Final Results

CSS Stellar PLC 9 March 2001 CSS Stellar plc, the sports and entertainment management group which listed on AIM in December 2000, announces its unaudited preliminary results for the year to 31 December 2000 SUMMARY * Successful flotation on the Alternative Investment Market, raising £4.3m net for the company. * Operating profits were £1,400,000 (9 months to 31 December 1999: £468,000) * EBITDA was £2,114,000 (9 months to 31 December 1999: £909,000) * Earnings per share were 1.95p (9 months to 31 December 1999: 1.35p) * Client Representation and Event Management divisions established in key areas of Motor Sport, Football, Tennis, Golf and Entertainment * Barcelona Office opened in January 2001 to service local client base and to use as an operating centre for growth in Continental Europe * Encouraging start to 2001 with the acquisition of Anne Robinson's management company * 2001 client additions include Sir Steven Redgrave and Bernhard Langer 9th March 2001 Enquiries to : CSS Stellar plc Tel: 0207 7907 4520 Julian Jakobi, CEO Sean Kelly, Finance Director Shandwick Tel: 0207 329 0096 Bobby Leach Sarah Moriarty Granville Baird Tel: 0207 488 1212 Peter Watson CHAIRMAN'S STATEMENT I am pleased to announce the first results since the Company was admitted to the Alternative Investment Market on 12 December 2000 and I would like to welcome our new shareholders as members of the Company. The year 2000 was the period when the commercial benefits of the merger between CSS International Holdings Ltd. and Stellar Management Ltd. began to enhance earnings. Obtaining a Stock Market quotation will facilitate the implementation of our corporate strategy, in that it enables us to more easily make acquisitions in the diversified sports and entertainment businesses. The results show an increase in turnover from £6.8m to £13.2m and operating profits from £468,000 to £1,400,000, which, given the nine month accounting period ending 31 Decmber 1999, is 45% growth on an annualised basis for turnover and a 124% increase in operating profits. EBITDA grew from £909,000 to £2,114,000, an annualised increase of 74%. During the year, we strengthened all of the key areas of our business including: * The acquisition of an option over the management business of Nick Faldo, now called CSS Stellar Golf Limited. * The acquisition of 50% of the event lighting company ARB, which specialises in event services in motor sport and tennis. * The appointment by a number of prestigious new clients such as Orange, AXA, and Richard Burns. Our strategy is to expand our activities in the key sports of motor racing, football, tennis and golf and to develop alongside this an entertainment division, which both represents clients and manages events. In addition to acquisitions we will expand geographically and through increasing market share in our chosen specialist fields. Current trading and prospects Since the year end we have acquired Anne Robinson's management company, and agreed a management contract with five-time Olympic winner Sir Steven Redgrave and ASIM Limited. CSS Stellar Golf now represents several new golf clients, including Bernhard Langer, who remains the number one German golfer. We have also opened an office in Barcelona to service our client base there and to use as an operating centre for growth in Continental Europe. We are currently looking at acquisitions which could significantly increase the size of our business in all areas. At the same time we will remain focused on the opportunities to provide levels of service and performance efficiency which will drive organic growth across the group. On a sadder note, I would like to pass on our sympathy to the family and friends of Steve Herrick, a former director, who died in July of last year. Steve was much admired and valued by all his colleagues and clients and is greatly missed. I would also like to thank the Company's staff, who are the key to our success. I am pleased to report that all full-time employees who have been employed for more than a year have a stake in the future growth of the business. John Webber Chairman CHIEF EXECUTIVE'S OPERATIONAL REVIEW The year 2000 was another successful one for CSS Stellar, with both the Clients and Events businesses enjoying significant organic growth. Clients The Clients division made an operating profit of £1,285,000 prior to its share of the goodwill (9 months to 31st December: £504,000). Review of 2000 & Prospects for 2001 This area of the business represents 73% of the company's operating profit pre-goodwill amortisation. Major talent clients like Dario Franchitti, Shirley Bassey and Michael Parkinson have continued to make a significant contribution to the Company's growth. Shirley and Michael's on-going popularity has meant that their commercial careers have blossomed in this period; Dario Franchitti continued to drive for Team Green in the Champ Car series in the USA. The talent side of the business was supplemented with the signing of Richard Burns and the England Rugby Team. In August 2000 the England Football Team extended their representation contract for a further 2 years. Allan McNish was World Champion in the 2000 American Le Mans Series and will spend 2001 testing the Toyota 2002 Formula 1 car. Since the end of the year the Company has taken on a joint management contract for Sir Steven Redgrave with Athole Still International Management Limited; we also now represent Jon Champion. In January 2001, we acquired JRP Management Ltd., which manages Anne Robinson. Anne is currently recording 13 episodes of a US version of the popular 'Weakest Link' shows in Los Angeles for the NBC network. CSS Stellar Golf Limited has entered into a representation agreement with Bernhard Langer. We have also agreed to represent the current British Amateur Champion Mikko Ilonen when he turns professional after the US Masters in April. Pedro de la Rosa has achieved one of the prime objectives of his career, which was to obtain a drive with a Formula 1 motor manufacturer's team, by signing a 3-year contract with Jaguar. The corporate sponsorship division completed one of the largest-ever non- tobacco deals in the UK with Orange's three-year contract to sponsor the F1 Arrows Team and has recently entered into agreements with Reuters, LG Electronics and PPP. Events The Events division made an operating profit of £463,000 prior to its share of the goodwill (9 months to 31-12-99: £275,000). This area of the business represents 27% of the company's operating profit pre-goodwill amortisation. In the year 2000, the Event business successfully provided services to the Royal and Ancient at St. Andrews for The Open, the European Tour at Sunningdale and the K Club; UEFA for the Champions League; the Epsom Derby and at last summer's Test Match venues when England beat the West Indies. The group acquired a 50% interest in ARB, a specialist event lighting company, in September 2000. ARB is now undergoing a significant re- structuring and we expect it to make a contribution to Group profits in 2001. Inaugural tennis events were held in Dublin and Brighton during the year. The former, an ATP Seniors event was won by John McEnroe, and Tim Henman won the Samsung Open in Brighton in November. As expected first year deficits were incurred in these events, however in 2001 Dublin attracted a tournament sponsor, KPMG. CSS Stellar Entertainment promoted a series of concerts with Bryan Ferry and Chris de Burgh performing at stately homes throughout the UK and also managed the AXA Final Ball at Wembley last November. In 2001, there will be a more extended stately homes concert tour featuring Shirley Bassey as well as Chris de Burgh and advance ticket sales are well ahead of the comparable position in 2000. Julian Jakobi Chief Executive FINANCIAL REVIEW TURNOVER Turnover represents commission income from clients of the company and revenue from providing services at events, some of which are owned and managed by the Group. The aggregate turnover increased from £6,819,000 in 1999 (9 months) to £13,179,000 in 2000, an annualised increase of 45%. COST OF SALES Cost of sales of £6,042,000 (1999: £3,040,000) relates entirely to the event services business, including the implementation of tennis and entertainment events owned by the Company. The gross profit margin in 2000 was 30.2% compared with 33.2% in 1999, a small decrease largely because of the set -up costs written off in tennis. There was no cost of sales in the Client division. Note 2 to the accounts explains this in more detail. ADMINISTRATIVE EXPENSES All other expenses connected with the day to day operations of the business are written off as administrative expenses. Overall these expenses increased from £3,081,000 to £5,389,000. This reflects the increase in the level of activity in the group and is predominantly made up of salaries which were £4,286,000 in 2000 (1999; £2,392,000 - 9 months). There has been an improvement in the salary/gross profit ratio, which was 60% in 2000 compared with 63.3% in 1999. DEFICIT ON NEW EVENT SET-UP In order to provide shareholders with fuller information we have seperately disclosed the amount on start-up costs for two new tennis events at £220,000. These costs are required to build up events to a stature necessary to attract sponsorship, which will make it profitable in the medium term. In 2001 KPMG sponsored the Dublin Seniors event. EBITDA This is defined as operating profits before interest, taxation, depreciation and amortisation, which most clearly relates to cashflow, and which has increased significantly in the year. In 2000 this amount was £2,114,000 (1999; £909,000 - 9 months) an annualised increase of 74%. Exceptional Items There are two elements to the exceptional items. Firstly the gain on the sale of the property made in August 2000, which net of office re-location costs made a profit of £273,000. The flotation costs other than those directly associated with raising of finance were £443,000. Taxation The level of provision for taxation in 2000 is £674,000 (1999; £194,000) - this charge is higher than would normally be expected largely because of the non-deductability of the costs associated with the flotation (£443,000) and amortisation of goodwill (£348,000). Earnings Per Share The fully diluted earnings per share were 1.95p (9 months to 31 December 1999: 1.35p) - the increase has been impacted by the flotation costs and taxation provision. Liquidity and capital resources The improvement in the cash position in the year of £4.1m has been possible because of the sale of the freehold building, which raised £2.7m. This was used to repay £1.5m of debt, a further £753,000 was invested in the fixed assets of the business and £610,000 on acquisitions. The flotation raised £4.3m net of expenses, and other than some temporary working capital application, this cash is held on short-term deposit and is available to be used to finance the expansion of the business. Sean Kelly Finance Director The financial information below in relation to the year ended 31st December 2000 is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information relating to the period ended 31st December 1999 is extracted from the statutory accounts, which incorporated an unqualified audit report and which have been filed with the Registrar of Companies. CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31st December 2000 Year to 9 months 31.12.00 to 31.12.99 Notes £000 £000 Turnover 2 13,179 6,819 Cost of sales (6,042) (3,040) -------- -------- Gross profit 7,137 3,779 ------- ------- Administration expenses (5,389) (3,081) Amortisation of goodwill (348) (230) ------ ------ Administration expenses - (5,737) (3,311) Total ----- ------ Deficit on set up of new (220) - events Other operating profit 1,620 468 ------ ----- Operating profit 1,400 468 Share of operating loss of (41) - joint venture Share of operating profit - 81 of Associate Exceptional items 3 (170) - -------- -------- 1,189 549 Interest receivable 38 7 Interest payable (219) (153) -------- -------- Profit on ordinary 1,008 403 activities before taxation Tax on profit on ordinary (674) (194) activities -------- -------- Profit on ordinary 334 209 activities after taxation Equity minority interest (90) (45) -------- -------- Profit retained 244 164 -------- -------- Earnings per Ordinary share 4 p. p. (pence) Basic 1.97 1.35 Fully diluted 1.95 1.35 There are no recognised gains or losses in the current period other than the profit for the financial period. CONSOLIDATED BALANCE SHEET As at 31st December 2000 2000 1999 £000 £000 £000 £000 FIXED ASSETS Intangible Assets 6,347 5,918 Tangible Assets 1,137 2,826 Investments - interest in joint venture - share of gross assets 1,241 - share of gross liabilities (820) 421 - ----- Investments - interest in associate - 467 Investments - other 96 - ----- ----- 8,001 9,211 CURRENT ASSETS Stocks and work in progress 147 132 Debtors 4,370 2,031 Cash at bank and in hand 3,929 156 ------ ------- 8,446 2,319 ------ ------- CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (4,131) (3,322) ------ ------ Net Current Assets/(Liabilities) 4,315 (1,003) ------- ------- Total Assets less Current Liabilities 12,316 8,208 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Convertible Debt - (3,661) Other (400) (1,871) ----- ------- (400) (5,532) Equity minority interests (74) (71) ----- ------- 11,842 2,605 ====== ======= CAPITAL AND RESERVES Called up share capital 7,556 2,441 Share Premium 3,357 - Shares to be issued 350 - Revaluation reserve 171 - Profit and loss account 408 164 ------ ------ Equity shareholders' funds 11,842 2,605 ====== ====== CONSOLIDATED CASH FLOW STATEMENT 9 Months to 2000 31.12.99 £000 £000 £000 £000 Cash flow from operating 541 858 activities (see 1 below) Returns on investments and servicing of finance Interest Paid (219) (94) Interest Received 38 4 ----- ---- Net cash outflow from returns on investments and Servicing of finance (181) (90) Taxation (336) (97) Capital expenditure and financial investment Purchase of tangible fixed assets (753) (146) Purchase of intangible fixed assets (48) - Sale of Tangible Fixed Assets 2,736 - ----- ----- Net cash inflow/(outflow) from capital expenditure 1,935 (146) Acquisitions and disposals Net assets acquired on purchase of subsidiary undertakings Net of professional costs - (1,968) Purchase of subsidiaries (52) (46) Purchase of associate (462) (300) Purchase of investment - other (96) - ----- ----- Net cash outflow from acquisitions (610) (2,314) and disposals Management of Net Liquid Resources Purchase of short-term bank (3,500) deposits ----- ----- Net cash inflow/(outflow) before (2,151) (1,789) financing Financing New shares issued at £1.80 5,000 - Less associated costs (695) - Increase in debt 823 3,250 Repayment of debt (2,213) (1,557) Capital element of finance lease (138) (74) rentals ------ ------ Net cash inflow/(outflow) from 2,777 1,619 financing ------- ------- Increase/(Decrease) in cash 626 (170) ------- ------- - NOTES 1. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2000 1999 £000 £000 Operating profit 1,400 468 Dividend paid to minority interest (82) (15) Dividend received from Associate 90 - Depreciation charges 350 211 Amortisation of intangibles 364 230 Exceptional items (200) - (Increase) in stocks (15) (18) (Increase) in debtors (2,010) (361) Increase in creditors 644 343 ------ ------- Cash inflow from operating activities 541 858 ------ ----- 2. Analysis of Trading by Class of Business Turnover Profit before Taxation 2000 1999 2000 1999 £000 £000 £000 £000 Client representation 4,521 2,268 1,285 504 Events 8,658 4,551 463 275 ------ ------ ---- ---- 13,179 6,819 1,748 779 ==== ==== Goodwill (348) (230) Common costs - ( 81) ----- ----- Operating profit 1,400 468 Share of operating Profit and net assets (41) 81 of Joint-Ventures/Associates ----- ----- 1,359 549 Net interest (181) (146) Exceptional item (170) - Unallocated - - ----- ----- Group profit before Taxation 1,008 403 ===== ==== The origin and destination of turnover is substantially the United Kingdom 3. Exceptional items 2000 1999 £000 £000 Profit on sale of freehold premises 473 - (note 10) Cost of relocation (200) - Listing expenses (443) - ------ ------ (170) - ==== ==== 4. Earnings Per Share Earnings Weighted Per Share Average Amount £ No. of pence Shares 2000 Basic Earnings per share Earnings attributable to ordinary Shareholders 244,000 12,368,497 1.97 ==== Dilutive effect of securities Options and warrants - 169,678 ---------- ---------- Diluted Earnings per share Adjusted earnings 244,000 12,538,175 1.95 ======== ======== ==== 9 Months to 31 December 1999 Basic Earnings per share Earnings attributable to ordinary Shareholders 164,000 12,205,000 1.35 ==== Dilutive effect of securities Options and warrants - ----------- ---------- Diluted Earnings per share Adjusted earnings 164,000 12,205,000 1.35 ======== ======== ==== 5. Post Balance Sheet Events In January 2001, the Company acquired the entire share capital of JRP Management Limited for an initial consideration of 101,351 £0.50 ordinary shares issued at £2.22p per share. JRP manage the commercial interests of TV presenter, Anne Robinson. In February 2001, the Group acquired the minority interest of 25% in Icon Display Limited from its directors John Francis, Keith Goodwin and Andrew Hodson for an initial consideration of £675,000 by issuing 296,000 £0.50 ordinary shares of at £2.28 per share ordinary shares.

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