________________________________________________________Total shareholders' funds 13,235 10,753______________________________________________________________________________Shareholders' funds are analysed as:Equity interests 13,235 (3,440)Non-equity interests - 14,193______________________________________________________________________________ 13,235 10,753______________________________________________________________________________ CONSOLIDATED CASH FLOW STATEMENT Note Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Net cash inflow fromoperating activities a 17,371 12,451Returns on investments andservicing of finance b 598 (148)Capital expenditure (4,168) (1,127)______________________________________________________________________________ 13,801 11,176Equity dividends paid (783) (277)______________________________________________________________________________Net cash inflow beforefinancing 13,018 10,899Management of liquidresources - increase in shortterm deposits (3,500) (6,500)Financing b (900) (1,467)______________________________________________________________________________Net cash inflow 8,618 2,932______________________________________________________________________________ Reconciliation of net cash inflow tomovement in cash at bank and in hand Net cash inflow 8,618 2,932Increase in short termdeposits 3,500 6,500______________________________________________________________________________Increase in cash at bank andin hand 12,118 9,432______________________________________________________________________________ NOTES TO THE CASH FLOW STATEMENT a. Reconciliation of operating profit to net cash inflow from operatingactivities Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Operating profit beforeexceptional items 12,037 6,172Exceptional items (4,572) -______________________________________________________________________________Operating profit 7,465 6,172Depreciation charge 1,801 2,011Increase in stocks (440) (32)(Increase)/decrease indebtors (731) 786Increase/ (decrease) increditors - client cash (note 9) 6,371 4,110 - other creditors 2,905 (596)______________________________________________________________________________Net cash inflow fromoperating activities 17,371 12,451______________________________________________________________________________b. Analysis of cash flows Returns on investments and servicing of financeInterest received 937 240______________________________________________________________________________Interest paid (207) (123)Interest element of finance lease (132) (265)______________________________________________________________________________ (339) (388)______________________________________________________________________________ 598 (148)FinancingIncrease in asset finance - 401Repayment of capital element of finance lease (900) (1,868)______________________________________________________________________________ (900) (1,467)______________________________________________________________________________ c. Reconciliation of net cash flow to movement in net funds Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Net cash inflow 8,618 2,932Cash inflow from management of liquidresources 3,500 6,500Cash outflow from change in debt andlease financing 900 1,467______________________________________________________________________________Change in net funds resulting from cashflows 13,018 10,899New finance leases - (760)Debt converted 82 310______________________________________________________________________________Change in net funds 13,100 10,449Net funds at start of year 12,625 2,176______________________________________________________________________________Net funds at end of year 25,725 12,625______________________________________________________________________________ d. Analysis of changes in net funds At beginning Non-cash At end of year Cash flows movements of year £000 £000 £000 £000______________________________________________________________________________Cash 7,332 8,618 - 15,950Short term deposits 6,500 3,500 - 10,000______________________________________________________________________________Cash at bank and in hand 13,832 12,118 - 25,950Other loans (82) - 82 -Finance leases (1,125) 900 - (225)______________________________________________________________________________ 12,625 13,018 82 25,725______________________________________________________________________________ NOTES TO FINANCIAL STATEMENTS 1 Basis of preparation (i) The information set out above does not constitute the Groups statutoryaccounts for the years ended 31 March 2005 or 2004, but is derived from thoseaccounts. Statutory accounts for 2004 have been delivered to the Registrar ofCompanies and those for 2005 will be delivered following the companys annualgeneral meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under s237(2) or (3) of theCompanies Act 1985. (ii) The accounting policies used for the preparation of the preliminaryfinancial statements are unchanged from those used in the Group's 2004 annualreport and financial statements, except that the group has implemented UITF 38Accounting for ESOP Trusts from 1 April 2004. UITF 38 requires own shares heldunder trust to be deducted in arriving at shareholders' funds. Previously ownshares held under trust were presented as fixed asset investments. Accordinglyown shares held under trust at a book value of £25,000 have been reclassifiedfrom fixed asset investments to shareholders' funds. The implementation of UITF38 had no material impact on the Group's previously reported profits and losses.Comparative figures have been restated in the balance sheet and related notes. 2. Segmental reporting, net revenue analysis and gross throughput (i) Segmental Information (a) Geographical segments The Group operates in both the UK and Republic of Ireland but the Group has onlyone reportable geographical segment as defined in SSAP 25 Segmental Reportingdue to the fact that principally all operations and sales occur in the UK. (b) Classes of business The Group has one class of business, being cash payment collection anddistribution services. (ii) Analysis of revenues by market Group turnover comprises the value of sales (excluding VAT) of services in thenormal course of business and includes amounts billed to customers to be passedon to retail agents as commission payable. Cost of sales includes the cost tothe Group of the sale, including commission to retail agents and the cost ofmobile top-ups where PayPoint is the principal in the supply chain.Revenue performance of the business is measured by net revenue which iscalculated as the total turnover from clients less commission payable to retailagents and the cost of mobile top-ups where PayPoint is the principal in thesupply chain. (ii) Analysis of revenues by market continued Although there is only one class of business, the Group monitors net revenuewith reference to each market in which the Group operates as follows: Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Turnover 89,054 67,132less:Commission payable to retail agents (50,348) (37,743)Cost of e-vouchers on mobile topupsales as principal (1,810) (793)______________________________________________________________________________Net revenue 36,896 28,596______________________________________________________________________________Net revenue by marketBill and general payments 18,861 15,005Mobile top-ups 15,286 12,625ATMs 1,947 307Other 802 618______________________________________________________________________________Net revenue before deferred revenuerelease 36,896 28,555Deferred revenue release - 41______________________________________________________________________________Net revenue including deferred revenuerelease 36,896 28,596______________________________________________________________________________ (ii) Analysis of revenues by market continued Commission payable is included within cost of sales as shown below Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Turnover 89,054 67,132Cost of salesCommission payable to retail agents (50,348) (37,743)Cost of e-vouchers on mobile top-upsales as principal (1,810) (793)Other (9,174) (8,795)______________________________________________________________________________Total cost of sales (61,332) (47,331)______________________________________________________________________________Gross profit 27,722 19,801______________________________________________________________________________ (iii) Gross throughput Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Gross throughput 2,931,423 2,269,178______________________________________________________________________________ Gross throughput represents payments made by consumers using the PayPointservice and cash withdrawals from ATMs. Included within gross throughput is £104 million relating to ATM cashwithdrawals by customers for the year ended 31 March 2005 (2004 £14.1 million). 3. Exceptional items Exceptional charges of £4.6 million relate to the listing of Company's shares onThe London Stock Exchange (£4.2 million) and bid defence costs (£0.4 million). 4. Tax on profit of ordinary activities Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Analysis of tax charge on ordinary activitiesDeferred taxTiming differences origination andreversal - (4)Partial release of deferred tax asset (2,215) -______________________________________________________________________________ (2,215) (4)______________________________________________________________________________5. Dividend A final dividend of £3,473,000 is proposed (5.2p per share) to be paid on 21July 2005 to members on the register on 24 June 2005. No interim dividends wereproposed. The total dividends in the year ended 31 March 2004 were £1,055,000(1.6p per share based on the adjusted number of shares after the share split asdescribed in note 10). 6. Earnings per share (a) Basic and diluted earnings per share Basic and diluted earnings per share are calculated on the following profits andnumber of shares. Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Profit on ordinary activities aftertaxation (used for basic earnings pershare) 5,848 6,020 Potential dilutive impact of interestsaved on the conversion of debt 4 35______________________________________________________________________________Diluted basis 5,852 6,055______________________________________________________________________________ Number Number of of shares sharesWeighted average number of ordinary sharesin issue (for basic earnings per share) 67,054,583 65,850,855Dilutive potential ordinary shares:Conversion of convertible debt 30,550 652,979Long term incentive plan 171,366 -Exercise of share options - 496,336______________________________________________________________________________Diluted basis 67,256,499 67,000,170______________________________________________________________________________ (a) Basic earnings per share continued On 13 September 2004, the authorised share capital of 1,455,117,400 ordinaryshares of 1p each were sub-divided into 4,365,352,200 ordinary shares of 1/3 peach. In accordance with Financial Reporting Standard 14 Earnings Per Share, thecomparative figures for the numbers of shares used in the earnings have beenadjusted retrospectively as if the shares had been denominated at 1/3 p each. (b) Adjusted earnings per share The adjusted earnings per share are calculated on the profit after tax butbefore exceptional items (see note 3). This adjusted measure has been presented in order to demonstrate the growth inearnings in the underlying business. Year ended Year ended 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Earnings used for unadjusted basicearnings per share 5,848 6,020add: exceptional items 4,572 -______________________________________________________________________________Adjusted basis 10,420 6,020______________________________________________________________________________ 7. DebtorsAmounts falling due within one year 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Trade debtors 6,519 5,910Other debtors 782 276Prepayments and accrued income 451 460Deferred tax asset 1,385 3,600______________________________________________________________________________ 9,137 10,246______________________________________________________________________________Amounts falling due after more than one yearOther debtors - 375______________________________________________________________________________ - 375______________________________________________________________________________ Other debtors comprised a security deposit paid by the Company (now due withinone year). 8. Cash at bank and in hand Included within cash at bank and in hand is £11.1 million (2004: £4.7 million)relating to monies collected on behalf of PayPoint clients where PayPoint hastitle to the funds (client cash). An equivalent balance is included within tradecreditors (note 9). At 31 March 2005 the amount held included five days'collections (one day, two bank holidays and a weekend) rather than three dayscollections (one day and a weekend) at 31 March 2004. 9. Creditors Amounts falling due within one year 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Amounts owed in respect of client cash (see note8) 11,099 4,728Other trade creditors 5,094 3,675______________________________________________________________________________Trade creditors 16,193 8,403Obligations under finance leases 158 903Other taxes and social security 708 138Other creditors 55 515Accruals 5,823 4,544Deferred income 230 365Dividend 3,473 777______________________________________________________________________________ 26,640 15,645______________________________________________________________________________ Amounts falling due after more than one yearObligations under finance leases 67 222Convertible or redeemable loan stock - 82Deferred income 234 -______________________________________________________________________________ 301 304______________________________________________________________________________ 10. Capital and reserves 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Authorised share capital4,365,352,200 ordinary sharesof 1/3 peach (2004: 244,530,200 ordinaryshares including deferred ordinaryshares of 1p each) 14,551 2,4452004: 1,210,587,200 F shares of 1peach - 12,106______________________________________________________________________________ 14,551 14,551______________________________________________________________________________Called up, allotted and fully paid share capital67,653,358 ordinary shares of 1/3peach (2004: 22,427,499 ordinaryshares of 1p each) 226 2252004: 208,735,620 deferred ordinaryshares of 1p each - 2,0872004: 1,210,587,111 F shares of 1peach - 12,106______________________________________________________________________________ 226 14,418______________________________________________________________________________ Capital Reorganisation On 23 July 2004 1,210,587,111 F shares of 1p each were converted into and werere-designated as 1,210,587,111 deferred shares of 1p each. As a result of suchconversion there are no remaining F shares in the capital of the Company. On 13 September 2004 1,419,322,731 deferred shares of 1p each were repurchased(for a total sum of 1p for all such deferred shares) and cancelled by theCompany in accordance with its Articles of Association. As a result of suchrepurchase there were no remaining deferred shares in the capital of theCompany. This transaction created a capital redemption reserve of £14.2 million. On 13 September 2004 1,455,117,400 ordinary shares of 1p each were sub-dividedinto 4,365,352,200 ordinary shares of 1/3 p each. 10. Capital and reserves continued 31 March 31 March 2005 2004 £000 £000______________________________________________________________________________Called up share capitalAt start of year 14,418 14,415Loan stock converted - 3Share issued under Share Incentive Plan 1 -Deferred shares purchased and cancelled (14,193) -______________________________________________________________________________At end of year 226 14,418______________________________________________________________________________Share premiumAt start of year 23,894 23,586Loan stock converted 82 308______________________________________________________________________________At end of year 23,976 23,894______________________________________________________________________________Capital redemption reserve At start of year - -Deferred shares purchased and cancelled 14,193 -______________________________________________________________________________At end of year 14,193 -______________________________________________________________________________Investment in own sharesAt start of year as originally stated - -Reclassified (see note 1 (ii)) (25) (25)______________________________________________________________________________At start of year as restated (25) (25)Issued on exercise of options 25 -Issued under share incentive plan (1) -______________________________________________________________________________At end of year (1) (25)______________________________________________________________________________Profit and loss accountAt start of year (27,534) (32,499)Profit for the year 2,375 4,965______________________________________________________________________________At end of year (25,159) (27,534)______________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange