SIR.L Regulatory News (SIR)

14 Apr 2005 07:00

Sirius Financial Solutions PLC14 April 2005 14 April 2005 SIRIUS FINANCIAL SOLUTIONS PLC 2004 PRELIMINARY RESULTS PERFORMANCE IN KEY AREAS EXCEED EXPECTATIONS Sirius Financial Solutions, the specialist supplier of software and services tothe insurance and financial services industry worldwide, today announces itspreliminary results for the year ended 31 December 2004. • Group turnover grew 5.7% to £21.7m (2003: £20.5m) • In line with the Group's strategy to improve predictability of revenue, recurring revenues remained strong, growing 9.8% to £7.6m (2003: £6.9m) which represents 35.0% of Group turnover • Operating profit before goodwill amortisation of £1.4m (2003: £0.4m) exceeded Board expectations - after charging goodwill, operating profit was £0.5m (2003: operating loss of £0.5m) • Basic earnings per share of 1.4p (2003: loss per share of 3.9p), and adjusted earnings per share(1) of 6.5p (2003: 1.2p) • Continued strong operating cash inflows of £2.6m (2003: £0.7m) • Net cash of £0.5m (2003: net debt of £1.1m) at the year end, after acquisition spend • Acquisition of a 75.8% shareholding in Sirius Datasure, the leading supplier in New Zealand of broking software systems with a market share in excess of 60.0%, supports an increasing commitment to the region • Proposed final dividend of 1.0p per share (2003: 0.5p) making a total of 1.5p per share for the year (1) Adjusted earnings per share is based on the profit for the year beforededuction of goodwill amortisation Stephen Verrall, Chairman and Group Chief Executive of Sirius FinancialSolutions, said: "Our performance in 2004 exceeded expectations and represents a markedimprovement over the previous year in all key areas. We now have a strongfoundation upon which we can build and grow the business going forward. "The current financial year has started well and the Board looks forward tocontinued good progress." Enquiries: Sirius Financial Solutions (0121 779 8400) Citigate Dewe Rogerson (020 7638 9571)Stephen Verrall Martin JacksonRichard Bowser George Cazenove SIRIUS FINANCIAL SOLUTIONS PLC 2004 PRELIMINARY RESULTS CHAIRMAN'S STATEMENT REVIEW OF RESULTS I am delighted to report an excellent year for Sirius with improvements in allkey areas of financial performance. Turnover grew by 5.7% to £21.7m (2003:£20.5m), and operating profit before goodwill amortisation was ahead of theBoard's expectations at £1.4m (2003: £0.4m). After charging goodwillamortisation, interest and tax the profit for the year was £0.2m (2003: loss of£0.7m). In 2004 the Group continued to generate strong operating cash inflows,which for the year amounted to £2.6m (2003: £0.7m). The 2004 results are all the more remarkable as during the year Sirius adoptedits new business model and incurred the cost of its new head office. Theimproved working environment arising from the move to new offices was one of thekey factors in the considerable improvements achieved in the contribution fromprofessional services. The Group's turnover growth for the year was supported in part by a 9.8%increase in recurring revenues to £7.6m (2003: £6.9m). Recurring revenuescontinue to increase as a proportion of turnover, accounting for 35.0% of totalGroup turnover in 2004 (2003: 33.8%). This improving trend is a direct resultof larger Solutions projects moving into their care and maintenance phase, and aplanned focus on moving the business model to annual charges and away from largeupfront licences. A static staff cost base set against the higher turnover level for the yearresulted in improved margins from service revenues. Whilst maintaining thecommitment to ongoing investment in our applications, the amount of unfundedresearch and development activity undertaken by Sirius was reduced by comparisonto 2003. This was made possible by a number of measures including effectiveproject management which removed the need to engage sub-contract labour, and theestablishment of our own off-shore development capability in India. Last year I reported that 2003 had been a challenging year with a record numberof large projects to deliver. It is pleasing to report that these challengeswere successfully overcome and that in 2004 the business maintained a strongfocus and control over our operations that is apparent in the Group's improvedfinancial performance for the year. I can report that good progress was made in2004 against all developments and that Sirius continues to make successfulproject deliveries. Following the successful go-live of our first Managed Service Provision ("MSP")customer, Country Mutual Insurance Brokers, we undertook a re-launch of ourSirius for Broking product in December 2004 under the Sirius 21 banner. Sirius21 adopts the MSP deployment method. It is our aim to sell Sirius 21 to bothnew customers and convert existing users to this model. Early response has beenvery encouraging, not only in terms of take up and acceptance, but also in thebenefits to be gained from improved and reduced costs of maintenance. The strong operating cash inflows generated by the Group helped to remove allgearing as at 31 December 2004 (2003: gearing of 20.9%) and contributed towardsthe year end net cash position of £0.5m (2003: net debt of £1.1m). This netcash position is after applying the proceeds from the disposal of the Group'svacant freehold property in Sutton Coldfield, and payment of cash considerationin December 2004 to the vendors of Datasure Management Systems Limited, whichwas subsequently renamed Sirius Datasure Limited ("Sirius Datasure"). Following an excellent year of cash inflows, the Board propose a final dividendfor 2004 of 1.0p per share (2003: 0.5p) to shareholders on the register on 22April 2005 and payable on 25 May 2005. NEW BUSINESS MODEL From the outset of 2004 we have operated under a new business model. In commonwith other software companies, Sirius had for many years relied on an element oflicence sales in order to achieve its revenue and profit targets. We concludedthat the Group had grown too dependent upon large initial licence fees and thatthis combined with prolonged sales cycles and contract negotiations had led to ahigh degree of unpredictability and volatility in our revenues. To remove most of the unpredictability of licence revenues, the Board decided tochange the business model, and in 2004 we began the transition from licencingour software on a perpetual basis to licencing for a finite term - termlicencing. This provides greater opportunity for future licence sales fromexisting customers, thus reducing the reliance on new customer wins. In thisregard, 2004 was a year of transition with good progress made on majorcontracts. This model will be more extensively applied going forward and itshould be remembered that in the medium term revenue growth and thereforeprofitability will be lower than under our previous model. After this transitionperiod the Group will benefit from the comfort of more predictable andsustainable revenues and profits. AUSTRALIA AND NEW ZEALAND The acquisition of a 75.8% shareholding in Sirius Datasure supports ourincreasing commitment to the New Zealand and Australia region. Sirius Datasureis the leading supplier in New Zealand of broking software systems with a marketshare in excess of 60.0%. It is our intention to launch the Sirius for Brokingproduct in New Zealand by quarter four of 2005. This will provide an upgradepath for Sirius Datasure's existing customers and expand the company's marketpresence. During the year our customer IAG undertook a strategic review of their ITrequirements. They concluded not to proceed with the deployment of Sirius forInsurance, deciding instead that the system in use at their Australian parentshould be extended into IAG's operations in New Zealand. Whilst this isdisappointing, it has not altered our original assessment that the region hasexcellent potential for both our broking and insurer products. In support ofthis assessment, we are pleased to have signed contracts with two new insurercustomers in Australia during the first quarter of 2005. These two customersshould provide the necessary credentials and comfort for the larger prospectsthat we have already engaged with. OFFICES Head Office A key event for the Group was the move, in January 2004, from our offices of 15years in Sutton Coldfield to a new, larger head office within the BirminghamBusiness Park. We are delighted that the move went so smoothly and that wecontinue to benefit from the much improved location and facilities offered byour new accommodation. India Following the success of our pilot office in Delhi, established during 2004 with12 staff, we are now in the process of expanding this operation. The qualityand cost effectiveness of software development undertaken by our Indianworkforce supported the move in April 2005 to larger premises, again in Delhi,which will facilitate expansion up to a total of 30 employees. New Zealand Following the acquisition of Sirius Datasure in December 2004, we have closedthe Group's small office in Wellington and are in the process of relocating ourstaff to Sirius Datasure's premises in Auckland. PRINCE'S TRUST I am delighted to announce that Sirius has given it's support to the Prince'sTrust - the UK's leading charity which helps improve the lives of disadvantagedyoung people - by becoming a Patron. Our involvement with the Trust has alsoled to us spearheading the Insurance Leadership Group which has positionedSirius at the forefront of this prominent networking forum to increase theinsurance industry's profile within business and government. EMPLOYEES The Board would like to record its appreciation of our employees who continue todemonstrate considerable commitment and skill in pursuing the Group's vision formarket leadership. We continue to invest in the professional development of ouremployees, which includes a management training programme in association withthe Open University Business School. SUMMARY At the beginning of 2004, we set ourselves a number of specific goals and we arepleased to be able to report positive progress against all of them. All of themain initiatives planned and introduced for 2004 have been successful in bothimplementation and impact. They include: • Significant improvement to recoverable man-time revenues. • Launch of the Sirius for Broking product as an MSP deployment under the Sirius 21 banner. • Establishment of a presence in Australia, with the Group's first two customer contracts secured in the first quarter of 2005. • Establishment of a greater presence in New Zealand through the acquisition of the largest insurance broking software house. • Sirius for Insurance increasing its market acceptance with 30 customers. • Securing the largest order to date for our Swift application, from Zurich Financial Services Group. • Investment in off-shoring with the set up and recruitment of our office in Delhi, which is now set to expand. We forecast that the move to term licencing would, inevitably, result in reducedgrowth until such time as the Group builds a larger base of recurring revenues.The encouraging performance of 2004 supports the Board's belief that this is acourse of action that the business was right to take and that substantialbenefits will follow in the medium term and beyond. The financial and operational performance for the year represents a markedimprovement over 2003, and provides a strong foundation upon which to buildfurther returns in 2005. OUTLOOK FOR 2005 In 2005, the Board expects the business to build on the established success ofSirius for Insurance with further growth in sales from this product. In theIntermediary Systems business unit, managed service revenue growth will bedriven from the successful launch of Sirius 21 which is expected to besignificant in 2005. The drive to improve the visibility of future revenues by selling to newcustomers under term licence arrangements will continue. Our base of recurringsupport and maintenance revenues is expected to increase further as securedcustomers go-live with our applications, and as we continue to attract newcustomers to our market leading products. Management continue to focus on improving the contribution made by ourprofessional service and development functions, supported in part by ourimproved working environment in the UK and the expansion of our developmentcentre in India. The current financial year has started well, and is in line with the Board'sexpectations. The improved structure and focus of our business and the progressmade in 2004 presents a number of exciting opportunities which we confidentlyexpect to build upon. Stephen J VerrallChairman and Group Chief Executive14 April 2005 SIRIUS FINANCIAL SOLUTIONS PLC 2004 PRELIMINARY RESULTS BUSINESS REVIEW From the outset of 2004 the Group has operated under the simplified structure ofthree business units: Intermediary Systems, Insurance Systems and Sirius WebServices. INTERMEDIARY SYSTEMS Intermediary Systems is the largest of the Group's business units, and isaccountable for all revenue derived from the sale and support of the Sirius forBroking application to insurance intermediaries of all sizes. It is alsoresponsible for the insurance distribution operation, which develops andsupports product distribution between insurers and broking customers. Turnoverfor 2004 for this unit was £11.8m (2003: £11.2m). Some of this turnover growthwas achieved from the renewal of customers' Sirius for Broking contracts whichwere for an initial four year licence term. Sirius for Broking Sirius for Broking continues to win customers from all of its competitors. TheSirius for Broking application has now been deployed to over 5,000 users. From2005 the application is being deployed via the internet and within a managedservice framework - Sirius 21. The launch of Sirius 21 allows us to build onour success to date and maintain a competitive advantage in the marketplace. Sirius 21 has been well received by both customers and the market alike. It isabsolutely right for the market at a time when broadband internet access becomesboth widely and cheaply available. Sirius 21 is the preferred deployment methodfor Sirius for Broking and in 2005 there will be clear focus on migratingexisting customers across to Sirius 21 and on selling it to new customers. As predicted, FSA regulation as well as being a distraction continues to be akey factor in prompting the UK's insurance brokers to consolidate into groupsand networks, and to consider the ability of their IT systems to help them copewith the increased regulatory environment. Sirius continues to benefit fromthis market trend, a significant new business win in the first half of 2004being that of Perkins Slade, Birmingham's largest provincial broker. It wasalso pleasing to report that during the period, Country Mutual Insurance Brokers(part of NFU) successfully completed the roll out of Sirius for Broking acrossits 22 broker sites which account for greater than 400 users. Intermediary Systems has performed in line with plans for 2004 and is wellpositioned to make further advances in 2005. INSURANCE SYSTEMSs Insurance Systems is responsible for the sale, deployment and support of theSirius for Insurance application for insurers, underwriters and underwritingagencies; and the Swift application for financial services organisations.Product deployments from this business unit extend across territories includingthe UK, North America, Australasia, the Caribbean, Africa and the Far East.During the year the business unit generated £7.0m of revenues (2003: £6.2m). Insurance Systems benefited during the year from the appointment of a ManagingDirector, Phil Race, who brings experience of business development in theinternational financial sector, with a particular emphasis on the insurancemarketplace. In his recent role as Sales Director within LogicaCMG's financialservices business, Race secured and directed the delivery of high value projectsto many blue chip companies. Sirius for Insurance During 2004, Sirius for Insurance consolidated its dominant position in theCaribbean region with a number of clients transitioning to live operation of theapplication including GA Jamaica and Harmony General. Sirius has also continuedto secure new clients in the region, the most notable being the second largestinsurer in Jamaica, NEM. The signing of Europa General develops a fledgling position in the mature UKmarketplace whilst the recent 2005 successes in Australia, with Calliden gainingtheir insurance licence and going live simultaneously, alongside AustralianInternational Insurance signing up for Sirius for Insurance proves the logic ofthe international strategy. The Sirius for Insurance product has moved forward significantly with twoextensive enhancements being multi-currency and the incorporation ofClaimsBuilder. 2005 will see a focus on on-line functionality with enhancedservicing of insurance clients and business partners via the web. Swift The Swift application has been integral in arguably the largest programme formulti-tie in the UK - Zurich's Openwork initiative. This follows success withphase one of the St. James's Place programme and adds to an impressive Swiftcustomer portfolio which includes Royal Bank of Scotland and Co-operative BankFinancial Advisers. 2005 has seen Skipton go-live with Swift and activity levels remain high due tothe dynamic UK legislative regime. Sirius has a market leading position in thelarge intermediary marketplace and has proven its ability to support thecomplexities of the Self Invested Pensions (SIPP) marketplace. Pensions 'A' Dayand multi-tie will continue to fuel demand. Swift will also be deployed within a managed service framework during 2005. SIRIUS WEB SERVICES Sirius Web Services is an interactive communications service provider, offeringcreative web design, development and deployment in the business-to-business andconsumer environments. This business unit provides internet and intranetdesign and build services, including the provision of full cycle e-commerce, formany of the Group's insurance customers, as well as for a range of significantcompanies in other industries. Sirius Web Services was established in 2004 tobuild on and bring focus to an already strong service offering, to capitalise onthe Sirius brand and to exploit the rapidly emerging demand for insurancebusinesses to trade and service their offerings over the web. This business unit adopts its recognised MEDIAmaker brand for more traditionalcommunication services, including video programme making and the creation, anddelivery of significant conferences and events. During 2004 the business unit generated turnover of £2.9m (2003 £3.1m). Notablesuccesses in the year include a three year preferred supplier deal with theLearning Skills Council, the building of an e-learning platform 'Click Science'which has the potential to reach over 150,000 UK school children, and deliveryof the largest ever conference undertaken by Boots at the ICC and NEC inBirmingham. Stephen J VerrallChairman and Group Chief Executive14 April 2005 SIRIUS FINANCIAL SOLUTIONS PLC 2004 PRELIMINARY RESULTS GROUP PROFIT AND LOSS ACCOUNTfor the year ended 31 December 2004 2004 2003 Notes £ £Turnover 2Existing operations 21,628,551 20,523,966Acquisitions 75,501 - Continuing operations 21,704,052 20,523,966 Cost of sales (12,453,146) (12,895,684) Gross profit 9,250,906 7,628,282 Distribution costs (2,479,118) (2,418,984) Administrative expenses:- goodwill amortisation (876,310) (870,071)- depreciation (431,938) (438,081)- other (4,971,359) (4,414,401) - total administrative expenses (6,279,607) (5,722,553) Operating profit before goodwill amortisation 1,368,491 356,816 Goodwill amortisation (876,310) (870,071) Operating profit/ (loss)Existing operations 478,861 (513,255)Acquisitions 13,320 - Continuing operations 492,181 (513,255) Interest receivable 70,260 41,269Interest payable and similar charges (176,997) (109,174) Profit/ (Loss) on ordinary activities before taxation 385,444 (581,160) Tax on profit/ (loss) on ordinary activities (145,331) (89,427) Profit/ (Loss) on ordinary activities after taxation 240,113 (670,587) Minority interests (3,358) - Profit/ (Loss) for the financial year 236,755 (670,587) Equity dividends on ordinary shares 3 (258,274) (255,049) Retained loss for the financial year (21,519) (925,636) Earnings/ (Loss) per share: 4- basic 1.4p (3.9)p- diluted 1.4p (3.9)p- adjusted 6.5p 1.2p EBITDA 1,800,429 794,897 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the year ended 31 December 2004 2004 2003 £ £ Profit/ (Loss) for the financial year 236,755 (670,587) Exchange difference on retranslation of net assets of subsidiaryundertaking (28,272) (23,212) Total recognised gains and losses relating to the year 208,483 (693,799) GROUP RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 31 December 2004 2004 2003 £ £ Total recognised gains and losses 208,483 (693,799)Dividends (258,274) (255,049)Shares issued net of expenses and amounts accrued 229,704 3,554 Total movements during the year 179,913 (945,294) Shareholders' funds at 1 January 11,070,578 12,015,872 Shareholders' funds at 31 December 11,250,491 11,070,578 GROUP BALANCE SHEETat 31 December 2004 2004 2003 £ £Fixed assets Intangible assets 5,686,700 5,596,902Tangible assets 1,599,121 1,914,106 7,285,821 7,511,008 Current assets Stocks 4,351 8,850Debtors 7,686,485 8,351,152Cash at bank and in hand 1,063,918 54,290 8,754,754 8,414,292 Creditors: amounts falling due within one year (3,415,813) (3,447,883) Net current assets 5,338,941 4,966,409 Total assets less current liabilities 12,624,762 12,477,417 Creditors: amounts falling due after more than one year (329,128) (877,033) Accruals and deferred income (1,074,850) (529,806) Net assets 11,220,784 11,070,578 Capital and reserves Called up share capital 175,334 172,157Share premium account 4,392,760 4,166,233Merger reserve 5,891,572 5,891,572Profit and loss account 790,825 840,616 Shareholders' funds 11,250,491 11,070,578 Minority interests (29,707) - Total capital employed 11,220,784 11,070,578 Shareholders' funds may be analysed as:Equity 11,248,376 11,068,463Non-equity 2,115 2,115 11,250,491 11,070,578 GROUP STATEMENT OF CASH FLOWSfor the year ended 31 December 2004 2004 2003 Notes £ £ Net cash inflow from operating activities 5(i) 2,613,448 703,571 Returns on investments and servicing of finance Interest received 70,260 41,269Interest paid (151,333) (103,836)Interest element of finance lease rental payments (18,869) (2,628) (99,942) (65,195) TaxationCorporation tax paid (247,997) (757,713) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (780,206) (224,462)Receipts from sales of tangible fixed assets 713,314 14,800 (66,892) (209,662) AcquisitionsPurchase of subsidiary undertaking (766,922) -Cash acquired with subsidiary undertaking 219,731 - (547,191) - Equity dividends paid (170,076) (459,009) Net cash inflow/ (outflow) before financing 1,481,350 (788,008) Financing Issue of ordinary share capital 134,084 3,554 Repayment of long-term loans (452,500) (205,000) Repayment of capital element of finance leases and hirepurchase contracts (153,306) - (471,722) (201,446) Increase/ (Decrease) in cash 5(ii) 1,009,628 (989,454) NOTES TO THE ACCOUNTSat 31 December 2004 1. BASIS OF PREPARATION The financial information set out above does not constitute the full statutoryaccounts of Sirius Financial Solutions Plc for the years ended 31 December 2004and 31 December 2003 respectively, but is derived from those accounts.Statutory accounts for 2003 have been delivered to the Registrar of Companies,and those for 2004 will be delivered following Sirius Financial Solution'sAnnual General Meeting on 23 May 2005. The auditors have reported on thoseaccounts; their reports were unqualified and did not contain statements undersection 237(2) or (3) of the Companies Act 1985. 2. TURNOVER AND SEGMENTAL ANALYSIS The Group operates in one principal area of activity, that of the developmentand supply of insurance specific application software both as a package and as asolution. In 2004 and 2003, turnover originated principally from two geographical markets:Europe and the United Kingdom; North America and the Caribbean. On 13December 2004 a 75.8% shareholding was acquired in Sirius Datasure Limited, acompany domiciled in New Zealand. The turnover originating from Sirius DatasureLimited in the post acquisition period is not considered significant enough torequire separate disclosure of the New Zealand territory in the analysis below,and is therefore included in the analysis for Rest of World. Europe and United North America and Rest of World Total Kingdom Caribbean 2004 2003 2004 2003 2004 2003 2004 2003 £ £ £ £ £ £ £ £Group turnoverTurnover bydestination:Sales to third parties 18,629,743 18,461,713 1,804,841 1,246,396 1,269,468 815,857 21,704,052 20,523,966 Turnover by origin:Sales to third parties 19,823,710 19,601,281 1,804,841 922,685 75,501 - 21,704,052 20,523,966 ProfitSegment operatingprofit/ (loss)beforegoodwill 1,057,967 689,224 382,530 (131,493) 46,391 - 1,486,888 557,731amortisation Goodwill (732,416) (732,416) (135,843) (137,655) (8,051) - (876,310) (870,071)amortisationInterest receivable 68,945 40,184 761 1,085 554 - 70,260 41,269Interest payableand similar charges (176,434) (106,564) (532) (2,610) (31) - (176,997) (109,174) Segment profit/(loss) beforecentral group costsand taxation 218,062 (109,572) 246,916 (270,673) 38,863 - 503,841 (380,245) Central group costs (118,397) (200,915) Profit/ (Loss) on ordinary activities before taxation 385,444 (581,160) Net assets/(liabilities)Net assets/(liabilities) bysegment 11,990,743 12,136,787 (703,997) (1,066,209) (65,962) - 11,220,784 11,070,578 3. DIVIDENDS AND OTHER APPROPRIATIONS 2004 2003 £ £ Equity dividends on ordinary shares:Final proposed 1.0p per share (2003: 0.5p) 173,219 85,021Interim paid 0.5p per share (2003: 1.0p) 85,055 170,028 258,274 255,049 4. EARNINGS/ (loss) PER ORDINARY SHARE The calculation of basic earnings per ordinary share is based on profits of£236,755 (2003: losses of £670,587) and on 17,027,606 (2003: 17,002,039)ordinary shares, being the weighted average number of ordinary shares in issueduring the year. The 2004 diluted earnings per share is based on the profit for the year of£236,755 and on 17,096,084 ordinary shares, calculated as follows: 2004 No. Basic weighted average number of shares 17,027,606Dilutive potential ordinary shares:Executive share options and employee SAYE scheme 68,478 17,096,084 For 2003, the loss attributable to ordinary shareholders and weighted averagenumber of ordinary shares for the purpose of calculating the diluted loss pershare are identical to those used for the basic earnings per share. This isbecause the exercise of share options would have the effect of reducing the lossper ordinary share and is therefore not dilutive under the terms of FRS14. Adjusted earnings per share The adjusted earnings per share is calculated from the profit for the financialyear before goodwill amortisation of £1,113,065 (2003: £199,484) and on17,027,606 (2003: 17,002,039) ordinary shares of 1p each being the weightedaverage number in issue during the year. The directors have chosen to present this adjusted earnings per share as theybelieve that it provides a more meaningful indicator of the performance of theGroup. 5. NOTES TO THE STATEMENT OF CASH FLOWS (i) Reconciliation of operating profit/ (loss) to net cash inflow fromoperating activities 2004 2003 £ £ Operating profit/ (loss) 492,181 (513,255)Depreciation of tangible fixed assets 431,938 438,081Amortisation of goodwill 876,310 870,071(Profit)/ Loss on sale of fixed assets (6,501) 12,526Decrease in deferred payment debtor 36,685 212,243Decrease in other debtors 709,196 775,224Decrease in stocks 5,820 7,202Increase/ (Decrease) in creditors 67,819 (1,098,521) Net cash inflow from operating activities 2,613,448 703,571 (ii) Analysis of net funds/ (debt) At At 1 January Cash 31 December 2004 flow Other 2004 £ £ £ £ Cash at bank and in hand 54,290 1,009,628 - 1,063,918 54,290 1,009,628 - 1,063,918Bank loans (707,400) 452,500 (6,795) (261,695)Finance leases (490,580) 153,306 - (337,274) (1,143,690) 1,615,434 (6,795) 464,949 (iii) Reconciliation of net cash flow to movement in net funds/ (debt) 2004 2003 £ £ Increase /(Decrease) in cash in the year 1,009,628 (989,454)Cash outflow from movement in debt and lease financing 605,806 205,000 Change in net debt arising from cash flows 1,615,434 (784,454)New finance leases - (490,580)Amortisation of loan issue costs (6,795) (2,710) Movement in net debt in the year 1,608,639 (1,277,744)Net (debt) /funds at 1 January (1,143,690) 134,054 Net funds /(debt) at 31 December 464,949 (1,143,690) This information is provided by RNS The company news service from the London Stock Exchange