TIDMHNG
RNS Number : 7912N
Hawkwing PLC
26 September 2019
26 September 2019
Hawkwing plc
("Hawkwing", the "Company" or the "Group")
Unaudited interim results for the six months ended 30 June
2019
Hawkwing plc (AIM: HNG), formerly TLA Worldwide Plc, announces
its interim results for the six months ended 30 June 2019.
Financial Highlights
Headline figures
-- Revenue decline of 55.2% to $10.6 million (H1 2018: $23.6 million)
-- Operating income(1) of $6.0 million (H1 2018: $15.2 million)
-- Headline EBITDA(2) of $0.03 million (H1 2018: $(1.2)
million)
-- Headline Loss Before Tax(3) of $0.2 million (H1 2018: $2.3
million)
-- Headline Diluted Loss Per Share(4) of 0.23 cents (H1 2018:
1.52 cents)
-- Sports Marketing Headline EBITDA of $0.5 million (H1 2018:
$1.0 million)
-- Cash balances of $2.3 million (H1 2018: $4.5 million)
-- Pro forma net assets following post period end disposal of
the business GBP514,000
Statutory figures
-- Operating loss from continuing operations of $0.7 million (H1 2018 loss: $2.8 million)
-- Loss before tax of $0.7 million (H1 2018 loss: $2.8 million)
-- Loss per share from continuing operations of $0.52 cents (H1 2018 loss: $1.98 cents)
-- Earnings per share from discontinued operations of $0.07 cents (H1 2018 loss: $0.40 cents)
-- Net debt as at 30 June 2019 was $20.2 million (H1 2018: $21.2 million)
Post Period
Hawkwing sold its Australian business on 5 September to QMS
Sport Holding Limited, a subsidiary of QMS Media Limited, which is
quoted on the ASX.
Keith Sadler, Interim Non-Executive Chairman, commented: "In the
first half of the year, our focus was on progressing the disposal
of the Australian business and we are pleased to have completed the
disposal in September 2019. Following completion of the sale, we
changed our name to Hawkwing plc and became an AIM Rule 15 Cash
Shell.
"The Group's strategy is to pursue an acquisition and we intend
to identify a business with the prospects of being profitable and
cash generative. We have started the process of identifying such a
business and look forward to updating the market as appropriate. On
behalf of the board, I would like to thank all our shareholders for
their continued support."
1 Operating income is equal to gross profit in the segmental
analysis income statement.
2 Headline EBITDA is defined as statutory operating profit
adjusted to add back depreciation, amortisation of acquired
intangible assets and any acquisition related charges, and
exceptional items.
3 Headline EBITDA after bank interest and depreciation.
4 Headline earnings per share is defined as headline profit for
the period divided by the weighted average number of ordinary
shares in issue during the period.
Enquiries:
Hawkwing plc
Keith Sadler Interim Non-Executive
Chairman +44 20 7618 9100
-----------------
Beaumont Cornish
Roland Cornish and James Biddle (Nomad) +44 20 7628 3396
-----------------
Christopher Wilkinson
-----------------
Luther Pendragon
Harry Chathli, Alexis Gore +44 20 7618 9100
-----------------
About Hawkwing plc
Hawkwing is an AIM Rule 15 Cash Shell. It intends to pursue a
reverse takeover transaction, subject to shareholder approval, with
the aim of delivering shareholder value. The board intends to seek
a business with the prospects of being profitable and cash
generative. For more information, please visit www.hawkwing.co
Overview
The performance for the six months ended 30 June 2019 represents
the Group's Australian business and some residual income from the
events activities. The latter was formally closed down in November
2018 and the former was put up for sale in December when the Group
announced the sale of its US business, which was concluded on 28
December 2018.
Post the period end, on 5 September 2019 the Australian business
was sold to QMS Sport Holdings Limited, a subsidiary of QMS Media
Limited, which is quoted on the ASX. This disposal was required
under the forbearance agreed with the Group's bank. With this
disposal, the Group's debts were repaid, and any outstanding
balance forgiven by the Group's bank. This leaves Hawkwing without
any bank debt and minimal creditors. As set out in the recent
circular, the proforma balance sheet (in GBP, which is the currency
of Hawkwing) after the sale of Australia is as follows:
As at 30 Proceeds Proforma
June 2019 from the
Proposed
Sale
----------- ---------- ---------
GBP000's GBP000's GBP000's
Current assets
Trade and other receivables 72 - 72
Cash and cash equivalents 105 511 616
----------- ---------- ---------
Total assets 177 511 688
Current liabilities
Trade and other payables 174 - 174
Total current liabilities 174 - 174
Net assets 3 511 514
=========== ========== =========
Equity
Share capital 2,869 - 2,869
Share premium 29,899 - 29,899
Retained loss (32,765) 511 (32,254)
----------- ---------- ---------
Equity attributable to owners
of the company 3 511 514
=========== ========== =========
Following completion of the disposal, the Company is now an AIM
Rule 15 cash shell. As such, the Company will be required to make
an acquisition or acquisitions which constitute a reverse takeover
under Rule 14 of the AIM Rules on or before the date falling six
months from completion or be re-admitted to trading on AIM as an
investing company under the AIM Rules (which requires the raising
of at least GBP6 million) failing which, its ordinary shares would
then be suspended from trading on AIM pursuant to Rule 40 of the
AIM Rules. Admission to trading on AIM would be cancelled six
months from the date of suspension should the reason for the
suspension not have been rectified. The board has begun the process
of seeking suitable acquisitions and will update the market as
necessary. During this period the board will seek to conserve cash
resources.
The performance of the Group has been split into continuing
(Hawkwing) and discontinued (the Australian and Events businesses)
performance.
Group Headline results
For the six-month Continuing Discontinued 2019 2018
period to 30 June operations operations Change
$000's $000's
--------------------------- ------------ ------------- --------- -------- -----------
Revenue - 10,573 10,573 23,598 55.2%
Operating income - 6,073 6,073 15,206 (60.1)%
Headline EBITDA (524) 527 3 (1,203) 100.2%
Headline EBITDA margin(1) - 8.7% 0.05% (7.9)% 7.95pp
Headline (loss)/profit
before tax(2) (524) 304 (220) (2,258) (90.3)%
Headline loss per
share (cents) (0.23) (1.52) 1.29 cents
Group statutory results
For the six-month 2019 2018
period to 30 June Change
$000's $000's
Revenue - discontinued 10,573 23,598 55.2%
Operating loss -
continuing (749) (2,760) 72.9%
Loss before tax -
continuing (749) (2,760) 72.9%
Profit from discontinued
operations 100 577 (82.7)%
Loss after tax (649) (2,259) 71.3%
Loss per share (cents)
- continuing (0.52) (1.98) 1.46 cents
Loss per share (cents) (0.33)
- discontinued 0.07 0.40 cents
1 Headline EBITDA divided by operating income
2 Headline EBITDA after bank interest and depreciation
Group operating income decreased by 60.1% to $6.0 million (H1
2018: $15.2 million).
The statutory operating loss is after charges relating to
amortisation of intangibles of $0.1 million (2018: $0.4
million).
Sports Marketing
For the six-month period to 2019 2018 %
30 June
$000 $000 Change
------- ------- --------
Revenue 10,573 17,051 (38.0)%
Operating income 6,037 9,202 (34.4)%
Headline EBITDA 527 964 (45.3)%
Headline EBITDA Margin 8.7% 10.5% (1.8)%
Operating profit 178 727 (75.5)%
The fall in revenue, operating income and EBITDA reflects the
sale of the Group's US businesses on 28 December 2018 and no
events, as the business was closed in November 2018.
Baseball Representation
For the six-month period to 30 2019 2018 %
June
$000 $000 Change
----- ------ -------
Revenue - 6,547 - %
Operating income - 6,004 - %
Headline EBITDA - 13 - %
Headline EBITDA margin - 0.2% - pp
Operating profit - 723 - %
Baseball was sold on 28 December 2018
Cash flow and net debt
The Group cash balances as at 30 June were $2.3 million (H1
2018: $4.5 million).
The Group's net debt was $20.2 million as at 30 June 2019 (H1
2018: $21.2 million). The Group expects net debt for the 2019 full
year to be in the range of $25 million - $28 million.
Following the sale of the Australian business on 5 September
2019, the Group's debt has been repaid and forgiven by its bank and
the Group is debt free.
Dividend
The Directors are precluded from declaring an interim dividend
for the six months ended 30 June 2019. The Directors will continue
to review the Group's dividend policy.
Current trading and outlook
Hawkwing is now an AIM cash shell and the board, as stated
previously, is seeking potential businesses that could be reversed
into the Company. The board intend to identify a business with the
prospects of being profitable and cash generative. The process of
identifying such a business has started and the board look forward
to updating the market as appropriate.
Condensed Consolidated Income statement (unaudited)
For the six month period to 30 June 2019
6 month 6 month period
period to to 30 June
30 June 2018
2019
$000's $000's
Continuing operations
Administrative expenses (749) (2,760)
Operating loss (749) (2,760)
Headline EBITDA (continuing and discontinued
operations) 3 (1,203)
Amortisation of intangibles (126) (356)
Depreciation (223) (141)
Exceptional and acquisition related costs
(continuing) 3 (225) (864)
Exceptional and acquisition related income
(discontinued) 3 - 817
Less: operating profit from discontinued
operations (178) (1,013)
Operating loss from continuing operations (749) (2,760)
Loss before taxation (749) (2,760)
Taxation 4 - (76)
----------- ---------------
Loss after taxation from continuing operations (749) (2,836)
Profit after taxation from discontinued
operations 100 577
Loss after taxation for the period (649) (2,259)
Loss for the year is entirely attributable to the owners of the
parent company.
(pe Loss per share from continuing operations attributable
to the owners of the parent company:
Basic (cents) 2 (0.52) (1.98)
Diluted (cents) 2 (0.52) (1.98)
(pe Loss per share from discontinued operations attributable
to the owners of the parent company:
Basic (cents) 2 0.07 0.40
Diluted (cents) 2 0.07 0.40
(pe Loss per share from total operations attributable to
the owners of the parent company:
Basic (cents) 2 (0.45) (1.58)
Diluted (cents) 2 (0.45) (1.58)
Condensed Consolidated Comprehensive Income (unaudited)
For the six-month period to 30 June 2019
6 month period to 30 June 2019 6 month period to 30 June 2018
$000's $000's
Loss for the period (649) (2,259)
Exchange differences on translation of overseas
operations (87) (454)
Total comprehensive expense (736) (2,713)
Continuing operations (926) (3,285)
Discontinued operations 190 572
Total comprehensive expense (736) (2,713)
Total comprehensive expense for the period is entirely
attributable to the owners of the parent company.
Condensed Consolidated Group Balance Sheet (unaudited)
Note 30 June 2019 30 June 2018
$000's $000's
Unaudited Unaudited
Non-current assets
Goodwill - 42,526
Intangible assets - 782
Property, plant and equipment - 427
Deferred tax asset - 7,808
Derivative financial instruments - 65
- 51,608
Current assets
Inventories - 1,013
Trade and other receivables 1,200 12,656
Cash and cash equivalents 135 4,471
1,335 18,140
Assets of disposal group classified as held for sale 6 25,879 -
Total current assets 27,214 18,140
Total assets 27,214 69,748
Current liabilities
Trade and other payables (248) (19,122)
Borrowings 7 (22,465) (4,168)
Contingent consideration 8 - (7,877)
(22,713) (31,167)
Liabilities directly associated with assets classified as held for sale 9 (16,276) -
Net current liabilities (11,775) (13,027)
Non-current liabilities
Borrowings 7 - (21,457)
Contingent consideration 8 - (1,250)
- (22,707)
Total liabilities (38,989) (53,874)
Net (liabilities)/assets (11,775) 15,874
Equity
Share capital 4,473 4,473
Share premium 46,079 46,079
Merger reserve 309 309
Foreign currency reserve (7,734) (6,717)
Retained loss (54,902) (28,270)
Equity attributable to owners of the company (11,775) 15,874
Condensed Statement of Cash Flows (unaudited)
For the six-month period to 30 June 2019
6 month period to 30 June 2019 6 month period to 30 June 2018
Note $000's $000's
Unaudited Unaudited
Net cash outflow from operating activities 10 (536) (3,579)
Investing activities
Purchases of property, plant and equipment (55) (24)
Net cash used in investing activities (55) (24)
Financing activities
Interest paid (61) (914)
Repayment of borrowings - (2,500)
Lease repayments (107) -
Net cash outflow from financing activities (168) (3,414)
Net decrease in cash and cash equivalents (759) (7,017)
Cash and cash equivalents at beginning of
period 3,035 11,630
Foreign currency translation effect (18) (142)
Cash and cash equivalents at end of period 2,258 4,471
Cash and cash equivalents comprise:
Continuing operations 135 53
Disposal group classified as held for sale 2,123 4,418
Total cash and cash equivalents 2,258 4,471
Condensed Consolidated Statement of Changes in Equity
(unaudited)
For the six-month period to 30 June 2019
Share Share Merger Foreign Retained Total
Capital Premium reserve Currency Loss
Reserve
$000s $000's $000's $000s $000s $000s
--------------------- --------- --------- --------- ---------- ---------- ----------
Balance as at 1
January 2018 4,473 46,079 309 (6,263) (26,011) 18,587
Total comprehensive
income for period - - - (454) (2,259) (2,713)
Balance as at 30
June 2018 4,473 46,079 309 (6,717) (28,270) 15,874
========= ========= ========= ========== ========== ==========
Balance as at 1
January 2019 4,473 46,079 309 (7,647) (54,253) (11,039)
Total comprehensive
income for period - - - (87) (649) (736)
Balance as at 30
June 2019 4,473 46,079 309 (7,734) (54,902) (11,775)
========= ========= ========= ========== ========== ==========
Notes to the Interim Report
General information
Hawkwing plc (the "Company") is incorporated and domiciled in
the United Kingdom. The Company is listed on the AIM market of the
London Stock Exchange. The registered address is 25 Walbrook,
London EC4N 8AF.
Basis of preparation
The condensed set of financial statements has been prepared
using accounting policies consistent with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
same accounting policies, presentation and methods of computation
are followed in the condensed set of financial statements as
applied in the Group's latest annual audited financial statements.
While the financial figures included in this half-yearly report
have been computed in accordance with IFRSs applicable to interim
periods, this half-yearly report does not contain sufficient
information to constitute an interim financial report as that term
is defined in IAS 34.
The reporting currency of the Group is US$, unless stated
otherwise.
Going concern
The Group's results for 2019 and the net liabilities position at
30 June 2019 reflect the issues the Group has faced during the
period and, following a strategic review of the business in
September 2018, the US businesses were sold on 28 December 2018 and
the decision has been made to also sell the Group's Australian
business. The Group has now sold the Australian business to QMS
Sport, the proceeds from which have facilitated settlement of the
Group's bank borrowings. Following the sale and settlement of the
borrowings the Company has become an AIM Cash Shell under AIM Rule
15. The board intends to seek a business that can be reversed into
the Company. The Company has 12 months from the date of the sale of
the Australian business to complete a reverse takeover, during
which period the board intends to keep costs to a minimum in order
to preserve cash. If it is not possible to complete a reverse
takeover or should funds not be available to sustain the company
during the foreseeable future, the going concern position of the
Company would be at risk.
As a result of the sale of the Australian business the Board
continues to adopt the going concern basis of accounting in
preparing the financial statements.
Discontinued Operations
A discontinued operation is a component of the consolidated
entity that has been disposed of or is classified as held for sale
and that represents a separate major line of business or
geographical area of operations, is part of a single co-ordinated
plan to dispose of such a line of business or area of operations,
or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately in the
Group Income Statement.
In accordance with 'IFRS 5 - Non-current Assets Held for Sale
and Discontinued Operations' comparative figures for the prior
period have been restated in the Group Income Statement so that the
discontinued operations disclosures relate to all operations that
have been discontinued at 30 June 2019.
Application of new and amended standards
In the current period, the following standards and
interpretations have been adopted which were effective for periods
commencing on or after 1 January 2019:
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Annual Improvements to IFRS Standards 2015-2017 Cycle
Amendments to IFRS 9: Prepayment Features with Negative
Compensation
Amendments to IAS 28: Long-term Interests in Associates and
Joint Ventures
Amendments to IAS 19: Plan Amendment, Curtailment or
Settlement
Except for the implementation of IFRS 16, the adoption of these
standards has not had any impact on the financial statements.
Initial application of IFRS 16 'Leases' (IFRS 16) - effective 1
January 2019
On 1 January 2019, the group adopted IFRS 16 'Leases' (IFRS 16)
for the first time. IFRS 16 replaces IAS 17 'Leases'. The main
change on application of IFRS 16 is the accounting for 'operating
leases' where rentals payable (as adjusted for lease incentives)
were previously expensed under IAS 17 on a straight-line basis over
the lease term.
Under IFRS 16 a right-of-use asset and a lease liability are
recognised for all leases except 'low-value' and 'short' term
leases where lease payments are recognised on a straight-line basis
over the lease term.
At 1 January 2019 a right-of-use asset and corresponding lease
liability of $1,680,219 has been recognised. The net impact on the
income statement of additional depreciation and interest expense
for the period ended 30 June 2019 in excess of the rental expense
is $41,026.
The group has applied the modified retrospective approach on
adoption of IFRS 16. There was no impact on opening reserves at 1
January 2019. The comparative figures are as previously reported
under IAS 17. The group has used the following practical expedients
in IFRS 16.
-- For all contracts that existed prior to 1 January 2019, the
group has not applied IFRS 16 to reassess whether each contract is,
or contains, a lease.
-- Single discount rates have been applied to portfolios of
buildings, vessels and vehicles leases with similar
characteristics.
-- The right-of-use assets have not been assessed for impairment
at 1 January 2019 but have been reduced by the amount of any
onerous lease provisions at that date.
-- Initial direct costs have been excluded from the measurement of the right-of-use assets.
-- Hindsight has been applied in determining the lease term for
contracts that contain lease extension or termination options.
1. Segmental Analysis
The segmental analysis provided below presents full details of
the Baseball Representation and Sports Marketing business segments
activity which are classified as discontinued operations in the
Group Income Statement. Consequently, the gross profit, operating
loss and finance income/costs disclosed below do not directly
correspond to the Group Income Statement.
Prior to the events giving rise to classification of the Group's
principal activities as discontinued operations, the Group reported
its business activities in two areas: Baseball Representation and
Sports Marketing. Central costs represent the Group's costs as a
public company, along with certain exceptional items and
acquisition related costs.
In 2019 the Central costs represent the entirety of the Group's
continuing operations. Central costs in the 2018 segmental analysis
do not reflect the 2017 continuing operations as Central costs also
included certain exceptional and other items of expenditure
subsequently classified as discontinued in that period.
Sports Marketing - primarily assists with the on-field and
off-field activities of athletes; it represents broadcasters and
coaches in respect of their contract negotiations; manages,
produces events, primarily in sports, PR and activation, media
consultancy and the selling of merchandise, primarily in sport.
Baseball Representation - primarily assisted the on-field
activities of baseball players, including all aspects of a player's
contract negotiation.
In the six-month period ended 30 June 2019, no client generated
in excess of 10 percent of total revenue.
Six months to 30 June 2019 Discontinued Continuing
operations operations Total
Sports Marketing Central
$000's $000's $000's
Revenue - discontinued 10,573 - 10,573
Cost of sales - discontinued (4,536) - (4,536)
Gross profit - discontinued 6,037 - 6,037
Operating expenses excl. depreciation,
amortisation, acquisition
related costs and exceptional
items (5,510) (524) (6,034)
Headline EBITDA 527 (524) 3
Depreciation (223) - (223)
Amortisation of intangibles (126) - (126)
Exceptional and acquisition
related costs - (225) (225)
Operating profit/(loss) 178 (749) (571)
Finance costs (61) - (61)
Profit/(loss) before tax 117 (749) (632)
Taxation (17) - (17)
Profit/(loss) for the period 100 (749) (649)
Assets 25,879 1,335 27,214
Liabilities (16,276) (22,713) (38,989)
------------------ ------------ ----------
Capital employed 9,603 (21,378) (11,775)
------------------ ------------ ----------
1. Segmental Analysis (continued)
The following segmental disclosures for 30 June 2018 are stated
prior to any adjustment for operations subsequently
discontinued:
Six months to 30 June Baseball Player Sports Central Total
2018 Representation Marketing
$000's $000's $000's $000's
Revenue 6,547 17,051 - 23,598
Cost of sales (543) (7,849) - (8,392)
Gross profit 6,004 9,202 - 15,206
Operating expenses excl.
depreciation, amortisation,
acquisition related
costs and exceptional
items (5,991) (8,238) (2,180) (16,409)
Headline EBITDA 13 964 (2,180) (1,203)
Depreciation - (57) (84) (141)
Amortisation of intangibles (176) (180) - (356)
Exceptional and acquisition
related costs 886 - (933) (47)
Operating profit/(loss) 723 727 (3,197) (1,747)
Finance costs (1,008)
Loss before tax (2,755)
Taxation 496
Loss for the period (2,259)
Assets 27,444 35,047 7,257 69,748
Liabilities (5,663) (13,292) (34,919) (53,874)
---------------- ----------- --------- -----------
Capital employed 21,781 21,755 (27,662) 15,874
---------------- ----------- --------- -----------
2. Loss per share
Basic and diluted loss per share: attributable to ordinary
shareholders:
6 month period 6 month period
to 30 June to 30 June
2019 2018
cents per cents per
share share
Continuing operations (0.52) (1.98)
Discontinued operations 0.07 0.40
Total operations (0.45) (1.58)
The calculation of loss per share per share is based on the
following data:
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Loss from continuing operations for the
purposes of basic earnings per share being
net loss attributable to owners of the Company
Profit from discontinued operations for (749) (2,836)
the purposes of basic earnings per share
being net loss attributable to owners of
the Company 100 577
Number of Number of
Shares Shares
Weighted average number of shares in issue: 143,427,199 143,427,199
3. Exceptional and acquisition related costs
Exceptional items comprise:
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Continuing operations
Loan refinancing costs - 346
Impairment of loans in other ventures - 414
Costs relating to offers by potential investors 225 104
225 864
Discontinued operations
Loan refinancing costs - 49
Other - 20
Fair value movement of contingent consideration
(note 8) - (886)
- (817)
Total exceptional and acquisition related
costs 225 47
4. Taxation Expenses
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
UK Taxes
Current tax - 17
USA Taxes
Current tax - 51
Adjustments in respect of prior periods - 170
Deferred tax - (793)
Australian Taxes
Current tax (218) 190
Deferred tax 201 (131)
Total tax credit (17) (496)
Total tax credit is attributable to:
Loss from continuing operations - 76
Profit from discontinued operations (17) (572)
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
5. Discontinued operations
The profit after taxation from discontinued operations is
comprised as follows:
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Australian subsidiaries and TLA-ESP
Limited 2 176
TLA Acquisitions Limited 98 (316)
US subsidiaries - 717
Profit after taxation from discontinued
operations 100 577
Australian subsidiaries and TLA-ESP Limited
On 12 December 2018 the consolidated entity announced the
decision to sell the Australian subsidiaries TLA Merchandise Pty
Ltd, The Legacy Agency Australia Pty Ltd and also the UK subsidiary
TLA Worldwide (Aust) Pty Ltd and TLA-ESP Limited. The Australian
sports marketing and event management business and the UK talent
representation and marketing business was sold on 5 September
2019.
The profit after taxation from these discontinued operations
included within the consolidated income statement is shown
below.
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Revenue 10,573 10,750
Expenses (10,554) (10,551)
Profit before tax 19 199
Taxation (17) (23)
Profit after taxation from discontinued
operations 2 176
5. Discontinued operations (continued)
TLA Acquisitions Limited
The trade of the UK subsidiary TLA Acquisitions Limited ceased
in 2018. The profit/(loss) after taxation from discontinued
operations included within the consolidated income statement is
shown below.
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Revenue - 13
Expenses 98 (403)
Profit/(loss) before tax 98 (390)
Taxation - 74
Profit/(loss) after taxation from discontinued
operations 98 (316)
US subsidiaries
On 28 December 2018 the Group sold the US subsidiaries The
Legacy Agency (NY) Inc., TLA Americas Inc. and The Legacy Agency
Inc.
The loss after taxation from discontinued operations included
within the consolidated income statement is shown below.
6 month period 6 month period
to 30 June
2018
to 30 June $000's
2019
$000's
Revenue - 12,835
Expenses - (12,639)
Profit before tax - 196
Taxation - 521
Profit after taxation from discontinued
operations - 717
Cash flow information
The net increase in cash and cash equivalents from discontinued
operations in the 6 month period to 30 June 2019 was $75,000 (6
months to 30 June 2018: $7,143,000 cash decrease).
Sale of the Australian business
Following the sale of the Australian business the arrangements
agreed with the Group's lender to settle the borrowings leave the
Group with sufficient financial resources to meet its liabilities
as they fall due for a period of at least 12 months from the date
of approval of these financial statements.
The Directors therefore have a reasonable expectation that the
Company and the Group will continue in operational existence for
the foreseeable future. As a result, and as set on in the Principal
Accounting Policies, the Board continues to adopt the going concern
basis of accounting.
6. Assets of disposal group classified as held for sale
As at 30 As at 30
June 2019 June 2018
$000's $000's
Goodwill 12,796 -
Investment 31 -
Intangible assets 272 -
Property, plant and equipment - owned assets 177 -
Property, plant and equipment - right of
use assets 1,532 -
Deferred tax asset 391 -
Cash and cash equivalents 2,123 -
Inventory 1,402 -
Trade receivables 6,350 -
Other receivables 271 -
Prepayments 534 -
25,879 -
The assets identified above represent the assets of TLA
Merchandise Pty Ltd, TLA Worldwide (Aust) Pty Ltd and TLA-ESP
Limited, subsidiaries of the Group which was sold on 5 September
2019. Refer to note 5 for further information.
7. Borrowings
As at 30 June As at 30 June
2019 2018
$000's $000's
Secured borrowing
Bank loans 22,465 25,625
Total borrowings
Amount due for settlement within 12
months 22,465 4,168
Amount due for settlement after 12 months - 21,457
22,465 25,625
All borrowings are denominated in US dollars. The facilities
hold security against trade receivables and contracted revenue.
The banking facilities were being operated under a Forbearance
Agreement in place with Group's bank at 30 June 2019. Under this
agreement no interest was accruing on the bank borrowings. The
Forbearance Agreement required the proceeds from the disposal of
the Australian businesses to be ringfenced to repay the debt, with
any shortfall being written off by the bank. The Group's bank debt
was settled on 5 September 2019 on the sale of the Australia
business.
Prior to the arrangement of the Forbearance Agreement, and at 30
June 2018, the terms of the bank loan were of an interest margin
which varied between 3.0% and 5.5 over US LIBOR, depending on the
Group's leverage ratio; fees of between 1.0% to 2.0% payable on any
payments made over and above the quarterly agreed repayment
schedule; covenants encompassing an agreed fixed charge ratio and
EBITDA being equal to or greater than 80%-85% of quarterly budget;
quarterly loan repayments over the life of the loan plus a final
bullet repayment; and a facility renewable date of March 2020.
8. Contingent Consideration
Under the terms of the acquisition agreements in relation to
Legacy, PEG and ESP (including ESPM) the Group has obligations to
the lenders of the businesses as set out below:
As at 30 As at 30
June 2019 June 2018
$000's $000's
Payable in less than one year 4,735 7,877
Payable in one to two years - 711
Payable in two to five years - 150
Payable in more than five years - 761
------------- ------------
4,735 9,499
Impact of discounting on provisions payable
in cash - (372)
Classified as held for sale (4,735) -
Total contingent consideration payable - 9,127
The employment and earn-out agreements with key personnel in the
Group's Baseball North America and Baseball Latin American
businesses (Legacy and PEG) were disposed upon sale of the US
businesses on 28 December 2019. The remaining contingent
consideration balance relates to the Australian business (ESPM) and
has been transferred to liabilities held for sale at 30 June 2019
and was disposed of on the sale of the Australian business on 5
September 2019.
There are subordination agreements in place that govern when the
contingent consideration become payable. The cash contingent
consideration requires the achievement of certain EBIT targets over
the period of each agreement and, in addition, the achieved EBIT
must be converted into cash.
The Group estimates the fair value of the contingent
consideration liability at 30 June 2019 based on the anticipated
future EBIT of each underlying business.
9. Liabilities directly associated with assets classified as
held for sale
As at 30 As at 30
June 2019 June 2018
$000's $000's
Trade payables 2,032 -
Accruals and other amounts payable 7,260 -
Deferred income 573 -
Current taxes payable 103 -
Contingent consideration 4,735 -
Lease liabilities 1,573 -
16,276 -
The liabilities identified above represent the liabilities of
TLA Merchandise Pty Ltd, TLA Worldwide (Aust) Pty Ltd and TLA-ESP
Limited, subsidiaries of the Group which were sold on 5 September
2019. Refer to note 5 for further information.
10. Notes to the Statement of Cash Flow
6 month period 6 month
period to
30 June
2018
to 30 June $000's
2019
$000's
Operating loss for the period from continuing
operations (749) (2,760)
Operating profit for the period from discontinued
operations 178 1,013
Adjustments for:
Amortisation and impairment of intangible
assets 126 356
Depreciation of tangible assets 223 141
Fair value movement on contingent consideration - (886)
Operating cash flows before movements in
working capital (222) (2,136)
Decrease/(increase) in trade other receivables 1,949 543
(Increase) in inventory (173) (1,013)
(Decrease) in trade other payables (1,850) (490)
Cash used in operations (296) (3,096)
Income taxes paid (240) (518)
Other non-cash movements - 35
Net cash outflow from operating activities (536) (3,579)
Cash and cash equivalents
Continuing operations 135 53
Disposal group classified as held for sale 2,123 4,418
Total cash and cash equivalents 2,258 4,471
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets is approximately equal to their
fair value.
The Group's net debt has moved as follows during the period:
1 January Cash flow Non-cash 30 June
2019 Movements 2019
$000 $000 $000 $000
----------- ----------- ----------- ----------
Cash and bank balances 3,035 (759) (18) 2,258
Borrowings (22,465) - - (22,465)
Net debt (19,430) (759) (18) (20,207)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KMGZLLVMGLZG
(END) Dow Jones Newswires
September 26, 2019 06:00 ET (10:00 GMT)
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