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Forever Broadcast (FOB)

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Wednesday 23 May, 2001

Forever Broadcast

Interim Results

Forever Broadcasting PLC
23 May 2001


FOREVER BROADCASTING PLC

PRESS RELEASE

INTERIM RESULTS FOR THE SIX MONTHS TO 31ST MARCH 2001

SUMMARY

  * Completion of two further acquisitions of Surf 107.2FM in Brighton and
    107.7FM The Wolf in Wolverhampton for aggregate consideration of £9.5
    million.
  * Turnover up to £702,000 in first half (2000: £107,000).
  * Loss per share of 10.7p (2000: 14.9p).
  * Number of analogue and digital licence applications made during period;
    and progress being made in existing four stations.
  * Post year - end acquisition of a 10% stake in Somethin' Else Sound
    Directions Ltd for £1.75m, a leading independent audio and multi-media
    production company.

John Josephs, Chairman of Forever Broadcasting plc, said:

'We are continuing our search for suitable acquisitions, and our efforts to
win new licences. We are also continuing to develop audiences and revenues at
our four radio stations. Success will not be achieved overnight; we remain
confident that the foundations laid in recent months will be the base on which
future success is built'.

Forever Broadcasting                               Tel: 0191 286 0000
John Josephs, Chairman
Eric Lawrence, Managing Director

Merlin Financial Communications                    Tel: 020 7606 1244
David Simonson / Sadhbh O'Gorman
[email protected]


CHAIRMAN'S STATEMENT

I am pleased to present our Interim Statement for the six months ended 31st
March 2001.

RESULTS

The 'normalised' operating loss for the period is £1,049,000, on turnover of £
702,000 (2000 normalised loss £261,000 on turnover of £107,000). The loss for
the current period includes a full six months trading at Juice in Liverpool
and Tower in Bolton/Bury, just over three months at Surf in Brighton (acquired
on 19th December 2000) and less than two months at The Wolf in Wolverhampton
(acquired on 8th February 2001). The comparative figures for the period ended
31st March 2000 include five months trading in Liverpool only. The basic loss
per share was 10.7p (2000 : 14.9p).

CORPORATE DEVELOPMENTS

In the prospectus which preceded the Company's flotation in August 2000, the
Directors stated that there was an opportunity to build, by acquisition and
new licence applications, a clearly focused, branded radio and new media
group. The prospectus also indicated that a number of acquisition targets had
been identified which could benefit from Forever Broadcasting's management
skills, or to which the Juice brand could be applied, or both.

During the six months ended 31st March 2001 we completed the acquisition of
two of our prime targets in Brighton and Wolverhampton for an aggregate
consideration of £9.5m, of which £7.6m was paid in cash, the balance being
satisfied by the issue of 943,480 shares.

Acquisitions

Surf 107.2 in Brighton is a youth targeted station with a programme format
similar to Juice in Liverpool and the process of rebranding the station as
Juice is well underway. The station was loss making and had been
under-resourced. Since acquisition we have appointed a new Managing Director
and have invested in the recruitment of higher calibre presenters and sales
personnel. Although the station is still loss making, we are now confident
that we have laid the foundations for future profitability

107.7 The Wolf in Wolverhampton is a different proposition. It is a mainstream
radio station primarily targeting the 25-44 age range with an emphasis on
local news and sport including commentary rights for Wolverhampton Wanderers
FC which we have recently renewed for the next three seasons. We have
increased the sales resource and believe that there is considerable scope for
growth in this market. The station is approaching profitability on a monthly
basis.

On 1st May 2001 we announced the acquisition of a 10% stake in Somethin' Else
Sound Directions Ltd (SESDL) for £1.75m. SESDL is a leading independent audio
and multi-media production company, with contracts with the BBC's national
radio networks, the World Service, BBC digital radio and the UK's commercial
radio stations. SESDL also provides over half of British Airways in-flight
audio entertainment programming, and syndicates audio programming to over
sixteen countries worldwide. SESDL has recently won commissions for television
production for BBC1, Channel 4, Rapture TV and Arts World.

SESDL holds 85% of the shares in XY Network Ltd (XY), in which we hold the
balance of 15%, acquired in June last year; this investment in the parent
company increases our interest in XY to 23.5%.

Earlier this year, SESDL entered a partnership with Reuters UK, producing a 24
hour on-line news service. XY, with its BT Genie carriage deal, is the only
mobile internet broadcaster to carry this service, along with interactive
audio music, literature and film reviews. Furthermore, proprietary technology
developed at XY is now generating a significant revenue stream from
application service provision.

Licence applications

In the six months ended 31st March 2001 we have invested £210,000 in a series
of analogue and digital licence applications. While this is a less certain
route to growth than acquisition, a successful licence application will
significantly enhance shareholder value.

Analogue licences

In February 2001 we submitted to the Radio Authority an application for the
regional analogue licence for South and West Yorkshire; there were fifteen
other applicants. We should know the outcome before the end of the current
year. We are now preparing applications for new analogue licences for the East
Midlands region, and for Chester, Reading and Worthing.

Digital licences

In the period ended 31st March 2001 we submitted applications for four digital
licences as a member of a consortium including Scottish Radio Holdings plc and
SAGA. At present we await the outcome of the application for the third London
digital licence but our other applications have been unsuccessful; each
licence was awarded to a consortium including holders of existing regional and
/or local analogue licences in the transmission area. However, we remain
committed to establishing the company as a digital broadcaster.

OPERATIONAL PROGRESS

107.7 The Wolf in Wolverhampton is our longest established radio station,
having commenced broadcasting in October 1997. Surf in Brighton and Juice in
Liverpool went on air in March 1998 and Tower FM serving Bolton and Bury, one
year later in March 1999. These stations are still developing and there is
significant scope for growth as they mature and the impact of Forever's
management begins to take effect. We manage and programme our stations
locally, rather than centrally, because we believe one of the keys to long
term success is our commitment to, and involvement with, the local communities
which we serve. Such involvement should help to stimulate local advertising
revenue, our principal revenue stream, thereby reducing the impact of any
downturn in national advertising.

Ultimately, we believe, this approach will maximise our audiences, sales and
profitability.

Sales

In the six months ended 31st March 2001 we derived over 80% of our revenue
from local advertisers.

Juice in Liverpool and Tower FM in Bolton/Bury were owned throughout the six
month period under review, although not for the full six months of the
comparative period last year. In Liverpool total revenue for the six months
ended 31st March 2001 was 72% higher than the corresponding period last year,
while in Bolton/Bury the growth was 25%.

Although Surf in Brighton and The Wolf in Wolverhampton have not been under
our ownership for long, we are starting already to see signs of sales progress
there. In aggregate, in April 2001, our four stations' revenue was 57% higher
than in April 2000.

Even though these early signs are encouraging, it is well documented that the
climate for advertising revenue has been, and remains, difficult. There is
little doubt that given better conditions, our sales progress would be faster.

Audiences

The latest quarterly results of the RAJAR audience survey were published
earlier this month. The survey, which is rolling, covers the six month period
October 2000 to March 2001.

The changes we have made to the programming at The Wolf and Surf since
acquisition were implemented too late in the period to influence the results.
The Wolf lost 3% of its reach, while Surf gained 3%.

Tower FM reached 19% of its potential audience; a respectable outcome despite
being a reduction on the previous survey result of 21%. Our long term plan for
audience growth in Tower remains intact.

Our latest RAJAR result for Juice in Liverpool was disappointing, reach having
fallen from 6% to 5%. This confirmed the conclusion of research that we
commissioned in November 2000. In February 2001 we conducted further research
into the musical preferences of the youth market in Liverpool following which
we have repositioned the station. Anecdotal evidence and our street surveys
suggest that audience reach is increasing, but this will not reflect fully in
RAJAR figures until the publication in November of the results for the survey
period ending in September.

NEIL ROBINSON OBE

We were shocked and saddened by the news last week of the sudden and untimely
death of our founder shareholder and non-executive director, Neil Robinson.
Neil was a colleague, friend and mentor for almost thirty years. He was a
pioneer of commercial radio in this country, the driving force behind the
establishment of the Radio Advertising Bureau, which has contributed so much
to the growth of commercial radio in recent years, and was awarded the OBE for
his services to the radio industry. Neil was a major influence in the
development of the careers of many of the people who occupy senior management
positions in the radio industry today, and he will be greatly missed.

PROSPECTS

We are continuing our search for suitable acquisitions, and our efforts to win
new licences. We are also continuing to develop audiences and revenues at our
four radio stations. Success will not be achieved overnight; we remain
confident that the foundations laid in recent months will be the base on which
future success is built.

John Josephs

Chairman

23 May 2001


Consolidated profit and loss account for the 6 months

ended 31 March 2001
                           Unaudited 6       Unaudited 5     Audited Period
                         months ended 31   months ended 31      ended 30
                        March 2001 £'000  March 2000 £'000  September 2000 £'000
Turnover
Continuing                            529               107               340
operations
Acquisitions                          173                 -                 -
                                      702               107               340
Operating loss
Continuing                        (1,601)             (464)           (1,757)
operations
Acquisitions                        (531)                 -                 -
Administrative
and selling
expenses
                                  (2,132)             (464)           (1,757)
Net interest                          238               (2)               118
receivable/
(payable)
Loss on ordinary                  (1,894)             (466)           (1,639)
activities before
taxation
Tax on loss on                          -                 -                 -
ordinary
activities
Loss for the                      (1,894)             (466)           (1,639)
financial period
Loss per share -                  (10.7)p           (14.9)p           (26.5)p
basic
Adjusted loss per                  (4.6)p            (8.4)p           (15.2)p
share

The group has no recognised gains or losses other than the loss above and
therefore no separate statement of total recognised gains and losses has been
presented.

'Normalised' operating loss is calculated as follows:

                                   £'000             £'000            £'000
Operating loss                    (2,132)            (464)          (1,757)
Amortisation of goodwill             810              125              406
Acquisition restructuring costs       63               78              295
Licence application costs            210                -                -
'Normalised' operating loss       (1,049)            (261)          (1,056)

The 'normalised' operating loss represents the underlying performance of the
business before the amortisation of goodwill, restructuring costs and licence
application costs.

Consolidated balance sheet as at 31 March 2001
                             Unaudited 31     Unaudited 31       Audited 30
                         March 2001 £'000 March 2000 £'000  September 2000 £'000

Fixed assets
Goodwill                             13,910            1,792              5,008
Tangible assets                         441              144                300
Investments                           1,038                -              1,038
                                     15,389            1,936              6,346
Current assets
Debtors                                 692              274                322
Cash at bank and in hand              3,154                -             12,649
                                      3,846              274             12,971
Creditors: amounts falling            (784)            (648)              (868)
due within one year
Net current assets/                   3,062            (374)             12,103
(liabilities)
Net assets                           18,451            1,562             18,449

Capital and reserves
Called up equity share                9,156            2,028              8,684
capital
Share premium account                12,828                -             11,404
Profit and loss account             (3,533)            (466)            (1,639)
Equity shareholders' funds           18,451            1,562             18,449


Consolidated cash flow statement for the period ended 31 March 2001

                             Unaudited 6       Unaudited 5     Audited Period
                           months ended 31   months ended 31      ended 30      
                         March 2001 £'000  March 2000 £'000 September 2000 £'000

Net cash outflow from               (1,273)            (324)             (1,240)
operating activities                                  

Returns on investments
and servicing of finance
Interest received                      270                4                 107
Interest paid                           (6)              (4)                (20)
Net cash inflow from                   264                -                  87
returns on investment and
servicing of finance
Taxation                                 -                -                   -
Capital expenditure and
financial investment
Purchase of trade                     (250)               -                (788)
investment
Purchase of tangible                   (57)             (13)                (96)
fixed assets
Net cash outflow from                 (307)             (13)               (884)
capital expenditure and                                                 
financial investment
Acquisitions
Purchase of subsidiary              (7,746)          (1,536)             (3,674)
undertakings
Net overdraft acquired                 (91)            (125)               (108)
with subsidiaries
Net cash outflow from               (7,837)          (1,661)             (3,782)
acquisitions
Cash outflow before                 (9,153)          (1,998)             (5,819)
financing
Financing
Net proceeds from issue                 (4)           2,028              18,593
of equity share capital
Repayment of loan notes               (256)               -                   -
Repayment of loans                     (82)            (125)               (125)
acquired with
subsidiaries
Net cash (outflow)/inflow             (342)           1,903              18,468
from financing
(Decrease)/increase in              (9,495)             (95)             12,649
net cash


 1. Basis of reporting

    The financial information for the 5 months ended 31 March 2000 and the 6
    months ended 31 March 2001 contained within this statement is unaudited
    and does not constitute statutory accounts as defined in Section 240 of
    the Companies Act 1985. The financial information for the period ended 30
    September 2000 is based on the statutory accounts for the period then
    ended. Full accounts for that period, on which the auditors made an
    unqualified report, have been delivered to the Registrar of Companies and
    did not contain a statement under section 237(2) or (3) of the Companies
    Act 1985.

    The interim accounts have been prepared on the basis of the accounting
    policies set out in the Company's statutory accounts for the period ended
    30 September 2000.

 2. Reconciliation of operating loss to net cash flow from operating activities

                        Unaudited 6 months  Unaudited 5 months    Audited Perio 
                      ended 31 March 2001 ended 31 March 2000 ended 30 September
                                    £'000               £'000        2000 £'000

    Operating loss                 (2,132)               (464)           (1,757)
    Depreciation of                    65                  13                48
    tangible fixed
    assets
    Amortisation of                   810                 125               406
    goodwill
    Increase in debtors              (208)               (203)             (137)
    Increase in                       192                 205               200
    creditors
    Net cash outflow               (1,273)               (324)           (1,240)
    from operating
    activities

 3. Reconciliation of net cashflow to movement in net funds

                   Unaudited 6 months   Unaudited 5 months  Audited Period ended
                  ended 31 March 2001  ended 31 March 2000  30 September 2000 
                               £'000                £'000                £'000

    (Decrease)/               (9,495)                 (95)              12,649
    increase in cash
    Loan notes                   256                 (256)                (256)
    redeemed/
    (issued)
    Movement in the           (9,239)                (351)              12,393
    period
    Net funds at the          12,393                    -                    -
    start of the
    period
    Net funds at the           3,154                 (351)              12,393
    end of the
    period

 4. Analysis of net funds
                             30 September 2000    Cashflow      31 March 2001
                                     £'000          £'000               £'000

    Cash at bank and in hand     12,649            (9,495)              3,154
    Loan notes                     (256)              256                   -
                                 12,393            (9,239)              3,154

 5. Loss per share

    The basic loss per 50p ordinary share has been calculated based on the
    loss after taxation of £1,894,000 (2000: £466,000) and 17,758,262 (2000:
    3,133,815) ordinary shares, being the weighted average number of ordinary
    shares in issue during the period.

    The adjusted loss per share has been calculated based on the loss after
    taxation of £811,000 (2000: £263,000), which is before amortisation of
    goodwill, acquisition restructuring costs and licence application costs,
    and upon 17,758,262 (2000: 3,133,815) ordinary shares, being the weighted
    average number of ordinary shares in issue.

 6. Tax on loss on ordinary activities

    No liability arises for UK corporation tax as a result of losses incurred
    during the period.

 7. Equity shareholders' funds

                                                                          £'000

At 1 October 2000                                                        18,449
Loss for the financial period                                           (1,894)
Issue of shares (net)                                                     1,896
At 31 March 2001                                                         18,451



                                                                                
                                                                                
                      

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