19th Sep 2005 07:01
Ricardo PLC19 September 2005 19 September 2005 Ricardo plc Preliminary results for the year ended 30 June 2005 Ricardo plc is the leading UK independent automotive consultancy, employing over1,700 people. The company has technical centres in the UK, USA, Germany andoffices in Tokyo and Shanghai, the client list includes the world's majorautomotive OEMs. HIGHLIGHTS • Recovery driven by growth in Strategic Consulting, electronics and increased business from Asia • Profit before tax and goodwill £8.4m (2004: £1.8m). Profit before tax and after goodwill and exceptional costs £7.4m (2004: loss of £2.8m) • Steady recovery in order book up 21% to £70m (2004: £58m) with increased visibility • Earnings per share before goodwill up to 16.2p (2004: 4.3p). Earnings per share after goodwill and exceptional costs 14.2p (2004: loss of 2.6p) • Dividend held at 6.3p, giving a full dividend for the year of 9.0p • Growth in business from Asian companies accelerating • Dave Shemmans to become CEO with effect from AGM on 4 November 2005 Commenting on the results, Rodney Westhead, Chief Executive said: "I am pleased with these results and the significant improvement in performanceover the year. Strategic Consulting and Ricardo UK have done especially well,driven by demand for our technology and strategic advice. "The new year has begun well, and our order prospects continue to strengthenwith a much better geographic balance with growth from Asia. Although the globalautomotive market remains challenging, we are confident of further steadyprogress for the coming year." Further enquiries: Ricardo plcRodney Westhead, Chief Executive (today) Tel: 020 7554 1400Dave Shemmans CEO DesignateAndrew Goodburn, Finance Director (thereafter) Tel: 01273 455611 Website: www.ricardo.com Gavin Anderson & CompanyCharlotte Stone /Robert Speed Tel: 020 7554 1400 REVIEW OF THE YEAR 2005 has been a much better year with a marked improvement in performance by theUK and a steady growth in the order book which closed at the end of June at thehighest level for a number of years. Profitability improved generally as theimpact of earlier restructuring took effect but has not yet recovered toacceptable levels in some of our businesses, nor for the group as a whole.Nonetheless our second half trading has laid the foundation for furtherimprovement. ANNUAL RESULTS & DIVIDEND Profit before tax, goodwill amortisation and exceptional costs rose to £8.4mfrom £1.8m last year. Net borrowings at the year end were £11.3m compared with£10.3m last year, reflecting the growth in working capital as activity levelsincreased. The preliminary results of the triennial valuation of the PensionFund indicate an increase in the deficit to £22m which is likely to result in anincrease in the Company's cash contribution of £1.6m per annum. The dividend has been held this year at 9.0p per share. STRATEGY Good progress has been made, particularly in two areas. Our focus on China hasled to a number of important new contracts with new Chinese clients and theaward of our contract with SAIC is testimony to the reputation we are rapidlybuilding in the territory. The other noteworthy success is in StrategicConsulting which is now profitable and growing steadily. The importance ofStrategic Consulting is not only in its own growth potential but theopportunities that it can also open up for our technology consulting. BUSINESS OVERVIEW All areas of the business have seen improved results in the last year with alloperating businesses profitable. Strategic Consulting and Ricardo UK performedparticularly well, and our order book at £70m (2004: £58m) has significantlyimproved during the year with major gains in Asia. The developments ofelectronics and strategic consulting continue to widen Ricardo's appeal andenhance our added value offering to our customers. Our recovery in the year proceeded well, with better than anticipated growth inboth our order book and in Asian markets. We still have a long way to go toachieve historic growth rates and levels of profitability, however good progresshas been made and the UK, USA and Strategic Consulting are all well ahead oflast year. The confidence in the business going forward is good. UK The UK performance improvement has been supported by the continuing growth inelectronics and the Chinese automotive expansion. This has reversed a previousdecline in the world-wide engine and the mechanical development markets and as aconsequence our engine division performed particularly well. The opening of an additional office in the Midlands to support our contract withSAIC underpins all of our UK activity. Transmission and vehicle engineering haveboth improved their order books after a tough trading year and start the newfinancial year in much better shape. In particular, the military vehicle marketcontinues to provide useful additional business to the traditional passenger carmarket. Transmissions now has a secure, low volume manufacturing base and isalso beginning to benefit from a pick up in the development market. We continueto grow our Prague office as a low cost support base for the UK operations andwill now be adding electronics engineers to the existing team of computer aideddesigners and software developers there. USA The USA had a satisfactory year. Profits increased over 50 percent and the orderbook up nearly 40 percent. This result was generated from our traditional marketplace together with increasingly active commercial vehicle and military markets.These performance improvements are particularly pleasing given the difficultmarket conditions that the traditional US car manufacturers face. Germany In Germany, all companies who service the automotive market face challenges fromthe weak domestic market, including Ricardo. Two of the major German carcompanies in particular are facing difficulties, so we are pleased that ourbusiness has achieved a near 50% increase in profits and only a very slightreduction in the order book, although the outlook for the New Year clearlyremains testing. Asia During the year, order intake in Japan tripled to 13% of all orders andsimilarly orders from China have grown from virtually zero to over 15%. There isa dramatic shift in emphasis for the automotive world from historically dominantmarkets of North America/Europe to Asia. The opening of our new offices in Tokyoand Shanghai, which we report as a cost, is most timely and will ensure wecontinue to capitalise on opportunities as they arise. As well as China and Japan, we are also seeing growth from India, Korea andother markets with aspirations to create their own automotive developmentcapability. These markets will bring their own commercial challenges but make amost welcome addition to the traditional markets of Europe and the USA withtheir overcapacity and high cost problems. Strategic Consulting Strategic Consulting is now well established and has had an excellent yearturning a significant start-up loss into a very good profit and has alsodelivered a five-fold increase in the order book. This has been achieved by teams in Europe, USA and Asia against competition fromthe major international consultancies. The combination of our traditionaltechnology capability, coupled with our newer strategic advisory service withdeep industry knowledge and a focus on delivering tangible results, is a verysuccessful formula with our client base and one with considerable potential forfurther development. We envisage this growth will also have an influence on our traditional businesswhich is likely to adopt some of the strategic methodologies, particularly inbusiness development and approach to clients. RESEARCH & DEVELOPMENT Internal research investment remains a key part of the Ricardo businessstrategy, creating tangible in-house solutions to industry challenges anddifferentiates Ricardo from lower added value routine engineering resourceproviders. Future needs are currently dominated by the demand for cost effective reductionsin carbon and exhaust emissions, together with improvements in vehicle safety.Also customers are keen to reduce the time and cost of product research anddevelopment as a key requirement for new models, which drives an increased needfor us to deliver more robust tools and processes in product development,including control and safety critical software. In line with the drive towards more cost effective research processes, Ricardohas focused on creating more collaborative research programme. Most internallyfunded research now attracts collaborative support from a range of automotivecustomers, often with added government funding in the US, Europe and the UK. 2S/4Sight Lower Fuel Consumption Programme------------------------------------------ A good example of a collaborative research programme with UK Government supporthas been the 2S/4Sight research programme. The 2S/4Sight concept uses a combination of downsizing and boosting to reduceinternal friction, resulting in lower fuel consumption and therefore carbonemissions. Uniquely this concept has addressed the low speed torque deficiencyhistorically exhibited by small, high performance engines. 2S/4Sight operates predominantly as a four stroke engine for good exhaustemissions control but is configured to switch to two stroke operation to deliverhigher torque when demanded at low engine speeds. Work to develop the combustion system has been successfully completed, based ona patented Ricardo configuration, and the focus is now on developing transientswitching strategies to provide seamless changes between two and four strokeoperation. Current estimates predict fuel economy benefits for this concept ofaround 25% compared with a conventional gasoline engine, with overall costssimilar to that of a diesel engine. R&D of this nature is fundamental to the development of products for ourcustomers in tomorrow's market place. Advancing Control & Electronics------------------------------- Advances in control and electronics capabilities are at the centre of manyinternally funded research programmes, as they are often the key to operation ofengines and transmissions in more efficient operating regimes. Ricardo has produced a very flexible and powerful prototype engine and vehiclemanagement system for investigating new control approaches. These flexible unitsare now in use on five major internal research programmes and many more havebeen purchased by our customers for their own research. Improving Road Safety--------------------- A third key R&D area for Ricardo is to help clients meet ambitious globaltargets to cut road deaths. This has driven an increased requirement for activesafety technology, using advanced sensors, actuators and control and electronicsto prevent vehicle accidents. Ricardo has identified interactions between safety-critical vehicle subsystemsand software as a key area for research. Validation of safety-critical softwareusing traditional analysis is creating major challenges due to the vast quantityof code now required for vehicle systems and susceptibility to human error inany manual process. To address the need for more automated, less error prone analysis, Ricardo hasinitiated a programme to create tools and processes for automated reliabilityand multiple failure mode analysis. Our approach and work to date offers majorbenefits compared to traditional analysis and has attracted significant customerinterest. ENVIRONMENTAL DRIVERS FOR OUR BUSINESS The product of our R&D and client programmes have a direct impact on theenvironment because much of our work is aimed at reducing both emissions andfossil fuel consumption and in the future will be increasingly focused onhelping to reduce road deaths and accidents, likely to be the world's thirdbiggest killer by 2020. Legislation continues to be a key driver for our growth in these areas, asautomotive manufacturers work to make new models meet future targets, andreflects the importance of our R&D programme in meeting the future challengesfor our clients. Legislated limits for key exhaust emissions are already a tenth of what theywere in 1990, and in some cases are likely to drop to a quarter of today'slevels in the next decade. Vehicles must achieve this environmental performancewhile meeting increasing customer expectations for performance, safety, comfortand value. The development of technologies, tools and processes to delivervehicles with improved exhaust emissions has been a mainstay of Ricardo's R&Dinvestment for many years. This investment has already delivered: • A diesel passenger car demonstrating emissions performance compatible with the likely requirements of "Euro 5" legislation, as a result of collaborative research with the former Fiat-GM Powertrain (FGP) and VROM, the Dutch ministry of Housing, Spatial Planning and the Environment. • An advanced Combustion Research programme, in collaboration with several UK and foreign Universities, which has built scientific understanding of the mechanisms by which exhaust emissions form in the engine. Ricardo is also engaged in an increasing number of production programmes todevelop lower emission products for the second half of this decade. Lookingfurther to the future, Ricardo is investing in low emission technology for truckengines; solutions for passenger car diesels that are compatible with the verydemanding US legislation; advanced control technology for ultra-cleancombustion; and further development of the engineering tools that will supportthis new generation of technology.These programmes include the development of Hybrid vehicles and "Low Carbon"powertrain technologies for market introduction in the second half of thisdecade, including: • I-MoGen, a cost-effective diesel Mild Hybrid demonstrator car demonstrated in 2002, which continues to showcase Ricardo's expertise in Hybrid systems integration, Advanced Control, and efficient engine technology. • Dual Clutch Transmission technology, which offers the smooth driving experience of an Automatic gearbox with the fuel efficiency of a Manual. Ricardo technology has recently been showcased on the Chrysler ME4-12 and Bugatti Veyron supercars, and will filter down to mainstream vehicles in the coming years where we have a steady flow of customer interest. • The Lean Boost system, a technology which enables the gasoline (Petrol) engine to compete with diesel in terms of carbon emissions. • The HyTrans micro-hybrid demonstrator, which showcases how low-risk technologies can have a big impact in the growing delivery van sector. This project was a result of collaborative research with Ford and suppliers Valeo and Gates, with support from the UK's Energy Savings Trust. For the longer term, Ricardo is investing in further efficient powertraintechnologies through the collaborative programmes "Efficient-C" (A veryefficient Hybrid people-carrier co-developed with PSA Peugeot-Citroen andQinetiq, sponsored by the UK Energy Savings Trust as part of their Ultra LowCarbon Car Challenge) and "2/4Sight". A Fuel Cell research programme focussed oncomputer modelling and integration of systems, and supported by collaborationwith two key North American players in this field. IMPACT OF IFRS Our project team has been working hard on the transition from UK GAAP toInternational Financial Reporting Standards. The 2005 interims will be the firsttime we report under these new standards. The impact to the P&L is expected to be relatively small, but the net assets anddistributable reserves will be significantly reduced due mainly to taking thepensions deficit onto the balance sheet. PENSIONS Under FRS17 the net deficit in our defined benefit pension scheme increased from£19.1m to £24.2m due mainly to the falling bond yield which is used as the basisfor the discount rate which was assumed to be 5% compared with 5.8% a yearearlier. At the time of writing this review, our actuary was well advanced in carryingout the triennial valuation of the pension scheme. Preliminary results of theactuarial valuation suggest that on an ongoing basis the deficit will haveincreased from £9m to around £22m. The main reasons for this increase are moreprudent assumptions being used coupled with the falling bond yield and a poorequity investment return over the three year period. As a consequence it isexpected that the Group will be required to significantly increase itsadditional contribution to the fund from £1.6m to approximately £3.2m per annum.Although the fund is now closed, this represents a significant impact on thecompany's future cash outflow. This increase will not affect the pensions chargeto the profit and loss account under IFRS. PEOPLE On 18 February 2005 we announced the appointment of Dave Shemmans as CEOdesignate to take over from Rodney Westhead when he retires on 8 November 2005.Dave will make a great leader for Ricardo and we look forward to working withhim over the coming years. The Board would like to take this opportunity of paying tribute to theconsiderable success with which Rodney has led the company over these last 9years, and to wish him a long and very happy retirement. Peter Ward resigned from the Board on 31 March 2005 to take up the Chairmanshipof another company. We thank him for his support and guidance to the companyover the last six years and wish him every success in his new role. Dr Clive Hickman resigned from the Board on 31 August 2005 to pursue his careerelsewhere. We thank him for his contribution to the company and wish him successfor the future. OUTLOOK Ricardo is now the world's major independent automotive consultancy and wellplaced to continue growing. We have withstood some very difficult years andemerged better equipped than ever to exploit the future. Despite the continuingdifficult automotive market in both Europe and the USA, our broadening customerand geographic base enables the Board to be confident of further steady progressin the years ahead. Our long term outlook is excellent and our immediate future prospects continueto improve most satisfactorily as we steadily restore previous levels of growthand profitability. This is not a one year task but one which we continue totackle with increasing confidence as Ricardo's breadth of capability and marketplace steadily improve. CONSOLIDATED PROFIT & LOSS ACCOUNTFor the year ending 30 June 2005 Before goodwill Goodwill amortisation amortisation and and Before 2005 exceptional exceptional 2004 goodwill Goodwill £'000 redundancy redundancy £'000 Notes amortisation amortisation Total costs costs Total--------------------------------------------------------------------------------------------------------------------Turnover 2 159,920 - 159,920 146,242 - 146,242--------------------------------------------------------------------------------------------------------------------Operating profit/(loss) 3 9,147 (1,004) 8,143 2,600 (4,558) (1,958)--------------------------------------------------------------------------------------------------------------------Profit/(loss) on ordinary activities before interest 9,147 (1,004) 8,143 2,600 (4,558) (1,958) Net interest (796) - (796) (800) - (800)--------------------------------------------------------------------------------------------------------------------Profit/(loss) on ordinary activities before taxation 8,351 (1,004) 7,347 1,800 (4,558) (2,758) Tax on profit/ (loss) on (186) - (186) 515 1,114 1,629ordinary activities --------------------------------------------------------------------------------------------------------------------Profit/(loss) on ordinary activities after taxation 8,165 (1,004) 7,161 2,315 (3,444) (1,129) Minority interest (82) (148)--------------------------------------------------------------------------------------------------------------------Profit/(loss) for the financial year 7,079 (1,277)Non - equity preference (6) (6)dividends --------------------------------------------------------------------------------------------------------------------Profit/(loss) attributable to ordinary shareholders 7,073 (1,283)Equity ordinary dividends 4 (4,505) (4,478) --------------------------------------------------------------------------------------------------------------------Retained profit/(loss) transferred to/(from)reserves 2,568 (5,761)====================================================================================================================Earnings per ordinary share -basic 14.2p (2.6)p-diluted 14.1p (2.6)p Earnings per ordinary sharebefore goodwill amortisation (2004: and exceptional redundancy costs) -basic 16.2p 4.3p-diluted 16.1p 4.3p-------------------------------------------------------------------------------------------------------------------- There is no material difference between the profit on ordinary activities beforetaxation and the profit/(loss) for the financial years stated above, and theirhistorical cost equivalents. All the above activities are continuing. CONSOLIDATED AND COMPANY BALANCE SHEETSAs at 30 June 2005 Group Company 2005 2004 2005 2004 £'000 £'000 £'000 £'000------------------------------------------------------------------------------------------------------Fixed assetsIntangible assets 14,643 16,161 - -Tangible assets 47,872 50,944 10,093 10,463Investments - - 26,062 20,333------------------------------------------------------------------------------------------------------ 62,515 67,105 36,155 30,796======================================================================================================Current assetsStocks 6,918 6,285 - -Debtors 46,589 36,525 42,576 164,726Cash at bank and in hand 8,807 11,119 22,354 13,227------------------------------------------------------------------------------------------------------ 62,314 53,929 64,930 177,953Creditors - amounts falling due within one year (45,066) (56,247) (20,372) (23,255)------------------------------------------------------------------------------------------------------Net current assets/(liabilities) 17,248 (2,318) 44,558 154,698------------------------------------------------------------------------------------------------------Total assets less current liabilities 79,763 64,787 80,713 185,494Creditors - amounts falling due after more than one year (18,655) (4,788) (15,534) -Provisions for liabilities and charges (1,815) (3,843) (162) (392)------------------------------------------------------------------------------------------------------Net assets 59,293 56,156 65,017 185,102======================================================================================================Capital and reservesCalled up share capital 12,504 12,474 12,504 12,474Share premium account 12,201 12,076 12,201 12,076Capital redemption reserve 40 40 40 40Merger reserve 967 967 - -Long term incentive plan reserve 143 - 143 -Profit and loss account 32,944 30,106 40,129 160,512------------------------------------------------------------------------------------------------------Shareholders' funds 58,799 55,663 65,017 185,102------------------------------------------------------------------------------------------------------Equity and non equity minority interests 494 493 - -------------------------------------------------------------------------------------------------------Capital employed 59,293 56,156 65,017 185,102------------------------------------------------------------------------------------------------------ CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 June 2005 2005 2004 Notes £'000 £'000 £'000 £'000----------------------------------------------------------------------------------------------------------- Net cash inflow from operating activities 6 10,183 12,037 Returns on investments and servicing of financeInterest received 774 919Interest paid (1,649) (1,662)Dividend paid to minority shareholder (85) (207)----------------------------------------------------------------------------------------------------------- Net cash outflow from returns on investment and servicing of finance (960) (950) Taxation 271 (3,531) Capital expenditure and financial investmentPurchase of tangible fixed assets (6,264) (11,091)Sale of tangible fixed assets 158 75----------------------------------------------------------------------------------------------------------- (6,106) (11,016) Equity and non equity dividends paid (4,499) (4,482)----------------------------------------------------------------------------------------------------------- Management of liquid resourcesLoan note repaid - (340)----------------------------------------------------------------------------------------------------------- (340)----------------------------------------------------------------------------------------------------------- Cashflow before financing (1,111) (8,282) FinancingIssue of ordinary share capital 155 27Loans taken out /(repaid) 13,855 (585)Amounts received in respect of ESOPshares 99 ------------------------------------------------------------------------------------------------------------ Increase/(decrease) in cash 14,109 (558) ----------------------------------------------------------------------------------------------------------- 12,998 (8,840)=========================================================================================================== NOTES TO THE ACCOUNTS 1. Accounting Policies This preliminary announcement has been prepared on the basis of the accountingpolicies as set out in the annual financial statements for the year ended 30June 2005. 2. Segmental reporting The directors consider that the Group operates in two business segments, theprovision of engineering and technology services and strategic consulting toindustry, commerce and other agencies. Turnover by destination 2005 2004 £'000 £'000 Europe 91,307 94,284North America 42,160 40,830Pacific Basin 16,266 5,529Rest of the World 10,187 5,599------------------------------------------------------------------------------------------- 159,920 146,242------------------------------------------------------------------------------------------- Turnover by origin, operating profit and net operating assets For engineering and technology services, the Group operates from 3 maingeographical areas. In addition, the Group's strategic consulting businessoperates on a global basis. Segmental analysis for the year ended 30 June 2005 Engineering and technology services Strategic North Rest of Sub - Consulting UK America Germany World total Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover by origin 88,629 32,441 29,660 249 150,979 8,941 159,920-----------------------------------------------------------------------------------------------------------Operating profit/(loss) beforegoodwill amortisation 4,735 1,599 1,626 (343) 7,617 1,530 9,147Operating profit/(loss) aftergoodwill amortisation 4,431 1,589 936 (343) 6,613 1,530 8,143-----------------------------------------------------------------------------------------------------------Net operating assets/ 40,904 12,503 21,178 (703) 73,882 (1,514) 72,368(liabilities) Net Group borrowings (11,260) Provisions for liabilities and (1,815)charges-----------------------------------------------------------------------------------------------------------Net assets 59,293----------------------------------------------------------------------------------------------------------- Segmental analysis for the year ended 30 June 2004 Engineering and technology services Strategic North Rest of Sub - Consulting UK America Germany World total Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover by origin 84,677 36,365 23,390 32 144,464 1,778 146,242-----------------------------------------------------------------------------------------------------------Operating profit/(loss) before 1,869 1,026 1,181 (185) 3,891 (1,291) 2,600goodwill amortisation andexceptional costsOperating profit/(loss) after 1,554 1,015 522 (185) 2,906 (1,291) 1,615goodwill amortisation and beforeexceptional costs-----------------------------------------------------------------------------------------------------------Net operating assets/ 42,775 9,564 17,557 (239) 69,657 599 70,256(liabilities) Net Group borrowings (10,257) Provisions for liabilities and (3,843)charges-----------------------------------------------------------------------------------------------------------Net assets 56,156----------------------------------------------------------------------------------------------------------- 3. Operating profit/(loss) on ordinary activities before taxation Profit on ordinary activities before taxation is after charging research anddevelopment of £3,862,000 (2004: £4,421,000) goodwill of £1,004,000 (2004:£985,000) and depreciation of £9,298,000 (2004: £9,518,000). 4. Dividends The final dividend is 6.3p (2004: 6.3p). This is payable on 18 November 2005ordinary shareholders on the register on 21 October 2005. 5. Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of shares in issue duringthe year, excluding those held by the LTIP Trustee which are treated ascancelled for the purposes of the calculation. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has two classes of dilutive potential ordinary shares: thoseoptions granted to employees where the exercise price is less than the marketprice of the Company's ordinary shares during the year and the contingentlyissuable shares under the Group's LTIP. At 30 June 2005, the performancecriteria for the vesting of awards under the plans maturing on 30 June 2005 and30 June 2006 had not been met and consequently the shares in question areexcluded from the diluted earnings per share computation. The contingently issuable shares under the Group's LTIP maturing on 30 June 2007 are included as the performance criteria for the vesting of awards will be met based on the current status of the conditions. Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below. 2005 2004 Per Per Number Share Number share Earnings of shares amount Earnings of shares amount £'000 '000 Pence £'000 '000 PenceBasic EPS Profit/(loss) attributable toordinary shareholders 7,073 49,938 14.2 (1,283) 49,770 (2.6)Effect of dilutive securities:LTIP 203 -Options - 61 - *-------------------------------------------------------------------------------------------------------- Diluted EPS 7,073 50,202 14.1 (1,283) 49,770 (2.6)-------------------------------------------------------------------------------------------------------- Supplementary earnings per share to exclude goodwill amortisation (2004: goodwill and exceptionalredundancy costs) Basic EPS 7,073 49,938 14.2 (1,283) 49,770 (2.6) Effect of goodwill 1,004 - 3,444 ---------------------------------------------------------------------------------------------------------Basic EPS excluding goodwillamortisation 8,077 49,938 16.2 2,161 49,770 4.3--------------------------------------------------------------------------------------------------------Diluted EPS 7,073 49,938 14.2 (1,283) 49,770 (2.6)Effect of goodwill 1,004 - 3,444 -Effect of dilutive securities:LTIP 203 -Options - 61 - 271--------------------------------------------------------------------------------------------------------Diluted EPS excluding goodwillamortisation 8,077 50,202 16.1 2,161 50,041 4.3-------------------------------------------------------------------------------------------------------- * No dilution due to loss in the year. The weighted average number of shares in issue may be reconciled to the numberused in the earningsper share calculation as follows: 2005 2004Weighted average number: '000 '000Ordinary shares in issue 49,943 49,889Shares held by Employee Share Ownership Trust - (67)Shares held by Long Term Incentive Plan Trustee (5) (52)------------------------------------------------------------------------------------------ 49,938 49,770------------------------------------------------------------------------------------------ 6. Net cash inflow from operating activites 2005 2004 £'000 £'000 Operating profit/(loss) 8,143 (1,958)Depreciation Charges 9,298 9,518Goodwill amortisation 1,004 985Loss/ (profit) on sale of tangible fixed assets 5 (7)Long term incentive plan charge/(credit) 143 (204)Reduction in potential deferred consideration (600) -Increase in stock (604) (1,632)(Increase)/decrease in debtors (10,781) 15,642Increase/(decrease) in creditors 3,575 (10,307)------------------------------------------------------------------------------------------ Net cash inflow from operating activities 10,183 12,037------------------------------------------------------------------------------------------ 7. Reconciliation of net cash flow to movement in net debt 2005 2004 £'000 £'000 Increase/(decrease) in cash 12,998 (8,840)Movement in debt (13,855) 691----------------------------------------------------------------------------------------Change in net debt from cash flows (857) (8,149)Translation difference (146) (916)-----------------------------------------------------------------------------------------Movement in net funds in year (1,003) (9,065)Net debt at 1 July (10,257) (1,192)-----------------------------------------------------------------------------------------Net debt at 30 June (11,260) (10,257)----------------------------------------------------------------------------------------- 8. Analysis of net debt At 1 July Cash Exchange At 30 June 2004 flow movement 2005 £'000 £'000 £'000 £'000 Cash in hand 11,119 (2,355) 43 8,807Overdrafts (16,588) 15,353 (301) (1,536)---------------------------------------------------------------------------------------Sub total (5,469) 12,998 (258) 7,271Debt due after 1 year (4,788) (13,855) 112 (18,531)---------------------------------------------------------------------------------------Total (10,257) (857) (146) (11,260)--------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ricardo