Interim Results
CSS Stellar PLC
20 September 2001
CSS STELLAR plc
INTERIM RESULTS 2001
CSS Stellar plc ('CSS Stellar' or the 'Group'), the sports and entertainment
management and marketing group, which listed on AIM in December 2000, today
announces its unaudited interim results for the six months ended 30 June 2001.
Highlights:
* Pre tax Profit increased by 78% to £700,000 (2000:£393,000)
* Operating Profit increased 48% to £745,000 (2000: £504,000)
* EBITDA was up 37% to £1.2m (2000: £0.88m)
* Earnings per share more than doubled to 3.04p (2000: 1.38p)
* Several acquisitions in the first half, continuing the strategic development
of the Group
* New Clients include Anne Robinson, Sir Steven Redgrave, PPP, Steve McManaman
and Toyota
John Webber, CSS Stellar Chairman today said:
'We have made a number of acquisitions since flotation in December 2000 to
build on the Board's strategy to create a global sports and entertainment
management and marketing business. Despite the overall down-turn in the
current economic climate, the Board is confident that the levels of contracted
income and the durability of the CSS Stellar business will allow us to
demonstrate further progress in the current year and continue the
implementation of the strategy outlined at flotation'
20th September 2001
Enquiries:
CSS Stellar plc
Julian Jakobi, CEO Tel: 0207 907 4520
Sean Kelly, Finance Director
Weber Shandwick
John Wade Tel: 0207 329 0096
Sarah Moriarty
Granville Baird
Peter Watson Tel: 0207 488 1212
CHAIRMAN'S STATEMENT
Group Results
The six months to 30 June 2001 were the first interim period for the Group as
an AIM listed Company. During this period, the Group recorded gross profit of
£4.2m (2000: £3.3m), an improvement of 25% and EBITDA for the six months was £
1,206,000 (2000: £883,000), an increase of 37% year on year. Operating profits
rose to £745,000 (2000: £504,000) and pre tax profit increased by 78% to £
700,000 (2000: £393,000)
Operating Review
The addition of new clients and acquisitions made in the first half have
served to strengthen the overall product and service offering to ensure a more
broadly balanced client base across the sport and entertainment sectors.
Clients
Prior to goodwill amortisation, the client business made an operating profit
of £770,000 (2000: £532,000), which represents an increase of 45%.
The client base at the beginning of the year, which included Michael Parkinson
and Richard Burns, performed ahead of expectation in the first half, and
contributions from new clients such as Anne Robinson, Sir Steven Redgrave,
Reuters (in golf) and PPP have all increased revenues in the client area.
In addition, since 30 June, Allan McNish has been confirmed as a F1 driver for
the new Toyota team next year and Dario Franchitti has extended his contract
with CART Racing's Team Green for two years.
In Football the Group has, since the period end, agreed terms to acquire the
businesses of Kate Buxton and Greville Waterman. Kate's business is primarily
concerned with the provision of financial advice to sports and entertainment
personalities, with a specialism in the football market obtained through her
advisory relationship with Steve McManaman. Greville recently obtained the
Pizza Hut sponsorship deal for Fulham FC. Both Kate and Greville are expected
to make a contribution to the second half profits.
The acquisition of GEM in July will also significantly add to the size of the
client division in the second half. CSS Stellar previously had an option to
purchase part of GEM and in July acquired 100% of this North American
consultancy which specialises in sports marketing. GEM's clients include
Coca-Cola, UPS, Sears and Molson. Following completion of the acquisition,
GEM's CEO, Rick Jones was appointed to the Board of CSS Stellar.
Events
Operating profits from events prior to goodwill amortisation rose by 55% to £
199,000 (2000: £128,000). Overall, the performance was encouraging, reflecting
the Group's decision to focus on event services, which have a proven track
record of income generation.
The events business increased in size as a result of exercising the option to
purchase the remaining 50% of ARB, the specialist provider of televisual and
electronic services at outdoor events, making it a wholly owned subsidiary of
the Group.
Icon, the specialist event display business, performed ahead of expectations
and continued to service the UEFA Champions League, the England Test Matches
and, for the first time, Wimbledon.
CSS Stellar Golf is holding its first event at Royal Liverpool Golf Club in
October with the inaugural staging of the Duke of York Young Champions Trophy.
Prior to flotation, the Group made a small investment in tennis events, namely
The ATP Seniors tennis event in Dublin sponsored by KPMG and The Samsung Open
in Brighton. Neither event has met expectations and consequently the Group is
reducing its exposure to tennis in the near future and will not hold the
Brighton event this year.
Acquisitions & Disposals
In the first six months of the year the Board has focused on resolving the
minority interest positions of its subsidiary companies whilst laying the
foundations for future acquisitions. In the period the Group: -
* Purchased JRP Management, Anne Robinson's management company for £231,000,
paid in shares.
* Purchased from its management the 25% of Icon not already owned by CSS
Stellar for £675,000, paid in shares.
* Exercised an option to purchase the other 50% of ARB, for a consideration
capped at £1m, to be determined by pre-tax profits for two years from 1
January 2001.
* Sold 25% of CSS Tennis Events to Jeremy Dier, realising a profit of £42,000.
In addition, since the 30th June 2001 the Group has made the following
acquisitions:
* Purchase of 100% of GEM, a North American based consultancy specialising in
sports marketing, whose clients include Coca Cola, UPS, Sears and Molson.
This purchase was for an initial consideration of $9.5m, of which $1.9m was
satisfied in cash, and $7.6m in new CSS Stellar shares. A further deferred
consideration capped at $20.5m, which is dependent on the achievement of
certain performance targets, is payable 50% shares and 50% loan notes.
* The Group believes that to pursue expansion in the management of football
players and related businesses and the provision of financial advice is an
important component of the total service offering to current and potential
clients This has been achieved in part by the purchase of the businesses of
Kate Buxton, who specialises in the provision of financial and contractual
advice in the Sports and Entertainment industry. The business, PFM, is PIA
registered and clients include Steve McManaman of Real Madrid, Samantha
Janus, and Alexander McQueen. The maximum consideration is £3m, payable in
shares, all of which is deferred and will be determined by profits over the
next 36 months.
* Terms have been agreed for the acquisition of The Sponsorship Consultancy, a
specialist sponsorship agency. Greville Waterman, the Chief Executive, was
previously at IMG and then MD of Strategic Sponsorship. The consideration is
for a maximum of £750,000, of which 50% is in shares. Clients include
Ericsson, Muller, Fulham Football Club and London Wasps.
* The expansion of the Group's television and entertainment business is being
progressed by the acquisition of certain broadcasting and presentation rights
from Dame Shirley Bassey and Michael Parkinson in September and which will be
exploited by the burgeoning entertainment division. Maximum consideration for
these rights is £700,000 payable in shares.
The Group is reviewing a number of other acquisitions to build on its strategy
to create a global sports and entertainment management and marketing business.
Current Trading & Outlook
Since the 30th June, the Group has started the integration of GEM and the
smaller businesses of Kate Buxton and Greville Waterman. The Board is
conscious that as a service business the quality of delivery is key to the
overall success of the Group. Therefore, the Group has continued to invest in
its staff to ensure that the infrastructure is in place to support its growth
strategy.
The global economic situation and the recent tragedy in the USA means the
macro- economic situation is generally less encouraging now than it was at the
beginning of the year. However, the Group's level of contracted income and the
quality of the existing businesses together with recent acquisitions gives the
Board confidence that further progress will be made in the second half in line
with the Group's objectives. This confidence is supported by current trading.
CSS STELLAR PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 Months ended 30th June 2001
Unaudited Unaudited Audited
6 Months 6 Months Year
to to to
30.6.2001 30.6.2000 31.12.2000
Notes £000 £000 £000
Turnover - Continuing 6,597 5,510 13,179
operations and share of joint
venture
Acquisitions 622 - -
Less : Share of joint venture (540) - -
------------- ------------- -------------
6,679 5,510 13,179
Cost of sales (2,502) (2,177) (6,042)
------------- ------------- -------------
Gross profit 4,177 3,333 7,137
Administration expenses other (3,208) (2,673) (5,389)
than amortisation
Amortisation of goodwill (224) (156) (348)
-------------
Administration expenses - Total (3,432) (2,829) (5,737)
------------- ------------- -------------
Operating profit 2 745 504 1,400
Share of operating loss of (82) - (41)
Joint Venture
Exceptional items 3 42 - (170)
------------- ------------- -------------
705 504 1,189
Interest receivable 91 3 38
Interest payable (96) (114) (219)
------------- ------------- -------------
Profit on ordinary activities 700 393 1,008
before taxation
Tax on profit on ordinary (253) (199) (674)
activities
------------- ------------- -------------
Profit on ordinary activities 447 194 334
after taxation
Equity minority interest 25 (26) (90)
------------- ------------- -------------
Profit retained 472 168 244
====== ====== ======
Earnings per Ordinary share 4 p. p. p.
(pence)
Basic 3.04 1.38 1.97
Diluted 2.46 1.38 1.95
------------- ------------- -------------
£000 £000 £000
Statement of total recognised
gains and losses
Profit for the financial year 472 168 244
Unrealised surplus on revaluation of - - 171
freehold property
------------- ------------- -------------
Total gains and losses 472 168 415
recognised since last annual
report ======= ======= =======
CSS STELLAR PLC
CONSOLIDATED BALANCE SHEET
As at 30th
June 2001 Unaudited Unaudited Audited
30.6.2001 30.6.2000 31.12.2000
£000 £000 £000 £000 £000 £000
FIXED ASSETS
Intangible Assets 7,408 5,786 6,347
Tangible Assets 2,411 2,990 1,137
Investments - Interest
in Joint Venture
- Share of 1,241
gross assets
- Share of (820) 421
gross liabilities
-------------
Investments - Interest 467 -
in Associate
- Other 115 65 96
------------- ------------ -------
9,934 9,308 8,001
CURRENT ASSETS
Stocks and work 311 197 147
in progress
Debtors 6,806 4,141 4,370
Cash at bank 2,639 304 3,929
and in hand
----------- ------------- -------------
9,756 4,642 8,446
----------- ------------- -------------
CREDITORS: AMOUNTS
FALLING DUE WITHIN (5,322) (5,693) (4,131)
ONE YEAR
----------- ------------- -------------
Net Current Assets/ 4,434 (1,051) 4,315
(Liabilities)
------------ ------------ ------------
Total Assets less 14,368 8,257 12,316
Current Liabilities
CREDITORS: AMOUNTS
FALLING DUE AFTER
MORE THAN ONE YEAR
Convertible debt - (3,661) -
Other (1,125) (1,743) (400)
----------- ------------- -------------
(1,125) (5,404) (400)
Equity minority - (80) (74)
interests
------------- ------------- -------------
13,243 2,773 11,842
------------- ------------- -------------
CAPITAL AND
RESERVES
Called up 7,857 2,441 7,556
share capital
Share premium 4,335 - 3,357
Shares to be - - 350
issued
Revaluation 171 - 171
reserve
Profit and 880 332 408
loss account
------------- ------------ ------------
Equity 13,243 2,773 11,842
shareholders'
funds ------------ ------------ ------------
CSS STELLAR PLC
CONSOLIDATED CASH FLOW STATEMENT
6 Months Unaudited Unaudited Audited
ended 30th 6 Months 6 Months Year
June 2001 to to to
Notes 30.6.01 30.6.01 31.12.2000
£000 £000 £000 £000 £000 £000
Cash (outflow) / 1 (257) 500 541
inflow from
operating
activities
Returns on
investments
and servicing of
finance
Interest Paid (66) (114) (219)
Interest Received 91 3 38
----------- ---------- -----------
Net cash inflow / 25 (111) (181)
(outflow)from
returns on
investments
and servicing of
finance
Taxation (122) - (336)
Capital
expenditure
and financial
investment
Purchase of (51) (319) (753)
tangible
fixed assets
Sale/ 24 (16) (48)
(Purchase )
of intangible
fixed assets
Sale of tangible - - 2,736
fixed assets
----------- ----------- -----------
Net cash (outflow)/ (27) (335) 1,935
inflow from capital
expenditure and
financial
investment
Acquisitions
and disposals
Purchase of (10) (13) (52)
subsidiaries
Sale of 42 - -
minority
interest in
subsidiary
Purchase of - - (462)
joint venture/
associate
Purchase of (19) (65) (96)
investment -
other
----------- ----------- -----------
Net cash outflow 13 (78) (610)
from acquisitions
and disposals
Management of
Liquid Resources
Sale / (Purchase) 3,500 - (3,500)
of short-term
bank deposits
----------- ----------- -----------
Net cash outflow 3,132 (24) (2,151)
before financing
Financing
New shares issued 30 - 5,000
Less associated - - (695)
costs
Increase in - 300 823
debt
Repayment of (382) (870) (2,213)
debt
Capital element (102) (58) (138)
of finance
lease rentals
----------- ----------- -----------
Net cash inflow (454) (628) 2,777
from financing
----------- ----------- ----------
Increase/(decrease) 2,678 (652) 626
in cash
----------- ----------- ----------
CSS STELLAR PLC
NOTES
6 Months ended 30th June 2001
1. Reconciliation of Operating Profit to Net Cash Inflow
from Operating Activities
6 Months 6 Months Year
to to To
30.6.2001 30.6.2000 31.12.2000
£000 £000 £000
Operating profit 745 504 1,400
Dividend paid to minority interest (26) (12) (82)
Dividend received from Associate - - 90
Depreciation charge 237 223 350
Amortisation of intangibles 224 156 364
Exceptional relocation costs - - (200)
Increase in stocks (36) (65) (15)
Increase in debtors (1,578) (2,110) (2,010)
Increase in creditors 177 1,804 644
------------- ------------- -------------
(257) 500 541
------------- ------------- -------------
2. Analysis of Trading and Net Assets by Class of Business
Divisions Turnover Profit before Taxation
6 Months 6 Months Year 6 Months 6 Months Year
to to to to to to
30.6.2001 30.6.2000 31.12.2000 30.6.2001 30.6.2000 31.12.2000
£000 £000 £000 £000 £000 £000
Client 2,790 2,246 4,521 770 532 1,285
representation
Events 3,889 3,264 8,658 199 128 463
----------- ---------- ---------- --------- --------- ----------
6,679 5,510 13,179 969 660 1,748
----------- ---------- ----------
Goodwill (224) (156) (348)
amortisation
--------- ----------- --------
Operating 745 504 1,400
profit
Share of
operating
profit of
Joint Venture/ (82) - (41)
Associates
---------- --------- ---------
663 504 1,359
Exceptional 42 - (170)
items
Net interest (5) (111) (181)
--------- --------- ---------
Group profit 700 393 1,008
before
taxation --------- --------- ---------
The origin and destination of turnover is substantially the United Kingdom
during the period.
CSS STELLAR PLC
NOTES
6 Months ended 30th June 2001
3. Exceptional items
6 Months 6 Months Year
to to to
30.6.2001 30.6.2000 31.12.2000
£000 £000 £000
Profit on sale of freehold premises - - 473
Profit on sale of minority interest 42 - -
Related cost of relocation - - (200)
Listing expenses - - (443)
------------- ------------- -------------
42 - (170)
------------- ------------- -------------
4. Earnings Per Share
Earnings Weighted Per share
average no. amount
£ of shares pence
6 Months ended 30 June 2001
Basic Earnings per share
Earnings attributable to ordinary 472,000 15,529,496 3.04
shareholders
-------------
Dilutive effect of securities
Options and warrants - 3,666,404
Diluted Earnings per share ------------- -------------
Adjusted earnings 472,000 9,195,900 2.46
------------- ------------- -------------
6 Months ended 30 June 2000
Basic Earnings per share
Earnings attributable to ordinary 168,000 12,205,000 1.38
shareholders
-------------
Dilutive effect of securities
Options and warrants - -
Diluted Earnings per share ------------- -------------
Adjusted earnings 168,000 12,205,000 1.38
------------- ------------- -------------
Year ended 31 December 2000
Basic Earnings per share
Earnings attributable to ordinary 244,000 12,368,497 1.97
shareholders
-------------
Dilutive effect of securities
Options and warrants - 169,678
Diluted Earnings per share ------------- -------------
Adjusted earnings 244,000 12,538,175 1.95
------------- ------------- -------------
The earnings per share have been calculated taking account of the share split
and the conversion of the unsecured Loan Stock 2014 for the whole of 2000 and
the preceding six months.
CSS STELLAR PLC
NOTES
6 Months ended 30th June 2001
5. Acquisitions After the Period
THE GEM GROUP
Consideration payable
The initial consideration payable under the acquisition agreement is $9.5m
(approximately £6.8m) which was satisfied 80 per cent in new ordinary shares in
the capital of the Company at 270p per share and 20 per cent in cash.
The deferred consideration payable, which is subject to an overall cap of $20.5
million, will equate to ten times GEM's audited EBITDA, for the year ended 31
December 2001 less the initial consideration, and debt outstanding as at that
date. Such additional deferred consideration will be payable 50 per cent in
cash, deferred for a year, and 50 per cent in shares. Existing share options in
GEM will convert into options on CSS Stellar shares.
Placing
In order to finance the cash proportion of the initial consideration payable
under the terms of the acquisition agreement, CSS Stellar placed 740,000 new
ordinary shares with institutional and other investors at 270 pence per share.
6. Publication of Non-Statutory Accounts
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
figures for the period ended 31 December 2000 have been extracted from the
statutory financial statements which have been filed with the Registrar of
Companies. The auditors' report on those financial statements was unqualified
and did not contain a statement under Section 237(2) of the Companies Act 1985.
7. Basis of Preparation
The interim financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost convention. The
principal accounting polices of the group have remained unchanged from those
set out in the group's 2000 annual report and financial statements.