Primorus Inv. Regulatory News (PRIM)

15 Mar 2007 07:03

CSS Stellar PLC15 March 2007 For Immediate Release 15 March 2007 CSS Stellar plc ("CSS" or "the Group") Preliminary Results for the year ended 31 December 2006 CSS Stellar plc, the entertainment and sports management and marketing group,today announces its preliminary results for the year ended 31 December 2006. Highlights: : Results ahead of market expectations : Turnover on continuing operations up by 13.6% to £31.6m (2005: £27.9m) : Operating profit on continuing operations before amortisation of goodwill increased by 89% to £1.5m (2005: £0.8m) : Group EBITDA on continuing operations of £1.9m (2005: £1.2m) : Improved profit in the US Marketing division of £356,000 (2005: loss of £83,000) : Central overheads reduced further by 17% Commenting on the results Peter Owen, Chairman, said: "We are pleased with the improved performance of the group in 2006. The increasein turnover and profit is due to better results in our Events division, recoveryin our North American marketing division, and a continuing reduction in centraloverheads. Trading has begun satisfactorily in 2007." For further information please contact:CSS StellarSean Kelly, Chief Executive Tel: 020 7078 1400 Buchanan CommunicationsBobby Morse/Rebecca Skye Dietrich Tel: 020 7466 5000 CHAIRMAN'S STATEMENT - DRAFT 13 March 2007 Overview and Strategy The Group's results for 2006 showed continued improvement with significantachievement throughout the Group, and increased profits in our core businesses.Strategically the Group is now reviewing how to optimise shareholder valuethrough the development or realisation of value from each of its existingbusinesses. Financial Results The 2006 results were comfortably ahead of market expectations with an operatingprofit on continuing operations before amortisation and impairment of goodwillof £1.5 million (2005: £0.8 million). Turnover of £31.6 million was 13.6% aheadof the prior year (2005: £27.9 million), after excluding turnover on operationsdiscontinued in 2005. The reasons for the 89% increase in adjusted operating profit are contained in amore detailed operational and financial review. In summary they are: • Improvement in the USA, where GEM Minneapolis has performed ahead of expectations; • Improvement in the profitability of the Sports Talent business, particularly in the USA; • Icon's events business having the best year in its history; and • Continued reduction in central overhead costs. The Group also repaid bank debt in the year of £0.4 million (2005: £2.1million), with a year end liability of £1.4 million (2005: £1.8 million). Current Trading The Group's first two months of trading in 2007 are in line with the Board'sexpectations. Board Changes As announced last year, John Webber retired from the Board in March 2006, andwas replaced by Peter Owen as non-executive chairman. Kevin Rose resigned asGroup Finance Director in March 2006 and Sean Kelly, CEO and previously financedirector, has overseen the finances of the Group. In October 2006, Duncan Soukupjoined the Board as a non-executive director. I would like to thank all our employees for their considerable effortsthroughout 2006, a year in which the results are much improved. Peter Owen Chairman 15 March 2007 OPERATING AND FINANCIAL REVIEW Group Review of 2006 The 2006 results are a significant improvement on 2005, as the Group hasbenefited from the restructuring work across the Group in 2004 and 2005. The Group made an operating profit of £118,000 in 2006, compared with anoperating loss of £16.2 million in 2005. The loss in 2005 was significantlyimpacted by an exceptional impairment charge of £14.8 million to reflect a writedown in the carrying value of goodwill. If this exceptional charge is excluded,the 2006 operating profit represents a significant improvement on an operatingloss of £1.4 million. Turnover on continuing operations for the year was £31.6 million, an increase of13.6% on 2005 (£27.9 million). The increase was due to growth in Icon (Events)and Talent Management. Operating profit on continuing operations before goodwill amortisation increasedto £1.5 million (2005: £0.8 million), an increase of 89%, and the Group's EBITDAon continuing operations was £1.9 million (2005: £1.2 million). This increase isdue to the strong performance in our Events division, in addition to a recoveryin our North American marketing division, and a continuing reduction in centraloverheads. In 2006 the Group faced several issues that have now been dealt with: • Unprofitable businesses now stabilised - in particular GEM in the USA. • Surplus property costs now removed. • Profitability on operating businesses now at 14.7% EBITDA to gross profit, which is acceptable in the industry. • Central costs stabilised at £0.7 million per annum or 3.6% of gross profit. The improvement in operating profit is analysed as follows: 2006 2005 Increase/Decrease £'000s £'000s £'000s Talent Management 1,049 1,128 (79) Marketing - GEM 356 (83) 439 Events - Icon 810 623 187 Central costs (736) (887) 151 ____ ____ ____ Operating Profit 1,479 781 698 ____ ____ ____ The primary reasons for these changes are improvements in trading, greateroperational efficiencies and the reduction in non-productive overhead. Thedecline in Talent is as a result of higher remuneration costs for senior agentsand the continuing investment in PFD New York, which has reduced profitability. Gross profit is the other key guide to our businesses performance, and the mostsignificant cost in these people businesses is salary and benefits. There was improvement in the following key ratios: 2006 2005 Gross profit per employee £87,058 £76,048 Salary/ Gross profit 69% 74% EBITDA per employee £8,220 £4,890 The individual units are discussed in more detail below. Talent Management Our Talent Management division reported turnover of £14.1 million for the year,an increase of 16.6% on 2005. Operating profit of £1.0 million was approximatelyin line with the prior year (£1.1 million). The gross profit shows a smallerincrease of 5.1% in 2006 at £12.4m (2005: £11.8 million). Entertainment The Group's Entertainment talent division consists almost entirely of The PetersFraser & Dunlop Group Limited ("PFD"), which is one of the oldest and largesttalent agencies in Europe. PFD's clients continued to achieve notable successes during the year. Inparticular: Within Film, Television and Theatre: •Kate Winslet was nominated for Best Actress both for an Oscar and a Golden Globe for "Little Children"; •Toni Collette was nominated for a Golden Globe for Best Actress (Musical or Comedy) for "Little Miss Sunshine"; •Dan Mazer was nominated for an Oscar for Best Adapted Screenplay for "Borat: Cultural Learnings of America For Make Benefit Glorious Nation of Kazakhstan"; •Jenna Russell won Best Actress in a Musical for "Sunday in the Park with George" at the Olivier Awards; •Alan Bennett's "The History Boys" won the award for Best Play at the 2006 Tony Awards, in addition to five other awards, making it the most honoured play on Broadway since 1949; •Anna Maxwell Martin won Best Actress at the 2006 BAFTA Awards for her role in Bleak House; and •James McEvoy was nominated Best Actor in a Supporting Role for "The Last King of Scotland" at the 2007 BAFTA's. Within the Literary Division: •Neil Griffiths' literary thriller "Saving Caravaggio" is shortlisted for Best Novel in the Costa Book Awards (formerly the Whitbread prize); •Ally Kennen ("Beast") and John Boyne ("The Boy in the Striped Pyjamas") have both been nominated for the 2006 Carnegie Medal; •Alan Bennett received the PEN/J. F. Ackerley prize for literary autobiography; and •Alan also won "Author of the Year" at the 2006 British Book Awards. Other PFD clients who achieved notable successes during the year includedRichard Curtis, who won Outstanding Made for TV movie and Outstanding Writing atthe 2006 Primetime Emmy Awards for "Girl in the Cafe", Keira Knightley, whostarred in the Hollywood blockbuster "Pirates of the Caribbean II", and KevinMacDonald, who directed "Last King of Scotland", which won a BAFTA forOutstanding British Film in 2007. Sports The Sports division's clients achieved notable successes during the year. WithinMotorsports, following his victory in the 2005 IRL Championship, Dan Wheldon wasrunner up in the 2006 Championship, having tied on points with the eventualchampion. Sebastien Loeb was crowned World Rally Champion for the thirdconsecutive year, and Allan McNish won the 2006 American Le Mans SeriesChampionship for the second time. In 2006 we also signed the up and comingNASCAR driver, A J Allmendinger, and continued our management of Milka Dunothrough the Citgo motorsports programme. Juan Pablo Montoya left Formula One torace for NASCAR. The growth in the client base in the USA over the last fouryears has meant that in 2007 the expectation is that 55% of income will begenerated by US-based clients. As anticipated in the 2005 results review, the Golf division is now operatingprofitably, and our clients achieved success on the European PGA Tour. GonzaloFernandez-Castano won the Asian Open in April, and Francesco Molinari became thefirst home winner of the Italian Open since 1980. Sandy Lyle released hisautobiography, "To the Fairway Born" in 2006 to critical acclaim. In Football, our relationship with the England football team ended after the2006 World Cup in Germany. Marketing The Marketing division recorded an operating profit of £356,000 (2005: loss of£83,000).The return to profitability has arisen as a result of the closure ofseveral offices and the consequent reduction in overheads. Turnover of £6.0 million was a reduction of 6.2% on 2005. The fall in turnoverhas arisen following the restructuring undertaken in 2005, when a number ofunderperforming offices were closed down. The benefits of this restructuringhave been evident in the improved results, and in a profit margin in 2006 whichimproved to 6.0% (2005: loss of 1.3%). The Marketing division now has two North American operations, in Minneapolis andNew York. There was a strong performance by our Minneapolis operation, which hasbeen streamlined following its establishment as an independent unit operatingunder local management throughout 2006. GEM Minneapolis has provided brand design and packaging, marketing andphotography studio and catalogue services to Best Buy, the leading USelectronics retailer, and 3M, and catalogue marketing services to FingerhutDirect Marketing. GEM's New York office is a promotional marketing specialist, which has a nichein the cable TV industry and in the use of the Olympic Games by top sponsorssuch as NBC and GE. In addition, GEM carried out an online and on pack promotionfor GE Lighting, and the delivery of strategic marketing, production andactivation for a retail driven 'instant win' promotion for Fujifilm. Events Our Events division has had another excellent year in 2006. Turnover of £11.6million represents an increase of 23% (2005: £9.4 million) and has resulted inan operating profit of £0.8 million (2005: £0.6 million), an increase of 30%.The 2006 Gross profit was £3.9 million (2005: £3.3 million). The increase during the year is due in part to the 2006 FIFA World Cup, and thelate call up to work on the 2006 Ryder Cup in Ireland. Icon played a pivotal role in delivering the look of the 12 host stadia at theWorld Cup in Germany, working closely with FIFA to design and install allinternal and external stadium dressing. Icon were also appointed to assist withmajor elements of the branding programme for the Ryder Cup at the K Club inIreland, and were responsible for the production, installation and operation ofthe rotating advertising units at the event, and also designed, produced andinstalled all directional signage. Icon also worked with Chelsea FC to provide branding for their end of seasonparade of the Premiership trophy, and also designed and installed all statictier dressing at Arsenal FC at their new Emirates stadium. The company provided all branding to the BMW Golf Championship at Wentworth, aswell as continuing relationships with clients such as UEFA and TEAM for TheChampions League, World Snooker and the ECB. Following on from Icon's opening ofoffices in Qatar, Icon has designed, produced and installed branding solutionsfor the International Triathlon Union World Cup and Qatar Masters Golfchampionship, and has recently coordinated branding and signage at the Abu DhabiF1 festival. Central Costs Central costs for 2006 were £0.7 million, a reduction of 17% (2005: £0.9million). Costs continue to be monitored closely, with savings continuing to bemade. During the year, the Group negotiated the surrender of surplus property,which will yield savings of £325,000 across the Group in future years, and staffcost reductions have been achieved both in the UK and the US. Interest Payable The net interest payable by the Group in 2006 was £144,000 (2005: £348,000). Thereasons for the decrease are the continued reduction in bank debt to £1.4million at 31 December 2006 (2005: £1.8 million), better management of theoverdraft facility and higher levels of interest received (2006: £141,000; 2005:£99,000) on cash deposits. Goodwill Following the impairment provision of £14.8 million made in 2005, the Board haveagain reviewed the goodwill held in the Balance Sheet and continue to believethat the carrying value of the Group's goodwill of £18.0 million is appropriate.The amortisation charge in the year is £1.4 million (2005: £1.9 million).Goodwill has been amortised over periods of 5 to 20 years. Taxation The Group's tax charge was £0.5 million (2005: £0.1 million), which relatesentirely to the UK operations, due to losses carried in our overseassubsidiaries. The increase in the charge reflects the Group's return toprofitability. Earnings per Share Unadjusted earnings per share on a basic and fully diluted basis shows a loss of2.18p per share (2005: loss of 60.25p). Once the figure is adjusted foramortisation of goodwill, the fully diluted earnings per share are 2.48p (2005:1p). The basic adjusted earnings per share in 2006 are 2.52p (2005: 1p). Foreign Exchange The Group's earnings are exposed to the movement in the US Dollar. The averageUS Dollar rate in 2006 was $1.84 to the Pound (2005: $1.82), although the rateat 31 December 2006 weakened to $1.96 to the Pound (2005: $1.72). Bank Debt The Group's gross bank debt at 31 December 2006 was £3.6 million (2005: £3.4million) of which £1.4 million is bank debt (2005: £1.8 million), and theremainder an overdraft to finance working capital. During the year £0.4 millionof borrowings were repaid, financed through cash from operations. Cash Flow The cashflow statement shows an increase in cash of £124,000, a significantimprovement on 2005, which showed a decrease in cash of £477,000. Net cashinflow from operating activities has also improved to £1.0 million (2005:£284,000). Transition to International Financial Reporting Standards The London Stock Exchange has now confirmed its intention to mandateInternational Accounting Standards for AIM registered companies from 2007onwards. The Group will apply these policies for the first time in the Group'sAnnual Report for the year ending 31 December 2007. Consequently, the Group'sInterim Results for the six month period 30 June 2007 will be presented underIFRS together with restated information for the six months ended 30 June 2006and the year ended 31 December 2006. The Group has identified that the principal differences between IFRS and theGroup's UK GAAP accounting policies relate to Goodwill, Deferred Taxation, andFinancial Instruments. International Accounting Standards require that goodwillis not amortised, but is subject to an annual impairment review and no longeramortised. The scope of IAS 12 "Income Taxes" is wider than that required bycorresponding UK GAAP, and requires deferred tax to be provided on all temporarydifferences rather than only timing differences under UK GAAP. IAS 32 and IAS39, which cover Financial Instruments, will require the Group to account for allfinancial instruments at either fair value or amortised cost. Sean KellyChief Executive Officer15 March 2007 CSS STELLAR PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December 2006 Unaudited Audited 2006 2005 Notes £000 £000Turnover- Continuing operations 31,644 27,854- Discontinued operations - 26,558 ---------- ----------Group Turnover 1 31,644 54,412Cost of sales (11,011) (29,251) ---------- ----------Gross profit 20,633 25,161 ---------- ----------Impairment of goodwill and investments 2 - (14,769)Amortisation of goodwill (1,361) (1,881)Other administrative expenses (19,154) (24,695) ---------- ----------Administrative expenses - total (20,515) (41,345) ---------- ----------Operating profit/(loss) ---------- ----------- Continuing operations 118 (2,476)- Discontinued operations - (13,708) ---------- ---------- 1 118 (16,184) Exceptional non-operating items 2 - (843) ---------- ---------- (17,027)Interest receivable 141 99Interest payable (285) (447) ---------- ----------Loss on ordinary activities before taxation 1 (26) (17,375)Tax on loss on ordinary activities 3 (469) (51) ---------- ----------Loss on ordinary activities after taxation (495) (17,426)Minority interests (137) - ---------- ----------Transferred from reserves (632) (17,426) ========== ========== Loss per Ordinary share (pence) 4 p. p.Basic (2.18) (60.25)Diluted (2.18) (60.25) ---------- ---------- CONSOLIDATED STATEMENT OF TOTALRECOGNISED GAINS AND LOSSESLoss for the financial year (632) (17,426)Translation adjustment on opening reserves 80 20 ---------- ---------- Total losses recognised since last annual report (552) (17,406) ========== ========== CSS STELLAR PLC CONSOLIDATED BALANCE SHEET As at 31 December 2006 Unaudited Audited 2006 2005 Notes £000 £000 £000 £000FIXED ASSETSIntangible assets 5 18,036 19,397Tangible assets 6 1,899 2,043Other investments 7 41 41 ------ -------- 19,976 21,481 CURRENT ASSETSStocks and work in progress 187 280Debtors 6,864 5,102Cash at bank and in hand 1,649 954 -------- -------- 8,700 6,336 CREDITORS: AMOUNTS FALLINGDUE WITHIN ONE YEAR (8,202) (6,751) -------- --------Net current assets/ 498 (415)(liabilities) ------ -------- Total assets less currentliabilities 20,474 21,066CREDITORS: AMOUNTS FALLINGDUE AFTER MORE THAN ONE YEAR (894) (1,275) Minority interests (442) (120) ------ -------- 19,138 19,671 ====== ======== CAPITAL AND RESERVESCalled up share capital 14,487 14,487Share premium 28,158 28,158Revaluation reserve 620 637Profit and loss account (24,127) (23,611) ------ -------- Equity shareholders' funds 8 19,138 19,671 ====== ======== CSS STELLAR PLC CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 2006 Unaudited Audited 2006 2005 Note £000 £000 £000 £000Cash inflow from operatingactivities 9 1,044 284Returns on investments and servicingof financeInterest paid (276) (447)Interest received 141 99Interest element of finance leasepayments (9) - ------- -------Net cash outflow from returns on (144) (348)investments and servicing offinanceTaxation (45) (20)Capital expenditure and financialinvestmentPurchase of tangible fixed assets (334) (350)Sale of tangible fixed assets 9 15 ------- -------Net cash outflow from capitalexpenditure and financialinvestment (325) (335)Acquisitions and disposalsPurchase of investments - (41)Disposal of subsidiaries - 2,546Net cash disposed of withsubsidiaries - (540)Net cash inflow from acquisitionsand disposals - 1,965 ------ ------ ------ ------ Net cash inflow before financing 530 1,546FinancingRepayment of borrowings 11 (362) (2,080)New finance leases 11 - 57Capital element of finance leaserentals 11 (44) -Net cash outflow from financing (406) (2,023) ------ ------Increase/(decrease) in cash 11 124 (477) ====== ====== CSS STELLAR PLC NOTES TO THE FINANCIAL INFORMATION Year Ended 31 December 2006 1. Analysis of Trading and Net Assets Class of Business Profit/(Loss) BeforeDivisions Turnover Taxation Net Assets 2006 2005 2006 2005 2006 2005 £000 £000 £000 £000 £000 £000 ContinuingoperationsTalentManagement 14,089 12,088 1,049 1,128 (1,205) (1,959)Marketing 5,959 6,354 356 (83) (2,076) (2,154)Events 11,596 9,412 810 623 1,918 1,858Centralcosts - - (736) (887) 20,501 21,926(1) ======== ========= ======== ======== ========= ========= 31,644 27,854 1,479 781 19,138 19,671 ======== ========= ========= ========= DiscontinuedoperationsTalent - - - - - -ManagementMarketing - 26,558 - (315) - -Events - - - - - - ======== ========= ======== ======== ========= ========= - 26,558 - (315) - - ======== ========= ========= ========= Impairmentof - (14,769)goodwillGoodwillamortisation (1,361) (1,881) -------- -------- --------Operatingprofit/(loss) 118 (16,184)Net interest (144) (348)Exceptionalitem - (843) -------- --------Group lossbeforetaxation (26) (17,375) ======== ======== Geographical Market Profit/(loss) before Turnover Taxation Net Assets 2006 2005 2006 2005 2006 2005 £000 £000 £000 £000 £000 £000ContinuingoperationsEurope 23,710 20,767 1,870 1,619 713 (102)North 7,934 7,087 345 49 (2,076) (2,153)AmericaCentralcosts - - (736) (887) 20,501 21,926(1) -------- ------ ------ ------ ------ ------ 31,644 27,854 1,479 781 19,138 19,671 ======== ====== ====== ====== ====== ====== DiscontinuedoperationsEurope - 3,284 - 102 - -North - 23,274 - (417) - -America -------- ------ ------ ------ ------ ------ - 26,558 - (315) - - ======== ====== ====== ====== ====== ====== (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 2006 2006 2006 2005 2005 2005 £000 £000 £000 £000 £000 £000Cost of sales 11,011 - 11,011 8,083 21,168 29,251Impairment ofgoodwill - - - 1,776 12,993 14,769Amortisationofgoodwill 1,361 - 1,361 1,481 400 1,881Otheradministrationexpenses 19,154 - 19,154 18,990 5,705 24,695 ======== ========= ====== ======== ========= ===== 2. Exceptional ItemsImpairment of goodwill and investments 2006 2005 £000 £000Impairment of goodwill (note 5) - 13,713Impairment of investments - 1,056 ---------- ---------- - 14,769 ========== ==========Exceptional non-operating items 2006 2005 £000 £000Cost of restructuring - 649Loss on disposal of subsidiary undertakings - 194 ---------- ---------- - 843 ========== ========== 3. Tax on Loss on Ordinary Activities Analysis of charge in year 2006 2005Current tax £000 £000 United Kingdom corporation tax 493 243Overseas taxation - 5 ---------- ---------- 493 248 ---------- ---------- Deferred TaxUnited Kingdom - current year 9 (39) - prior year (33) (158) ---------- ---------- (24) (197) ---------- ---------- Total tax charge on loss on ordinary activities 469 51 ========== ========== 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 (26) (17,375) ========== ========== Loss on ordinary activities multiplied by the standardrate of corporation tax (30%) (8) (5,213) Goodwill amortisation 408 564Capital allowances in excess of depreciation (1) 122Expenses not deductible for tax purposes 153 14Losses in overseas subsidiaries - 677Utilised losses (69) (4)Impairment of goodwill and loss on disposal of - 4,078subsidiariesDeferred tax unprovided - 10Other timing differences 10 - ---------- ---------- Tax charge on loss on ordinary activities 493 248 ========== ========== 4. (Loss)/Earnings Per Share Weighted Basic Adjusted average per share per share Earnings no. of shares amount amount2006 £000 Shares Pence PenceAttributable to ordinary shareholders: Loss (632)Amortisation of goodwill 1,361 -------Adjusted earnings 729 ------- (Loss) / earnings pershare 28,976,581 (2.18) 2.52 ======== ========Dilutive effect of securitiesOptions, warrants andshares to be issued 487,619 --------- ---------(Loss) / earnings pershare 29,464,200 (2.18) 2.48 ========= ======== ======== 2005Attributable to ordinary shareholders: Loss (17,426)Amortisation of goodwill 1,881Impairment of goodwill 14,769Loss on disposal ofsubsidiaries 843Operating loss ondiscontinued activities 315Less: tax at 30% (94) -------Adjusted earnings 288 ------- (Loss) / earnings pershare 28,922,957 (60.25) 1.00 ======== ========Dilutive effect of securitiesOptions, warrants and shares to be -issued --------- (Loss) / earnings pershare 28,922,957 (60.25) 1.00 ========= ======== ======== 5. Intangible Assets Goodwill £000 Cost:At 1 January 2006 30,195Additions -Disposals - --------At 31 December 2006 30,195 --------Accumulated amortisation and impairment: At 1 January 2006 10,798Amortisation charge for the year 1,361Impairment losses (note 2) -Disposals - --------At 31 December 2006 12,159 -------- Net book value at 31 December 2006 18,036 ======== Net book value at 31 December 2005 19,397 ======== 6. Tangible Fixed Assets Furniture Freehold Motor Event and property vehicles equipment equipment Total £000 £000 £000 £000 £000The GroupCost or valuation:1 January 2006 985 350 521 3,975 5,831Translation - - - (9) (9)Additions - 95 56 183 334Disposals - (76) - (18) (94) -------- ------- -------- --------- -------At 31 December 2006 985 369 577 4,131 6,062 -------- ------- -------- --------- -------Accumulated depreciation:1 January 2006 64 218 396 3,110 3,788Charge for the year 32 74 92 271 469Disposals - (76) - (18) (94) -------- ------- -------- --------- -------At 31 December 2006 96 216 488 3,363 4,163 -------- ------- -------- --------- -------Net book value:At 31 December 2006 889 153 89 768 1,899 ======== ======= ======== ========= =======At 31 December 2005 921 132 125 865 2,043 ======== ======= ======== ========= ======= 7. Other Investments £000 Cost:At 1 January 2006 1,078Additions -Disposals - --------At 31 December 2006 1,078 --------Provisions for impairment:At 1 January 2006 1,037Amounts written off during the year -Disposals - --------At 31 December 2006 1,037 -------- Net book value at 31 December 2006 41 ======== Net book value at 31 December 2005 41 ======== 8. Reconciliation of Movements in Shareholders' Funds 2006 2005 £000 £000Loss for the financial year (632) (17,426) ----------- ---------- Other recognised gains and losses relating to the year 80 20Share based payment charge 19 -New shares issued (including share premium) - 168Release of provision for shares to be issued - (489) ----------- ----------Net decrease in equity shareholders' funds (533) (17,727)Opening equity shareholders' funds 19,671 37,398 ----------- ----------Closing equity shareholders' funds 19,138 19,671 =========== ========== 9. Reconciliation of Operating Loss to Net Cash Inflow from OperatingActivities Operating profit/(loss) 118 (16,184)Depreciation charge 469 610Amortisation of intangible assets 1,361 1,881Impairment of goodwill - 14,769Decrease/(increase) in stocks 93 (109)(Increase)/decrease in debtors (1,856) 106Increase/(decrease) in creditors 859 (789) ---------- ---------Cash inflow from operating activities 1,044 284 ========== ========= 10. Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in period 124 (477)Cash outflow from decrease in net debt and lease 406 2,080financingNew finance leases - (57)Net debt eliminated on disposal - 170 ---------- ----------Change in net debt 530 1,716Net debt brought forward (2,463) (4,179) ---------- ----------Net debt carried forward (1,933) (2,463) ========== ========== 11. Analysis of net debt At 1 cc At 31 January December 2006 Cashflow 2006 £000 £000 £000Cash at bank 954 695 1,649Overdrafts (1,538) (571) (2,109) --------- -------- -------- (584) 124 (460)Bank debt due after 1 year (1,223) 362 (861)Bank debt due within 1 year (533) - (533)Finance leases (123) 44 (79) --------- -------- -------- Total (2,463) 530 (1,933) ========= ======== ======== 12. Principal Accounting Policies The principal accounting policies of the Group are set out in the Group's 2005Annual Report and Financial Statements. These policies have remained unchanged,with the exception of the adoption of FRS20, Share Based Payments. 13. 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 2006 and the summarised Profitand Loss Account, the summarised Cash Flow Statement and associated notes forthe 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 2005 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