Final Results
Unite Group PLC
23 March 2004
Date: 23 March 2004
On behalf of: The UNITE Group plc ('UNITE')
Embargoed until: 0700hrs
The UNITE Group plc - PRELIMINARY ANNOUNCEMENT
OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
HIGHLIGHTS
The UNITE Group plc, the UK's leading provider of student accommodation
services, today releases the preliminary announcement of its results for the
year ended 31 December 2003. The key highlights are:
• Strong growth in net rental income up 53% to £29.1m (2002: £19.0m)
• Like for like revenues increased 7.6%
• Operating margins improved to 60.5% (2002: 58.8%)
• Property portfolio up 34% to £948.8m (2002: £709.6m)
• Net asset value per share up 5.6% to 302 pence (2002: 286 pence)
• Loss before goodwill amortisation reduced to £5.2m (2002: £20.2m)
• Final recommended dividend of 1.67p per share (2003 total: 2.5p;
2002 total: 2.5p)
• 6,437 new beds completed, a 44% increase over 2002
• Local scale being achieved: more than 1,000 beds in 11 cities by
December 2004
• Committed roll out programme fully funded
Commenting on the results, Geoffrey Maddrell, Chairman of The UNITE Group plc,
said:
'2003 represented an important period of growth for UNITE. We now have a
portfolio of over 21,000 completed beds, with a significant and fully funded
development programme set to add to this.
'With our unquestionable leadership of a growing, non cyclical market, 2004 will
see UNITE continue to create shareholder value through its dedication to its
customers and its people. We will bring quality, value-adding properties to our
portfolio and enhance returns from our existing schemes.
'With a strengthened team and stable operating platform, we have every
confidence of achieving our objectives and moving into profit.'
A presentation will be held today at 0930hrs in the 23rd Floor Presentation
Room, the London Stock Exchange, Old Broad Street, London, EC2N 1HP.
Enquiries:
The UNITE Group plc
Nicholas Porter, Chief Executive Officer Tel: 020 7902 5055
Mark Allan, Group Finance Director Tel: 020 7902 5062
Redleaf Communications Ltd Tel: 020 7955 1410
Emma Kane/Nick Lambert Mob: 07876 338339
Chairman's Statement
Introduction
Since the listing of UNITE on the London Stock Exchange in 1999, the Company has
grown significantly, thereby achieving its initial objective of becoming
unquestionably the UK's leading provider of student accommodation. 2003 was a
year of substantial progress in building our platform, such that we are now
approaching an appropriate level of scale to enable us to focus greater
attention on increasing returns, reducing costs and improving quality standards,
in products and services.
By September 2004, we will be serving the accommodation needs of over 26,000
students in 28 cities, an increase of over 75% since January 2003. Taking into
account our investments over this period, we consider that the business is, as
planned, now reaching a scale commensurate with its infrastructure. As a result
the Board now intends to move the emphasis of its strategy away from the debt
funded annual roll out of a targeted number of beds to focus on optimising the
value of UNITE's unique portfolio. This will be done through maximising the
rental potential of our properties; through focusing future developments on
those cities where we consider the opportunities within a balanced portfolio to
be most attractive; and through seeking funding opportunities other than
straightforward debt finance, for example through selective asset disposals and
joint ventures. In line with our market opportunity our annual roll out
programme will still be significant; in addition to the 5,104 bed spaces to be
delivered in 2004, we anticipate a similar number being delivered in 2005. We
believe that this strategy will provide the most attractive returns to
shareholders over time.
An important objective in 2003 was to put in place the final elements of funding
for our development programme, without further recourse to equity markets. I am
pleased to report that this was achieved. With the recent establishment of a
new £100 million warehouse facility in addition to our existing borrowing, UNITE
is now fully funded to build out and refinance its development commitments. In
light of this increase in bank facilities and the lower capital requirements of
our revised strategy, the Board does not consider it necessary to undertake a
major capital recycling transaction at this time. We remain committed to the
undertaking made at the time of the last equity fund raising in 2002 not to
raise further equity to finance expansion.
With our large and increasing customer base, UNITE's mission has evolved to
becoming the first choice in the student accommodation market. To that end, we
have set out three imperatives on which to be judged, namely to provide:
• our customers with great value and service;
• our people with challenging, meaningful and rewarding careers; and
• our shareholders with continually improving financial returns.
Financial Results
Against the background of stable growth, I am pleased to report an encouraging
improvement in our financial performance over the year.
Net asset value increased by 5.6% to 302 pence per share (2002: 286 pence), with
uplifts from our development activity contributing £32.3 million (29.8 pence per
share). Our completed portfolio is now worth £788.3 million, with a further
£160.5 million in the course of development.
Built out, the portfolio will be worth approximately £1.3 billion. From a
valuation perspective, the initial yield applied to our completed portfolio has
increased to an average of 6.61%, up from 6.20% a year ago, and is now higher
than the reference Investment Property Databank initial yield for the entire
property sector of 6.55% at 31 December 2003.
Losses in 2003 (before goodwill amortisation) fell sharply to £5.2 million from
£20.2 million in 2002, representing a loss per share of 4.8 pence (2002: 23.6
pence). Importantly, the profit generated by our portfolio, after servicing
interest, increased by 255% to £3.9 million, driven largely by an increase in
both rents and margin. Rental income increased strongly by 48% to £48.1 million
(2002: £32.4 million) with like for like revenues up 7.6%, and the portfolio
operating margin increased to 60.5% (2002: 58.8%) with related overheads static
at £6.1 million. Occupancy across the portfolio at the year end was 96%.
New borrowing associated with portfolio growth contributed to the increase in
net interest costs to £25.2 million (2002: £17.6 million). Pre-contract costs
fell to £3.7 million (2002: £6.2 million) following a scaling back of
development resource in October 2002. Finally, goodwill of £5.6 million has
been amortised through the profit and loss account (2002: £5.5 million); the
remaining goodwill relating to development profits will be amortised in 2004.
Dividend
In line with our stated policy, the Board is pleased to recommend a final
dividend of 1.67 pence per share, making a total dividend of 2.5 pence per share
for the year (2002: 2.5 pence). The dividend will be paid on 14 May 2004 to
shareholders on the register on 16 April 2004.
Business Performance
The UNITE team delivered 6,437 new beds across 17 properties and in 13 cities in
the autumn of 2003, increasing the number of operating beds to 21,215 in 28
cities. The 2003 property openings proved to be the greatest challenge yet
faced by the business, which few similar organisations could have contemplated.
There were lessons to be learnt from this significant programme of openings,
which are being incorporated into our processes for 2004 and beyond.
As an increasing proportion of our portfolio is now direct let, we have been
strengthening our sales team to market our accommodation much earlier in the
year. We have also been investing in the continuous improvement of our systems
for handling larger volumes, as well as in strengthening our field based teams
to undertake more work in-house; the aim is to achieve consistent improvements
in services and costs. The Accommodation Services Division is already
delivering improvements in margin upon which we will continue to build.
As the market leader, we focus particular attention on understanding our
customers. Following recent research, a number of initiatives are being taken
to improve services and facilities within our accommodation.
Like all companies in our sector, build cost inflation is an important issue,
which we have clear plans to address. As we have a reasonably standard range of
products, compared with much of the industry, we are better placed than many to
address these issues. We have continued successfully to develop partnerships
with construction contractors, consultants and other providers, with the aim of
addressing cost, quality and speed of delivery, largely through better on and
off site processes and reduced material costs. Our manufacturing facility is
already demonstrating material cost savings, and produced 1,500 units during the
year, with weekly production rates increasing from five modules in January to 50
modules by the year end. As production volumes increase we expect to benefit
from greater build cost savings, both at the factory and on site.
The Board and People
The Board made a number of important appointments during the year. Mark Allan,
who has been with the Company for over four years, was promoted to Group Finance
Director when Simon Bernstein stepped down. We are grateful to Simon for his
energetic and diligent input at an important stage in UNITE's history. Andrew
Lee, our Human Resources Director since 2001, also joined the Board, confirming
the importance we attach to the development of our people in what is an
increasingly customer orientated business.
After the year end, Stuart Beevor, a member of the Board and Group Fund
Management Director of Grosvenor Group Limited, joined the Board as a
Non-Executive Director, bringing a breadth of knowledge of the property
industry. Stuart takes the place of Baroness Usha Prashar, who retired after
the completion of her three-year term of appointment. We thank Usha for her
wise counsel and sense of balance in encouraging the Company to pursue clear
commercial and public service objectives.
With UNITE's increasing scale, a greater level of accountability and appropriate
resource was successfully transferred to our operating divisions, namely
Development, Manufacturing and Accommodation Services. At this point we would
like to recognise all our people. There is significant energy for personal
development, delivery for our customers and teamwork and we warmly appreciate
the dedication and commitment of everyone in the business.
Prospects
During 2003, significant progress was made in establishing a platform of
sufficient scale to enable us to be fully cost and service competitive in our
target markets. Our portfolio is beginning to see the benefits of scale and
operating profits are improving as a result.
Looking forward, the Group will be moving away from a purely debt-funded capital
expenditure programme and is beginning to explore other effective sources of
capital. Our investment decisions will be driven by the creation of shareholder
value for the long term and, with a strengthened team and stable financing base,
we have every confidence of achieving our objectives and moving into profit.
Consolidated balance sheet
at 31 December 2003
Note 2003 2002
£000 £000 £000 £000
Fixed assets
Intangible assets 5,140 10,710
Tangible assets
Investment and development properties 3 948,792 709,595
Other tangible fixed assets 19,726 21,713
968,518 731,308
973,658 742,018
Current assets
Stocks 2,769 1,551
Debtors 20,072 18,509
Cash at bank and in hand 24,980 10,258
47,821 30,318
Creditors: amounts falling due within one
year
Short term build loans and other borrowings
(including convertible debt) (107,664) (74,359)
Other creditors (75,823) (41,426)
(183,487) (115,785)
Net current liabilities (135,666) (85,467)
Total assets less current liabilities 837,992 656,551
Creditors: amounts falling due after more
than
one year
Long term borrowings (511,200) (345,886)
Other creditors - (2,547)
Net assets 326,792 308,118
Capital and reserves
Called up share capital 6 27,054 26,901
Share premium account 136,936 136,233
Revaluation reserve 161,786 135,654
Merger reserve 40,177 40,177
Profit and loss account (39,161) (30,847)
Equity shareholders' funds 326,792 308,118
Net asset value per share 302p 286p
Consolidated profit and loss account
for the year ended 31 December 2003
2003 2002
Note £'000 £'000
Group turnover and share of joint venture 48,055 33,872
Less: share of turnover of joint venture - (999)
2 48,055 32,873
Cost of sales (12,848) (8,388)
35,207 24,485
Administrative expenses - ordinary (15,110) (16,583)
- exceptional 8 - (1,303)
Goodwill amortisation (5,570) (5,472)
Group operating profit 14,527 1,127
Share of results of joint venture - 299
Profit on disposal of investment properties (125) 461
Profit on ordinary activities before interest and taxation 14,402 1,887
Net interest payable and similar charges
- group - ordinary 9 (25,190) (17,567)
- exceptional 8 - (9,744)
- joint venture 9 - (211)
Loss on ordinary activities before taxation, exceptional items
and
goodwill amortisation (5,218) (9,116)
Loss on ordinary activities before taxation (10,788) (25,635)
Taxation 10 - -
Loss on ordinary activities after taxation (10,788) (25,635)
Dividends paid and proposed 11 (2,702) (2,685)
Retained loss for the financial period (13,490) (28,320)
Loss per share 12
Basic (10.0)p (30.0)p
Excluding goodwill amortisation, exceptional items and deferred (4.8)p (10.7)p
tax
Diluted (10.0)p (30.0)p
All of the above activities for the current year relate to continuing
operations.
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2003
2003 2002
£000 £000
Profit/(Loss) for the financial year
Group (10,788) (25,723)
Share of joint venture - 88
(10,788) (25,635)
Unrealised surplus on revaluation of properties 31,308 59,732
Unrealised surplus on revaluation of joint venture - 221
Unrealised loss on trading with joint venture - (33)
Total recognised gains and losses for the financial year 20,520 34,285
Consolidated cash flow statement
for the year ended 31 December 2003
Note 2003 2002
£000 £000
Cash flow from operating activities 13 23,513 5,987
Returns on investments and servicing of finance 14 (32,062) (28,323)
Acquisitions and disposals 14 - (1,210)
Capital expenditure 14 (172,127) (193,187)
Equity dividends paid (2,689) (2,131)
Cash outflow before financing (183,365) (218,864)
Financing 14 192,767 223,138
Increase in cash in the year 9,402 4,274
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2003
Note 2003 2002
£000 £000
Increase in cash in the year 9,402 4,274
Cash flow from increase in debt and lease financing (192,766) (168,114)
Change in net debt resulting from cash flows (183,364) (163,840)
Debt acquired in subsidiary undertaking - (54,807)
Loan stock converted into ordinary shares 856 -
Amortisation of debt issue costs (1,389) (3,039)
Movement in net debt in the year (183,897) (221,686)
Net debt at beginning of year 15 (409,987) (188,301)
Net debt at end of year 15 (593,884) (409,987)
Note of consolidated historical cost profits and losses
for the year ended 31 December 2003
2003 2002
£000 £000
Reported loss on ordinary activities before taxation (10,788) (25,635)
Realisation of property revaluation gains of previous 1,422 514
years
Historical cost loss on ordinary activities before (9,366) (25,121)
taxation
Historical cost loss for the year retained after (12,068) (27,806)
taxation and dividends
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2003
2003 2002
£000 £000
Loss attributable to ordinary shareholders (10,788) (25,635)
Dividends paid and proposed (2,702) (2,685)
(13,490) (28,320)
Net surplus on revaluations 31,308 59,920
Net proceeds of new share capital subscribed 856 74,460
Net addition to shareholders' funds 18,674 106,060
Opening equity shareholders' funds 308,118 202,058
Closing equity shareholders' funds 326,792 308,118
Notes
1. Basis of Preparation
The group accounts include the accounts of the company and its subsidiary
undertakings, all of which are made up to 31 December 2003.
The financial information set out in this preliminary announcement is prepared
on the basis of the accounting policies set out in the most recent set of annual
Financial Statements.
The financial information set out in this document does not constitute the
company's statutory accounts for the years ended 31 December 2003 or 2002 but it
is derived from those accounts. Statutory accounts for 2002 have been delivered
to the Registrar of Companies, and those for 2003 will be delivered following
the company's annual general meeting. The auditors have reported on those
accounts; their reports were unqualified and did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985.
This preliminary announcement was approved by the board of directors on 23 March
2004 and satisfies the provisions of S240 of the Companies Act 1985 regarding
the publication of non-statutory accounts.
2. Segmental analysis of operations
2003 2002
£000 £000
Turnover
Investment activities 48,055 31,356
Development activities - 1,517
Corporate activities - -
48,055 32,873
Profit before interest and tax
Investment activities 29,088 18,741
Development activities - ordinary (4,975) (6,000)
- exceptional - (1,303)
Corporate costs (4,016) (4,540)
(Loss)/profit on disposal of investment properties (125) 461
Goodwill amortisation - investment activities (150) (150)
- development activities (5,420) (5,322)
14,402 1,887
Net Assets
Investment activities 268,336 199,990
Development activities 58,456 108,128
Corporate activities - -
326,792 308,118
Portfolio Profit is calculated as follows:-
Profit before interest and taxation on investment activities - as above 29,088 18,741
Net interest payable (25,190) (17,778)
Adjust Peabody Unite joint venture to 100% - 88
3,898 1,051
Included in the development loss for the period to 31 December 2003 is the loss
relating to the under recovery of manufacturing overheads of £1,246,000, which
is not expected to recur.
Included in corporate costs for 2003 are non-recurring costs of £609,000
relating to the cessation of employment of two Executive Directors.
3. Investment and development properties
Properties held
Investment Developments in for future
Properties progress development Total
£000 £000 £000 £000
Cost or valuation and net book
value
At beginning of year 541,824 143,315 24,456 709,595
Additions 5,419 147,239 63,335 215,993
Disposals (7,635) - (784) (8,419)
Transfers 249,383 (189,893) (59,490) -
Transfer from other tangible fixed 315 - - 315
assets
Revaluations (1,002) 23,620 8,690 31,308
At 31 December 2003 788,304 124,281 36,207 948,792
At 31 December 2002 541,824 143,315 24,456 709,595
Included within investment and development properties are the following values
in respect of leasehold interests:
Properties held
Investment Developments in for future Total Total
Properties progress development 2003 2002
£000 £000 £000 £000 £000
Cost or valuation and net
book value
Long leasehold 115,670 18,980 5,467 140,117 89,570
Short leasehold 11,980 - - 11,980 11,900
127,650 18,980 5,467 152,097 101,470
The valuation of investment and development properties comprise:
2003 2002
£000 £000
Historical cost 787,006 573,941
Revaluation 161,786 135,654
948,792 709,595
Investment properties were valued as at 31 December 2003, on the basis of '
market value' (as defined in the RICS Appraisal and Valuation Manual issued by
the Royal Institution of Chartered Surveyors) by CB Richard Ellis Ltd and Messrs
King Sturge & Co, Chartered Surveyors as external valuers.
Developments in progress and properties held for future development have been
incorporated at valuations by the directors at acquisition or when planning
permission and appropriate pre-let agreements are in place, plus subsequent
expenditure. These valuations were based on completed property valuations by CB
Richard Ellis Ltd and Messrs King Sturge & Co, Chartered Surveyors.
CB Richard Ellis have valued 39% of the portfolio and Messrs King Sturge 61% by
reference to completed value.
The total interest included in Group properties at 31 December 2003 was
£25,177,350 (2002: £15,710,872). Total internal costs relating to
manufacturing, construction and development costs of group properties, which
have been deducted in arriving at the revaluation uplifts recognised on these
properties, amount to £25,805,000 at 31 December 2003 (2002: £17,215,000).
4. Analysis of debt
2003 2002
£000 £000
Bank loans, other loans and
overdrafts fall
due:
In one year or less, or on demand 107,163 73,607
Between one and two years 125,099 18,821
Between two and five years 121,103 65,646
In five years or more 263,835 259,858
617,200 417,932
The Group has various borrowing facilities available to it. The undrawn
committed facilities available at 31 December 2003 in respect of which all
conditions precedent had been met at that date were as follows:
2003 2002
£000 £000
Expiring in one year or less
Build facilities 47,086 104,373
Other facilities 5,000 5,000
52,086 109,373
Expiring between two and five years - 2,018
52,086 111,391
In addition, there are further committed facilities available where not all
conditions precedent have yet been met amounting to £328m. Of this amount £180m
remains available for completed properties and £148m for development properties.
Fair value of financial liabilities
Set out below is a comparison by category of the book value and fair values of
the Group's financial liabilities, excluding variable rate loans, at 31 December
2003:
Book value Fair value
£000 £000
Primary financial instruments held or issued to finance the Group's
operations:
Short term financial liabilities and current position of long term 1,115 1,152
borrowings
Long term borrowings 271,611 275,883
272,726 277,035
Derivative and other financial instruments held to manage the interest
rate
profile:
Interest rate swaps - 1,231
At 31 December 2003 272,726 278,266
At 31 December 2002 273,364 293,523
The fair values of the interest rate swaps and long term fixed rate debt have
been determined by reference to prices available from the markets on which the
instruments are traded. All the other fair values have been calculated by
discounting future cash flows at prevailing interest rates.
5. Provisions for liabilities and charges
The movement on the deferred tax balances and other provisions during the year
ended 31 December 2003 were as follows:
Deferred
taxation
Other Total Total
2003
2003 2003 2002
£'000 £'000 £'000 £'000
At 1 January 2003 - - - -
Capitalised interest 3,544 - 3,544 1,419
Accelerated capital allowances 1,576 - 1,576 2,697
Intra-group profits taxed but not relieved (4,171) - (4,171) (5,365)
Tax losses available (949) - (949) 1,249
At 31 December 2003 - - - -
The deferred tax balances at 31 December 2003 arose as follows:
Amount provided Amount not Amount Amount not
2003 provided 2003 provided 2002 provided 2002
£'000 £'000 £'000 £'000
Capitalised interest 7,305 - 3,761 -
Accelerated capital allowances 6,765 - 5,189 -
Intra-group profits taxed (12,605) - (8,434) -
Tax losses (1,465) (5,786) (516) (7,561)
Potential tax on property valuation surplus 49,595 - 47,481
At 31 December 2003 - 43,809 - 39,920
No provision has been made for tax arising on the revaluation of properties,
since the disposal of properties is not envisaged by the Directors.
6. Called up share capital
2003 2002
£000 £000
Authorised
155,000,000 (2002: 155,000,000) ordinary shares of 25p each 38,750 38,750
Allotted, called up and fully paid
Number of
shares £000
At beginning of year 107,604,772 26,901
Loan notes converted 605,963 152
Share options exercised and scrip dividends 2,697 1
At end of year 108,213,432 27,054
7. Profit on ordinary activities before taxation
2003 2002
£000 £000
Profit on ordinary activities before taxation is stated after charging/
(crediting):
Auditors' remuneration 205 145
Fees paid to the auditor in respect of other services 27 106
Depreciation and other amounts written off tangible fixed assets 2,524 1,694
Loss/(profit)on disposal of fixed assets 125 (461)
Amortisation of goodwill 5,570 5,472
Hire of plant and machinery - including rentals payable under operating 367 299
leases
Hire of other assets - including rentals payable under operating leases 979 1,024
8. Exceptional items
In 2002, the exceptional cost of £1,303,000 comprised bid costs relating to the
Sheffield PPP Project. In accordance with the Group's accounting policy, these
costs were expensed to the profit and loss account but were unusually large due
to the size and complexity of the proposed project.
The exceptional costs of £9,744,000 in 2002, comprised costs associated with the
early termination of loans and related hedging instruments as a result of the
securitised bond issue.
9. Net Interest payable
2003 2002
£000 £000
Amounts payable on bank loans and overdrafts
On loans not wholly repayable within five years 544 231
On loans wholly repayable within five years 15,213 10,866
On bank overdrafts 106 82
Amounts payable on other loans
On asset backed bonds 18,730 13,527
On convertible unsecured loan stock 433 466
On unsecured loan notes 156 285
Finance charges payable in respect of hire purchase agreements 155 102
35,337 25,559
Transfer to cost of investment and development properties (9,466) (7,411)
25,871 18,148
Share of interest payable by joint venture - 211
25,871 18,359
Less: Interest receivable (681) (581)
25,190 17,778
10. Taxation
(a) Analysis of charge in the year
There was no liability to taxation in respect of either year.
(b) Factors affecting the tax charge for the year
The tax credit on the loss on ordinary activities has been reduced from the
amount that would arise from applying the prevailing corporation tax rate to the
Group's losses, as follows:
2003 2002
£000 £000
UK corporation tax at 30% (3,236) (7,690)
Permanently disallowable expenditure 1,784 198
Intra-group profits taxed 4,175 4,772
Capitalised interest (1,944) (1,419)
Excess tax losses not utilised in year 2,631 6,602
Excess of capital allowances over depreciation (3,410) (2,463)
- -
A proportion of the profits arising in joint ventures has been distributed to
Group companies, in whose accounts the related tax charges have been provided.
(c) Factors that may affect future tax charges
In accordance with FRS19, the deferred tax in respect of property revaluation
surpluses has not been provided.
11. Dividends
2003 2002
£000 £000
Equity
Interim dividend paid of 0.83p (2002: 0.83p) per 25p ordinary share 895 897
Final dividend proposed of 1.67p (2002: 1.67p) per 25p ordinary share 1,807 1,788
2,702 2,685
12. Loss per share
Basic loss per share has been calculated using a weighted average number of
shares of 107,859,284 (2002: 85,398,488) as follows:
Losses EPS
After goodwill Before goodwill After goodwill Before goodwill
amortisation amortisation amortisation amortisation
£000 £000 pence pence
Year ended 31 December 2003
Basic loss (10,788) (5,218) (10.00) (4.84)
Year end 31 December 2002
Basic loss (25,635) (20,163) (30.02) (23.61)
Bond issue - loan cancellation costs 9,744 9,744 11.41 11.41
PPP bid costs written off 1,303 1,303 1.53 1.53
Prior to exceptional costs (14,588) (9,116) (17.08) (10.67)
The share options and convertible loan stock in issue during 2002 and 2003 do
not give rise to any dilutive potential ordinary shares and therefore the basic
and diluted loss per share are the same.
13. Reconciliation of operating profit to operating cash flows
2003 2002
£000 £000
Group operating profit 14,527 1,127
Depreciation and amortisation charges 8,094 7,166
(Increase)/ Decrease in stocks (1,218) 1,532
Increase in debtors (1,563) (805)
Increase / (Decrease) in creditors and provisions 3,673 (3,033)
Net cash inflow from operating activities 23,513 5,987
14. Analysis of cash flows
2003 2002
£000 £000
Returns on investment and servicing of finance
Interest received 681 581
Interest paid (32,743) (21,162)
Exceptional interest paid - (7,742)
Net cash flow from returns on investment and servicing of finance (32,062) (28,323)
Acquisitions and disposals
Purchase of subsidiary undertaking - (1,541)
Cash balances acquired with subsidiary - 331
Net cash flow from acquisitions and disposals - (1,210)
Capital expenditure
Purchase of tangible fixed assets (178,723) (196,147)
Disposal of tangible fixed assets 6,596 2,960
Net cash flow from capital expenditure (172,127) (193,187)
Financing
Issue of share capital 1 55,024
Movement on bank loans 197,324 171,088
Movement on loan notes (3,909) (4,496)
Capital element of hire purchase payments (649) 1,522
Net cash flow from financing 192,767 223,138
15. Analysis of net debt
At 1 January At 31 December
2003 Cash flow Other changes 2003
£000 £000 £000 £000
Cash at bank and in hand 10,258 14,722 - 24,980
Bank overdraft - (5,320) - (5,320)
10,258 9,402 - 19,660
Financing
Debt due within one year (73,607) (28,616) 380 (101,843)
Debt due after one year (344,325) (164,799) (913) (510,037)
Hire purchase agreements (2,313) 649 - (1,664)
(192,766)
Net debt at end of year (409,987) (183,364) (533) (593,884)
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