RNS Number:8495I
CSS Stellar PLC
18 March 2003
Embargoed until 07.00
18 March 2003
CSS Stellar plc
("CSS or "the Group")
2002 Preliminary Results
CSS Stellar, the AIM listed sports and entertainment management and marketing
group operating in Europe, the US and Asia, today announces preliminary results
for the year ended 31 December 2002.
HIGHLIGHTS
- Excellent strategic progress made in 2002 despite difficult market conditions
- Acquisition programme outlined at flotation now completed. Acquisitions /
Investments during 2002 included Craigie Taylor, the Echo group and Target
Entertainment
- Results in line with December statement. Turnover during the year up to #48.5
million (2001: #23.0 million)
- EBITDA increased 33% to #5.3 million from #4.0 million in 2001
- Adjusted pre-tax profit up 16% to #3.7 million
- Inaugural dividend recommended.
- Focus in 2003 will be on consolidation and debt reduction
Chairman, John Webber, today said:
"The group has made excellent strategic progress in 2002, building an
infrastructure of businesses in sports and entertainment, where we can now
credibly represent both individual and corporate clients on a global basis.
"Despite the prevailing market conditions, we remain cautiously optimistic that
our range of operations, broad geographical spread, and enthusiasm to succeed
will help us to drive the business forward this year."
- Ends -
Enquiries:
CSS Stellar plc 020 7078 1400
Julian Jakobi, Chief Executive
Sean Kelly, Finance Director and Deputy Chief Executive
Weber Shandwick Square Mile 020 7067 0700
Ben Padovan or Sally Lewis
CHAIRMAN'S STATEMENT
Overview and Strategy
At flotation we said that our strategy would be to acquire businesses in our
chosen specialist areas in order to represent both individual and corporate
clients on a global basis. This has been achieved during 2001 and 2002. The
Group can now represent both individual and corporate clients on a global basis.
The Group is now a much changed, and far more broadly-based, business than it
was a year ago. As a result, we also believe we are much more resilient in the
current market than many of our competitors, many of whom have found 2002 an
even more difficult year than we have.
At the year end we represented or worked for more than 1,500 clients and had
over 600 employees, divided equally between North America and Europe. Having
achieved the strategic objectives which we set ourselves at flotation, the Board
is now determined to move to the next stage of CSS's growth.
Our key aims for 2003 are to digest and integrate the acquisitions made over the
past two years and to improve the cross-selling between the talent, marketing,
and media arms of our business.
Financial Results
We told the market three months ago that the 2002 profit was likely to be more
disappointing that we had originally hoped and the eventual outcome is in line
with those reduced expectations.
On turnover of #48.5 million (2001: #23.0 million), adjusted EBITDA increased
33% to #5.3 million (2001: #4.0 million) and adjusted profit before tax
(excluding goodwill, non-recurring and exceptional items) was up 16% to #3.7
million (2001: #3.2 million).
The profit before tax was #6,000 compared with #2.3 million in 2001.
The fully diluted earnings per share showed a loss per share of 1.71p (2001:
earnings of 7.19p per share)
Adjusted fully diluted earnings per share before non-recurring items and
goodwill was 10.15p (2001: 10.75p).
While the results are not as good as we had hoped, we take comfort from the
one-off nature of this year's problems, which amounted to #1.5 million of
non-recurring or exceptional costs. These costs are described in more detail in
the Financial Review below.
In April we raised a net #9.3million through a placing and open offer to
shareholders. This was partly, as we stated at the time, to complete our
strategic acquisitions, details of which are set out below.
The balance sheet shows a strong financial position with loan facilities and
cash available for the development of the Group.
With effect from 1 January 2003, the Group will report by the following four
divisions: Talent Management; Marketing; Event Services and Television.
Acquisitions
We made a total of 8 acquisitions or strategic investments during 2002 for an
initial aggregate consideration of #9.6 million. These acquisitions were across
all our divisions and performed in line with, or above, expectation since
joining the Group. Further information on these acquisitions is included in the
Chief Executive's Review, which follows my statement.
Board Changes and Employees
We announced in September that Sean Kelly would be moving to New York to become
President of our significant North American businesses, as well as continuing to
serve as Group Finance Director. In December we informed the market that Rick
Jones had left as former CEO of GEM and that he had also relinquished his
non-executive position on the plc board. Sean Kelly was subsequently appointed
Chairman of GEM.
In January 2003 Barrie Gill, who had served as a non-executive Director on the
plc board since flotation, very sadly died after a long fight against cancer.
In the light of the above, the Board is currently looking at the appointment of
a further non-executive Director.
Once again, as a result of the acquisitions, strategic investments, and options
issued during the year, we have increased our employee equity base. Internal
presentations for the Share Incentive Plan ('SIP') are taking place. Most of our
employees will be able to make monthly tax-free contributions to buy shares
within the SIP, which the company will then match on the basis of 1 share for
every 3 shares purchased.
At the forthcoming Annual General Meeting the Board also intends to seek the
necessary approval to enable it to buy-in the Company's shares.
We thank all our employees for their whole-hearted efforts in 2002 and our
shareholders for their support in trying times.
Final dividend
We said in December that we expected to recommend payment of an inaugural final
dividend for 2002. The Board is pleased to recommend payment of 1p per share to
shareholders on the register on 25 April 2003.
Outlook
I remain cautiously optimistic that our range of operations, broad geographical
spread, and enthusiasm to succeed will enable us to drive the business forward
this year despite the prevailing economic conditions.
John Webber
Chairman
GROUP CHIEF EXECUTIVE'S OPERATIONAL REVIEW
The Group now encompasses a cross-section of businesses, evenly divided between
sport and entertainment during 2002. In the current year we are expecting
revenues and gross profits to be greater in our entertainment companies, three
of which were only included for part of 2002.
This review will be presented regionally, split between the four new reporting
divisions comprising:
- Talent Management
- Marketing (including Sponsorship Sales)
- Event Services; and
- Television
Europe
2002 was a year of mixed fortunes for the European division. Overall revenues
grew to #24.8 million (2001: #16.7 million). At the operating level, profits
were #2.9million, prior to goodwill and non-recurring items (2001: #2.4
million).
In comparative terms, in 2002 the European client division generated operating
profits prior to goodwill and non-recurring items of #2.7 million (2001: #1.8
million).
Events Services made #0.2 million (2001: #0.6 million) after a disappointing
performance from ARB.
Talent Management
During 2002 we made one investment in the European Talent Management division.
Stellar Financial Partners ('SFP') provides bespoke financial services to high
net worth individuals from our offices in Covent Garden and began trading in the
final quarter of the year. Initial cash consideration of #10,000 was paid with a
future maximum 7.6 million CSS shares to be issued on the achievement of
exacting profit targets over the next two years. SFP performed ahead of
expectations for the period following acquisition.
Operationally the division as a whole had a solid year. Entertainment clients
Kiera Knightley, Sandy Powell and Simon Schama have been nominated for industry
awards; Nicholas Hytner was appointed new artistic director of the National
Theatre and Rosamund Pike starred in the latest Bond film. At the recent British
Book Awards, Allison Pearson won Newcomer of the Year, whilst Alan Bennett won
the prestigious Lifetime Achievement Award. Motorsport saw the first full year
contribution from Juan Pablo Montoya. SFP, our new financial services division,
also made an impressive start accessing clients across several divisions.
Marketing
We acquired Craigie Taylor (now GEM Europe) in April for an initial
consideration of #3.4 million. GEM Europe's clients include Vodafone and
Powergen. The company had a good eight months under our ownership exceeding our
expectations. The highlight was the securing of the Powergen Challenge Cup a
deal which GEM Europe conceived and to which GEM now provides marketing support.
TSC, our sponsorship consultancy, fared well, winning the Group's first
government contract for the Foreign Office and the first entertainment
sponsorship deal bringing together Muller and Blind Date.
Despite a difficult year for sports sponsorship sales, our businesses had some
notable successes, with motorsport deals for Oris and Nicorette and, in cricket,
Frizzell's four-year sponsorship of the English Cricket Board County
Championship.
Event Services
We made one acquisition during the year, Backporch, which is now part of ARB and
hires out audio and visual equipment to events. Total consideration of #117,000
was paid.
Icon again performed well over the year, providing signage to the BBC Music Live
concerts in honour of the Queen's Jubilee in 25 UK cities. They also secured a
four year contract with the English Cricket Board. On an ongoing basis, Icon
services 14 of the Champions League grounds as well as The Royal and Ancient,
PGA European Tour and Wimbledon. ARB had another difficult year. Management
changes have been made and new systems installed, which will enable us to better
analyse asset utilisation and improve margins.
Television.
We spent a considerable amount of time identifying the right investment to grow
our existing television business.
In September we announced we had acquired 58.5% of Target Distribution Limited
('Target') from Tiger Aspect Group, for #568,183 cash and the issue of shares to
Tiger Aspect.
Target, managed by Alison Rayson, the other shareholder, is an international
television distribution company with a catalogue of approximately 1,000 hours of
programming, including Popstars, Popstars The Rivals, Bad Girls and Footballers
Wives.
A busy year was capped with the launch of the brand licensing division in the
final quarter. The company had a good three months under our ownership exceeding
our expectations.
2003
The current year has begun promisingly across most of our divisions in Europe.
Talent Management
For the entertainment division one of the key aims for 2003 is to secure a
bridgehead for its clients on the US West Coast.
In Motorsport Richard Burns has signed a new long term contract and Allan McNish
is the new test driver for the Renault team in the new Formula 1 season.
In Football, we signed a new agreement to represent the commercial rights for
Team England, which runs until after the next World Cup in 2006. We also
negotiated the personal terms of the deal for the eighteen year old, Philippe
Senderos, to move from Switzerland to Arsenal. Philippe is regarded as one of
the outstanding young football talents in Europe.
SFP are continuing to establish themselves as experts in their specialist
financial areas and are already providing tax and financial advice for a number
of Group clients.
Marketing
We are targeting growth sectors and hope to secure additional work from our
existing clients. GEM Europe and Design @ Large are also involved in brand
strategy work for the Group.
Television
Target has recently moved to Drury House, alongside our talent management
division and has secured the rights to distribute several new productions.
Appointment
Anthony Baring (Managing Director PFD) was appointed Chief Operating Officer for
Europe on 1 February 2003 and has quickly embraced this important role.
NORTH AMERICA
2002 was a year of substantial change for our North American operations. The
acquisition of the Toronto-based Echo group at the end of July virtually doubled
the number of employees: we now have over 300 operating from 6 offices in the
region. The vast majority (85%) work in marketing but we have a growing talent
management business and a new television division.
On turnover of #23.7million (2001: #6.3 million), we made adjusted profits of
#0.8 million (2001: #0.8 million).
Marketing
At the start of 2002 we acquired Vertical Mix Marketing Inc ('VMM') for an
initial consideration of #267,000. Now part of GEM, the company's current
clients include NBC, A&E, National Geographic and Comcast. It was a
disappointing year for the company since acquisition following the deferral of
several important projects. New client wins such as National Geographic and
Comcast make us hopeful of achieving better results this year.
The purchase of the Echo group meant that the Group could for the first time
offer both above and below the line marketing and advertising services to
clients. Echo retains many of its early entertainment clients, including film
distributor Alliance Atlantis for whom the group has acted for 15 years. It now
applies these specialist marketing techniques to a far-broader client range,
such as Labatt Breweries, Microsoft and Starbucks. Echo also continues to do
work for the Toronto International Film Festival, the Toronto Stock Exchange,
and the popular groups U2 and the Rolling Stones.
The initial consideration for Echo was #4.1million and as a result of the better
than targeted performance in 2002 a further cash payment of CDN$3.6million
(#1.5million) is payable in the next twelve months. In the period since
acquisition, Echo performed well. In particular, the company handled all the
publicity for its long-term client Alliance Atlantis around the launch of the
highly successful second film of the Lord of the Rings trilogy, "The Two Towers"
and also for "Chicago" and "About Schmidt".
Sean Kelly, Finance Director and Deputy Chief Executive, relocated to New York
on 1 October 2002 to take charge of the Group's increased operations in the
region. He immediately conducted a review of all our offices to see how the
businesses could best be structured to achieve better results. In most of GEM's
offices he found a committed team ready to embrace change.
Following Rick Jones's departure, operations have now been restructured at GEM,
reducing the cost base, including staff cuts and exiting unnecessary and
expensive properties. The impact of some of these cost reductions will take
time to filter through, although the majority will take effect in the first half
of 2003.
Talent Management
This small but growing division was focused on motorsport clients but the
strategic investment we made in Rocky Hambric's golf-management businesses in
September has already had an impact, and we are confident of Rocky's ability to
grow our golf client business on both sides of the Atlantic. Golf clients
include Justin Leonard, Bob Tway and the new star of the Ladies US Tour, Lorena
Ochoa. We invested a total of #0.5 million of which #0.45 million was working
capital for the businesses.
2003
Trading in the current year in the region has begun satisfactorily in all
divisions and in line with the Group's expectations.
GEM has signed Domino's Pizza and Fingerhut (a significant direct-mail retailer)
as clients and has project work for Diageo, Labatt and the History Channel
amongst others. GEM Toronto will shortly be moving in to the same premises as
the Echo group which will greatly benefit the integration of certain back office
functions. In sponsorship sales, General Motors has extended its contract and we
are doing work for the Canadian Olympic Committee.
In motorsport, we have moved into NASCAR to complement GEM's marketing expertise
in the sport and NASCAR drivers Hank Parker, Jason Sarvis and Michelle Thierault
have been signed by the Talent Management division. Rocky Hambric has already
added Mitchell Spearman to his impressive client roster and Justin Leonard won
the US Tour event last weekend. We plan to expand the entertainment client
representation in New York and we want to open a small office in Los Angeles
during 2003.
The Television division has expanded to the USA with the recruitment of Target's
first employee in New York. Ellen Lovejoy joins with much experience both in
the US and in Europe and will be looking to add to the UK catalogue and, as in
the UK, grow the licensing capability.
The region is now run from New York and managed by a North American board,
chaired by Sean Kelly, with representatives from all our divisions and with
Kevin Rose as Chief Financial Officer for the region.
ASIA
In June 2002 we acquired 20% of Sportsunite (Asia) Limited with an option to
purchase the remainder, for an initial investment of #50,000. The importance of
this region and its growth prospects have led to further expansion culminating
in us setting up CSS Stellar Asia on 1 January 2003, which is run out of Hong
Kong, by Chris Guinness. The office is already generating revenues and we look
forward to reporting on its progress. Chris Guinness now reports to Sean Kelly
on all Asian activities.
I endorse our Chairman's comments for the current year. We have cautious
expectations, but the breadth of our business and quality of our employees makes
me confident about the Group's prospects for the future.
Julian Jakobi
Chief Executive
FINANCIAL REVIEW
The purpose of this review is to highlight matters of interest to shareholders
and to provide guidance on reasons for alterations in some of the key operating
areas of the business.
Profit and Loss Account
Turnover
There has been a substantial rise in turnover, which has more than doubled to
#48.5 million (2001: #23.0 million). Turnover was evenly split between Europe
and North America.
The turnover rise is mainly due to the expansion of the business but also
because of the acquisition of the Echo group, which undertakes media buying for
clients. This has increased turnover and the cost of sales by #9.1 million in
the five months since acquisition.
There has been a decrease in turnover in the Events Services division,
particularly at ARB, which is referred to in the Chief Executive's Report, to
#9.8 million (2001: #10.6 million).
Cost of Sales
Cost of Sales in 2002 was #15.1 million (2001: #6.8 million). The increase is
due to the Echo purchase as noted above. There was a fall in the cost of sales
in the Event Services division to #5.9 million (2001: #6.8 million). This
decrease was largely due to the fall in turnover. However, it is encouraging to
see some improvement in gross profit margins to 39.6% (2001: 35.4%) in the event
service division.
Administration Costs excluding Goodwill and Exceptional Costs
These have risen substantially as would be expected from the increase in
turnover to #29.7 million (2001: #12.9 million). The largest component is staff
costs, which have increased to #20.8 million (2001: #9.4 million). The average
number of employees is 484 (2001: 205).
This substantial increase means the average cost per employee was #42,966,
against #45,700.
However staff costs as a proportion of gross profit rose to 61.8% (2001: 58.0%),
a reversal from last year and a reflection of the relatively high North American
remuneration costs.
Exceptional Items
The items totalling #1.55 million are referred to earlier and are analysed in
the Notes.
During the year we suffered a number of bad debts. The well-documented demise of
the Arrows Formula 1 racing team had a major effect on the disappointing results
in our sponsorship business. The talent management division also suffered a
small number of large bad debts.
In our marketing division, GEM in North America performed below expectation in
2002. We outlined in December the actions we have taken. The reduced cost base
for the North American operations was implemented during the final quarter of
2002. We believe the short term cost of making changes was both necessary and
appropriate for the anticipated level of business in 2003.
We referred to the non-recurring dilapidation and relocation costs in moving to
Covent Garden in the interim results statement last September. There is however
no doubt as to the considerable operational benefits of integrating the talent
management businesses together into Drury House.
The Board believes these are non-recurring and are due to important operational
benefits, in the case of the move to Covent Garden, and the restructuring of the
North American business. Bad debts are unusual in the industry. 2002 however,
has been an exceptional year and the Group has suffered disproportionately. The
losses have arisen from a few large debts. The Board does not believe this
raises concerns about the credit control systems generally in the Group
Amortisation
The charge for the year of #1.96 million (2001: #0.78 million) results from the
acquisition programme undertaken in the period since flotation. Overall, the
Group has accumulated goodwill of #42.5 million since flotation, with
amortisation being spread over a period of 5 to 20 years.
Dividend
The Board is to commence payment of a dividend in line with the pledge given at
flotation. The amount of the recommended dividend is 1p. Assuming approval by
shareholders, the dividend will be paid on 20th May 2003 to shareholders on the
register on 25th April 2003.
Earnings per Share - Fully Diluted
This key performance indicator unadjusted shows a loss of 1.71p per share (2001:
earnings 7.19p).
Once the figure is adjusted for amortisation and non-recurring items the fully
diluted earnings per share is 10.15p (2001: 10.75p). Earnings have therefore
reduced by 5.9%, reflecting the Group's relative performance over the year.
However, this is against the backdrop of a very challenging market and the
substantial improvements in the infrastructure of the business made in 2002.
Balance Sheet
Share Capital and Acquisitions
Overall, the Group significantly increased its share capital over the year:
1. Issue of 1.52 million shares at an average issue price of 225p for
acquisitions.
2. Issue of 4.42 million shares at 225p by means of a Placing and Open Offer to
shareholders.
Deferred consideration has been accrued in the 2002 financial statements as
shares to be issued. The total value of #4.1 million is primarily in relation to
the Canadian former shareholders of GEM and Echo. The share values of these
transactions were 270p and 240p respectively.
It is difficult to predict future deferred consideration share payments other
than to note that the only businesses which could receive a substantial payment
are GEM Europe, Echo and Stellar Financial Partners. The minimum price at which
shares can be issued for these companies is 180p, 190p and 250p respectively.
The remainder of the financial information is explained in the notes to the
Financial Statements.
Sean Kelly
Finance Director and Deputy Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31st December 2002
Unaudited Audited
2002 2001
Notes #000 #000
Turnover
- Continuing operations and share of joint venture 32,467 25,542
- Acquisitions 15,990 -
- Less: Share of joint venture - (540)
_________ ________
Group Turnover 1 48,457 25,002
Cost of sales (15,069) (6,841)
_________ ________
Gross profit 33,388 18,161
Exceptional administrative expenses 2 (1,547) -
Amortisation of goodwill (1,955) (780)
Other administrative expenses (29,676) (12,947)
Administrative expenses - Total (33,178) (13,727)
_________ ________
Operating profit 1
- Continuing operations 1,762 2,434
- Acquisitions 672 -
210 2,434
Share of operating loss of joint venture - (82)
Exceptional items - 42
_________ ________
210 2,394
Interest receivable 230 170
Interest payable (434) (234)
_________ ________
Profit on ordinary activities before taxation 6 2,330
Tax on profit on ordinary activities 3 (388) (842)
_________ ________
Profit on ordinary activities after taxation (382) 1,488
Minority interest (56) 29
_________ ________
(438) 1,517
Proposed dividend (258) -
_________ ________
Profit retained (696) 1,517
========= ========
(Loss) / Earnings per Ordinary share (pence) 4 p. p.
Basic (1.84) 9.00
Diluted (1.71) 7.19
_________ ________
Adjusted Earnings per Ordinary share (pence) 4
Basic 10.93 13.45
Diluted 10.15 10.75
#000 #000
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Profit for the financial year (438) 1,517
Translation adjustment on opening reserves (78) -
_________ ________
Total gains and losses recognised since last annual report (516) 1,517
========= ========
CONSOLIDATED BALANCE SHEET
As at 31st December 2002
Unaudited Audited
2002 2001
Notes #000 #000 #000 #000
FIXED ASSETS
Intangible assets 5 39,293 29,225
Tangible assets 6 4,990 3,507
Trade investments 7 1,093 66
_______ _______
45,376 32,798
CURRENT ASSETS
Stocks and work in progress 344 266
Debtors 16,963 10,580
Cash at bank and in hand 5,302 1,896
______ ______
22,609 12,742
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR (23,355) (12,209)
______ ______
Net Current (liabilities) / assets (746) 533
_______ _______
Total assets less current liabilities 44,630 33,331
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR (3,523) (5,214)
Minority interests 169 -
_______ _______
41,276 28,117
======= =======
CAPITAL AND RESERVES
Called up share capital 8 12,880 9,913
Share premium 8 22,976 13,176
Shares to be issued 8 4,098 2,932
Revaluation reserve 171 171
Profit and loss account 1,151 1,925
_______ _______
Shareholders' funds 9 41,276 28,117
======= =======
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31st December 2002
Unaudited Audited
2002 2001
Note #000 #000 #000 #000
Cash inflow from operating activities 10 1,892 2,564
Returns on investments and servicing of finance
Interest paid (434) (204)
Interest received 230 170
_____ _____
Net cash (outflow) from returns on investments (204) (34)
and servicing of finance
Taxation (1,026) (534)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,072) (482)
Purchase of intangible fixed assets (10) -
Sale of tangible fixed assets net of relocation costs 94 64
_____ _____
Net cash (outflow) from capital
expenditure and financial investment (988) (418)
Acquisitions and disposals
Purchase of subsidiaries (3,570) (6,471)
Net overdraft from purchase of subsidiaries - (613)
Purchase of investments (894) -
Sale of investment 66 81
_____ _____
Net cash outflow from acquisitions and disposals (4,398) (7,003)
Management of liquid resources
Sale of short-term bank deposits - 3,500
_______ _______
Net cash outflow before financing (4,724) (1,925)
Financing
New shares issued for cash 9,937 2,028
Less associated costs (580) (98)
Receipt from borrowings - 3,205
Repayment of borrowings (1,973) (1,809)
Capital element of finance lease rentals (881) (363)
_____ _____
Net cash inflow from financing 6,503 2,963
_______ _______
Increase in cash 1,779 1,038
======= =======
NOTES TO THE FINANCIAL INFORMATION
Year Ended 31st December 2002
1. Analysis of Trading and Net Assets
Class of Business
Profit before
Divisions Turnover Taxation Net Assets
2002 2001 2002 2001 2002 2001
#000 #000 #000 #000 #000 #000
Client representation 38,648 12,407 2,001 2,619 30,499 20,905
Events 9,809 10,595 164 595 2,763 2,985
_______ ______ ______ ______ _______ _______
48,457 23,002 2,165 3,214 33,262 23,890
======= ======
Goodwill amortisation (1,955) (780)
_______ ______
Operating profit 210 2,434
Share of operating profit and net assets
of Joint Venture - (82) - -
______ ______ _______ _______
210 2,352 33,262 23,890
Net interest (204) (64) - -
Exceptional items - 42 - -
Unallocated - - 8,014 4,227
______ ______ _______ _______
Group profit before taxation/net assets 6 2,330 41,276 28,117
====== ====== ======= =======
Geographical
Europe 24,783 16,695 1,632 2,424 25,993 20,190
North America 23,674 6,307 533 790 15,283 7,927
_______ ______ ______ ______ _______ _______
48,457 23,002 2,165 3,214 41,276 28,117
====== ====== ====== ====== ======= =======
2. Exceptional administrative expenses
2002 2001
#000 #000
Relocation costs of the Group's head office 395 -
Provision for significant bad debts 914 -
North America's cost of restructuring 238 -
_____ ____
1,547 -
===== ====
3. Tax on Profit on Ordinary Activities
United Kingdom corporation tax charge at 30% (2001: 30%)
based on the profit for the year 516 783
Adjustment in respect of prior year charge (9) (159)
_____ ____
507 624
Overseas taxation 104 218
Adjustment in respect of prior year charge (122) -
_____ ____
489 842
_____ ____
Deferred Tax
United Kingdom
- current year (19) -
- prior year (85) -
Overseas - current year 3 -
_____ ____
(101) -
_____ ____
388 842
===== ====
Tax chargeable in relation to the non-operating exceptional item in 2001
amounted to #12,000.
The tax charge is more than would be expected on profits of #6,000 (2001:
#2,330,000) at the standard 30% rate of corporation tax. The
differences are explained as follows:
Tax on profits on ordinary activities at 30% 2 699
Effects of:
Goodwill amortisation and other expenses not deductible for tax purposes 586 297
Capital allowances in excess of depreciation 16 (6)
Expenses not deductable for tax purposes 114 -
Share of joint venture loss - 34
Higher tax rate on overseas earnings 21 57
Losses in overseas subsidiaries 71
Use of losses from previous periods (35) (83)
Adjustment to tax charge in respect of previous period (153) (159)
Exchange differences on inter-company balances (55) -
Other timing differences (78) 3
____ ____
Tax charge on profit on ordinary activities 489 842
==== ====
4. Earnings Per Share
Weighted Basic Adjusted
average per share per share
Earnings no. of shares amount amount
2002 #000 Shares Pence Pence
Attributable to ordinary shareholders:
(Loss) (438)
_________
Adjusted earnings 2,600
_________
(Loss) / earnings per share 23,783,309 (1.84) 10.93
======= =====
Dilutive effect of securities
Options, warrants and shares to be issued 1,830,331
___________
Diluted earnings per share
(Loss) / earnings per share 25,613,640 (1.71) 10.15
=========== ======= =====
2001
Attributable to ordinary shareholders:
Earnings 1,517
______
Adjusted earnings 2,268
______
Earnings per share 16,858,009 9.00 13.45
====== =====
Dilutive effect of securities
Options, warrants and shares to be issued 4,243,238
___________
Diluted earnings per share
Earnings per share 21,101,247 7.19 10.75
=========== ====== =====
The Adjusted earnings per share is based on the retained results adjusted by the
amortisation of goodwill and the exceptional administrative expenses and
exceptional items net of taxation at 30%.
5. Intangible Assets
Goodwill TV Rights Total
#000 #000 #000
Cost:
At 1 January 2002 30,583 - 30,583
Subsidiaries acquired in year 11,870 - 11,870
Acquired with subsidiaries - 249 249
Additions - 10 10
_______ _______ _______
At 31 December 2002 42,453 259 42,712
_______ _______ _______
Amortisation:
At 1 January 2002 1,358 - 1,358
Charge for the year 1,955 106 2,061
_______ _______ _______
At 31 December 2002 3,313 106 3,419
_______ _______ _______
Net book value at 31 December 2002 39,140 153 39,293
======= ======= =======
Net book value at 31 December 2001 29,225 - 29,225
======= ======= =======
6. Tangible Fixed Assets
Plant & Furniture
Freehold Motor event and
property vehicles equipment equipment Total
#000 #000 #000 #000 #000
The Group
Cost or valuation:
1 January 2002 530 1,726 1,573 3,400 7,229
Translation - - - (109) (109)
Additions - 320 1,124 865 2,309
Acquired on acquisition - 149 38 1,852 2,039
Disposals - (373) (341) (305) (1,019)
_____ ______ ______ _____ ______
At 31 December 2002 530 1,822 2,394 5,703 10,449
_____ ______ ______ _____ ______
Accumulated depreciation:
1 January 2002 15 1,044 632 2,031 3,722
Translation - - - (36) (36)
Charge for the year 15 340 432 721 1,508
Acquired on acquisition - 68 - 1,122 1,190
Disposals - (279) (341) (305) (925)
_____ ______ ______ _____ ______
At 31 December 2002 30 1,173 723 3,533 5,459
_____ ______ ______ _____ ______
Net book value:
At 31 December 2002 500 649 1,671 2,170 4,990
===== ====== ====== ===== =====
At 31 December 2001 515 682 941 1,369 3,507
===== ====== ====== ===== =====
7. Trade Investments
At 1 January 2002 66
Additions during the year:
Hambric Sports Management Inc.
- 17.5% shareholding 424
- convertible loan stock (12.5% of shareholding) 322
StandOut Sports and Entertainment Inc.
- 50% shareholding 162
- loan at 8% interest 129
Sportsunite (Asia) Limited 56
_____
1,159
Disposal of share option in CSS Stellar Golf Limited (66)
_____
At 31 December 2002 1,093
=====
8. Called Up Share Capital
The following is the movement in shares, shares capital and share premium during
in the year:
Date Shares Share Share Share
Price Capital Premium
No. # #000 #000
At 1 January 2002 19,826,530 9,913 13,176
Acquisition of:
Vertical Mix Marketing 22 January 46,894 2.97 23 116
The GEM Group (Europe) 26 April 840,000 2.50 420 1,680
Backporch 26 April 16,400 2.44 8 32
Hambric Sports Management Inc. 18 September 114,000 1.25 57 85
StandOut Sports and Entertainment Inc. 18 September 46,000 1.25 23 34
Target Entertainment 25 September 155,000 1.55 78 162
Deferred consideration for:
The GEM Group 18 April 109,903 2.52 55 222
The Peters Fraser & Dunlop Group 17 September 190,502 2.18 95 320
New Shares issued for cash: 22 April 4,416,316 2.25 2,208 7,729
Costs of issuing shares (580)
__________ __________ __________
At 31 December 2002 25,761,545 12,880 22,976
========== ========== ==========
Shares to be issued: 1 January Movements 31 December
#000 #000 #000
The GEM Group acquisition
705,186 ordinary shares at #2.70 1,900 - 1,900
Share options to be granted at a discount to market value 256 - 256
Deferred consideration 276 (113) 163
The Peters Fraser & Dunlop Group acquisition
Deferred consideration 500 (500) -
The Echo group of companies acquisition
701,526 ordinary shares at #2.40 - 1,684 1,684
Other deferred consideration for acquisitions
The Sponsorship Consultancy - 35 35
Stellar Financial Partners - 60 60
_______ _______ ______
2,932 1,166 4,098
======= ======= ======
9. Reconciliation of Movements in Shareholders' Funds
2002 2001
#000 #000
(Loss) / profit for the financial year (696) 1,517
Translation adjustment on opening reserves (78)
New shares issued (including share premium) 13,347 12,274
Costs of issuing shares charged to share premium (580) (98)
Shares to be issued 1,166 2,582
______ ______
Net addition to shareholders' funds 13,159 16,275
Opening shareholders' funds 28,117 11,842
______ ______
Closing shareholders' funds 41,276 28,117
====== ======
10. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
Operating profit 210 2,434
Dividend paid to minority interest - (22)
Depreciation charge 1,508 796
Amortisation of intangibles 2,061 812
(Increase)/decrease in stocks (78) 9
Decrease /(increase) in debtors 1,210 (784)
(Decrease) in creditors (3,019) (681)
______ ______
Cash inflow from operating activities 1,892 2,564
====== ======
11. Reconciliation of net cash flow to movement in net cash/debt
Increase in cash in period 1,779 1,038
(Decrease) in short term bank deposits - (3,500)
Cash outflow / (inflow) from increase in net debt and lease financing 2,854 (1,033)
Net debt acquired on acquisition (912) (4,870)
______ ______
Change in net (debt)/cash 3,721 (8,365)
Inception of finance leases (1,237) (207)
______ ______
2,484 (8,572)
Net (debt)/cash brought forward (5,760) 2,812
______ ______
Net (debt) carried forward (3,276) (5,760)
====== ======
Analysis of Net Cash/(Debt)
At 1 Cash Flow Non-cash At 31
January /Acquisitions items December
2002 2002
#000 #000 #000 #000
Cash at bank 1,896 3,406 - 5,302
Overdrafts (472) (1,627) - (2,099)
______ _____ ______ _______
1,424 1,779 - 3,203
Bank debt due after 1 year (2,387) 1,137 - (1,250)
Bank debt due within 1 year (1,136) 261 - (875)
GEM loan notes - (440) - (440)
ECHO loan notes - (394) - (394)
Unsecured equity bonds 2004 (104) 22 - (82)
Guaranteed loan notes (2,500) 553 - (1,947)
Finance leases (1,057) 803 (1,237) (1,491)
______ _____ ______ _______
Total (5,760) 3,721 (1,237) (3,276)
====== ===== ====== =======
12. Principal Accounting Policies
The principal accounting policies of the Group are set out in the Group's 2001
Annual Report and Financial Statements. The policies have remained unchanged
from the previous Annual Report apart from the policy in relation to deferred
tax which has been amended in line with FRS 19.
13. Financial Information
The financial information set out in this preliminary announcement does not
constitute Statutory Accounts as defined in Section 240 of the Companies Act
1985. The summarised Balance Sheet at 31 December 2002 and the summarised
Profit and Loss Account, the summarised Cash Flow Statement and associated notes
for the year then ended have been extracted from the Group's Financial
Statements. Those Financial Statements have not yet been delivered to the
Registrar, nor have the Auditors reported on them.
The financial information relating to the period ended 31 December 2001 is
extracted from the statutory accounts, which incorporated an unqualified audit
report and which has been filed with the Register of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUQPWUPWUGR