PMR.L Regulatory News (PMR)

17 Mar 2005 07:30

DURLACHER CORPORATION PLC CHAIRMAN'S STATEMENT Durlacher Corporation Plc and subsidiaries ("Durlacher" or the "Group") is a UKinvestment bank focusing on corporate finance, institutional broking, equityresearch and market making.HIGHLIGHTS * Turnover ‚£15.6m for the 18 months (12 months ended 30 June 2003, ‚£6.6m) * Turnover net of cost of sales ‚£11.4m for the 12 months ended 31 December 2004 (‚£3.5m 12 months ended 31 December 2003) * Operating profit pre-bonus and pre exceptionalsof ‚£2.3m for the 12 months ended 31 December 2004 (‚£4.6m loss 12 months ended 31 December 2003) * Operating profit achieved in the last six months of 2004 * Operating loss for the 12 months ended 31 December 2004 reduced to ‚£1.8m (12 months ended 31 December 2003 ‚£10.4m loss) * Strong performance of corporate finance activities * Expansion of corporate client list * Successful fundraising of ‚£10m achieved in March 2004 * Strong performance from market-making and secondary commissions in early 2005; corporate finance activity is expected to be biased towards the second half of 2005 For further information please contact:Simon Hirst, Chief Executive 020 7459 3600David Rydell, Bell Pottinger Financial 020 7861 3232CHAIRMAN'S STATEMENTThe eighteen month period to December 2004 has been one of considerable changefor Durlacher. As we have previously reported the business was re-focused atthe beginning of the period as an investment bank concentrating on theprovision of sales, trading and corporate finance activities to the UK smallcap sector. To support these activities we concluded a fund raising in March2004 which raised ‚£9.7m net of expenses, attracting a blue chip list ofinstitutional shareholders. We have recently announced a proposed transactionwhereby we will merge our company's business with that of Panmure Gordon(currently owned by Lazard) and negotiations are progressing well. This willcreate a leading independent UK Stockbroker which is able to offer servicesacross the range of UK corporate market capitalisations and sectors with theability to support smaller UK companies as they grow. We believe that thistransaction enables the Group to build significantly on the progress alreadymade, and provide enhanced prospects for clients, shareholders and staff alike.Summary ResultsFor the 18 month period turnover was ‚£15.6m compared with ‚£6.6m for the yearended 30 June 2003. Loss on ordinary activities before taxation was ‚£5.4mcompared with ‚£1.5m, the latter benefiting from an exceptional gain ondebenture redemption of ‚£5.5m. The 18 month figures include the results of thediscontinued private client stockbroking business (c. 3 months) which was soldto Charles Stanley in September 2003. The loss is stated after chargingsignificant exceptional and restructuring costs, as more fully explained below.Progress has been made in growing the revenue of the business which achievedmodest operating profits (pre bonuses and pre exceptionals) of ‚£2.2m in thefinal six month period and ‚£340,000 in the 18 months as a whole. The followingsummarised information shows the results of the business over the threediscrete six month periods which make up the current reporting period. (‚£000) 6 months 6 months 6 months Total to 31 December to 30 June to 31 December 2004 2004 2003 Turnover net of cost 7,296 4,147 1,927 of sales Administrative (5,056) (4,056) (3,918) expenses Operating profit/ 2,240 91 (1,991) (loss) pre bonus/pre exceptionals Bonuses (1,477) (369) (710) Exceptionals (926) (1,516) (262) Continuing operating (163) (1,794) (2,963) loss Discontinued 269 (94) (1,225) Operating profit/ (loss) 106 (1,888) (4,188) (5,970) Deduct termination (726)income on discontinued operations Operating loss per profit and loss (6,696)account Note: this table is not presented in a format compliant with UK accountingstandardsFor the six months to 31 December 2004, revenues were ‚£7.3m, 1.8 times thelevel for the six month period ended 30 June 2004 and 3.8 times the level forthe comparable six month period to 31 December 2003.The termination income on discontinued activities in the Profit and LossAccount includes estimated future consideration for the sale of the privateclient stockbroking business to be received from Charles Stanley.Turnover net of cost of salesCorporate Finance fees from successful IPOs and M&A transactions have been thedriver of the growth in revenue, as set out in the table below:(‚£000) 6 months 6 months 6 months to 31 December to 30 June 2004 to 31 December 2003 2004 Success fees 5,062 3,400 845 Market-making 1,086 (138) 786 Retainers 703 545 429 Commissions 271 311 18 Other 174 29 (151) 7,296 4,147 1,927The Group has benefited from its position in the UK small-cap sector as much ofthe corporate activity in the UK stock market during 2004 related to small-capmarkets, and in particular to AIM. During 2004, the Group was involved in anumber of significant IPOs raising a total of ‚£96m, including successful fundraisings for NETeller plc, Visonic plc, ITM Power plc, Blue Star Capital plc,Cello plc and DAT Group plc. In addition, the Group raised ‚£71.4m for clientsthrough secondary fundraisings. The Group's most significant transaction during2004 was its role as joint broker to NETeller plc. In November the foundingshareholders sold 25.5% of the company's share capital to UK and Europeaninstitutions for ‚£85.7m. The Group was responsible for placing ‚£28m of this. Inaddition, in April 2004 the Group advised Host Europe plc on a ‚£31m recommendedcash offer from PIPEX Communications plc. In August 2004 the Group advisedEstates & Agency Holdings plc. on a ‚£52.3m recommended cash offer from TheEndeavour Trust Limited. In September 2004, the Group advised Coutts Holdingsplc on a ‚£22m recommended offer from Media Square plc.The number of corporate clients retained by the Group continued to grow from 19in June 2003 to 45 in February 2005, a net gain of 26 clients. The averagemarket capitalisation of the Group's quoted clients is now approximately ‚£44m.The Group's corporate client list is spread across a broad range of sectorsincluding technology, mining, oil & gas, healthcare, media, and specialistfinancials. The Group has maintained good continuity in its corporate finance,equity research and equity sales teams. As a result of the people in which theGroup has invested, and continues to invest, the Board believes that it hasassembled a high quality team with a good blend of experience and a strongrecord in executing transactions.Operating CostsOperating costs in the six months to 31 December 2004 were higher than in theprevious six months; the latter benefited from the recovery of a bad debt of ‚£385,000 where provision had been made in administration costs in a priorperiod. The second half of 2004 also suffered from expensing for a full sixmonths the cost of the new Fidessa trading platform which was operational fromMay onwards. The costs of this system are shown in administration costs, ratherthan cost of sales as previously disclosed. Employment costs increasedmarginally, since although employee numbers decreased, a 10% definedcontribution pension benefit was paid from 1 July 2004 where none existedpreviously.Restructuring and Fund RaisingAs reported on 23 July 2003 Durlacher issued 3.25m shares to acquire the entireissued share capital of web-angel plc, a cash shell with a net cash balance of‚£2.7m. Shareholders will also be aware that in September 2003 the Group tookthe opportunity to sell its loss making and non-core private clientstockbroking business and the nothingventured.com trading system to CharlesStanley. The 18 month result to 31 December 2004 incorporate s a net loss of ‚£1.1m associated with discontinued activities (consisting of an operating lossof ‚£1.8m from the period when the activities were part of the Group, togetherwith payments and estimated provisions against claims, and a net income of ‚£726,000, being actual cash received for the sale of the private clientstockbroking business of ‚£350,000, an estimate of the proportionate saleproceeds to be received in September 2005 of ‚£700,000 less costs associatedwith selling and closing businesses of ‚£324,000).In March 2004 the Group completed its successful ‚£10m placing and open offer toprovide additional working capital to fund the growth of the investment bankingbusiness. It is pleasing to welcome a significant number of blue chipinstitutional investors to our share register.Exceptional ItemsIn June 2004 the Group moved offices to more flexible and productive singlefloor accommodation in Moorgate. As a result of this relocation we have writtenoff fixed assets and provided for dilapidations, totalling ‚£346,000. The Grouphas also, on a prudent basis, provided ‚£604,000, being a significant proportionof the future costs of the remaining lease on the old office. The Board isconfident that the Group will be able partly to offset some of the future costsof these premises from letting them out. In total we have therefore provided ‚£950,000 in exceptional items as regards property costs. The Group has a rentfree period on its new office until November 2006.The Group has also expensed ‚£1,362,000 in respect of redundancies,restructurings and one-off investment realisation costs in the 18 month period.In particular in the six months to 31 December 2004 we charged ‚£676,000 inrespect of items resulting from a strategic review. These costs related in themain to the closure of the activities of fund management and Durlacher Ventureswhich were making a negative contribution. The Group incurred compensationcosts in lieu of commission of ‚£392,000 associated with the fund raising inMarch 2004 which have been charged as exceptional items.International Financial Reporting Standards (IFRS)The Board has conducted an initial review of the effect of adopting IFRS on theGroup's financial statements. Other than in certain presentational aspects, wedo not believe that the adoption of IFRS would have a material impact on thereporting of the Group's results in the future.12 Month ResultsThe table below, shows a summarised review of the Group's progress over thelast 12 months.(‚£000) 12 months to 12 months to 31 31 December December 2003 2004 Turnover net of cost of sales 11,443 3,524 Administrative expenses (9,112) (8,121) Operating profit pre-bonus and pre exceptionals 2,331 (4,597) Bonus (1,846) (1,026) Continuing operating profit/ (loss) before exceptional items 485 (5,623) Exceptional items (2,442) (770) Continuing operating loss after exceptional items (1,957) (6,393) Discontinued operations 175 (3,967) Operating loss (1,782) (10,360)Note: this table is not presented in a format compliant with UK accountingstandards.Revenue for the 12 month period ended 31 December 2004 was ‚£11.4m, 3.2 timesthe level for the previous 12 month period. The Group also achieved anoperating profit pre-bonus and pre-exceptionals of ‚£2.3m, compared with a lossof ‚£4.6m in the prior 12 month period. This was primarily as a result of thesignificant increase in successful fund raisings and M&A transactions executedby the Group. In the 12 months to 31 December 2004, the Group earned ‚£8.5m insuccess fees from IPOs, secondary fundraisings and M&A transactions comparedwith only ‚£1.6m in the 12 months to 31 December 2003.OutlookIn recent months, particularly January and February 2005, significant revenuehas been generated by Durlacher's market making and our secondary equitycommission business has performed well. Since the beginning of the year, thecorporate finance team has closed two transactions of significance. It acted asfinancial adviser to Personal Group plc on its ‚£12.3m recommended offer forBerkeley Morgan Group plc and also acted as Nominated Adviser and broker toStraight plc on its simultaneous ‚£5m placing and ‚£6m acquisition. We expectthat future corporate finance activity will be biased towards the second halfof the year.Tony CaplinChairman16 March 2005CONSOLIDATED PROFIT AND LOSS Audited AuditedACCOUNT 18 12 Months Months to 31 to 30 December June Note Continuing Discontinued 2004 2003 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Turnover Continuing/discontinued 14,152 1,422 15,574 6,645 Total turnover 3 14,152 1,422 15,574 6,645 Cost of sales Continuing/discontinued (782) (1,255) (2,037) (2,653) Total cost of sales 5 (782) (1,255) (2,037) (2,653) Gross profit 13,370 167 13,537 3,992 Administrative expenses Continuing/discontinued (15,586) (1,943) (17,529) (11,165) Exceptional expenses 6 (2,704) - (2,704) (818) Total Administrative (18,290) (1,943) (20,233) (11,983)expenses Operating loss (4,920) (1,776) (6,696) (7,991) Profit on disposal of fixed 111 - 111 2,617asset investments Net income/(costs) on - 726 726 (890)termination of discontinued activities Net interest and similar costs Exceptional gain on - 5,531debenture redemption Other interest receivable 372 70 442 243 Total net interest and 372 70 442 5,774similar costs Amounts written off fixed - - - (1,007)asset investments Loss on ordinary activities (4,437) (980) (5,417) (1,497)before taxation Tax on loss on ordinary 8 (77) 516activities Loss on ordinary activities (5,494) (981)after taxation Basic loss per ordinary 9 (33.44)p (17.57)pshare Diluted loss per share 9 (33.44)p (17.57)p The Group has no recognised gains or losses other than the result for theperiod.DURLACHER CORPORATION Plc BALANCE SHEETS Audited Audited 31 December 30 June 2004 2003 Notes ‚£'000 ‚£'000 Fixed assets Intangible fixed assets 10 - 475 Tangible fixed assets 1,423 499 Investments 10 - 6 Total fixed assets 1,423 980 Current assets Investments 10 2,712 2,968 Debtors 11 8,055 3,065 Cash and bank balances 8,557 3,041 19,324 9,074 Creditors: amounts falling due within one 12 (8,674) (3,904)year Net current assets 10,650 5,170 Total assets less current liabilities 12,073 6,150 Creditors: amounts falling due after one 13 (69) (221)year Provisions for liabilities and charges 14 (1,544) (1,541) Net assets 10,460 4,388 Capital and reserves Ordinary shares 776 326 Deferred shares 28,330 28,330 Called up share capital 15 29,106 28,656 Share premium account 16 27,473 18,072 Merger reserve 16 1,715 - Profit and loss account 16 (47,834) (42,340) Equity shareholders' funds 17 10,460 4,388Approved by the Board on 16 March 2005 and signed on its behalf by:S Hirst D LiddellChief Executive Officer Finance DirectorDURLACHER CORPORATION Plc CONSOLIDATED CASH FLOW Audited Audited 18 Monthsto 12Monthsto30 31 December June 2003 2004 Notes ‚£'000 ‚£'000 Net cash outflow from operating activities 18 (4,506) (9,453) Returns on investment and servicing of finance 19 477 (115) Capital expenditure and financial investment 19 (1,329) 3,106 Acquisitions and disposals 19 58 (65) Cash outflow before financing (5,300) (6,527) Financing Proceeds of issue of ordinary share capital 19 11,566 4,001 (Decrease)/Increase in short term loan (750) 750 Repaid convertible debentures - (3,500) Net cash inflow from financing activities 10,816 1,251 Increase/(Decrease) in cash 5,516 (5,276) Reconciliation of cash outflow to movement in net funds: Increase/(decrease) in cash for the period 5,516 (5,276) (Decrease)/Increase in short term loan 750 (750) Non-cash movement on redemption of debentures - 5,250 Repayment of convertible debentures - 3,500 Change in net funds resulting from cash flows 6,266 2,724 Net funds/(debt) 1 July 2,291 (433) Net funds 31 December 2004/30 June 2003 20 8,557 2,291An analysis of the cash flows from discontinued operations is included in note18. Except as disclosed above, the cash flows arising from acquisitions havenot been disclosed as they are immaterial. Unless explicitly stated all othercash flows above arise from continuing operations.1 BASIS OF PREPARATIONACCOUNTING POLICIESThe results for the 18 months ended 31 December 2004 have been prepared inaccordance with the accounting policies of Durlacher Corporation Plc as set outin its 2004 Annual Report.2. SEGMENTAL ANALYSISThe Directors consider that the Group operates in one segment, being investmentbanking.3. TURNOVER ANALYSISThe following provides an analysis of turnover by major activity: Audited Audited 18 Months to 31 12 Months to 30 December 2004 June 2003 ‚£'000 ‚£'000 Market-making 2,083 318 Corporate finance 11,024 1,709 Institutional broking 903 70 Discontinued operations 1,422 4,117 Other 142 431 Total 15,574 6,645The Group acquired web-angel, a non-trading company during the period.web-angel plc has no post acquisition results to disclose.A small proportion of turnover is attributable to non-UK markets.4. DISCONTINUED ACTIVITIES Audited Audited 18 months to 12 months to 31 December 30 June 2003 2004 Continuing Discontinuing Total Continuing Discontinued Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Turnover 14,152 1,422 15,574 2,528 4,117 6,645 Cost of sales (782) (1,255) (2,037) (175) (2,478) (2,653) Gross Profit 13,370 167 13,537 2,353 1,639 3,992 Administrative (18,290) (1,943) (20,233) (8,202) (3,781) (11,983)expenses Operating loss (4,920) (1,776) (6,696) (5,849) (2,142) (7,991)5. COST OF SALES Audited Audited 18 Months to 12 Months to 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Commission payable and settlement costs (2,037) (2,653) Total (2,037) (2,653)6. ADMINISTRATION EXPENSES - EXCEPTIONAL EXPENSES Audited Audited Included within administration expenses are the 18 Months to 12 Months tofollowing non-recurring exceptional expenses: 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Termination, redundancies and one-off costs (1,362) (818)relating to realisation of investments Compensation in lieu of commission on share issue (392) - Property costs (950) - Total (2,704) (818)Property costs resulted from the move to new offices in June 2004.Predominantly, they are a provision for the onerous lease conditions on the oldoffices. Further, dilapidation costs have been incurred and leaseholdimprovements have been written off.7. DIVIDENDThe Board does not recommend the payment of a final dividend (2003:‚£nil). Nointerim dividend was declared (2003: ‚£nil).8. TAXATIONThe current tax charge for the period is different to the standard rate ofcorporation tax in the UK of 30%, (2003: 30%). The amounts are compared below: Audited Audited 2004 2003 ‚£'000 ‚£'000 Analysis of current tax charge in period Current period UK corporation tax - - Prior year corporation tax over/(under) provision (77) 516 Current tax credit/(charge) (77) 516 Current tax reconciliation Loss on ordinary activities before tax (5,417) (1,497) Current tax at 30% (2003: 30%) (1,625) (449) Effects of: Sundry permanent differences 256 324 Timing differences: Current year tax losses not relievable 1,369 125 Prior year corporation tax (over)/under provision (77) 516 Current tax per profit and loss statement (77) 516The effective rate of Corporation tax for the period ended 31 December 2004 was1.5% per cent (2003: nil).Deferred taxationAt 31 December 2004 the Group had a deferred tax asset as set out below. Thisasset has not been recognised in the balance sheet due to the uncertainty overthe timing of its recoverability. It will become recoverable if the Groupgenerates profits Audited Audited 31 December 30 June 20 2004 03 ‚£'000 ‚£'000 Potential deferred tax asset 9,603 8,141 9. EARNINGS PER SHAREThe calculations of earnings per share are based on the following profits andnumbers of shares: Audited Audited 18 Months to 12 Months to 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Loss attributable to ordinary shareholders: After exceptional expenses and discontinued (5,494) (981)activities Weighted average number of shares in issue 15,636,079 5,582,246 Adjusted weighted average number of shares in 15,636,079 5,582,246issue FRS 14 requires presentation of diluted EPS when a company would be called uponto issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding options, net loss per share would only be decreased by the exercise of these share options therefore no adjustment has been made to the weighted average number of shares in issue. 10. INVESTMENTSFixed asset investments Audited Audited 31 December2004 30 June 2003 ‚£'000 ‚£'000 Other investments - unquoted - 6 Movements in Fixed asset investments (excluding subsidiaries) were as follows: Audited Audited 18 months to 12 months to 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Carrying value at start of period/year 6 1,790 Additions - 6 Disposals - (783) Impairment (6) (1,007) Carrying value at 31 December / 30 June - 6Fixed asset investments include participating interests which it is notappropriate either to consolidate or equity account on the basis that the Groupexercises no control or significant influence over them.Additional information on principal subsidiary undertakings included inconsolidation:At 31 December 2004 the Company owned 100% of the ordinary share capital of thefollowing significant subsidiary undertakings, all of which operate in theUnited Kingdom and are registered in England and Wales.Name Nature of business Durlacher Limited Stockbroking, corporate finance and market making Web-angel plc Dormant Durlacher Research Ltd Dormant Life Capital Ltd Dormant The Throgmorton Press Ltd DormantA full list of the Group's companies will be included in the Company's AnnualReturn to Companies House.Current asset investmentsCurrent asset investments represent the Group's investment in quoted entities.The market value of the quoted investments at 31 December were as follows: Audited Audited 31 December 30 June2003 2004 ‚£'000 ‚£'000 Shares traded on the London Stock Exchange 210 216 Shares traded on AIM 2,502 2,530 Other - 222 Total 2,712 2,968 11. DEBTORS Audited Audited 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Due within one year Trade debtors 743 430 Market debtors 5,303 1,863 Other debtors 926 232 Prepayments and accrued income 1,083 540 Total 8,055 3,06512. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Audited Audited 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Bank Loan - (625) Trade creditors (479) (946) Market creditors (4,290) (889) Short positions (293) (78) Other taxation and social security (381) (215) Other creditors (2,295) (366) Accruals and deferred income (936) (785) Total (8,674) (3,904)13. CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR Audited Audited 31 December 30 June 2003 2004 ‚£'000 ‚£'000 Bank Loan - (125) Other (69) (96) Total (69) (221)Other long term creditors relate to the settlement of complaints regarding themanagement of certain investment portfolios.14. PROVISIONS FOR LIABILITIES AND CHARGES Reorganisation Legal Other Total & action Reconstruction ‚£'000 ‚£'000 ‚£'000 ‚£'000 Provisions at 1 July 2003 (797) (600) (144) (1,541) Utilised during the period 773 600 144 1,517 Charged during the period (700) (570) (250) (1,520) As at 31 December 2004 (724) (570) (250) (1,544)The Group has received a small number of complaints regarding the management ofcertain investment portfolios. Legal action has been served against the Companyin respect of certain of the complaints while others have been referred to theFinancial Ombudsman Service. Having carefully considered the Group's positionand after taking legal advice on specific complaints the Directors haveestablished a provision representing their best estimate of the liabilitieslikely to arise in respect of these complaints. The timing of any payment isdependent on how the cases develop.Reorganisation and reconstruction costs have been quantified on the basis of acommitment to pay the relevant parties. It is envisaged that these paymentswill be made in the course of the next financial year.15. SHARE CAPITAL Audited Audited 31 December20 30 June 2003 04 ‚£'000 ‚£'000 Authorised 30,507,117 (2003: 16,757,117) ordinary shares of 4p 1,220 670each 708,242,883 unquoted deferred shares of 4p 28,330 28,330 Total 29,550 29,000 Allotted, called up and fully paid: 19,394,026 ordinary shares of 4p each (2003: 776 3268,144,861 shares) 708,242,883 unquoted deferred shares of 4p 28,330 28,330 Total 29,106 28,656 On 23 July 2003 Durlacher issued shares to acquire the entire share capital ofweb-angel plc. web-angel plc was a non-trading company with cash resources atthe time of this acquisition. For this reason the transaction has been treatedas proceeds of a share issue rather than an acquisition of a company.Nevertheless merger relief is still applicable and the premium on issue of theshares has been recognised in a merger reserve. As at 31 December 20043,248,798 ordinary shares of 4p each had been issued in respect of thistransaction. The shares were issued for 73p each.On 24 February 2004 the shareholders approved the issue of 8,000,366 OrdinaryShares issued at ‚£1.25 each which raised cash of ‚£10m.The Deferred Shares have no rights to vote or participate in dividends andcarry only limited rights to any return of capital on liquidation.16. RESERVES Share Merger Profit & Total Premium Reserve Loss Account ‚£'000 ‚£'000 ‚£'000 ‚£'000 At 1 July 2003 18,072 - (42,340) (24,268) Shares issued re web-angel plc - 1,715 - 1,715 Shares issued re share placing 9,401 - - 9,401 Loss for the period - - (5,494) (5,494) At 31 December 2004 27,473 1,715 (47,834) (18,646)17. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS Audited Audited 18 months to 12 months to 31 December 20 30 June 2003 04 ‚£'000 ‚£'000 Loss for the financial period (5,494) (981) Shares issues 11,566 3,692 Opening shareholders' funds 4,388 1,677 Closing shareholders' funds 10,460 4,388The proceeds of shares issued is net of issue costs of ‚£280,00018. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES Audited Audited 18 months to 12 months to 31 December20 30 June 2003 04 ‚£'000 ‚£'000 Operating loss (6,696) (7,991) Depreciation and write down of tangible and 687 295intangible fixed assets Decrease in current asset investments 471 285 (Increase)/decrease in debtors (4,325) (1,614) Increase/(decrease) in creditors and provisions 5,357 (428) Net cash outflow from operating activities (4,506) (9,453)Net cash outflow from operating activities comprises: Continuing operating activities (2,923) (8,098) Discontinued operating activities (1,583) (1,355) (4,506) (9,453)19. ANALYSIS OF CASH FLOW FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT Audited Audited 18 months to 12 months 31 December 20 to 30 June 04 2003 ‚£'000 ‚£'000 Returns on investment and servicing of finance Interest received 525 370 Interest paid (48) (210) Cash acquired/paid out from employee benefit trust - (275) Net cash inflow for returns on investments and 477 (115)servicing of finance Capital expenditure and financial investment Purchase of tangible fixed assets (1,446) (322) Proceeds from sale of tangible fixed assets - 27 Proceeds from sale of investments 117 3,401 Net cash inflow/(outflow) from capital expenditure (1,329) 3,106and financial investment Acquisitions and disposals Proceeds over termination costs 58 - Overdraft acquired with subsidiary undertaking - (65) Net cash o