StatPro Group PLC – Final Results

For immediate release
1 March 2004

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Preliminary Results for the Year ended 31 December 2003

StatPro Group plc, a leading AIM listed provider of portfolio analytics solutions for the global asset management industry, announces its preliminary results for the year ended 31 December 2003.

 Year ended       Year ended   Change
                                     31 December 2003 31 December 2002

Turnover                                 £8.4 million     £7.2 million     +17%
Profit/(loss) before tax                 £0.1 million   (£2.4) million
Profit/(loss) before tax, amortisation
and exceptional items (note 1)           £0.5 million   (£1.8) million
Operating cash inflow/(outflow)          £1.6 million   (£0.5) million
Basic earnings/(loss) per share                  0.6p           (7.3)p

 Highlights

  • Achieved first pre-tax profit during the year as a result of:
    * the cost cutting programme initiated in 2002
    * the resilience of the recurring revenue business model – annualised recurring software revenues up by 18% to £7.4m (2002: £6.3m)
  • Whilst managing expansion, strong operating cash inflow of £1.6m generated – cash positive for last eighteen months
  • Strategic risk management solution acquired

Commenting on the results, Carl Bacon, Chairman of StatPro said: ‘I am pleased to report that StatPro has continued to make further steady progress throughout 2003 achieving both its main objectives of generating operating cash and operating profits, whilst increasing turnover by 17% to £8.4 million. Annualised recurring software revenues increased by 18% to £7.4 million whilst professional services revenue increased by 29% to £1.2 million.’

– Ends –

For further information, please contact:

StatPro Group plc

Justin Wheatley, Chief Executive 020 8410 9876
Andrew Fabian, Finance Director

Weber Shandwick Square Mile

Mike Kirk/Rachel Taylor 020 7067 0700

Notes to Editors:

StatPro Group plc is a leading provider of portfolio analytics solutions for the global asset management industry, which floated on the London Stock Exchange in May 2000. StatPro transferred its listing in June 2003 to AIM and has grown its recurring software revenue base per annum from less than £1.0 million to £7.4 million in four years.

CHIEF EXECUTIVE’S REVIEW

Highlights of 2003

This year’s results show the resilience of our recurring revenue business model, together with benefits of the cost reduction in 2002. Whilst 2003 was a tough year for software businesses, with clients’ budgets remaining very tight, we have been able to increase revenues by 17% to £8.4 million (2002: £7.2 million). At the same time we have achieved our first pre-tax profit of £0.1 million (2002: loss of £2.4 million). It is perhaps more significant that whilst managing this expansion we have generated an operating cash inflow for 2003 of £1.6 million, against an operating cash outflow of £0.5 million for 2002.

Regional Performance and Outlook

Sales of our products were made in Belgium, Canada, Denmark, France, Ireland, Italy, the Netherlands, Norway, Singapore, South Africa, the US and the UK. In total there were 39 sales including 24 contract extensions. Although the absolute level of additional sales was lower than in 2002, our cancellation rate was also lower. This reflects the change in culture amongst clients from the more aggressive cost reductions in 2002, to a more balanced approach in 2003, with the lower sales reflecting their reluctance to take on new projects but a willingness to stick with existing operations.

We believe that optimism has replaced pessimism with the majority of our clients. However, we still believe that in the short term this may result only in increased ‘window shopping’, rather than a significant increase in projects. That being the case we are approaching 2004 with caution and a clear focus on cost control, whilst ensuring we remain well-positioned to respond positively to growth opportunities.

Acquisition

In October 2003 we acquired a 51% stake in RiskMap Srl (renamed StatPro Italia) and have an option to buy the remaining 49% between 31 December 2006 and 31 December 2013. StatPro Italia has two key products – StatPro Risk Management (SRM) and StatPro Portfolio Insurance (SPI). These have been integrated with our Data Hub and are being actively promoted to our clients and prospects. In February 2004 we signed our first new client for SRM and we have built a significant pipeline of prospects for the product. Clients have responded positively to SRM and SPI and we believe that both products will be successful.

Strategy

Our strategy remains to provide our clients with the best value possible for their Portfolio Analysis needs. By developing and building on our original systems, we now offer a product structure that can be configured to suit the needs of any type of asset manager, large or small.

The core of the product strategy is the StatPro Data Hub (SDH), which centralises, cleans and prepares all the data required for analysis. On top of SDH five other products can be added: StatPro Performance & Attribution (SPA), StatPro Composites (SC), StatPro Risk Management (SRM), StatPro Portfolio Insurance (SPI) and StatPro Fixed Income (SFI). These products produce a very wide range of analysis that covers the majority of current needs of most asset managers.

At the start of 2004 we implemented two revenue sharing partnership agreements to create a new reporting platform. The first is with Artech SA (France) to create StatPro Enterprise Reports (SER) and the second is with Delve Ltd (UK) to make StatPro Web Management (SWM). Rather than seeking to build or buy reporting solutions, we have taken this route so that we can offer our clients a ‘best of breed’ range of reporting systems that can handle the specific needs of asset managers, whether they are hedge funds, private banks, mutual fund companies or institutional asset managers. By layering these products over our data hub and analytics products, clients can automate every aspect of their reporting requirements.

As asset managers seek to rationalise costs and improve their internal systems, we believe they will work with suppliers who can provide the best platform with the broadest array of analysis modules. StatPro’s approach of acquiring market leading products and integrating them through the StatPro Data Hub provides both a ‘best of breed’ and an integrated solution. Therefore we should be well placed to take advantage of any upturn in the market.

Market Survey

Shareholders will be pleased to learn that a recent independent survey conducted by the Spaulding Group put StatPro top of the list of 33 suppliers for Composite, Performance and Attribution systems in response to the question ‘Which three suppliers would you consider in your system selection?’ We believe that this reflects not only our success in selling over 150 systems but also the quality of our reputation in our market place. We are determined to maintain our position.

Summary

We achieved our two objectives for 2003 of generating positive operating cash flow and making a profit and I would like to thank all the staff and directors for all their hard work during 2003. However, 2003 was difficult and 2004 could also prove a challenge. Our objectives for 2004 are to increase profits and to generate further operating cashflow. We will launch our new reporting platform and aim to win clients for each of our new products, concentrating on building our core revenues through organic growth. By strengthening the financial position of StatPro we hope to be in a position to take advantage of any opportunities that may occur in the market.

Justin Wheatley
Chief Executive

OPERATING AND FINANCIAL REVIEW

Overview

StatPro has continued to grow its revenue for the eighth consecutive half-year period and achieved the first full year operating profit since the Company’s flotation in May 2000. We also generated an operating cash inflow during the year and we have now done so for over 18 months.

Turnover

Group turnover increased by 17% to £8.43 million (2002: £7.23 million). Excluding the impact of the acquisition of RiskMap Srl (renamed StatPro Italia), which contributed £0.09 million of revenue for the three months to the 31 December 2003, the revenue growth was 15%. Whilst additional sales of licences were modest, a lower rate of cancellations in 2003 compared to 2002 resulted in an overall growth of 21% in software licence revenue. Despite lower levels of new business and related implementation requirements, the professional services revenues grew by 29%. Other recurring revenue from the TAP royalties fell by 7% and there was no revenue contribution from the Swiss agency during 2003 as the agency agreement was terminated in August 2002.

The split of revenue by type was as follows:

  Year to       Year to       Year to       Year to    Growth
                     31 December   31 December   31 December   31 December   year on
                            2003          2003          2003          2002      year
                       £ million     £ million     £ million     £ million         %

                      Continuing   Acquisition         Total
                      operations
Turnover
Software licences           6.61          0.05          6.66          5.52       +21
Professional services       1.20          0.04          1.24          0.96       +29
Other recurring revenue     0.53             -          0.53          0.57        -7
Swiss agency                   -             -             -          0.18       n/a
                        --------      --------      --------      --------
                            8.34          0.09          8.43          7.23       +17
                        --------      --------      --------      --------

Recurring revenue

The underlying recurring revenue from software licences at the end of December 2003 grew to £7.38 million (2002: £6.28 million), an increase of 18% year on year. Part of the increase was due to the acquisition of the risk product (3%). The impact of exchange rates on recurring revenues amounted to a gain of £0.19 million on euro priced contracts offset by a loss of £0.10 million on US dollar denominated contracts. Overall, foreign exchange movements resulted in a gain of £0.09 million (1%) on the revaluation of the net value of contracts to the 2003 year-end rates compared with the 2002 year-end rates. The revenue from the TAP royalties reduced by 7% to £0.53 million (2002: £0.57 million).

The recurring revenue is analysed as follows:

Annualised value           At 31   New contracted    Acquisition     Net impact of      At 31      Growth
£ million               December  revenue (net of                   exchange rates   December     year on
                            2002   cancellations)                                        2003        year
                                                                                                       %

Recurring revenues
Software licences           6.28            0.81            0.20              0.09       7.38         +18
Other recurring revenue     0.57           (0.04)              -                 -       0.53          -7
                        --------        --------        --------          --------   --------
Total recurring revenue     6.85            0.77            0.20              0.09       7.91         +15
                        --------        --------        --------          --------   --------

The restructuring of our Account Management and Client Services function during 2002 yielded financial benefits in 2003. The proportion of consulting to existing clients increased to approximately 70%. The total incremental revenue (including new modules and users) per additional contract increased to approximately £75,000 compared to £62,000 in 2002 mainly as the result of an increase in the value of additional modules sold to existing contracts. The average value was also boosted by the addition of the two acquired contracts from RiskMap with an average annual value of £100,000. The proportion of recurring revenue on multi-year contracts increased from 18% at the end of 2002 to 33% at the end of 2003.

Operating expenses

Operating expenses (before goodwill amortisation) decreased to £7.78 million (2002: £8.83 million before exceptional items of £0.31 million) following the full year benefit of the restructuring in July 2002. Of the total operating expenses, £0.14 million related to the operating expenses (before goodwill amortisation) of RiskMap, for the three-month period following its acquisition in October 2003. The combination of increased revenue and reduced operating expenses allowed us to report our first full year operating profit of £0.33 million (2002: loss of £2.20 million).

We achieved earnings before interest, tax, depreciation and amortisation (‘EBITDA’) of £0.89 million compared with a loss of £1.30 million in 2002 (before exceptional costs), as shown in the following table:

      Year to       Year to   Change
                                            31 December   31 December        %
                                                   2003          2002
                                              £ million     £ million

Revenue                                            8.43          7.23      +17
Operating expenses *                              (7.54)        (8.53)     -12
                                                 --------      --------
EBITDA                                             0.89         (1.30)     n/a
Depreciation                                      (0.24)        (0.30)     -21
Goodwill amortisation                             (0.32)        (0.29)      +9
                                                 --------      --------
Operating profit/(loss) (before exceptional items) 0.33         (1.89)     n/a
Exceptional items                                     -         (0.31)     n/a
                                                 --------      --------
Operating profit/(loss)                            0.33         (2.20)     n/a
                                                 --------      --------

* before depreciation, goodwill amortisation and exceptional items

Our strategy is to continue to invest a significant proportion of our revenue in new and improved products to ensure we remain at the forefront of performance and risk analytics technology. Within our operating expenses of £7.78 million (before goodwill amortisation), £1.17 million (2002: £1.41 million) was spent on research and development to improve our products continually and to upgrade the software for increased functionality.

Employees

There was a reduction in the average number of employees during the year from 97 to 77 following the restructuring in July 2002. In acquiring a majority stake in RiskMap, we added seven new employees in October 2003. We ended the year with a total of 82 employees, situated in seven locations (London, Paris, New York, Milan, Frankfurt, Luxembourg and Brisbane).

Interest

Net interest expense, which results from interest accrued on the bank loans, on the convertible loan notes (redeemed on 2 January 2004), including related financing costs, and finance leases, less interest earned on cash and deposits, amounted to £0.18 million (2002: £0.17 million).

Profit/(Loss) before tax and Taxation

The profit before taxation was £0.15 million (2002: loss before taxation of £2.37 million). A provision of £0.01 million has been made for corporation tax for an overseas subsidiary. There is no current or deferred charge for UK corporation tax for 2003 (2002: nil) due to accumulated taxable losses.

Equity minority interests

The equity minority interests amounting to £0.07 million (2002: nil) relate to the minorities’ share of losses in StatPro Australia and StatPro Italia.

Earnings/(loss) per share

Basic earnings per share were 0.6p (2002: loss per share 7.3p). The earnings per share before goodwill amortisation and exceptional items were 1.6p (2002: loss per share 5.5p). The diluted earnings per share in 2003 are 0.6p based on potentially dilutive shares outstanding amounting to 308,853. The diluted loss per share in 2002 was the same as the basic loss per share of 7.3p as there were no potentially dilutive shares outstanding since the Group was making losses.

Balance Sheet

The Group’s net liabilities reduced to £2.71 million at 31 December 2003 from £2.81 million at 31 December 2002. The balance sheet includes deferred income of £5.23 million (2002: £4.82 million), which is a non-cash liability and has a significant adverse impact on the reported net liability position of the Group balance sheet.

Fixed assets

Total capital expenditure amounted to £0.10 million in 2003 (2002: £0.18 million including £0.03 million acquired under finance leases). Goodwill arising on the investment in StatPro’s Italian subsidiary amounted to £0.34 million. The other main component of the total goodwill balance of £0.74 million (2002: £0.72 million) arose on the acquisition of AMS S.A. in 2000. Goodwill is amortised over a five-year period.

Current assets

The level of debtors remained broadly unchanged at £3.03 million (2002: £3.40 million). Improvements in working capital management resulted in lower trade debtors amounting to £2.24 million at the end of 2003 (2002: £2.76 million). The level of cash at bank and in hand increased by 54% to £2.29 million (2002: £1.49 million).

Creditors

The level of short-term creditors (excluding deferred income and short-term debt) increased by 19% to £1.61 million (2002: £1.35 million) mainly as a result of creditors assumed with the acquisition. Long-term creditors include £1.46 million of bank debt (2002: £1.60 million). The convertible loan issued on 3 July 2002 with a nominal value of £1.00 million was redeemed on 2 January 2004 and is therefore shown as a current liability in the year-end balance sheet. Deferred income increased by 8% to £5.23 million from £4.82 million as a result of the continued growth in the annual recurring revenue base. Of the £5.23 million, £5.08 million is expected to be recognised in 2004.

Cash flow and financing

We generated an operating cash inflow of £1.57 million during 2003 (2002: outflow of £0.48 million). Net debt reduced from £1.43 million at 31 December 2002 to £0.20 million at 31 December 2003.

Share capital and reserves

The issued share capital amounted to £0.33 million (2002: £0.33 million) representing 33,089,244 shares of 1p nominal value (2002: 32,810,986) as a result of the issue of 278,258 shares issued under the Share Plan and on exercise of options under employee share option schemes. As a result, the share premium account has increased from £8.54 million to £8.56 million. The equity minority interests of £0.07 million (2002: nil) have been deducted in computing the total capital employed.

Dividend

The directors currently propose continued investment in growing the business and are not proposing to recommend any dividend at present.

Andrew Fabian
Finance Director

Consolidated profit and loss account for the year ended 31 December 2003

 

                                                          Unaudited    Audited
                                                   Note        2003       2002
                                                              £'000      £'000

Group turnover
 Continuing operations                                        8,340      7,229
 Acquisition                                          3          86          -
                                                            --------- ----------
                                                      2       8,426      7,229

 Operating expenses before goodwill amortisation
 and exceptional items                                       (7,775)    (8,832)
 Amortisation of goodwill                                      (321)      (294)
 Exceptional items                                     4          -       (306)

Operating expenses                                           (8,096)    (9,432)
                                                            --------------------

 Continuing operations                                          400     (2,203)
 Acquisition (after goodwill amortisation of £17,000)           (70)         -
                                                            --------- ----------
Operating profit/(loss)                                         330     (2,203)

Net interest payable                                           (184)      (170)
                                                            --------- ----------
Profit/(loss) on ordinary activities before taxation            146     (2,373)

Taxation                                              5         (14)         -
                                                            --------- ----------
Profit/(loss) on ordinary activities after taxation             132     (2,373)

Equity minority interests                             6          70          -
                                                            --------- ----------
Retained profit/(loss) for the financial year                   202     (2,373)
                                                            ========= ==========

Earnings/(loss) per share - basic and diluted         7        0.6p      (7.3)p
                                                            --------- ----------
Earnings/(loss) per share - before amortisation of
goodwill and exceptional items                        7        1.6p      (5.5)p
                                                            --------- ----------

The results above all relate to continuing operations

Statement of group total recognised gains and losses

Unaudited      Audited
                                                             2003         2002
                                                            £'000        £'000
Retained profit/(loss) for the financial year                 202       (2,373)
Exchange differences offset in reserves                       (52)         (19)
                                                            --------- ----------
Total recognised gains and losses for the year                150       (2,392)
                                                            ========= ==========

C

Unaudited         Audited
                                               Note       2003            2002
                                                         £'000           £'000
Fixed assets
Intangible assets                                          737             716
Tangible assets                                            561             674
                                                      ---------      ----------
                                                         1,298           1,390
Current assets
Debtors
- Amounts falling due after one year                       297             308
- Amounts falling due within one year                    2,728           3,087
Cash at bank and in hand                                 2,292           1,486
                                                      ---------      ----------
                                                         5,317           4,881
Creditors: amounts falling due within one year    8    (7,690)         (6,269)
                                                      ---------      ----------
Net current liabilities                                 (2,373)         (1,388)
                                                      ---------      ----------
Total assets less current liabilities                   (1,075)              2
                                                      ---------      ----------
Creditors: amounts falling due after
more than one year
Deferred income                                           (150)           (213)
Convertible loan                                             -            (971)
Bank loans                                              (1,457)         (1,602)
Finance lease obligations                                  (27)            (26)
                                                      ---------      ----------
                                                        (1,634)         (2,812)
                                                      ---------      ----------

Net liabilities                                         (2,709)         (2,810)
                                                      =========      ==========
Capital and reserves
Called up share capital                                    331             328
Share premium account                                    8,559           8,541
Warrant reserve                                            424             424
Profit and loss account                                (11,953)        (12,103)
                                                      ---------      ----------
Equity shareholders' deficit                            (2,639)         (2,810)
Equity minority interests                  6               (70)              -
                                                      ---------      ----------
Capital employed                                        (2,709)         (2,810)
                                                      =========      ==========

Consolidated cash flow statement for the year ended 31 December 2003

Unaudited    Audited
                                                               2003       2002
                                                              £'000      £'000
Net cash inflow/(outflow) from operating activities           1,572       (476)
                                                            --------- ----------
Returns on investments and servicing of finance
Interest received                                                34         22
Interest paid                                                  (138)      (143)
Issue costs in respect of bank loan                             (10)       (27)
Issue costs in respect of convertible loan                        -        (43)
                                                            --------- ----------
Net cash outflow from returns on investments and
servicing of finance                                           (114)      (191)

Taxation                                                          -          -
                                                            --------- ----------
Capital expenditure and financial investment
Purchase of tangible fixed assets                               (99)      (162)
                                                            --------- ----------
Net cash outflow from capital expenditure and financial
investment                                                      (99)      (162)
                                                            --------- ----------

Acquisitions and disposals
Deferred consideration proceeds from disposal of
subsidiary undertaking                                            -         89
Cash subscription on acquisition of subsidiary
undertaking                                                    (282)       (53)
Costs incurred on acquisition of subsidiary undertaking         (32)       (12)
Cash acquired on acquisition of subsidiary undertaking          411         55
                                                            --------- ----------
Net cash inflow from acquisitions and disposals                  97         79
                                                            --------- ----------

Net cash inflow/(outflow) before management of liquid
resources and financing                                       1,456       (750)

Management of liquid resources
Increase in short-term deposits                                (448)      (151)

Financing
Proceeds from bank facility                                       -        250
Repayment of bank facility                                     (499)       (51)
Repayment of debt assumed on acquisition                       (167)         -
Proceeds from issue of ordinary shares                           21         48
Capital element of finance lease payments                        (5)       (61)
Proceeds from issue of convertible loan                           -      1,000
                                                            --------- ----------
Net cash (outflow)/inflow from financing                       (650)     1,186
                                                            --------- ----------
Increase in cash in the year                                    358        285
                                                            ========= ==========

Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities

Unaudited     Audited
                                                              2003        2002
                                                             £'000       £'000

Operating profit/(loss)                                        330      (2,203)
Depreciation of tangible fixed assets                          239         301
Amortisation of goodwill                                       321         294
Decrease in debtors                                            461          58
(Decrease) in creditors (excluding deferred income)             (9)       (151)
Movement in deferred income                                    282       1,186
Loss on disposal of tangible fixed assets                        -          58
Exchange differences                                           (52)        (19)
                                                            --------- ----------
Net cash inflow/(outflow) from operating activities          1,572        (476)
                                                            ========= ==========

Reconciliation of net cash flow to movement in net debt

  Unaudited      Audited
                                                             2003         2002
                                                            £'000        £'000

Increase in cash in the year                                  358          285
Movement in short-term deposits                               448          151
Issue of convertible loan (net of issue costs)                  -         (957)
Movement on finance leases                                      5           61
Bank loan (net of issue costs)                                  -         (223)
Bank loan repayment                                           499           51
Other non-cash movements                                      (79)         (67)
                                                          ---------   ----------
Movement in net debt                                        1,231         (699)
Net debt at beginning of year                              (1,428)        (729)

                                                          ---------   ----------
Net debt at end of year                                      (197)      (1,428)
                                                          =========   ==========

Analysis of net debt

 Unaudited    Audited
                                                               2003       2002
                                                              £'000      £'000

Cash at bank and in hand (excluding short-term deposits)      1,093        735
Short-term deposits                                           1,199        751
Convertible debt (net of deferred issue costs)               (1,000)      (971)
Bank loan (net of deferred issue costs)                      (1,457)    (1,912)
Finance leases                                                  (32)       (31)
                                                           --------- ----------
Net debt                                                       (197)    (1,428)
                                                           ========= ==========

Notes to the preliminary financial statements

1. Profit before tax, amortisation and exceptional items

  Unaudited           Audited
                                                        2003              2002
                                                       £'000             £'000
Profit/(loss) on ordinary activities before taxation     146            (2,373)
Add: Amortisation of goodwill                            321               294
Exceptional items                                          -               306
                                                    ---------        ----------
Profit/(loss) before taxation, amortisation, and
exceptional items                                        467            (1,773)
                                                    ---------        ----------

2. Segmental Analysis Analysis of revenue by destination is as follows:

Unaudited        Audited        year on
                                            2003           2002           year
                                           £'000          £'000              %

United Kingdom                             2,330          2,140             +9
North America                              1,350          1,213            +11
Europe - continuing operations             3,971          3,500            +13
Europe - acquisition                          86              -            n/a
Rest of the World                            689            376            +83
                                         --------       ---------
Total revenue                              8,426          7,229            +17
                                         --------       ---------

3. Acquisition.On 3 October 2003 the Company invested £0.31 million including related costs in acquiring a 51% stake in an Italian company, RiskMap Srl, which has developed a risk management system (now marketed as StatPro Risk Management or SRM). RiskMap Srl has now been renamed StatPro Italia Srl and receives commissions on sales of SRM and other products/services. StatPro has an option to acquire the remaining 49% between 31 December 2006 and 31 December 2013.

4. Exceptional items. There were no exceptional items in 2003. The exceptional charge of £0.31 million in 2002 related to the restructuring of the business including redundancy and associated costs.

5. Taxation. A corporation tax provision of £0.01 million has been made for an overseas subsidiary. There is no current or deferred charge for UK corporation tax for 2003 (2002: nil) due to accumulated taxable losses.

6. Equity minority interests. The £0.07 million equity minority interests (2002: nil) relate to the minorities’ share of losses in StatPro Australia and StatPro Italia. The equity minority interests of £0.07 million have been deducted in computing the total capital employed.

7. Basic earnings/(loss) per share. Basic earnings/(loss) per share has been calculated based on the profit after taxation and minority interests of £0.20 million (2002: loss of £2.37 million) and the weighted average number of shares of 32,913,328 (2002: 32,485,849). The diluted earnings per share in 2003 are 0.6p based on potentially dilutive shares outstanding amounting to 308,853. The diluted loss per share in 2002 was the same as the basic loss per share of 7.3p as there were no potentially dilutive shares outstanding since the Group was making losses.

8. Creditors – amounts falling due within one year. The largest component of short-term creditors relates to deferred income, which is a non-cash liability, as shown in the following analysis:

Unaudited             Audited
                                                     As at               As at
                                                31December         31 December
                                                     2003                 2002
                                                    £'000                £'000
Bank loans and finance leases                           5                  315
Convertible loan                                    1,000                    -
Trade creditors                                       335                  240
Corporation tax                                        14                    -
Other creditors and accruals                          857                  690
Taxation and social security                          401                  418
Deferred income                                     5,078                4,606
                                                 ----------           ----------
                                                    7,690                6,269
                                                 ----------           ----------

This announcement was approved by the Directors on 1 March 2004. The preliminary results for the year ended 31 December 2003 are unaudited. The financial information set out in the announcement does not constitute the Company’s statutory accounts for the years ended 31 December 2003 or 31 December 2002. The financial information for the year ended 31 December 2002 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditors reported on those accounts and their report was unqualified.

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