Primorus Inv. Regulatory News (PRIM)

16 Mar 2005 07:01

CSS Stellar PLC16 March 2005 For Immediate Release 16 March 2005 CSS Stellar plc ("CSS" or "the Group") Preliminary Results for the year ended 31 December 2004 CSS Stellar plc, the global entertainment and sports management and marketinggroup, today announces its preliminary results for the year ended 31 December2004. Summary: • Results ahead of 2004 interim expectations • Turnover on continuing businesses increased to £67.8 million (2003: £63.5 million) • Increase in EPS adjusted profit to £0.85 million (2003: £0.69 million) • Reduction in administrative expenses to £31.9 million (2003: £34.6 million) • Disposal of Target generated £0.7 million in cash • Improvement in fully diluted earnings per share to a loss of 10.61p (2003: loss of 17.15p) Commenting on the results John Webber, Chairman, stated: "I am delighted that the results are ahead of expectations. We believe that ourcore companies are operating in market sectors that will deliver significantgrowth in the coming years. Our aim is to have established profitable companiesin position to take advantage of this growth." For further information please contact:CSS StellarSean Kelly, Chief Executive Tel: 020 7466 5000 (am)Kevin Rose, Finance Director Tel: 020 7078 1400 (thereafter) Buchanan CommunicationsBobby Morse/Rebecca Skye Dietrich Tel: 020 7466 5000 CHAIRMAN'S STATEMENT Overview & Strategy I am very pleased to report that the year end result was ahead of ourexpectations when we announced our half-year results last September, with theGroup improving its profits from core operating activities by 23% in the year.The restructuring exceptional costs envisaged for the Group were announced atthe half-year. I am also pleased to report the successful sale of our partiallyowned investment in Target Entertainment, which gave us a profit of £216,000,releasing cash back to the Group of nearly £700,000. The business has now achieved its short term objectives - rationalisation alongwith a significant cut in overhead costs. It now needs to progress to the nextstage of its development, which is primarily a commitment to grow the nowprofitable core businesses in the Group by improving margins and building onexisting centres of excellence. Financial Results The year end profits were slightly ahead of market forecasts, on a turnover of£77.8m (2003: £72.9m). The fully diluted adjusted earnings per share increasedto 2.84p (2003: 2.56p), which arose because of an increase in adjusted operatingprofits from our ongoing businesses to £847,000 (2003: £688,000) an improvementof 23%. Net asset value per share at the year end was 129p (2003: 149p), thefall arising largely as a result of the amortisation of goodwill. Theconsolidated losses after amortisation, tax and minority interests were £2.9m(2003: £4.5m). The Market The markets in which we operate have generally improved in the year,particularly in the areas of film, events and sport. The weakness of the USdollar continues to mean that increasingly we need to service our US dollarearning clients out of the USA. PricewaterhouseCoopers, in their media outlook for 2004-08, anticipated thatimproved economic growth will boost spending on entertainment and media, newdistribution channels will contribute to growth and new technology willstimulate some mature market segments. Looking forward, this reinforces ourbelief that our core companies are operating in market sectors that will deliversignificant growth in the coming year. In particular, we believe that there will be a substantial increase in thedemand for content, which will put a premium on our talent base as they are anintegral part of providing this content. Similarly, our corporate clients willincreasingly spend high proportions of their marketing budgets on exploitingthat content. Current Trading The Group has made a good start to 2005 with Talent Management and Eventsshowing some improvement on their 2004 trading after two months last year. Dividends It remains the intention of the Group to resume payment of dividends on itsreturn to profitability. Once again, I express my thanks to all our employees worldwide for their effortsin what has been a much better year, with the business's operations now bothprofitable and focused. John Webber Chairman 16 March 2005 CHIEF EXECUTIVES' OPERATIONAL REVIEW This year has seen a restructuring of the Group with the aim of concentrating onits profitable core businesses, building them up as centres of excellence, whichprovide high quality service to their respective client bases. In 2004 and inearly 2005, businesses which did not meet these criteria were sold or closeddown. Talent Management Overall, revenues for the Division showed an increase to £10.9m (2003: £10.1m).Operating profits prior to amortisation were £1.2m (2003: £1.0m). The growth of20% in profits is after taking account of a declining US dollar and continuinginvestment in the development of a New York literary agency as well asestablishing a golf management division in the UK. During the period continued investments were made in the future development ofboth the entertainment and sport businesses, principally in the US and Asia. In Europe, PFD had a good year, and a number of awards were won by clientsreflecting the strength and depth of the client base. These included: • Mike Leigh won the BAFTA for Best Director for his film 'Vera Drake', as well as The Golden Lion at the Venice Film Festival and Best Film at the Evening Standard Awards. It also received 2 Oscar nominations for Best Director and Best Original Screenplay. • Pawel Pawlikowski wrote and directed 'My Summer of Love', winner of the BAFTA for Outstanding British Film of the Year. It stars Natalie Press, winner of the award for Most Promising Newcomer at the Evening Standard Awards. • Alan Bennett's play 'The History Boys' won the Olivier Award for Best New Play, with Nicholas Hytner winning the award for Best Director. • Julian Barnes has won the Austrian State Prize for European Literature. The prize has only been awarded to a British writer on three previous occasions in its history, and will be presented to Julian by the Austrian President in the summer of 2005. • John Barry won a BAFTA Academy Fellowship for his achievements as a music composer. • Kate Winslet was nominated for the Best Actress Oscar, and twice in that same category for the BAFTA Awards. In addition, PFD authors featured highly on the bestseller lists with PaulMcKenna's 'Change Your Life in Seven Days' and 'I Can Make You Thin', RickyGervais' first foray into children's books 'Flanimals', and Ewan McGregor andCharley Boorman's 'Long Way Round'. PFD's New York office is now fully operational and in 2004 successfully soldbooks for London-based clients such as Charles Chadwick and Mark Lewisohn aswell as attracting clients based in the USA, such as Garry Kasparov and HowellRaines, the former editor of the New York Times. The management representation of presenters continued to flourish in the yearwith Piers Morgan and Mark Nicholas joining established stars Anne Robinson andMichael Parkinson, who made a very successful move to ITV in 2004. In Sports, the Group continued to represent F1 star, Juan Pablo Montoya, as hemade his move to McLaren for the 2005 season. In the USA, Dan Wheldon emergedas a new star in the IRL race series as he and Dario Franchitti made AndrettiGreen the most successful team of 2004. In motor sport, world rally driverSebastien Loeb won the 2004 World Rally Championship while Andrea Dovizioso wonthe junior MotoGp 125 world championship. 2004 also saw the representation ofMilka Duno leading to a multi-million dollar sponsorship deal with CITGO, theVenezuelan Oil Company, and the management of their sponsorship programme in theRolex Sports Car Series. Duno became the first woman ever to secure a victoryin this series. In football a contract has been agreed with Chelsea FC to work on in theircentennial celebrations in 2005, and our Swiss client, Philippe Senderos is nowa regular in the Arsenal first team. During 2004 a number of promising younggolfers were signed, including Lars Brovold and Franceso Molinari. Stellar Financial Partners was closed during the year as part of the Group'sstrategy to concentrate on core businesses. Marketing Operating profits prior to amortisation of goodwill were £0.9m (2003: £1.9m) onturnover of £50.3m (2003: £48.1m). While North American currencies have devaluedagainst sterling, we have still had growth in turnover, particularly in ouradvertising company, Echo. However margins have been reduced as a result ofcompetition to win and retain business. The UK business was not as profitable in 2004 as early years as a result of itbuilding up its global capabilities. In 2004 GEM Europe placed much greateremphasis on developing the ability of the agency to deliver Strategic Marketingconsultancy in addition to the more established UK event and sponsorshipactivation and exploitation services. The benefits of this are beginning to berealised and UBS and B&Q have now become major global clients. The agency hasalso strengthened its reputation within sailing working for BG Group and theirsponsorship of a boat in the Global Challenge Yacht Race. In the USA we are alsonow activating part of GE's Olympic programme through 2008. The merger of GEM and Echo was completed during 2004. We expect there to beoperational synergies in particular in Canada, and an improved offering tocorporate clients going forward. As announced at the interims, we have now removed stand alone sponsorship salesas a business, either integrating it into GEM, in the UK, or selling it as inCanada. In the UK the CSS sponsorship business was closed which resulted in aloss of £0.1m. Events Operating profits prior to amortisation of goodwill were £0.7m (2003: £0.4m) onturnover of £6.6m (2003: £5.0m). Events has seen strong revenue and margin growth in 2004. Icon supplied andinstalled the signage for all venues at EURO 2004 in Portugal. Icon also becamethe branding agency for the London 2012 Olympic bid. Icon has started strongly in 2005 continuing work on the London 2012 Olympic bidin addition to major contracts with the England and Wales Cricket Board, ChelseaFC and The Champions League. Television In February 2005 we sold Target Entertainment Ltd for £0.7m in consideration. Reality based television, which had become the focus of Target's productionportfolio, was not an ideal fit with the assets that we have available to us.Therefore, it made both financial and strategic sense to focus our attention onother areas of television going forward. CSS remains committed to the strategyof incorporating a television division to create, develop and distributeprogramming which incorporates the personalities and clients of companies withinthe Group. Future Prospects In the entertainment industry, we have a powerful agency in PFD, which now hasextended its operations into the USA, and a management company, both of whichdeal internationally with broadcasters. Our marketing division has considerableexperience in managing sponsorship for large companies which is becoming a moresignificant element of funding programming. The Group, however, lacks a core TV creation capability and will be seeking togrow this area of the business. We continue to believe that as the businessbecomes more talent-led, there will be increasing opportunities in this area. In the sports industry, we continue to consolidate our position in motor sportsboth in Europe and the USA. We represent talent and manage sponsorshipprogrammes for corporations on both sides of the Atlantic and act as globalconsultants for some of the world's leading businesses. To date, we have movedvery cautiously in the expansion of our event business, which remains a serviceprovider, both organising events and providing signage at those events. Sean Kelly Chief Executive 16 March 2005 FINANCIAL REVIEW The purpose of this review is to highlight matters of interest to shareholdersand to provide guidance on reasons for alterations in some of the key operatingareas of the business. Group Profit and Loss Account Turnover There has been a rise in turnover on continuing operations, which has increased7% to £67.8 million (2003: £63.5 million). Turnover was split between Europe£21.8 million, North America £46.0 million and Asia £0.01 million. Talent Talent saw an 8% rise in turnover on continuing operations to £10.9 million(2003: £10.1 million) on the back of a new client win in the United States andincreased client revenue in the UK. Marketing Marketing saw an increase in turnover of 5% to £50.3 million (2003: 48.1million). This was a result of increased media buying within the Echo Group. Television Target Entertainment Ltd was sold in February 2005 and the turnover hastherefore been included in discontinued operations. Events Turnover in the Events division increased 32% to £6.6 million (2003: £5.0million) on the back of new business won in 2004. Cost of Sales Cost of Sales in 2004 was £46.2 million (2003: £37.6 million). The increase ismainly due to production costs incurred by Target Entertainment in 2004 as itmoved into production. The Events division saw an increase in cost of salesresulting from the increase in turnover. Marketing saw an increase in turnoverrelated to media but at the same time media margins within Echo were squeezed. Other Administrative Expenses These have fallen 8% to £31.9 million (2003: £34.6 million). The largestcomponent is staff costs, which have fallen 6% to £22.8 million (2003: £24.2million). The average number of employees was 503 (2003: 575). Discontinued Operations Losses on discontinued operations relate to Canadian sponsorships, StellarFinancial Partners, Stellar Wealth, CSS Hong Kong and CSS Stellar Entertainmentwhich were disposed of at the half year amounting to losses of £1.2 million(2003: £1.3 million). Target was sold in February 2005 with operational lossesof £0.8 million. Amortisation The charge for the year of £2.4 million (2003: £2.3 million) results from theacquisition programme undertaken in the period since flotation. The group hasremaining goodwill of £37 million. Goodwill is amortised over periods of 5 to 20years. Taxation The Group's tax charge was £0.3 million (2003: £0.3 million). The tax chargerelates predominantly to the Echo group of companies. As far as possible theGroup has taken steps to minimise its overall tax liability. Dividend As stated in the Chairman's Statement there will be no dividend for the yearended 31 December 2004. Earnings per Share Unadjusted earnings per share on a basic and fully diluted basis shows a loss of10.61p per share (2003: loss of 17.15p). The diluted loss per share isequivalent to the basic loss per share as any dilutive effect would decrease thenet loss per share. Once the figure is adjusted for amortisation andnon-recurring items the fully diluted earnings per share is 2.84p (2003: 2.56p).The basic adjusted earnings per share in 2004 is 3.06p (2003: 2.64p). This isagainst the backdrop of substantial improvements made in the infrastructure ofthe business during 2004. Foreign Exchange The Group's earnings have been impacted by the weakening of the US Dollar. Theaverage US Dollar rate in 2004 was $1.83 to the Pound (2003: $1.64). The USDollar rate at 31 December 2004 was $1.93 to the Pound (2003: $1.78). Bank Debt The Group's gross bank debt at 31 December 2004 was £5.4 million compared with£6.6 million in 2003. During the year £3.0 million of borrowings were repaid.Deferred consideration of £1.0m was also paid. This was financed through acombination of restructured bank borrowings and cash from operations. During the period the group restructured its bank's debt to align debtrepayments with the businesses cash flows. The group also re-mortgaged itsfreehold property to secure a long term debt facility. The sale of Target Entertainment Ltd in February 2005 realised £0.7million ofcash inflows which has since been used to pay down bank debt. Operating Cash Flow Cash flow from operating activities was £0.15 million (2003: £5.0 million) ascontinued improvement was made in working capital. Share Capital and Acquisitions There were no acquisitions made during 2004. During 2004 2,374,926 shares were issued at an average issue price of 192p, fordeferred consideration provided for in 2003. No further significant deferred consideration has been accrued for in the 2004financial statements. Transition to International Financial Reporting Standards CSS Stellar has established a working party to timetable IFRS implementation.The working party is reviewing group accounting policies in order to assess thechanges required under IFRS. The 2004 accounts will also be reviewed tounderstand and quantify the impact of IFRS adoption. Further, the financialreporting system will be reviewed to ensure that it is sufficient to captureIFRS data. The result of the above assignment by the working party will be theproduction of the 2005 opening balance sheet. The remainder of the financial information is explained in the notes to theFinancial Statements. Kevin Rose Group Finance Director 16 March 2005 CSS STELLAR PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December 2004 Unaudited Audited 2004 2003 Notes £000 £000Turnover - Continuing operations 67,812 63,460 - Discontinued operations 10,032 9,456Group Turnover 1 77,844 72,916Cost of sales (46,215) (37,628)Gross profit 31,629 35,288 Exceptional administrative expenses 2 - (167)Amortisation of goodwill (2,438) (2,283)Other administrative expenses (31,902) (34,557)Administrative expenses - total (34,340) (37,007)Operating loss - Continuing operations (786) (404) - Discontinued operations (1,925) (1,315) 1 (2,711) (1,719)Exceptional loss on disposal of subsidiaryundertakings - (2,326) (2,711) (4,045)Interest receivable 112 176Interest payable (404) (343)Loss on ordinary activities before taxation 1 (3,003) (4,212)Tax on loss on ordinary activities 3 (267) (252)Loss on ordinary activities after taxation (3,270) (4,464)Minority interests 331 (10)Transferred from reserves (2,939) (4,474) Loss per Ordinary share (pence) 4 P. p. Basic (10.61) (17.15) Diluted (10.61) (17.15) Adjusted Earnings per Ordinary share (pence) 4 Basic 3.06 2.64 Diluted 2.84 2.56 £'000 £'000CONSOLIDATED STATEMENT OF TOTALRECOGNISED GAINS AND LOSSESLoss for the financial year (2,939) (4,474)Unrealised surplus on revaluation ofinvestment properties 500 -Translation adjustment on opening reserves 5 18 Total losses recognised since last annual report (2,434) (4,456) CSS STELLAR PLC CONSOLIDATED BALANCE SHEET As at 31 December 2004 Unaudited Audited 2004 2003 Notes £000 £000 £000 £000FIXED ASSETSIntangible assets 5 36,690 39,775Tangible assets 6 3,201 3,007Investments 7 1,056 1,056 40,947 43,838 CURRENT ASSETSStocks and work in progress 173 252Debtors 12,470 15,964Cash at bank and in hand 1,220 4,803 13,863 21,019 CREDITORS: AMOUNTS FALLINGDUE WITHIN ONE YEAR (15,689) (23,646)Net current liabilities (1,826) (2,627) Total assets less current liabilities 39,121 41,211CREDITORS: AMOUNTS FALLINGDUE AFTER MORE THAN ONE YEAR (1,723) (1,726) Minority interests - 163 37,398 39,648 CAPITAL AND RESERVESCalled up share capital 8 14,452 13,265Share premium 8 28,025 24,654Shares to be issued 8 489 4,863Revaluation reserve 654 171Profit and loss account (6,222) (3,305) Equity shareholders' funds 9 37,398 39,648 CSS STELLAR PLC CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 2004 Unaudited Audited 2004 2003 Note £000 £000 £000 £000Cash inflow from operating activities 10 148 5,023Returns on investments and servicing of financeInterest paid (392) (261)Interest received 112 176Interest element of finance lease payments (12) (82)Net cash outflow from returns on (292) (167)investments and servicing of financeTaxation (35) (848)Capital expenditure and financial investmentPurchase of tangible fixed assets (848) (1,028)Purchase of intangible fixed assets (440) (104)Sale of tangible fixed assets 170 128Net cash outflow from capitalexpenditure and financial investment (1,118) (1,004)Acquisitions and disposalsPurchase of subsidiaries (970) (1,064)Disposal of subsidiaries (151) (551)Net cash outflow from acquisitions and disposals (1,121) (1,615) Equity dividends paid - (258)Net cash (outflow)/inflow before financing (2,418) 1,131FinancingReceipts from borrowings 12 3,900 -Repayment of borrowings 12 (3,048) (2,004)Capital element of finance lease rentals 12 (75) (796)Net cash inflow/(outflow) from financing 777 (2,800)Decrease in cash 12 (1,641) (1,669) CSS STELLAR PLC NOTES TO THE FINANCIAL INFORMATION Year Ended 31 December 2004 1. Analysis of Trading and Net Assets Class of Business Profit/(Loss) beforeDivisions Turnover Taxation Net Assets 2004 2003 2004 2003 2004 2003 £000 £000 £000 £000 £000 £000 Continuing operationsTalent Management 10,924 10,101 1,236 1,031 14,209 18,724Marketing 50,321 48,133 920 1,945 21,359 19,160Television - 256 - 44 - -Events 6,567 4,970 687 435 1,830 1,417Central costs (1) - - (1,191) (1,576) - - 67,812 63,460 1,652 1,879 37,398 39,301 Discontinued operationsTalent Management 229 1,752 (976) (123) - (20)Marketing 93 519 (369) (173) - (116)Television 9,710 4,618 (580) - - 483Events - 2,567 - (1,019) - - 10,032 9,456 (1,925) (1,315) - 347 Goodwill amortisation (2,438) (2,283)Operating loss (2,711) (1,719)Net interest (292) (167)Exceptional item - (2,326) Group loss before taxation (3,003) (4,212) Geographical Market Loss before Turnover Taxation Net Assets 2004 2003 2004 2003 2004 2003 £000 £000 £000 £000 £000 £000Continuing operationsEurope 21,807 18,363 1,912 2,038 25,929 26,083North America 45,993 45,044 1,028 1,455 11,860 13,148Rest of the world 12 53 (97) (38) (391) 70Central costs (1) - - (1,191) (1,576) - - 67,812 63,460 1,652 1,879 37,398 39,301 Discontinued operationsEurope 9,938 8,937 (1,658) (1,142) - 463North America 48 356 (128) (27) - -Rest of the world 46 163 (139) (146) - (116) 10,032 9,456 (1,925) (1,315) - 347 (1) Central costs have been separately analysed to enable a direct comparison ofthe operating performance of each division. The origin and destination of turnover, profit before taxation and net assetsare not materially different. Cost of sales, amounts written off goodwill and administrative expenses areanalysed between continuing and discontinued operations below: Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total 2004 2004 2004 2003 2003 2003 £000 £000 £000 £000 £000 £000Cost of sales 38,952 7,263 46,215 32,634 4,994 37,628Exceptionaladministrationexpenses - - - 167 - 167Amortisation ofgoodwill 2,368 70 2,438 2,178 105 2,283Otheradministrationexpenses 27,097 4,805 31,902 29,630 4,927 34,557 2. Exceptional administrative expenses 2004 2003 £000 £000Provision for significant bad debts - 50Cost of restructuring - 117 - 167 3. Tax on Loss on Ordinary Activities Analysis of charge in year Current tax United Kingdom corporation tax 2 (17)Adjustment in respect of prior year charge - 40 2 23Overseas taxation 216 265Adjustment in respect of prior year charge - - 218 288 Deferred TaxUnited Kingdom - current year 49 (55) - prior year - -Overseas - current year - 19 49 (36) 267 252 The tax charge assessed for the period is higher than the standard rate ofcorporation tax in the UK (30%). The differences are explained below: Tax charge reconciliation Loss on ordinary activities before taxation (3,003) (4,212) Loss on ordinary activities multiplied by the standardrate of corporation tax (30%) (901) (1,264) Goodwill amortisation 730 661Capital allowances in excess of depreciation 9 35Expenses not deductible for tax purposes 72 137Higher tax rate on overseas earnings 61 27Losses in overseas subsidiaries - 55Losses carried forward 382 76Adjustment to tax charge in respect of previous period - 40Utilised losses (105) -Loss on disposal of subsidiaries (65) 524Deferred tax unprovided - (17)Other timing differences 35 14 Tax charge on loss on ordinary activities 218 288 4. Earnings Per Share Weighted Basic Adjusted average per share per share Earnings no. of shares amount amount2004 £000 Shares Pence PenceAttributable to ordinary shareholders: Loss (2,939)Amortisation of goodwill 2,438Operating loss on discontinued 1,925activitiesLess: tax at 30% (577) Adjusted earnings 847 (Loss) / earnings per share 27,692,271 (10.61) 3.06Dilutive effect of securitiesOptions, warrants and shares to be issued 2,155,116(Loss) / earnings per share 29,847,387 (10.61) 2.84 2003Attributable to ordinary shareholders: Loss (4,474)Amortisation of goodwill 2,283Exceptional loss on disposal 2,326Exceptional administrative expenses 167Operating loss on discontinued 1,620activitiesLess: tax at 30% (1,234) Adjusted earnings 688 (Loss) / earnings per share 26,088,513 (17.15) 2.64Dilutive effect of securitiesOptions, warrants and shares to be issued 806,422 (Loss) / earnings per share 26,894,935 (17.15) 2.56 5. Intangible Assets Intellectual property Goodwill rights Total £000 £000 £000 Cost:At 1 January 2004 45,237 363 45,600Additions 373 440 813Disposals (1,086) (803) (1,889)At 31 December 2004 44,524 - 44,524Amortisation:At 1 January 2004 5,517 308 5,825Charge for the year 2,438 40 2,478Disposals (121) (348) (469)At 31 December 2004 7,834 - 7,834 Net book value at 31 December 2004 36,690 - 36,690 Net book value at 31 December 2003 39,720 55 39,775 6. Tangible Fixed Assets Plant & Furniture Freehold Motor event and property vehicles equipment equipment Total £000 £000 £000 £000 £000The GroupCost or valuation: 1 January 2004 530 816 326 5,972 7,644 Translation - - - (14) (14) Revaluation 455 - - - 455 Additions - 131 148 622 901 Disposals - (438) - (339) (777)At 31 December 2004 985 509 474 6,241 8,209Accumulated depreciation: 1 January 2004 45 443 273 3,876 4,637 Translation - - - (1) (1) Revaluation (45) - - - (45) Charge for the year 32 81 38 669 820 Disposals - (238) - (165) (403)At 31 December 2004 32 286 311 4,379 5,008Net book value:At 31 December 2004 953 223 163 1,862 3,201At 31 December 2003 485 373 53 2,096 3,007 The freehold property was revalued to market value by Caxtons, CharteredSurveyors. 7. Investments £000 At 1 January and 31 December 2004 1,056 8. Called Up Share Capital The following is the movement in shares, share capital and share premium duringin the year: Date Shares Share Share Share Price Capital Premium No. £ £000 £000At 1 January 2004 26,531,502 13,265 24,654Acquisition of:JRP Management Limited 25 May 113,636 0.88 57 43The Sponsorship Consultancy 25 May 101,124 2.70 50 222The Echo group of companies 29 June 498,088 2.40 249 946The GEM Group (Europe) Limited 12 July 1,662,078 1.80 831 2,160 At 31 December 2004 28,906,428 14,452 28,025 31 1 January DecemberShares to be issued 2004 Movements 2004 Issued during the year 4,863 (4,374) 489 9. Reconciliation of Movements in Shareholders' Funds 2004 2003 £000 £000Loss for the financial year (2,939) (4,474) Other recognised gains and losses relating to the year 505 18New shares issued (including share premium) 500 -Release of provision for shares to be issued (316) -Shares to be issued - 2,828Net decrease in equity shareholders' funds (2,250) (1,628)Opening equity shareholders' funds 39,648 41,276Closing equity shareholders' funds 37,398 39,648 10. Reconciliation of Operating Loss to Net Cash Inflow from OperatingActivities Operating loss (2,711) (1,719)Depreciation charge 820 1,442Amortisation of intangible assets 2,478 2,485Decrease/(increase) in stocks 79 (113)Decrease in debtors 1,326 616(Decrease)/increase in creditors (1,844) 2,312Cash inflow from operating activities 148 5,023 11. Reconciliation of net cash flow to movement in net debt Decrease in cash in period (1,641) (1,669)Cash outflow from decrease in net debt and lease financing (777) 2,800Net debt eliminated on disposal - 656Change in net debt (2,418) 1,787Inception of finance leases - (272) (2,418) 1,515Net debt brought forward (1,761) (3,276)Net debt carried forward (4,179) (1,761) 12. Analysis of net debt At 1 At 31 January December 2004 Cash Flow 2004 £000 £000 £000Cash at bank 4,803 (3,583) 1,220Overdrafts (3,269) 1,942 (1,327) 1,534 (1,641) (107)Bank debt due after 1 year (500) (1,053) (1,553)Bank debt due within 1 year (724) (1,559) (2,283)Unsecured loan stock 2004 (70) 70 -Guaranteed loan notes (1,690) 1,690 -Finance leases (311) 75 (236)Total (1,761) (2,418) (4,179) 13. Principal Accounting Policies The principal accounting policies of the Group are set out in the Group's 2003Annual Report and Financial Statements. These policies have remained unchanged. 14. Financial Information The financial information set out in this preliminary announcement does notconstitute Statutory Accounts as defined in Section 240 of the Companies Act1985. The summarised Balance Sheet at 31 December 2004 and the summarisedProfit and Loss Account, the summarised Cash Flow Statement and associated notesfor the year then ended have been extracted from the Group's unaudited FinancialStatements. Those Financial Statements have not yet been delivered to theRegistrar, nor have the auditors reported on them. The financial information relating to the period ended 31 December 2003 isextracted from the statutory accounts, which incorporated an unqualified auditreport and which has been filed with the Register of Companies. This information is provided by RNS The company news service from the London Stock Exchange