RNS Number:2610P
Wireless Group PLC
02 September 2003


2 September 2003

                            TWG: FIRST EVER PROFITS

                         THE WIRELESS GROUP PLC ("TWG")
                    INTERIM RESULTS FOR THE SIX MONTHS ENDED
                                  30 JUNE 2003

Financial results

   *Group makes first ever half year profit of #0.6 million (before interest,
    tax, associates, goodwill amortisation and exceptionals) against a loss of
    #1.7 million
   *Turnover rises by 3.8% from #14.2 million to #14.8 million
   *Group generates positive half year cash flow
   *Net interest cover of 2.2 times
   *Local stations increase operating profit from #1.6 million to #2.6
    million
   *talkSPORT reports operating profit before depreciation of #0.9 million
    (2002: loss of #0.3 million)

Operating achievements

   *GfK electronic survey confirms talkSPORT as the UK's largest commercial
    radio station with an audience of 7.7 million
   *Legal action to be launched against RAJAR
   *Launch of Soccer Bet magazine
   *Stoke digital multiplex licence awarded in February

Outlook

   *Increasing revenues in the second half: Local stations showing cash
    revenue for July up 27% and August up 22%
   *Confident of continuing improvement in overall performance
   *Actively seeking fresh acquisitions in radio and magazine sector

Kelvin MacKenzie, Chairman and Chief Executive of TWG, said:

"The Wireless Group has reached profitability a year ahead of forecasts. We have
achieved this against the odds given the severe conditions the entire media
industry has faced over the last three years.

"It has been an historic first half. I look forward to a continuing improvement
in the Group's overall performance."

                                    - ends -

For further information, please contact:

Kelvin MacKenzie
The Wireless Group plc        020 7959 7900

David Rydell / Luke Morton
Bell Pottinger Financial      020 7861 3232



Chairman's statement

For the six months ended 30 June 2003

The Wireless Group has reached profitability a year ahead of forecasts. We have
achieved this against the odds given the severe conditions the entire media
industry has faced over the last three years. This performance is reflected in
revenues that are at a record level, the GfK survey confirming talkSPORT as the
most listened-to commercial radio station in the UK and a cost base that has
been reduced significantly without impacting on operational performance.

In the interim period, we have out-performed our peers with a rise in top-line
income of more than double the industry average. The Group also reached positive
cash flow in the period, reducing debt to a negligible level.

This strong performance reflects the hard work of management and staff which has
turned the Group into a major powerhouse in UK radio broadcasting in less than
four years.

Importantly, we are seeing positive changes in our marketplace with a new-found
appetite among advertisers for our products and we view the prospects for the
Group with increasing confidence.

In the period the Group produced a profit of #0.6 million (before goodwill
amortisation) against a loss for the same period last year of #1.7 million. The
Group was also profitable after net interest over the period. On the above
basis, interest was covered 2.2 times. Turnover for the half year beat the
industry average, rising by 3.8% from #14.2 million to #14.8 million. This
compares to radio industry figures indicating that total advertising revenues
increased by only 1.5%.

The loss on ordinary activities before taxation was #6.5 million (2002: loss of
#8.9 million, which included the profit from the disposal of discontinued
operations of #1.1 million).

The Group also generated a positive cash flow from operating activities of #0.3
million against an outflow of #4.2 million for the comparable period in 2002.

The table below sets out the operating performance for the Group entities.

                                             6 months to   6 months to
                                                 30 June       30 June
                                                    2003          2002
                                                      #m            #m
                                              ----------    ----------

Turnover
Continuing operations                               14.8          14.2
                                              ----------    ----------

Operating profit/(loss) before depreciation
and goodwill amortisation
talkSPORT                                            0.9          (0.3)
ILR - continuing                                     2.6           1.7
ILR - discontinued                                     -          (0.1)
Central costs                                       (2.5)         (2.5)
                                              ----------    ----------
Operating profit/(loss) before depreciation          1.0          (1.2)
and goodwill amortisation

Depreciation                                        (0.4)         (0.5)
                                              ----------    ----------
Operating profit/(loss) before goodwill              0.6          (1.7)
amortisation
Goodwill amortisation                               (6.2)         (6.6)
                                              ----------    ----------
Reported operating loss                             (5.6)         (8.3)
                                              ----------    ----------

Local radio

Our 13 local radio stations ("ILRs") performed exceptionally well in difficult
market conditions, increasing operating profit, before depreciation and goodwill
amortisation, from #1.6 million to #2.6 million. Revenue increased by 11.3% to
#9.2 million (2002: #8.2 million) for the six months to 30 June 2003. In line
with our policy of active management of all assets, this has been achieved
through new revenue initiatives adopted by management in the individual
stations.

We continue to invest in our local stations and have seen the benefits of doing
so in the first six months of the year. We are confident that the second half
will see our ILRs continue to build on the investment made with improving
listener numbers.

The RAJAR results for the quarter to June 2003 showed our ILR stations suffered
a decrease in reach of 8.4% and in total hours listened of 14.1% over the
comparable quarter for 2002. This fall was accounted for as a result of using
the latest census data that reduced the population in our survey areas. In
common with other local radio operators we also found that people switched from
music to speech stations during the war in Iraq.

talkSPORT

talkSPORT put in a sparkling performance, achieving a record operating profit
against the backdrop of a difficult national sales environment. First quarter
revenues increased by 9.5% year on year, compared to an industry movement of
2.3%. The second quarter was set against an exceptionally strong second quarter
for 2002, distorted by the phenomenal impact of the football World Cup. In this
respect the second quarter shows a year on year decrease of 20.5%.

Overall, revenues for the six months decreased by 9.2% from #6.0 million to #5.5
million. Excluding contra revenue the fall reduces to 5.7% and four of the six
months were ahead of last year.

talkSPORT saw operating profits in five of the six months of this reporting
period, resulting in an operating profit before depreciation and goodwill
amortisation for the period of #0.9 million compared to a loss of #0.3 million
for the comparable period. This #1.2 million improvement is the result of less
contra sales being executed combined with effective cost management, relating
principally to the costs of programming and outside broadcasts.

We announced in July 2003 the results of the second quarter of GfK's electronic
research methodology that measures accurately radio audiences. These showed a
weekly reach of 16% or 7.2 million listeners, which is significantly higher than
that recorded under the RAJAR system of audience measurement which reported a 4%
reach or 2.2 million listeners. The research confirms that talkSPORT is the
largest commercial radio station in the UK.

To coincide with the launch of the football season we have launched a football
betting magazine, Soccer Bet. This is a specialist magazine but in a growing
market of the betting industry. We are publishing Soccer Bet with a small team
of dedicated staff. Early indications show that the magazine is popular with
footie fans.

RAJAR

We were extremely disappointed when RAJAR rejected the opportunity to introduce
electronic audience measurement, preferring instead to fall back on its
haphazard diary system, a methodology entirely out of touch with modern
listening habits which grossly understates the true level of our audience. It
appears that some elements of the radio industry are preventing the adoption of
electronic measurement. We have asked RAJAR to substantiate its claim that its
testing produced "anomalous" results. At the time of writing they have not yet
done so. RAJAR's stance is impeding the Group's revenue potential and we view
this very seriously. As a consequence we have instructed Counsel to investigate
legal action against RAJAR.

Digital radio

We were awarded the Stoke digital multiplex licence in February this year. This
licence was awarded to our joint venture with EMAP thus sharing the cost of
carrying the multiplex. Digital is the future and the Group will continue to
support the digital concept. With the take-up of digital radios increasing
rapidly as the cost of the units falls and the range of sets available widens,
we are positioned to take advantage of this new transmission platform, both as
owners and broadcasters.

Outlook

Our prospects look good. We are seeing stronger demand for advertising - both at
national and local levels. July's cash revenues for our local stations were up
27% year on year and August should be 22% ahead of last year. Our view is that
the worst of the bad times are behind us. Importantly, the Group has used the
last three years to quietly restructure and, particularly as a result of
effective cost control, we are now in a position to see any improvement in
revenue directly fall through to further improved operating profits.

It has been an historic first half. I look forward to a continuing improvement
in the Group's overall performance.

Kelvin MacKenzie
Chairman and Chief Executive

2 September 2003




Consolidated Profit and Loss Account

                               6 months to   6 months to    Year ended
                                   30 June       30 June   31 December
                                      2003          2002          2002
                       Notes         #'000         #'000         #'000
                      ------      --------      --------     ---------

Turnover
Continuing                          14,793        14,244        28,470
operations                        --------      --------     ---------


Administration
expenses

goodwill                            (6,133)       (6,569)      (15,204)
amortisation

other administration               (14,233)      (15,941)      (32,271)
expenses
                                  --------      --------     ---------
                           3       (20,366)      (22,510)      (47,475)
                                  --------      --------     ---------
Operating loss

Continuing                          (5,573)       (8,266)      (19,005)
operations

Income from interests                  (16)          134            87
in associate
undertakings

Profit on sale of          4             -         1,142         1,141
discontinued
operations

Interest receivable                    318           431           880
and similar income

Amounts written off                   (642)       (1,545)       (1,760)
fixed asset
investments

Interest payable and                  (577)         (779)       (1,603)
similar charges                   --------      --------     ---------

Loss on ordinary                    (6,490)       (8,883)      (20,260)
activities before
taxation

Tax on loss on                           -             -             -
ordinary activities

                                  --------      --------     ---------
Loss on ordinary                    (6,490)       (8,883)       (20,260)
activities after
taxation

Minority interests -                  (113)          (70)          (113)
equity interests

                                  --------      --------     ---------
Retained loss for the      6        (6,603)       (8,953)       (20,373)
period                            --------      --------     ---------

Basic loss per share:

- Loss attributable to     5         (0.07)        (0.09)         (0.21)
each ordinary share               --------      --------     ---------
(#)

- Loss attributable to     5        (68.21)       (92.48)      (210.45)
each "B" ordinary                 --------      --------     ---------
share (#)


Basic loss per share
before profit on sale
of discontinued
operations:

- Loss attributable to     5         (0.07)        (0.10)        (0.22)
each ordinary share               --------      --------     ---------
(#)

- Loss attributable to     5        (68.21)      (104.28)      (222.24)
each "B" ordinary                 --------      --------     ---------
share (#)


Consolidated Balance Sheet

                                      30 June    30 June   31 December
                                         2003       2002          2002
                             Notes      #'000      #'000         #'000
                            ------ ---------- ----------    ----------

Fixed assets
Intangible assets
Goodwill                               28,788     42,966        34,845
Other intangible assets                11,471     13,350        12,523
Tangible assets                         2,247      2,832         2,584
Investments                             1,083      2,132         1,726
                                   ---------- ----------    ----------
                                       43,589     61,280        51,678
Current assets
Debtors                                 8,711     10,850         8,241
Loan notes receivable                       -      6,000         6,000
Short term deposits                    15,449     15,552        15,449
Cash at bank and in hand                1,023        364           418
                                   ---------- ----------    ----------

                                       25,183     32,766        30,108
Creditors: amounts falling
due within one year
Bank and other borrowings              (5,782)   (11,126)      (11,287)
Loan notes                            (15,449)   (15,552)      (15,449)
Other creditors                       (13,248)   (12,695)      (13,082)
                                   ---------- ----------    ----------
                                      (34,479)   (39,373)      (39,818)
                                   ---------- ----------    ----------

Net current liabilities                (9,296)    (6,607)       (9,710)

                                   ---------- ----------    ----------

Total assets less current              34,293     54,673        41,968
liabilities

Creditors: amounts falling
due after more than one
year

Bank and other borrowings                (125)      (331)         (219)

Other creditors                        (9,311)   (11,471)      (10,419)
                                   ---------- ----------    ----------
                                       (9,436)   (11,802)      (10,638)

Provisions for liabilities               (143)      (197)         (158)
and charges

                                   ---------- ----------    ----------
Net assets                             24,714     42,674        31,172
                                   ---------- ----------    ----------
Capital and reserves
Called up share capital                 9,682      9,681         9,682
Share premium account            6     35,064     35,064        35,064
Merger reserve                   6     81,820     81,820        81,820
Profit and loss account          6   (102,173)   (83,956)      (95,570)
                                   ---------- ----------    ----------
Equity shareholders funds              24,393     42,609        30,996
Equity minority interests                 321         65           176
                                   ---------- ----------    ----------
Total capital employed                 24,714     42,674        31,172
                                   ---------- ----------    ----------

Consolidated Cash Flow Statement

                               6 months to   6 months to    Year ended
                                   30 June       30 June   31 December
                                      2003          2002          2002
                       Notes         #'000         #'000         #'000
                      ------     ---------     ---------     ---------

Net cash inflow/           7           328        (4,181)       (3,656)
(outflow) from
operating activities

Dividends from                           -             7             7
associates

Return on investments      8             9          (331)         (716)
and servicing of
finance

Capital expenditure        8          (133)           26          (382)
and financial
investment

Acquisitions               8             -             -           271

Disposals                  8             -           999           999
                                 ---------     ---------     ---------

Cash inflow/(outflow)                  204        (3,480)       (3,477)
before management of
liquid resources and
financing

Financing and              8          (104)        2,811         3,702
management of liquid             ---------     ---------     ---------
resources

Increase/(decrease) in                 100          (669)          225
cash in the period                 ---------     ---------     ---------


Notes

 1. Basis of accounting

    These statements do not constitute statutory accounts within the meaning of
    section 240 of the Companies Act 1985. Statutory accounts for the year ended
    31 December 2002, which include an unqualified audit report, have been filed
    with the Registrar of Companies.

    The unaudited results have been prepared in accordance with the accounting
    policies set out in the Annual Report for the year ended 31 December 2002.

    Copies of the interim report will be sent to shareholders and will be
    available to the public at the registered office of The Wireless Group plc,
    18 Hatfields, London SE1 8DJ.

 2. Segmental analysis

    All turnover arose wholly within the United Kingdom. The Directors consider
    that the business of The Wireless Group plc is all of one class.

 3. Administration expenses

    A charge of #1,490,000 was included in administration expenses for the year
    ended 31 December 2002 as a provision against certain football rights
    contracts. This charge in the view of the Directors has brought these future
    obligations to market value.

 4. Profit on sale of discontinued operations

    On 19 February 2002, 1458 Big AM Limited, a wholly owned subsidiary,
    disposed of its BIG AM radio licence for #235,000 after costs.

    On 31 January 2002 the Group disposed of its 24.5% associate undertaking
    Kingdom FM Ltd. The proceeds, after costs, on the disposal were #999,000,
    which realised a profit on disposal of #906,000.

 5. Loss per share

    The basic loss per share attributable to each ordinary share was #0.07
    (2002: #0.09) and to each "B" ordinary share was #68.21 (2002: #92.48) have
    been calculated on the retained losses for the six months to 30 June 2003 of
    #6,603,000 (2002: #8,953,000) and the weighted average share capital for the
    period of #9,682,000 (2002: #9,681,000).

    The adjusted loss for the period attributable to each ordinary share was
    #0.07 (2002: #0.10 after adding back the profit on sale of Kingdom FM and
    the Big AM licence) and to each "B" ordinary share was #68.21 (2002:
    #104.28). This figure has been calculated on the losses attributable to
    holders of ordinary shares of #6,603,000 (2002: #10,095,000 after adding
    back the profit on sale of Kingdom and the Big AM licence) and weighted
    average share capital for the period of #9,682,000 (2002: #9,681,000).

    The loss attributable to ordinary shareholders and the weighted share
    capital that would be used for the purpose of calculating the diluted loss
    attributable to each ordinary share are identical to those used for the
    basic loss attributable to each share. This is because the exercise of share
    options would have the effect of reducing the loss attributable to each
    ordinary share and is therefore not dilutive under the terms of FRS 14.


 6. Reserves

                    Merger reserve       Share premium   Profit and loss
                                               account         account
                            #'000                #'000           #'000
                       -----------          ----------      ----------


        At 1               81,820               35,064         (95,570)
        January
        2003

        Retained                -                    -          (6,603)
        loss for      -----------           ----------      ----------
        the
        period

        At 30 June         81,820               35,064        (102,173)
        2003          -----------           ----------      ----------


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

                               6 months to                 6 months to
                                   30 June                     30 June
                                      2003                        2002
                                     #'000                       #'000
                               -----------                  ----------


        Operating loss              (5,573)          (8,266)   (19,005)

        Depreciation charges           411              481        942

        Loss/(profit) on                 -                9        (17)
        disposal of fixed
        assets

        Goodwill                     6,133            6,569     13,076
        amortisation

        Goodwill impairment              -                -      2,128

        Licence amortisation         1,052              827      1,654

        Loss on disposal of              -                -         30
        trade investments

        (Increase)/decrease in        (721)          (1,826)     1,052
        debtors

        Decrease in                   (974)          (1,975)    (3,516)
        creditors              -----------       ---------- ----------

        Net cash inflow/               328           (4,181)    (3,656)
        (outflow) from         -----------       ---------- ----------
        operating activities


 8. Analysis of cash flows for headings netted in the cash flow statement

                          6 months to        6 months to    Year ended
                              30 June            30 June   31 December
                                 2003               2002          2002
                                #'000              #'000         #'000
                          -----------         ----------    ----------
        Returns on
        investments and
        servicing of
        finance

        Interest                  533                292           598
        received

        Dividends                  38                 36            78
        received

        Interest paid            (562)              (659)       (1,392)
                          -----------         ----------    ----------

        Net cash inflow/            9               (331)         (716)
        (outflow)         -----------         ----------    ----------



        Capital
        expenditure and
        financial
        investment

        Purchase of               (74)              (350)         (596)
        tangible fixed
        assets

        Disposal of                 -                141           197
        tangible fixed
        assets

        Disposal of                 -                235           235
        Licence

        Purchase of fixed         (15)                 -           (81)
        asset
        investments

        Purchase of               (44)                 -          (137)
        minority          -----------         ----------    ----------
        interest

        Net cash                 (133)                26          (382)
        (outflow)/        -----------         ----------    ----------
        inflow

        Acquisitions and
        disposals

        Acquisitions

        Purchase of                 -                  -          (766)
        subsidiary
        undertakings

        Cash at bank and            -                  -         1,037
        in hand           -----------         ----------    ----------
        acquired

        Net cash inflow             -                  -           271
                          -----------         ----------    ----------



        Disposals

        Sale of                     -                999           999
        associate         -----------         ----------    ----------

        Net cash inflow             -                999           999
                          -----------         ----------    ----------

        Financing and
        management of
        liquid
        resources

        Financing

        Net (reduction)/       (6,000)             3,000         4,000
        addition in
        borrowings

        Proceeds from               -                  -             1
        exercise of share
        options

        Redemption of           6,000                  -             -
        loan notes
        receivable

        Repayment of loan           -                  -          (103)
        notes payable

        Capital element          (104)              (189)         (299)
        of finance lease  -----------         ----------    ----------
        rental payments

                                 (104)             2,811         3,599

        Management of
        liquid
        resources

        Decrease in short           -                  -           103
        term deposits


                          -----------         ----------    ----------

        Net cash                 (104)             2,811         3,702
        (outflow)/        -----------         ----------    ----------
        inflow

9. *Analysis and reconciliation of movement in net debt

                               6 months to   6 months to    Year ended
                                   30 June       30 June   31 December
                                      2003          2002          2002
                                     #'000         #'000         #'000
                               -----------    ----------    ----------


    Increase/(decrease) in             100          (669)          225
    cash in the period

    Cash outflow/(inflow) from         104        (2,811)       (3,701)
    decrease/(increase) in     -----------    ----------    ----------
    debt & lease financing

    Change in net debt                 204        (3,480)       (3,476)
    resulting from cash
    flows

    Finance leases                       -           (31)          (31)
                               -----------    ----------    ----------

    Movement in net debt in            204        (3,511)       (3,507)
    period



    Opening net debt                (5,088)       (1,581)       (1,581)


                               -----------    ----------    ----------

    Closing net debt                (4,884)       (5,092)       (5,088)
                               -----------    ----------    ----------





                                 1 January         Cash        30 June
                                      2003         Flow           2003
                                     #'000        #'000          #'000
                                ----------     --------      ---------

Bank overdraft                      (1,081)        (505)        (1,586)
Cash at bank and in hand               418          605          1,023
                                ----------     --------      ---------
                                      (663)         100           (563)


Debt due within one year           (10,000)       6,000         (4,000)
Loan notes receivable                6,000       (6,000)             -
Loan notes                         (15,449)           -        (15,449)
Short term deposits                 15,449            -         15,449
Finance leases                        (425)         104           (321)
                                ----------     --------      ---------
                                    (5,088)         204         (4,884)
                                ----------     --------      ---------


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
IR SSAFWFSDSEEU