Preliminary Results

GB Group PLC 29 May 2002 GB GROUP PLC Preliminary Results for the Year Ended 31 March 2002 Highlights * GB was reorganised during the year to focus on its Customer Relationship Management ('CRM') activities. The Group disposed of its loss making Travel Interests for a cash consideration of Â£4.0 million and Richard Law, formerly the Finance Director, was appointed Chief Executive to head up a new executive management team. * The Group's continuing CRM business is profitable and cash generative. In the year ended 31 March 2002, turnover from CRM increased by 8% to Â£12.0 million (2001: Â£11.1 million) and the operating profit, that is profit before head office costs, goodwill, interest and taxation was Â£1.1 million (2001: Â£1.1 million). * The Group's strategy is now to grow its CRM business organically to increase its market presence whilst improving the efficiencies of existing operations and to make strategic investments where appropriate. * Cash generated from the Group's operating activities was Â£0.7 million (2001: Â£0.7 million cash consumed). * Head Office costs of Â£0.5 million are expected to reduce to Â£0.3 million in the next year following the disposal of the Travel Interests. * Exceptional costs primarily associated with the write-off of goodwill on disposal of the Travel Interests were Â£2.2 million. Of these costs, Â£0.3 million involved cash outflows while Â£1.9 million were non-cash items. * Overall, the Group's retained loss after goodwill amortisation, exceptional costs and taxation was Â£1.7 million (2001: Â£2.1 million). * At 31 March 2002, the Group had net cash balances of Â£5.3 million (2001: Â£1.3 million) and the current cashflows are positive. On 28 May 2002, the Group had net cash balances of Â£6.1 million. * Commenting on the results, John Walker-Haworth, Chairman, said: 'I am pleased to report that real progress has been made during this past year and GB is now a focused and profitable business. We are pleased with our progress to date.' For further information, please contact: GB Group plc Richard Law, Chief Executive 01244 657333 Weber Shandwick Square Mile Richard Hews 020 7950 2800 Trish Featherstone CHAIRMAN'S STATEMENT I am pleased to report to you that real progress has been made during this past year, and now your Company comprises a focused and profitable business Sale of Travel Interests and Reorganisation The Group's Travel Interests, which were loss making, were sold in December 2001 for Â£4 million in cash. (It is also possible a further Â£1 million may be received dependant upon an increased level of turnover of the Travel Interests during 2002 under their new ownership.) Following this sale, the management of the Group was reorganised and Richard Law, previously the Finance Director of the Group, was appointed Chief Executive to lead a new management team drawn from within the Customer Relationship Management ('CRM') business. Also, the Group changed its name from Telme Group plc to GB Group plc ('GB'); GB is the brand name under which the Group's CRM activities are carried out. Graham Ramsey was Chief Executive of the Group for five years before leaving last December to run a substantial international travel business, enlarged by the Group's Travel Interests, and he subsequently relinquished his role as a non-executive director. Graham steered the Group with skill and tenacity through the difficult times of the dot.com boom and bust, and more recently the turbulence of the travel sector during the last quarter of 2001. We thank him for all he did for the Group, and wish him well. Continuing Business The result of the sale of the Travel Interests has been to give the Group a clear focus on its CRM activities, and this, together with good demand in our markets, has resulted in an underlying improvement in financial performance. Our net cash balance at 28 May 2002 was Â£6.1 million. The Group's strategy for the coming year is to grow our business in the CRM sector organically, whilst at the same time to increase our own internal efficiency and, in turn, our margins. We expect our development team to enhance our existing products and devise a number of interesting new ones. We may also make relevant investments and acquisitions if we consider these to be for the Group's long-term benefit. Prospects As expected, sales in the present financial year have started quietly, but we expect an increase in pace in line with the seasonal trend of previous years. We are pleased with our progress to date. JL Walker-Haworth Chairman CHIEF EXECUTIVE'S REVIEW Overview This has been a year of positive change and progress for the business. The sale of the Group's Travel Interests in December 2001 means that the Group is now firmly focused on its profitable Customer Relationship Management ('CRM') activities and is operating in a rapidly growing and exciting market. The effect of the disposal of the Group's Travel Interests has been as follows: * The concentration on a single sector, with a sharper management focus, has resulted in a significant improvement in financial performance in the final quarter to 31 March 2002 through increased sales, improved efficiency and higher margins. * The Group is profitable and cash generative. As explained in the Financial and Operating Review the Group's CRM activities generated operating profits, that is profits before head office costs, goodwill, interest and tax, of Â£1.1 million in the year to 31 March 2002. * The Group changed its name to GB Group plc (GB) and the business has been rebranded with a fresh new image. This has been well received by our clients and employees alike. * GB now has cash resources with which to pursue opportunities in its marketplace. At 31 March 2002, the Group had net cash balances of Â£5.3 million compared to Â£1.3 million a year earlier. As at 28 May 2002 net cash balances were Â£6.1 million. The Continuing GB Business GB is one of the UK's leading CRM businesses specialising in customer and marketing data. We help our clients to find, keep and get to know their most valuable customers. We do this by using advanced information technology together with GB's National Register(r) database to maximise the value of our clients' data. GB has four different product and service offerings; DataCapture, DataManagement, DataCare and DataInsight. Each is dedicated to enhancing the customer information held by our clients, whether checking the accuracy of names and addresses or finding out more about people's lifestyle habits. This type of information is valuable to companies who want to forge better relationships with their customers and increase sales of their products or services. The three fundamental building blocks, which enable GB to provide its products and services successfully are as follows: People Talented people are GB's most important asset. The business now employs 139 highly skilled people who provide the essential mix of management, sales, support and business development skills required to grow the business. The average age of our people is only 34 but many are long serving. This means that GB is able to combine experience and knowledge with enthusiasm and ambition to provide first class products and services to our clients. A new team of talented managers has been drawn from within the CRM business to create an executive management board and an environment has been created to incentivise and motivate these managers to succeed. Clients GB's clients include many household names such as BskyB, WH Smith, NPower and Thomas Cook and the business is growing organically by expanding the range of services provided to these and our other clients. Referrals from satisfied clients account for a significant proportion of new business and this has enabled GB to develop a market leading presence in sectors such as utilities. The products and services provided to GB's clients are usually provided over a contractual period of at least one year and a significant proportion of GB's business involves renewals. This means that once a product or service is sold to a client, revenue will continue to come in each year unless the contract is cancelled. As a result, GB's earnings are of a high quality and the repeat nature of revenues means that sales and marketing resource can be directed principally towards further expanding our client base. Products and Services GB provides its clients with an extensive range of CRM solutions. We work with clients right from the initial capture of their customers' data through to its management and updating as well as analysis and interpretation of that data. One of GB's key strategic objectives is to ensure that our products and services remain the best in the market. GB's products and services are underpinned by the National Register(r), a regularly updated database of 48 million individuals and households developed and owned by GB. Industry observers have described the National Register(r) as the most comprehensive data set available in the UK. Future Strategy The Group's strategy for the coming year and beyond is to remain firmly focused on the CRM sector and to grow the business organically whilst improving the efficiency of existing operations. We will also make strategic investments and acquisitions where this makes sense. The market for our products and services is continuing to expand and we are committed to increasing our market presence. Progress towards achieving our strategy in the period since the disposal of Travel Interests is as follows: * A strong performance in the final quarter to 31 March 2002 enabled the CRM business to achieve an operating profit, that is profit before Head Office costs, goodwill, interest and tax, of Â£1.1 million. This was in line with last year's full-year result despite being Â£0.5 million behind at the half-year stage. * The positive progress achieved at the end of last year has continued. Although sales are seasonally slow in the early months of the year our performance in the year-to-date is ahead of last year and Head Office costs for the CRM business have been reduced by approximately half. * Internal reorganisation throughout the business has improved communication and, with the aid of new management information systems, the business is now working smarter. In addition, new managers have been appointed to head up key areas of the business such as research and development and value added reseller sales. * GB has commenced, and will continue with, a proactive approach to sales and marketing aimed at increasing awareness of its products, services and brands. The commitment for the current year is to increase marketing spend by around 40% compared to last year. * Internal efficiency initiatives backed by new computer systems are starting to deliver improved margins from our service businesses. The benefits from these measures aimed at both existing and new contracts, are expected to continue throughout the year as existing long- term contracts come to an end and are renegotiated. * We are in the process of increasing our business development resource to increase the flow of new business opportunities and initiatives. In February 2002, GB acquired a 25% interest in PostcodeID Limited which produces voice-activated data capture software to the growing call centre market. Regulation and the Use of Data for Marketing Purposes GB's National Register (r) and a number of GB's other products and services make use of Electoral Roll data which is sold on to our clients for use in marketing campaigns and for purposes of data analysis. Electoral Roll data, compiled by local authorities, is currently available publicly in its complete form. From October 2002, as a result of a change in the law, individuals will be able to opt out of allowing their Electoral Roll details to be used for marketing purposes and a proportion of the population is expected to follow this course. Whilst this choice will mean that it will be less comprehensive for all operators engaged in the CRM industry, we believe that the Electoral Roll will continue to be a valuable source of information for our clients. GB is currently developing relationships with other owners of data with the aim of securing alternative sources of data to the Electoral Roll. Reduction of Capital In March 2002, the Company obtained approval from the High Court to offset Â£28 million of historical losses in its company balance sheet against the share premium account. This is a positive move aimed at giving the Company the option to pay dividends from its distributable profits in the future without first having to generate sufficient profits to cancel out historical losses. Summary GB is entering a challenging and exciting stage in its development and we look forward to a positive year ahead. RA Law Chief Executive FINANCIAL AND OPERATING REVIEW Overview As outlined in the Chairman's Statement and Chief Executive's Review the most significant event during the financial year has been the disposal of the Travel Interests. At the last year-end, the Group's activities comprised of three trading divisions: CRM, Corporate Travel and Online Services. The Travel Interests, which were disposed of, comprised the Corporate Travel and Online Services divisions. The disposal of the Travel Interests accounts for the downturn in Group turnover and gross profit shown in the profit and loss account. The underlying turnover and gross profit trend for the continuing CRM business was upwards. The Group achieved operating profits of Â£0.4 million (2001: Â£0.8 million loss) before exceptional costs and goodwill amortisation. The exceptional costs of Â£2.2 million (2001: Â£0.6 million) relate principally to the disposal of the Travel Interests, and were principally non-cash items including the impairment of goodwill. Goodwill amortised during the year was Â£0.6 million (2001: Â£0.7 million). The retained loss for the year after goodwill amortisation, exceptional items and taxation was Â£1.7 million (2001: Â£2.1 million). Despite the loss the Group's operations generated Â£0.7 million of cash because, as outlined above, many of the large exceptional items had no cash impact. Accordingly, the Group's cash position and liquidity has improved significantly with net cash balances at the year- end of Â£5.3 million (2001: Â£1.3 million). Turnover Turnover attributable to the continuing businesses increased during the year by 8% to Â£12.0 million (2001: Â£11.1 million). Turnover attributable to the discontinued businesses at Â£5.2 million was lower than that reported last year as a result of the disposal of these businesses during the year. Continuing Business: CRM The CRM business provides software and services to major corporates enabling them to have a more in-depth understanding of their customer's current and future needs by giving them the ability to record and use customer data accurately and effectively. Turnover increased by 8% to Â£12.0 million (2001: Â£11.1 million) and was the result of organic growth. Discontinued Business: The Travel Interests The Travel Interests comprised the Corporate Travel and the Online Services divisions. The results of these divisions have been incorporated in the Group results for the 9 month period to 31 December 2001 - the date of their disposal. On a like for like comparison, turnover increased by 5.5% to Â£5.2 million compared to the same period last year. At the half-year to 30 September 2001, the Travel Interests turnover, which had not been significantly impacted by the events of September 11 at that stage, had increased by 13% compared to the previous half-year. Gross Profit and Cost of Sales Gross profit margin for the Group for the year reduced by 3% to 68% (2001: 71%). The principal reason for this reduction is the change in sales mix as a result of the disposal of the Travel Interests. Turnover from the Corporate Travel division represents the commission on travel bookings and carried no cost of sales. This gave rise to a 100% gross margin. The underlying gross margin on the continuing business remains broadly in line with last year at 56%. Other Operating Expenses Other operating expenses excluding goodwill amortisation and exceptional items were Â£11.4 million (2001: Â£13.7 million). Operating expenses for the continuing business increased by 11% to Â£6.1 million (2001: Â£5.5 million). Included in the operating expenses for the continuing business are head office costs of Â£0.5 million which are expected to reduce to Â£0.3 million per annum next year. Exceptional operating costs of Â£2.2 million (2001: Â£0.6 million), associated with discontinued operations, were incurred during the year. The exceptional costs were principally as a result of the impairment of goodwill on the Travel Interest divisions and other costs arising as a result of the disposal of these businesses. Of these costs, Â£0.3 million involved cash outflows of which Â£0.1 million had been paid by 31 March 2002, while Â£1.9 million were non-cash items. Goodwill Amortisation The goodwill amortised during the year ended 31 March 2002 was Â£0.6 million (2001: Â£0.7 million). Included in the Â£2.2 million of exceptional costs described above is an additional impairment provision of Â£1.8 million in respect of the Travel Interests. Group Profit/Loss The Group operating profit before goodwill amortisation and exceptional items was Â£0.4 million (2001: Â£0.8 million loss). After the amortisation of goodwill, exceptional items and taxation, the Group loss was Â£1.7 million (2001: Â£2.1 million). Customer Relationship Management The CRM division generated operating profit before goodwill amortisation of Â£1.1 million (2001: Â£1.1 million). After the amortisation of goodwill of Â£0.4 million (2001: Â£0.4 million) operating profit for the year was Â£0.7 million (2001: Â£0.7 million). Travel Interests Travel Interests, which comprise the former Corporate Travel and Online Services divisions, generated operating losses before goodwill amortisation and exceptional costs of Â£0.2 million (2001: Â£1.4 million). After the amortisation of goodwill of Â£0.1 million (2001: Â£0.2 million) and exceptional costs of Â£2.1 million (2001: Â£0.2 million) the net operating loss was Â£2.5 million (2001: Â£1.8 million). Head Office Head Office comprises the cost of the Group's head office function and the cost associated with being a public limited company. Head Office costs were Â£0.5 million. Annualised Head Office costs moving forward are now Â£0.3 million. Profit from Interest in Associated Undertaking The Group acquired 25% of PostcodeID Limited for Â£25,000 in February 2002. Following the investment, new shares were issued by Postcode ID Limited for cash to other investors and at 31 March 2002, the Group held 23.2%. The Group's share of the pre-tax profits for the period ended 31 March 2002 was Â£12,000. Disposal of Subsidiary Undertakings In anticipation of the disposal of the Travel Interests for consideration agreed in outline an impairment of goodwill provision was recognised in the interim accounts. This impairment is shown as an exceptional cost as it was created in advance of the disposal. As a result of this impairment there was no loss on disposal of the subsidiary to be recognised at the time of the sale. Interest Receivable Less Payable Interest is earned on cash balances which are invested in accordance with the Group's treasury policy. Interest payable arose on mortgages, loans, finance leases and overdrafts. Net interest receivable increased during the year as a result of the increased cash balances following the disposal of the Travel Interests and the transfer of mortgages, loans and overdrafts with the sale. Taxation The Group did not incur a taxation charge during the year. Taxation provisions of Â£0.1 million, which are no longer required, were released to the profit and loss account. At 31 March 2002, the Group had potential deferred tax assets of Â£7.5 million of which Â£0.4 million has been recognised in the accounts in accordance with FRS 19. Trading losses carried forward were Â£19.8 million (2001: Â£19.6 million) and capital losses were Â£1.7 million (2001: Â£0.2 million). Amounts Transferred from Reserves The amount transferred from reserves to cover losses was Â£1.7 million (2001: Â£2.1 million). Financial Instruments At 31 March 2002, the Group's principal financial instruments comprise hire purchase contracts, cash and short-term deposits. Balance Sheet and Liquidity The principal influences on the balance sheet during the year have been the ongoing profitable operation of the CRM business and the disposal of the Travel Interests. The overall impact has been to increase Group liquidity as a result of the cash inflow from operations and the disposal and to reduce the size of trade debtors associated with the travel business and the associated risk. Net assets have reduced by Â£1.8 million to Â£13.3 million (2001: Â£15.1 million), however, the current ratio and liquidity has improved significantly. The principal movements, other than trade debtors and creditors associated with the Travel Interests, have been the reduction in intangible assets of Â£4.3 million and an increase in cash balances of Â£3.5 million. Explanations of the most significant movements in the balance sheet during the year are as follows: Intangible Assets The carrying value of intangible assets at 31 March 2002 was Â£7.3 million (2001: Â£11.6 million). During the year the Group disposed of the Travel Interests, the carrying values of the intangible assets in respect of the Travel Interests at the date of disposal was Â£1.8 million. Goodwill amortisation and amortisation of other intangible assets associated with Travel Interests during the year was Â£0.6 million and Â£0.1 million respectively. In addition, an impairment review of the Travel Interests was carried out leading to an impairment provision of Â£1.8 million prior to the disposal which was reflected in the half-year accounts. Cash and Short-Term Deposits At 31 March 2002, the Group had cash and short-term deposit balances of Â£5.3 million (2001: Â£1.8 million). There were no overdrafts (2001: Â£0.5 million) giving net cash balances available to the Group of Â£5.3 million (2001: Â£1.3 million). In accordance with the Group's treasury policy all funds are held with major UK High Street financial institutions. The principal uses of cash were the net investment in tangible fixed assets of Â£0.2 million (2001: Â£0.5 million) and the repayment of the capital element of finance leases and loans of Â£0.1 million (2001: Â£0.1 million). The principal sources of cash were inflows from operating activities of Â£0.7 million (2001: Â£0.7 million outflow) and net cash inflow from acquisitions and disposals of Â£3.6 million (2001: Â£nil). Share Premium Account Following the passing of the reduction of capital resolution at the last Annual General Meeting and the granting of High Court approval in March 2002, Â£28.1 million of the Company's share premium account was cancelled against the debit balance of the Company's profit and loss account reserve. This reduction in capital enables the Company to make distributions without first having to equal its accumulated losses built up over the years that the company has traded since incorporation. Consequently, the Company's profit and loss reserves are now positive and the Company will be in a position to make distributions in the future when the Board considers this to be in the best interests of shareholders. Profit and Loss Account The balances on the Group and Company profit and loss reserve accounts at 31 March 2002, were Â£1.6 million (2001: Â£29.7 million loss) and Â£3.0 million (2001: Â£28.1 loss) respectively. The change from a significant deficit at the end of last year to surplus at the end of this year was as a result of the offset Â£28.1 million of losses against the share premium account following the reduction of capital exercise, the release of the merger reserve of Â£4.9 million in respect of the Travel Interests and the transfer of losses of Â£1.7 million (2001: Â£2.1 million) from reserves during the year. M T Navin-Mealey Chief Financial Officer GROUP PROFIT AND LOSS ACCOUNT Year ended 31 March 2002 Continuing Discontinued Operations Operations Discontinued Including before Operations exceptional exceptional Exceptional Restated Items items Items Note 2 Note 2002 2002 2002 2002 2001 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Turnover Customer Relationship Management 12,017 - - 12,017 11,081 Travel Interests - 5,172 - 5,172 7,008 ------------------------------------------------------------------------------ 12,017 5,172 - 17,189 18,089 Cost of sales (5,326) (133) - (5,459) (5,194) ------------------------------------------------------------------------------ Gross profit 6,691 5,039 - 11,730 12,895 Other operating expenses (excluding goodwill amortisation) 1. (6,101) (5,271) (2,122)(13,494) (14,326) Goodwill amortisation (449) (111) - (560) (654) ------------------------------------------------------------------------------ Operating profit /(loss) Customer Relationship Management 679 - - 679 655 Travel Interests - (343) (2,122) (2,465) (1,782) Head office (538) - - (538) (958) ------------------------------------------------------------------------------ 141 (343) (2,122) (2,324) (2,085) ------------------------------------------------------------------------------ Share of operating profit in associate 12 - ------------------------------------------------------------------------------ Total operating loss: Group and share of associate (2,312) (2,085) ------------------------------------------------------------------------------ Interest receivable less payable 52 2 ------------------------------------------------------------------------------ Loss before taxation (2,260) (2,083) Taxation 517 - ------------------------------------------------------------------------------ Loss on ordinary activities after taxation (1,743) (2,083) Dividend - - ------------------------------------------------------------------------------ Amount transferred from reserves (1,743) (2,083) ------------------------------------------------------------------------------ Loss per 2.5p ordinary share (pence) 2. (2.2p) (2.8)p ------------------------------------------------------------------------------ Loss per 2.5p ordinary share (pence)- diluted (2.2p) (2.8)p ------------------------------------------------------------------------------ Adjusted profit / (loss) per 2.5p ordinary share (pence)- before goodwill amortisation and operating exceptionalitems 1.2p (1.1)p ------------------------------------------------------------------------------ GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES There were no other recognised gains or losses in the year ended 31 March 2002 or in the year ended 31 March 2001 apart from those shown in the profit and loss account for the year. GROUP BALANCE SHEET As at 31 March 2002 2002 2001 Â£'000 Â£'000 Fixed assets Intangible assets 7,325 11,602 Tangible assets 613 1,848 Investment in associate 33 - -------------------- 7,971 13,450 -------------------- Current assets Stocks - 1 Debtors 4,143 7,744 Cash and short-term deposits 5,338 1,786 -------------------- 9,481 9,531 Creditors : amounts falling due within one year (3,860) (7,534) -------------------- Net current assets 5,621 1,997 -------------------- Total assets less current liabilities 13,592 15,447 Creditors : amounts falling due after more than one year - (358) Provisions for liabilities and charges (246) - -------------------- 13,346 15,089 -------------------- Capital and reserves Called up share capital 1,991 1,991 Share premium account 3,132 31,219 Merger reserve 6,575 11,526 Profit and loss account 1,648 (29,647) -------------------- Shareholders' funds attributable to equity interests 13,346 15,089 -------------------- GROUP STATEMENT OF CASH FLOWS Year ended 31 March 2002 Note 2002 2002 2001 2001 Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow/(outflow) from operating activities 4(a) 715 (673) Returns on investments and servicing of finance Interest received 229 151 Interest paid (177) (140) Interest element of finance lease rental payments - (4) ---------- ---------- 52 7 Taxation Corporation tax paid - (6) Capital expenditure and financial investment Payments to acquire tangible fixed assets (432) (520) Receipts from the sale of tangible fixed assets 214 43 ---------- ---------- (218) (477) Acquisitions and disposals Acquisitions of subsidiary undertakings - (22) Disposal of subsidiary undertakings 4,021 - Fees associated with the disposal of subsidiary undertakings (247) - Net cash transferred with subsidiary undertakings (190) - Purchase of associate (25) - ---------- ---------- 3,559 (22) ---------- ---------- Cash inflow/(outflow) before management of liquid resources and financing 4,108 (1,171) Management of liquid resources Cash (deposited)/withdrawn (to)/from short-term deposits (3,833) 13 Financing Repayment of capital element of finance leases (19) (53) Repayment of capital element of loans (61) (79) ---------- ---------- (80) (132) ---------- ---------- Increase/(decrease) in cash 4(b) 195 (1,290) ---------- ---------- Notes to the Preliminary Announcement: 1. Included in other operating expenses are exceptional costs which can be analysed as follows: Continuing Discontinued Total 2002 2002 2002 2001 Â£000 Â£000 Â£000 Â£000 Impairment at half year of Prenton site arising through closure 50 - 50 149 Profit on sale of Prenton site (38) - (38) - Write-off of assets no longer used at the Prenton site - - - 131 Provision for redundancy and other closure costs at the Prenton site 32 - 32 69 Costs of aborted acquisition - - - 250 Impairment of goodwill on travel related businesses - 1,764 1,764 - Compensation for loss of office payments - 112 112 - Provision against lease rentals - 246 246 - ------------------------------------------------------------------------------ 44 2,122 2,166 599 ------------------------------------------------------------------------------ The provision against lease rentals is considered to be an exceptional cost as it relates to properties leased by the Group which are vacant as a result of the disposal of the Travel Interests. 2. There has been a change in accounting classification whereby the direct salary and other direct costs associated with the fulfilment of revenue previously charged to administrative expenses have now been charged to cost of sales. For consistency the 2001 numbers have been restated to reflect the same classification as follows: Restated Other operating expenses: 2002 2001 Â£'000 Â£'000 Administrative expenses before classification 15,399 15,142 Costs previously classified as operating expenses moved to cost of sales (1,896) (1,501) -------------------------- Administrative expenses (including goodwill amortisation and exceptional items) 13,503 13,641 Distribution costs 551 1,339 -------------------------- Less: goodwill amortisation 14,054 14,980 (560) (654) -------------------------- 13,494 14,326 -------------------------- 3. Earnings per share has been calculated in accordance with Financial Reporting Standard 14 by reference to a loss of Â£1,743,000 (2001: Â£2,083,000) and a weighted average number of shares in issue of 79,665,527 (2001: 79,665,527). 4(a).Reconciliation of operating loss to net cash outflows from operating activities 2002 2001 Â£'000 Â£'000 Total operating loss (2,312) (2,085) Depreciation 431 662 Goodwill amortisation and impairment 2,324 654 Amortisation of intangible fixed assets 120 160 Provision against tangible fixed assets 50 149 (Profit)/loss on disposal of tangible fixed assets (40) (4) Share of profit of associated undertaking (12) - Increase in provisions 246 - Increase in debtors (154) (997) Increase in creditors 62 788 -------------------------- Net cash inflow/(outflows) from operating activities 715 (673) -------------------------- 4(b).Reconciliation of net cash flow to movement in net funds 2002 2001 Â£'000 Â£'000 At the beginning of the year 939 2,110 Loans transferred on disposal of subsidiary undertakings 291 - Decrease in debt 80 132 Increase/ (decrease) in cash 195 (1,290) Movement in short term deposits with banks 3,833 (13) -------------------------- At the end of year 5,338 939 -------------------------- 5. The above financial information which is unaudited does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 March 2002 has been extracted from the draft statutory accounts on which an unqualified audit opinion is expected to be issued. Statutory accounts for the year ended 31 March 2002 will be delivered to the Registrar in due course. The preliminary announcement is prepared on the same basis as set out in the previous year's statutory accounts except for the change in accounting policy, the adoption of Financial Reporting Standard 19: Deferred Tax. The comparative financial information is based on the statutory accounts for the financial year ended 31 March 2001. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 6. The Company intends to dispatch to shareholders printed copies of the full annual report and accounts for the year to 31 March 2002 before the end of June 2002. This information is provided by RNS The company news service from the London Stock Exchange

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