Final Results
CSS Stellar PLC
20 March 2006
For Immediate Release 20 March 2006
CSS Stellar plc
('CSS' or 'the Group')
Preliminary Results
for the year ended 31 December 2005
CSS Stellar plc, the entertainment and sports management and marketing group,
today announces its preliminary results for the year ended 31 December 2005.
Highlights:
• Operating profit adjusted for amortisation and impairment of goodwill
of £0.8 million (2004: £1.5 million)
• Strategy to be focused on Entertainment
• Reduction in administrative expenses to £24.7 million (2004: £31.9
million)
• Structured Bank debt reduced by 54% to £1.8 million, down from £3.8
million
• Disposal of loss making North American operations
• Disposal of GEM Europe generated £1.9 million in cash
• Reduction in Central costs of 26%
Commenting on the results Peter Owen, Chairman, stated:
'I am delighted to report results that are ahead of the Board's expectations
when we announced our interim results in September 2005. We believe that the
Group now has a stable operational platform and that it will deliver significant
growth in the coming years to shareholders by focusing on the development of its
operating base in the entertainment industry, where it has a leading market
position.'
For further information please contact:
CSS Stellar
Sean Kelly, Chief Executive Tel: 020 7466 5000 (am)
Kevin Rose, Finance Director Tel: 020 7078 1400 (thereafter)
Buchanan Communications
Bobby Morse/Rebecca Skye Dietrich Tel: 020 7466 5000
CHAIRMAN'S STATEMENT
Overview and Strategy
I am pleased to report the Group's 2005 results, which are ahead of the Board's
expectations at the half-year.
The Group achieved its key objectives, stabilising European operations,
re-structuring North America, reducing debt and minimising central overheads.
The Board is now focusing on improving margins this year and expanding the
businesses which have the greatest potential for growth and improving
shareholder return. We anticipate that our leading market position in the
entertainment sector of the media industry will provide the company with the
opportunity to achieve these aims.
Financial Results
The year-end results were also ahead of market expectations with an operating
profit before amortisation and impairment of goodwill of £781,000 (2004:
£1,466,000). The major difference between 2004 and 2005 was in our North
American businesses, which recorded an operating loss of £83,000 (2004: profit
of £615,000). We have now reduced our exposure to this lower margin business,
and as reported in our Interim Results in September 2005, refocused the Group on
its core markets. The Talent and Events businesses have both had pressure on
their margins, as explained in the Chief Executive's Operational Review, which
we expect to be redressed in 2006.
The Group has undergone a significant amount of restructuring during the year,
with the disposal or closure of several businesses, the net effect of which is a
loss of £843,000, of which £725,000 was provided at the half year. Further to
this, the Board has reviewed the value of goodwill held in the Balance Sheet and
concluded that a write down in goodwill of £14.8 million was required, of which
£13.7 million was provided for at the half year.
Current Trading
The Group's first two months of trading in 2006 are in line with the Board's
expectations. In the Entertainment area of the business, trading is ahead of the
prior year.
Board Changes
The Group has already announced the retirement of John Webber as Chairman and
thanks him for his considerable contribution to the Board. John will leave the
Board at the end of March 2006. In addition, Kevin Rose intends to resign as
Group Finance Director on 24 March 2006 to take up a more senior position
outside the Group; the Board also thanks him for his substantial contribution to
the Group. Sean Kelly, who previously was finance director, will oversee the
finances of the Group until a suitable appointment is made.
Peter Owen
Chairman
20 March 2006
CHIEF EXECUTIVE'S OPERATIONAL REVIEW
The 2005 results clearly demonstrate the effect of the restructuring work
undertaken in Europe in 2004, but also show how the lower margin North American
businesses were vulnerable to client losses.
These results are described in more detail below.
Talent Management
Overall revenues for the division rose to £12.1 million (2004: £10.9 million) an
increase of 11%. Operating profits prior to amortisation were £1.1 million
(2004: £1.4 million), which is primarily due to a decrease in profit arising in
the Sports business which will be reversed in 2006, as some of the younger
clients such as Dan Wheldon and Andrea Dovizioso begin to generate significantly
more revenue.
Sports
The Group's clients continued to achieve success in 2005. Juan Pablo Montoya won
three Formula 1 races during the year. Englishman Dan Wheldon, now US-based, won
both the Indy 500 and the IRL championship. Sebastien Loeb retained his World
Rally Championship title. A number of commercial deals were handled by CSS
Stellar on behalf of their clients, most notably, Dan Wheldon's move to the
Ganassi race team and the management of the Citgo motorsports programme focused
on our client, Milka Duno.
In football, the England football team qualified for the 2006 World Cup and Sir
Bobby Robson's autobiography became a best-seller, reaching number one in the
hard-back sales list.
In golf, the Group's strategy continues to be to build up a representation
business that can manage clients on both the US and European Tours. The US
representation is through our associate Hambric Sports Management (HSM) and the
European business has been built up over the last three years. Although we have
made a provision against our investment in HSM of £1.0 million, the golf
division has now built up a portfolio of outstanding young clients, and this
part of the Sports division is expected to make a profit in 2006. During 2005,
Gonzalo Fernandez Castano won his first European PGA golf event, the Dutch Open,
and both Oliver Wilson and Francesco Molinari continued to make progress on The
European Tour.
The strength and depth of the client base within Sports continues to grow and a
number of new clients were signed during 2005 including Indian cricket star,
Sachin Tendulkar, round-the-world yachtsman, Alex Thomson and Formula 1 driver,
Tiago Monteiro.
Entertainment
The management representation of television presenters continued to do very
well. Pamela Stephenson is the latest star to become a client and she joins
Piers Morgan, whose reputation as a presenter is growing all the time, and
established TV stars Anne Robinson and Michael Parkinson, whose shows continue
to attract excellent TV audience ratings.
PFD's stable of acting and writing talent continues to go from strength to
strength. Keira Knightley's role in Pride and Prejudice saw her being nominated
for a string of Awards. She was nominated for Best Actress both for an Oscar and
a Golden Globe; she was awarded the Variety UK Personality at the British
Independent Film Awards. Several other clients had an outstanding year resulting
in a string of nominations and awards. These included Emily Barclay, Rosamund
Pike, Ewan McGregor, Douglas Hodge, Jenna Russell and finally, James McAvoy, who
won the 'Orange Rising Star' BAFTA award. Additionally, James Lomas has had rave
reviews for his role in Billy Elliot and Dominic Monaghan won a Golden Globe for
Best Television Series for Drama for his role in 'Lost'.
Within the Literary Division:
•Julian Barnes' latest book, Arthur and George was shortlisted for the
2005 Man Booker Prize;
•Nick Hornby's book A Long Way Down was shortlisted for the 2005 Whitbread
Novel Award;
•John Mortimer received a lifetime achievement award at the British Book
Awards; and
•Other clients who enjoyed great success during the year included William
Hague, Alan Bennett, Claire Sambrook and John Boyne.
In Film, Television and Theatre:
•Francesca Marciano, co writer on Don't Tell, was nominated for an Oscar
for Best Foreign Language Film;
•Avie Luthra was nominated for a BAFTA in the Best Short Category for
Lucky; and
•Amelia Bullmore, Nell Leyshon, Mike Leigh, Peter Oswald, Richard Bean and
Tim Crouch received a variety of nominations and honours for their work; and
Charles McDougall was nominated for a Golden Globe as director of the TV hit
'Desperate Housewives'.
Overall the Board is pleased to note that the successes of this division are now
broadly spread across the agents, and consequently recognises the benefit of the
investment that has been made in sports and entertainment. Specifically, the two
start up operations, PFD's literary agency in New York and the golf division,
are close to operating at a break-even and are expected to make a contribution
to profits in 2006.
Marketing
The Marketing division has undergone some major changes in 2005; the Group is no
longer pursuing a strategy of building up a global marketing services division
but is instead realising value from disposing or shutting unprofitable operating
units and continuing with a specialist sports and event promotional marketing
unit in the USA.
The 2005 result therefore partially reflects these changes with turnover on the
continuing business falling to £6.4 million (2004: £9.9 million) and the
division having a loss of £0.1 million (2004: profit of £0.6 million). This
operating result was largely due to the loss of several important clients, and
the management made some major changes to the existing operations which are as
follows:
•Sale of GEM Europe for a profit of £1,887,000 before goodwill written off
of £1,634,000;
•Closure of the Atlanta Office in May as reported at the Interims;
•Closure of GEM's CEO office and its infrastructure based in Minneapolis.
The overall impact is to remove £1.1million ($2.0million) from the central
running costs, and give both the Minneapolis and New York operations more
control over their respective operational budgets;
•Closure of the Canadian operations. The Canadian operations including the
Echo Group of companies and GEM Canada have been wound up; and
•Creation of an independent operating unit for Minneapolis. Dave Kuettel,
the CEO of GEM Minneapolis, bought a 25% equity interest in the Minneapolis
operation for £143,000, realising a profit to the Group of £30,000. The
legal arrangements with Dave envisage the business being sold in three to
five years time with Dave getting an increasing proportion of the proceeds
as the sale price increases.
In 2005 the on-going GEM business in New York and its client GE Consumer &
Industrial worked together on the GE Olympic Marketing campaigns to create fully
integrated, results-oriented, consumer and trade promotions. These included the
highly successful 'Switch and Win' national consumer promotion representing GE
Lighting's (NA) largest promotion to date. On the event marketing side GEM added
another major Diageo brand in 2005, creating and activating a series of events
for Captain Morgan Original Spiced Rum.
Events
Operating profits prior to amortisation of goodwill were £623,000 (2004:
£687,000) on a significantly increased turnover of £9.4 million (2004: £6.6
million). The slight decrease in profits is as a result of expanding the
operating base of the business and the consequential short-term incentives given
to staff to achieve this increase in market share. Additionally the Group now
accounts for all pass-through income as revenue, which increases turnover and
cost of sales without affecting gross profit.
2005 was a strong growth year for our Events division. Icon Display, our events
operating business, is now rightly regarded as one of the leading event signage
specialists in Europe. Undoubtedly one of the highlights for them was to be
involved in producing all the signage and support display material for the
successful London 2012 Olympic bid. In football the credentials of the company
continued to go from strength to strength. In addition to the work done with
UEFA and TEAM on the world's biggest annual football tournament, The Champions
League, Icon have managed Chelsea's new rotating board system as well as working
with FIFA on this year's football World Cup. Icon continues to be heavily
involved with most major sports including cricket, golf, horse racing and
snooker and further strengthened its credentials in golf by being appointed to
look after the BMW Championship at Wentworth.
Icon has just opened new representative offices in Germany and Qatar, the latter
as a result of an increasing workload in the Middle East region which is
developing an impressive portfolio of major sporting events. Icon have recently
been heavily involved in the Qatar Open Golf - part of the European PGA Tour -
and the Tour of Qatar cycling event.
Central Costs
The key achievements in the period have been a reduction in central overheads to
£0.9 million (2004: £1.2 million) and a reduction in the amount of structured
bank debt to £1.8 million (2004: £3.8 million).
There has also been a substantial reduction in the carrying value of the Group's
investments which is believed by the Board to more closely relate to the
appropriate carrying value of the Group's assets. The charge to the profit and
loss account is £14.8 million of which £13.7 million was announced at the half
year.
Discontinued Activities
The Group has completed the process begun in 2004 of selling or closing
businesses or parts of divisions which either no longer fitted in with the
Group's strategic aims or were unprofitable and, as noted above, revalued the
remaining assets through a goodwill impairment charge.
Future Prospects
As outlined in the Chairman's statement, we believe that the best opportunities
for expanding the Group will come from those which are closely associated with
the entertainment industry and consequently will be focusing our attention on
the development of this area of the media business.
Sean Kelly
Chief Executive
20 March 2006
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.
Group Profit and Loss Account
Turnover
There has been a rise in turnover on continuing operations, which has increased
by 2% to £27.9 million (2004: £27.4 million). Turnover was split between Europe
£20.8 million and North America £7.1 million.
Talent
Talent saw an 11% rise in turnover on continuing operations to £12.1 million
(2004: £10.9 million) due largely to the continuing success of the entertainment
sector.
Marketing
Turnover on continuing operations fell by 36% to £6.4 million (2004: £9.9
million), as a result of difficult trading conditions experienced in North
America.
Events
Turnover in the Events division increased by 43% to £9.4 million (2004: £6.6
million). The Group now recognises pass through costs of £1.8 million within
turnover. Notwithstanding this, like on like turnover increased by 16% as a
result of a significant increase in new business won, both in the UK, with the
London 2012 bid, and the BMW Golf Championship at Wentworth, and in Germany and
the Middle East.
Cost of Sales
Cost of Sales in 2005 was £29.3 million (2004: £46.2 million). The reduction is
due to the number of businesses closed or disposed of during the year, as
highlighted in the Chief Executive's Operational Review.
Impairment of goodwill and investments
The Board has reviewed the carrying value of goodwill and investments held on
the Balance Sheet and concluded that an impairment provision of £14.8 million
should be made to more accurately reflect the value of the businesses held.
88% of the total provision for impairment related to the Group's Canadian
operations and GEM Europe. Within Canada, a number of significant client losses
occurred in the first part of 2005, and the Board concluded that the value of
the Canadian business should be fully written down. It had been the Board's
stated intention to sell GEM Europe, as it was felt that GEM Europe had reached
a stage of maturity, which indicated it was a good time and price to sell the
business. The goodwill of GEM Europe was therefore written down at the half year
to its expected net realisable value. This provision was necessary due to the
high value of shares given as deferred consideration (a price of £1.80), as set
out in the original sale and purchase agreement. The remainder of the provision
for impairment was made based on discounted future cashflows against ongoing
businesses or against businesses which are no longer trading.
Of the total provision of £14.8 million, which had no cash impact on the Group,
£13.7 million was provided at the time of the Interim Results. The additional
impairment provision of £1.1 million was made against our investment in Hambric
Sports Management, as detailed in the Chief Executive's Operational Review. The
directors consider that the current valuation of goodwill of £19.4 million is
fairly stated and no further impairment provision is required.
Other Administrative Expenses
Other administrative expenses have fallen by 23% to £24.7 million (2004: £31.9
million). The largest component is staff costs, which have fallen by 22% to
£17.8 million (2004: £22.8 million). The average number of employees was 389
(2004: 503).
Discontinued Operations
Operating losses on discontinued operations relate to GEM Europe, Echo and the
Atlanta and Canadian operations of GEM North America, which have been disposed
of or closed down.
Amortisation of goodwill
The charge for the year of £1.9 million has fallen by 23% (2004: £2.4 million)
as a consequence of the decision to adjust the carrying value of goodwill in the
Balance Sheet. The group has remaining goodwill of £19.4 million, which is
amortised over periods of 5 to 20 years.
Taxation
The Group's tax charge was £0.1 million (2004: £0.3 million). The tax charge
relates predominantly to the UK operations. As far as possible the Group has
taken steps to minimise its overall tax liability.
Earnings per Share
Unadjusted earnings per share on a basic and fully diluted basis shows a loss of
60.25p per share (2004: loss of 10.61p). The diluted loss per share is
equivalent to the basic loss per share as any dilutive effect would decrease the
net loss per share. Once the figure is adjusted for amortisation and
non-recurring items the fully diluted earnings per share is 1p (2004: 2.84p).
The basic adjusted earnings per share in 2005 is also 1p (2004: 3.06p). The
reduction on 2004 reflects the significant write down in goodwill.
Foreign Exchange
The Group's earnings are exposed to the movement in the US Dollar. The average
US Dollar rate in 2005 was $1.82 to the Pound (2004: $1.83), although the rate
at 31 December 2005 strengthened to $1.72 to the Pound (2004: $1.93).
Bank Debt
The Group's gross bank debt at 31 December 2005 was £3.4 million (2004: £5.4
million) of which £1.8 million represents structured bank debt (2004: £3.8
million), and the remainder an overdraft to finance working capital. During the
year £2.1 million of borrowings were repaid. This was financed through a
combination of sale proceeds from disposals and cash from operations.
The sale of Target Entertainment Ltd in 2004 and GEM Europe during 2005 realised
£2.1 million net in cash which has partly been used to pay down bank debt.
Cash Flow
The cashflow statement shows a net cash inflow from operating activities of
£284,000, an improvement on 2004 (net cash inflow from operating activities of
£148,000) as the European operations have been stabilised and further
improvement was made to working capital.
Share Capital and Acquisitions
There were no acquisitions made during 2005.
During 2005 70,153 shares were issued at an issue price of £2.40, for deferred
consideration provided for in 2003. No further deferred consideration is
provided for in the 2005 financial statements.
Transition to International Financial Reporting Standards
CSS Stellar has established a working party to timetable IFRS implementation.
The London Stock Exchange has now confirmed its intention to mandate
International Accounting Standards for AIM registered companies from 2007
onwards. The working party is reviewing group accounting policies in order to
assess the changes required under IFRS. The 2005 accounts will also be reviewed
to understand and quantify the impact of IFRS adoption. Further, the financial
reporting system will be reviewed to ensure that it is sufficient to capture
IFRS data. The result of the above assignment by the working party will be the
production of the 2006 opening balance sheet in preparation for the production
of the 2007 Interim Results.
The remainder of the financial information is explained in the notes to the
Financial Statements.
Kevin Rose
Group Finance Director
20 March 2006
CSS STELLAR PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 December 2005
Unaudited Audited
2005 2004
Notes £000 £000
Turnover
- Continuing operations 27,854 27,363
- Discontinued operations 26,558 50,481
________ ________
Group Turnover 1 54,412 77,844
Cost of sales (29,251) (46,215)
________ ________
Gross profit 25,161 31,629
________ ________
Impairment of goodwill and 2 | (14,769)| | - |
investments | | | |
Amortisation of goodwill | (1,881)| | (2,438)|
Other administrative expenses | (24,695)| | (31,902)|
|________ | |________ |
Administrative expenses - total (41,345) (34,340)
Operating loss
________ ________
- Continuing operations | (2,476)| | (892)|
- Discontinued operations | (13,708)| | (1,819)|
| ________| | ________|
1 (16,184) (2,711)
Exceptional non-operating items 2 (843) -
________ ________
(17,027) (2,711)
Interest receivable 99 112
Interest payable (447) (404)
________ ________
Loss on ordinary activities before 1 (17,375) (3,003)
taxation
Tax on loss on ordinary activities 3 (51) (267)
________ ________
Loss on ordinary activities after (17,426) (3,270)
taxation
Minority interests - 331
________ ________
Transferred from reserves (17,426) (2,939)
======== ========
Loss per Ordinary share (pence) 4 p. p.
Basic (60.25) (10.61)
Diluted (60.25) (10.61)
________ ________
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
Loss for the financial year (17,426) (2,939)
Unrealised surplus on revaluation
of investment properties - 500
Translation adjustment on opening 20 5
reserves
________ ________
Total losses recognised since last annual (17,406) (2,434)
report
======== ========
CSS STELLAR PLC
CONSOLIDATED BALANCE SHEET
As at 31 December 2005
Unaudited Audited
2005 2004
Notes £000 £000 £000 £000
FIXED ASSETS
Intangible assets 5 19,397 36,690
Tangible assets 6 2,043 3,201
Other investments 7 41 1,056
______ _______
21,481 40,947
CURRENT ASSETS
Stocks and work in progress 280 173
Debtors 5,102 12,470
Cash at bank and in hand 954 1,220
______ ______
6,336 13,863
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR (6,751) (15,689)
______ ______
Net current liabilities (415) (1,826)
______ _______
Total assets less current
liabilities 21,066 39,121
CREDITORS: AMOUNTS FALLING
DUE AFTER MORE THAN ONE YEAR (1,275) (1,723)
Minority interests (120) -
______ _______
19,671 37,398
====== =======
CAPITAL AND RESERVES
Called up share capital 8 14,487 14,452
Share premium 8 28,158 28,025
Shares to be issued 8 - 489
Revaluation reserve 637 654
Profit and loss account (23,611) (6,222)
______ _______
Equity shareholders' funds 9 19,671 37,398
====== =======
CSS STELLAR PLC
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2005
Unaudited Audited
2005 2004
Note £000 £000 £000 £000
Cash inflow from operating
activities 10 284 148
Returns on investments and servicing
of finance
Interest paid (447) (392)
Interest received 99 112
Interest element of finance lease
payments - (12)
______ ______
Net cash outflow from returns on (348) (292)
investments and servicing of finance
Taxation (20) (35)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (350) (848)
Purchase of intangible fixed
assets - (440)
Sale of tangible fixed assets 15 170
______ ______
Net cash outflow from capital
expenditure and financial
investment (335) (1,118)
Acquisitions and disposals
Purchase of subsidiaries - (970)
Purchase of investments (41) -
Disposal of subsidiaries 2,546 (151)
Net cash disposed of with
subsidiaries (540) -
Net cash inflow/(outflow) from
acquisitions and disposals 1,965 (1,121)
_____ ______
Net cash inflow/(outflow) before
financing 1,546 (2,418)
Financing
Receipts from borrowings - 3,900
Repayment of borrowings 12 (2,080) (3,048)
New finance leases 12 57 -
Capital element of finance lease
rentals - (75)
______ ______
Net cash (outflow)/inflow from
financing (2,023) 777
_____ ______
Decrease in cash 12 (477) (1,641)
====== ======
CSS STELLAR PLC
NOTES TO THE FINANCIAL INFORMATION
Year Ended 31 December 2005
1. Analysis of Trading and Net Assets
Class of Business
Profit/(Loss)
Before
Divisions Turnover Taxation Net Assets
2005 2004 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000
Continuing operations
Talent
Management 12,088 10,888 1,128 1,355 (1,959) (2,796)
Marketing 6,354 9,908 (83) 615 (2,154) (1,212)
Television - - - - - -
Events (1) 9,412 6,567 623 687 1,858 1,272
Central costs(2) - - (887) (1,191) 21,926 38,960
====== ====== ===== ====== ======= ======
27,854 27,363 781 1,466 19,671 36,224
====== ====== ======= ======
Discontinued
operations
Talent
Management - 229 - (976) - -
Marketing 26,558 40,542 (315) (183) - 1,174
Television - 9,710 - (580) - -
Events - - - - - -
====== ====== ===== ====== ======= ======
26,558 50,481 (315) (1,739) - 1,174
====== ====== ======= ======
Impairment of
goodwill (14,769) -
Goodwill
amortisation (1,881) (2,438)
_______ ______
Operating loss (16,184) (2,711)
Net interest (348) (292)
Exceptional
item (843) -
Group loss
before
taxation (17,375) (3,003)
===== ======
Geographical Market
Loss before
Turnover Taxation Net Assets
2005 2004 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000
Continuing
operations
Europe 20,767 16,549 1,619 1,758 (102) (1,524)
North America 7,087 10,814 49 899 (2,153) (1,212)
Rest of the world - - - - - -
Central costs (2) - - (887) (1,191) 21,926 38,960
______ ______ _____ ______ _______ ______
27,854 27,363 781 1,466 19,671 36,224
====== ====== ===== ====== ======= ======
Discontinued
operations
Europe 3,284 15,196 102 (1,504) - 638
North America 23,274 35,227 (417) 1 - 1,024
Rest of the
world - 58 - (236) - (488)
______ ______ _____ ______ _______ ______
26,558 50,481 (315) (1,739) - 1,174
====== ====== ===== ====== ======= ======
(1) Turnover for the Events division in 2005 includes pass through costs. The
comparable figure for 2004 was £8,141,000.
(2) Central costs have been separately analysed to enable a direct comparison of
the operating performance of each division.
The origin and destination of turnover, profit before taxation and net assets
are not materially different.
Cost of sales, amounts written off goodwill and administrative expenses are
analysed between continuing and discontinued operations below:
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
2005 2005 2005 2004 2004 2004
£000 £000 £000 £000 £000 £000
Cost of sales 8,083 21,168 29,251 7,807 38,408 46,215
Impairment of
goodwill 1,776 12,993 14,769 - - -
Amortisation
of goodwill 1,481 400 1,881 2,359 79 2,438
Other
administration
expenses 18,990 5,705 24,695 18,089 13,813 31,902
====== ====== ====== ====== ====== ======
2. Exceptional Items
Impairment of goodwill and investments 2005 2004
£000 £000
Impairment of goodwill (note 5) 13,713 -
Impairment of investments (note 7) 1,056 -
______ ____
14,769 -
====== ====
Exceptional non-operating items 2005 2004
£000 £000
Cost of restructuring 649 -
Loss on disposal of subsidiary 194 -
undertakings
______ ____
843 -
====== ====
3. Tax on Loss on Ordinary Activities
Analysis of charge in year
2005 2004
Current tax £000 £000
United Kingdom corporation tax 243 2
Overseas taxation 5 216
______ ____
248 218
______ ____
Deferred Tax
United Kingdom
- current year (39) 49
- prior year (158) -
______ ____
(197) 49
______ ____
Total tax charge on loss on ordinary 51 267
activities
====== ====
The tax charge assessed for the period is higher than the standard rate of
corporation tax in the UK (30%). The differences are explained below:
Tax charge reconciliation
Loss on ordinary activities before (17,375) (3,003)
taxation
====== ====
Loss on ordinary activities multiplied by
the standard
rate of corporation tax (30%) (5,213) (901)
Goodwill amortisation 564 730
Capital allowances in excess of 122 9
depreciation
Expenses not deductible for tax purposes 14 72
Higher tax rate on overseas earnings - 61
Losses in overseas subsidiaries 677 -
Losses carried forward - 382
Adjustment to tax charge in respect of - -
previous period
Utilised losses (4) (105)
Impairment of goodwill and loss on disposal of
subsidiaries 4,078 (65)
Deferred tax unprovided 10 -
Other timing differences - 35
______ ____
Tax charge on loss on ordinary activities 248 218
====== ====
4. (Loss)/Earnings Per Share
Weighted Basic Adjusted
average per share per share
Earnings no. of amount amount
shares
2005 £000 Shares Pence Pence
Attributable to ordinary shareholders:
Loss (17,426)
Amortisation of goodwill 1,881
Impairment of goodwill 14,769
Loss on disposal of
subsidiaries 843
Operating loss on
discontinued activities 315
Less: tax at 30% (94)
______
Adjusted earnings 288
______
(Loss) / earnings per share 28,922,957 (60.25) 1.00
====== ====
Dilutive effect of securities
Options, warrants and shares to be -
issued
__________
(Loss) / earnings per share 28,922,957 (60.25) 1.00
========== ====== ====
2004
Attributable to ordinary shareholders:
Loss (2,939)
Amortisation of goodwill 2,438
Operating loss on
discontinued activities 1,925
Less: tax at 30% (577)
______
Adjusted earnings 847
______
(Loss) / earnings per share 27,692,271 (10.61) 3.06
====== ====
Dilutive effect of securities
Options, warrants and
shares to be issued 2,155,116
__________
(Loss) / earnings per share 29,847,387 (10.61) 2.84
========== ====== ====
5. Intangible Assets
Goodwill
£000
Cost:
At 1 January 2005 44,524
Additions -
Disposals (14,329)
______
At 31 December 2005 30,195
______
Accumulated amortisation and
impairment:
At 1 January 2005 7,834
Amortisation charge for the year 1,881
Impairment losses (note 2) 13,713
Disposals (12,630)
______
At 31 December 2005 10,798
______
Net book value at 31 December 2005 19,397
======
Net book value at 31 December 2004 36,690
======
6. Tangible Fixed Assets
Furniture
Freehold Motor Event and
property vehicles equipment equipment Total
£000 £000 £000 £000 £000
The Group
Cost or valuation:
1 January 2005 985 509 474 6,241 8,209
Translation - - - 129 129
Additions - 70 47 233 350
Disposals - (74) - (89) (163)
Disposed of with
subsidiaries (155) - (2,539) (2,694)
____ ____ ___ ______ ______
At 31 December 2005 985 350 521 3,975 5,831
____ ____ ___ ______ ______
Accumulated
depreciation:
1 January 2005 32 286 311 4,379 5,008
Charge for the year 32 95 85 398 610
Disposals - (74) - (89) (163)
Disposed of with
subsidiaries - (89) - (1,578) (1,667)
____ ____ ___ ______ ______
At 31 December 2005 64 218 396 3,110 3,788
____ ____ ___ ______ ______
Net book value:
At 31 December 2005 921 132 125 865 2,043
==== ==== === ====== ======
At 31 December 2004 953 223 163 1,862 3,201
==== ==== === ====== ======
7. Other Investments
£000
Cost:
At 1 January 2005 1,056
Additions 41
Disposals (19)
_____
At 31 December 2005 1,078
_____
Provisions for impairment:
At 1 January 2005 -
Amounts written off during the year 1,056
Disposals (19)
_____
At 31 December 2005 1,037
_____
Net book value at 31 December 2005 41
=====
Net book value at 31 December 2004 1,056
=====
8. Called Up Share Capital
The following is the movement in shares, share capital and share premium during
in the year:
Date Shares Share Share Share
Price Capital Premium
No. £ £000 £000
At 1 January 2005 28,906,428 14,452 28,025
Acquisition of:
The Echo group of
companies 7 October 70,153 2.40 35 133
__________ ______ ______
At 31 December 2005 28,976,581 14,487 28,158
========== ====== ======
31
1 January December
Shares to be issued 2005 Movements 2005
The Echo group of
companies
Ordinary shares at £2.40 489 (489) -
=== ==== ===
9. Reconciliation of Movements in Shareholders' Funds
2005 2004
£000 £000
Loss for the financial year (17,426) (2,939)
_______ ______
Other recognised gains and losses relating to the 20 505
year
New shares issued (including share premium) 168 500
Release of provision for shares to be issued (489) (316)
_______ ______
Net decrease in equity shareholders' funds (17,727) (2,250)
Opening equity shareholders' funds 37,398 39,648
_______ ______
Closing equity shareholders' funds 19,671 37,398
======= ======
10. Reconciliation of Operating Loss to Net Cash Inflow from Operating
Activities
Operating loss (16,184) (2,711)
Depreciation charge 610 820
Amortisation of intangible assets 1,881 2,478
Impairment of goodwill 14,769 -
(Increase)/decrease in stocks (109) 79
Decrease in debtors 106 1,326
Decrease in creditors (789) (1,844)
_______ ______
Cash inflow from operating activities 284 148
======= ======
11. Reconciliation of net cash flow to movement in net debt
Decrease in cash in period (477) (1,641)
Cash outflow from decrease in net debt and lease 2,080 (777)
financing
New finance leases (57) -
Net debt eliminated on disposal 170 -
_______ ______
Change in net debt 1,716 (2,418)
Net debt brought forward (4,179) (1,761)
_______ ______
Net debt carried forward (2,463) (4,179)
======= ======
12. Analysis of net debt
At 1 At 31
January December
2005 Cashflow Disposals 2005
£000 £000 £000 £000
Cash at bank 1,220 (266) - 954
Overdrafts (1,327) (211) - (1,538)
______ ____ ____ _____
(107) (477) - (584)
Bank debt due after 1 (1,553) 330 - (1,223)
year
Bank debt due within 1 (2,283) 1,750 - (533)
year
Finance leases (236) (57) 170 (123)
______ ____ ____ _____
Total (4,179) 1,546 170 (2,463)
====== ==== ==== =====
13. Principal Accounting Policies
The principal accounting policies of the Group are set out in the Group's 2004
Annual Report and Financial Statements. These policies have remained unchanged.
14. 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 2005 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 unaudited 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 2004 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
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