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Wireless Group PLC (TWG)

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Wednesday 31 March, 2004

Wireless Group PLC

Final Results

Wireless Group PLC
31 March 2004


                 THE WIRELESS GROUP PLC ('TWG' or the 'Group')

            PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003

    WIRELESS GROUP ANNOUNCES FIRST ADJUSTED OPERATING PROFIT OF £2.3 MILLION


Operating performance

* First ever full year adjusted operating profit

* Adjusted operating profit £2.3 million (2002: Loss £2.3 million) - Up £4.6
 million

* Turnover £32.6 million (2002: £28.5 million) - Up £4.1 million
                                                                                
* Turnover up 14.3% compared to industry average of 6.8% - Beat industry average
                                                                                                                   
* Advertisers' confidence returning

* Interest cover (before goodwill amortisation) of 3.0 times  - Lower debt
                                                   
* Net debt of £3.3 million at year end  - Down £1.7 million
                                                                                
* talkSPORT operating profit £1.2 million (2002:Loss £2.9 million) - Up £4.1
 million                                       
                                       
* ILRs operating profit £5.6 million (2002: £3.7 million)  - Up £1.9 million       
                                                               

Adjusted operating profit is presented to provide a better indication of
overall financial performance and to reflect how the business is run on a
day to day basis. The adjustments made are to exclude goodwill amortisation
(£12.3 million; 2002 £15.2 million); provisions for uneconomic sports rights
(£0.7 million; 2002 £1.5 million) and to show divisional results without an
allocation of central and selling costs (£5.2 million; 2002 £4.6 million).


Statutory results

* Operating loss of £10.7 million (2002: Loss £19.0 million) after goodwill 
amortisation of £12.3 million (2002: £15.2 million) - Down £8.3 million
                                                                     
* Loss on ordinary activities before taxation £11.2 million (2002: Loss £20.3 
million) - Down £9.1 million
            

Implementation of strategy

* Post year-end acquisition of Forever Broadcasting plc, adding three
  high quality and contiguous ILRs to Group

* Stake in London III digital multiplex increased post year-end to 30.2
  per cent from 23.6 per cent

* talkSPORT consistently ranked No 1 commercial radio station in the UK
  with highest-ever audience levels recorded (GfK Media Survey)

* Proceedings issued against RAJAR in the High Court

* Major advertiser backs GfK results as 'on the money. It couldn't have
  been more accurate'

Outlook

* Strong start to 2004 financial year with Group revenues, excluding
  contra, estimated to be 18.7 per cent ahead for first quarter - better
  than figures announced by competitors in recent trading update
  statements:
      * EMAP up 7% (Year to March 2004)
      * SRH up 12% (Half year to March 2004 excluding acquisitions)
      * GWR up 7% (Quarter March 2004)

* talkSPORT performing strongly, ahead of major sporting events in 2004
  (Euro 2004, Olympics)

* Cost base reduced and continues to be monitored

* Visibility of revenue becomes longer as advertising confidence
  returns


Kelvin MacKenzie, Chairman and Chief Executive of TWG, said:

'As The Beatles so rightly said, it's been a 'long and winding road...', but I
am delighted to announce a full year adjusted operating profit for the Group of
£2.3 million. We have continued the improvement in our operating performance
highlighted at the interim results and have established commercial speech radio
as a profitable operation. We have produced these strong results against a
backdrop of general economic uncertainty, particularly in the advertising-led
media industries. The Group has an appropriate cost base from which to maximise
margins but also to ensure the quality and variety of output that has put
stations within the Group among the most listened to in the UK.'

                                    - ends -


For further information, please contact:

Kelvin MacKenzie/Keith Sadler
The Wireless Group plc                    020 7959 7900

David Rydell/Luke Morton/Robin Tozer
Bell Pottinger Corporate & Financial      020 7861 3232




Chairman's statement

As The Beatles so rightly said, it's been a 'long and winding road...', but at
last I am pleased to announce a full year adjusted operating profit for the
Group of £2.3 million. We have continued the improvement in our operating
performance that I highlighted at the interim results and have established
commercial speech radio as a profitable operation. We have produced these strong
results against a backdrop of general economic uncertainty, particularly in the
advertising led media industries. The Group has an appropriate cost base from
which to maximise margins but also to ensure the quality and variety of output
that has put stations within the Group among the most listened to in the UK.
Research by leading global market research group, GfK, using the latest
electronic audience measurement techniques, has consistently confirmed talkSPORT
as the most listened to commercial station in the UK.

The operating profit before provision for uneconomic sports rights and goodwill
amortisation is £2.3 million compared to an operating loss of £2.3 million (on
the same basis) as reported last year, a significant improvement. We continue to
see improvement in our marketplace and took the opportunity to reinforce our
local station reach with the purchase of Forever Broadcasting plc on 20 February
2004. This brings three good stations into the Group, which, we expect to, and
should make a positive contribution to the results during the year.

Turnover from continuing activities increased from £28.5 million to £32.6
million, an increase of 14.3 per cent. This result is materially ahead of the
industry average, which reported revenues up 6.8 per cent for the year.

In the year the Group produced an operating profit of £1.6 million (before
goodwill amortisation) against a loss for the previous year of £3.8 million, a
£5.4 million improvement. The Group was also profitable (excluding goodwill
amortisation) after the net interest charge for the year. The interest cover, on
this basis, was 3.0 times. On a statutory basis the operating loss of £10.7
million fell by £8.3 million from £19.0 million in 2002. This operating loss
includes goodwill amortisation of £12.3 million (2002: £15.2 million). Loss
before taxation of £11.2 million fell by £9.1 million from £20.3 million in
2002.

talkSPORT continued its operating improvement in the second half of the year
producing an operating profit of £1.2 million (excluding central and selling
costs), which included a provision for uneconomic sports rights of £0.7 million.
On a like for like basis, excluding sports rights provisions and the allocation
of central costs, compared to the previous year operating losses of £1.4 million
have been turned into operating profits of £1.9 million.

We have seen a dramatic improvement in the operating performance of the Group's
local stations as well, with operating profits up from £3.7 million to £5.6
million, before allocation of central costs and national selling costs. Through
the acquisition of Forever Broadcasting, we have added Peak 107 FM (based in
Chesterfield), 107.7 The Wolf (based in Wolverhampton) and Tower 107.4 FM (based
in Bolton) to the Group's existing 13 local radio stations. These stations are a
good geographic fit as they are contiguous to our stations in Staffordshire and
the North West. In the year ended 30 September 2003, these stations produced
revenue of £3.7 million and an operating loss before goodwill and amortisation
of £0.5 million.

Since the year end the Group has increased its shareholding in Digital Radio
Group (London) Limited, which operates the London III digital multiplex, from
23.6 per cent to 30.2 per cent. This makes the Group one of the largest digital
multiplex operators in the UK. We continue to believe that the take up of
digital radio will continue to accelerate and that the foundations we are
building will be for the long term benefit of the Group.

We continue to be in dispute with RAJAR, the current industry body responsible
for audience measurement. RAJAR's insistence on persisting with a diary-based
system, reliant on respondents' memory, deprives the industry of an accurate
reflection of the true radio audience in the UK. Despite advanced electronic
alternatives being available, RAJAR has neither implemented nor given any clear
indication of when it will implement a more accurate system. In our view, RAJAR
continues to drag its feet and to misrepresent the true audience figures of our
Group and that of others. As of 16 March 2004 the Group has issued legal
proceedings against RAJAR and the matter will now be settled by the courts.

In October 2003, Stephen Davidson joined the Board on the departure of Peter
Wilkinson. I would like to put on record my thanks for Peter's contribution to
the Board and the support he has given over the years. Stephen brings a wealth
of media and banking experience to the Board and has already made a
contribution.

Outlook

January, February and March of 2004 have produced like for like revenues,
excluding contra, up 18.7 per cent on the first three months of 2003. This is a
good start for the year in which we see a lot of sporting activity and
opportunity. Improving markets does not mean we have taken our eye off costs,
which are rigorously controlled.

I look forward with confidence to the future performance of The Wireless Group
or as The Beatles said: 'Here comes the Sun...'.

Kelvin MacKenzie
Chairman and Chief Executive
31 March 2004




Operational Review

Results

Group turnover for the year ended 31 December 2003 increased 14.3 per cent to
£32.6 million from £28.5 million.

The operating profit before goodwill amortisation was £1.6 million compared to a
loss of £3.8 million for 2002. This includes a one-off provision for uneconomic
sports rights of £0.7 million (2002: £1.5 million) discussed in the review of
talkSPORT below. Therefore, excluding this charge the operating profit before
goodwill amortisation for the year ended 31 December 2003 is £2.3 million. The
loss before taxation was £11.2 million (2002: £20.3 million).

The table below sets out the operating performance for the Group entities.



        Year ended                                     31 December   31 December
                                                            2003          2002
                                                              £m            £m
        Turnover

        talkSPORT                                           11.7          11.2

        ILR                                                 20.4          17.1

        Other                                                0.5           0.2
                                                      ------------  ------------
        Total turnover                                      32.6          28.5
                                                      ------------  ------------



Operating profit/(loss) before goodwill amortisation and provision for 
uneconomic sports rights

            talkSPORT                                        1.9          (1.4)

            ILR                                              5.6           3.7

            Impact - national selling costs                 (1.9)         (1.7)

            Central costs                                   (3.3)         (2.9)
                                                      ------------  ------------

Operating profit/(loss) before goodwill amortisation  
and provision for uneconomic sports rights                   2.3          (2.3)


            Provision for uneconomic sports rights          (0.7)         (1.5)
                                                      ------------  ------------

Operating profit/(loss) before goodwill amortisation         1.6          (3.8)
        
            Goodwill amortisation                          (12.3)        (15.2)
                                                      ------------  ------------
Reported operating loss                                    (10.7)        (19.0)
                                                      ------------  ------------

talkSPORT

talkSPORT has produced an operating profit for the year ended 31 December 2003
of £1.9 million, before a provision for uneconomic sports rights and allocation
of central and sales costs against a loss for the previous year of £1.4 million.
This £3.3 million improvement has been driven through revenue increases and also
cost reduction within programming.

At the half-year we reported talkSPORT revenue had decreased by 9.2 per cent,
although this was comparing against the World Cup in 2002, therefore the second
half generated revenues up 21.1 per cent. Overall for the year revenues
generated on talkSPORT were up 4.7 per cent.

Audience figures produced by RAJAR, the diary based research system, for
talkSPORT continue to show improvement. Quarter four of 2003 showed average
hours increased by 7.9 per cent to 8.2 hours per week. talkSPORT's reach was
down from 5.0 per cent to 4.0 per cent.

The Company has questioned the validity of the RAJAR audience research, being
joined by Virgin Radio in questioning the last RAJAR results. The Company has
been frustrated at every turn on the adoption of a new measurement system and as
a result of the procrastination of RAJAR the Company has had no alternative but
to issue proceedings against RAJAR for its failure to adopt a more accurate form
of measurement. The cost of proceedings, which will come to court next year,
will be approximately £1.0 million. The Company will be seeking these costs and
damages as a result of any success in court.

The costs continue to be controlled and contributed to the improved performance
for talkSPORT. Before the allocation of central and selling costs talkSPORT
produced a full year adjusted operating profit of £1.9 million (2002: loss £1.4
million). A charge has been made for the provision for cricket rights acquired
at the height of sports right values. This provision has been made to reflect
the cost of covering the England winter tours to the West Indies and South
Africa against the economic value. Programming costs during the year have been
reduced by approximately £0.5 million.

Regional and local radio (ILRs)

The ILRs have produced an excellent result with operating profits before the
allocation of central and sales costs up 50.7 per cent at £5.6 million from £3.7
million last year. For all activities revenue has increased by 19.1 per cent
over the previous year. Costs have been well controlled within the local
stations and we seek to improve the operating margins in the future. However,
this was not an easy year for the ILRs where we have experienced increased
competition and local economic difficulties. So, it is commendable that these
results that have been produced and where we have loss making stations that
those losses have been significantly reduced.

Revenue generation benefited from the Image plus programme, where businesses
that are not traditional radio advertisers are offered special rates for taking
a twelve month campaign. Overall local revenue was up 29.2% year on year.

The latest RAJAR results were mixed for our local stations. The stations we
operate in the North West all improved their market share, but our heritage
stations elsewhere faced competition from new regional stations. We have
implemented programming training to ensure our stations offer exactly what their
local market place seeks together with improved training of production and
presenters alike.

Post the balance sheet date the Company acquired the outstanding share capital
of Forever Broadcasting plc. This brought into the Group three local stations
contiguous to our existing stations in the North West: Tower (based at Bolton),
Peak (based at Chesterfield) and Wolf (based at Wolverhampton). Our offer valued
Forever Broadcasting at £8.1 million. The majority of the Forever Broadcasting
shareholders accepted the Company's shares in exchange and we welcome them to
the Company.

With the creation of Ofcom there are to be changes in the way analogue licences
are to be advertised. Ofcom has set out that the process is to be quicker and to
this end has advertised six licences already. This is from a list of 35 that
they intend to roll out over the coming months. We continue to support local
radio in the UK and will be applying for new licences. Our belief is local
stations should be just that, local.

Selling and Central Costs

Impact is the Group's national sales team and the cost of this service
fluctuates with both staffing levels and commissions earned. As a result of the
increased revenue the cost of operating Impact has increased and reflects the
underlying improvement in the revenue performance of the Group.

Central costs have increased as a result of application expenses for licences,
digital multiplexes and the full year charge for the GfK research costs.

Digital radio

We have continued to support the growth of digital radio in the UK through our
marketing and management of digital multiplexes. Since the end of the year we
increased our shareholding in the Digital Radio Group (London) Limited, who own
the London III digital multiplex, from 23.6 per cent to 30.2 per cent.

We shall be making further applications for digital multiplex licences through a
subsidiary in which EMAP has a minority interest.

Finance

The net interest charge for the year was £0.5 million (2002: £0.7 million)
reflecting the lower average debt levels in the Group throughout the year. The
Group has refinanced its banking facilities with Barclays Bank PLC. The new
facility is for £8.5 million and matures on 31 December 2005. To complete the
acquisition of Forever Broadcasting the Group entered into a separate facility
with Barclays Bank PLC to cover the costs of the transaction and debts of
Forever Broadcasting.




Unaudited Consolidated Profit and Loss Account


For the year ended 31 December             Notes       2003       2002
                                                      £'000      £'000

Turnover
Continuing operations                                32,547     28,470
                                                    ---------  ---------
                                                     32,547     28,470
                                                    ---------  ---------

Administration expenses
- goodwill amortisation                             (12,266)   (15,204)

- other administration expenses                     (30,944)   (32,271)
                                                    ---------  ---------
                                                    (43,210)   (47,475)
                                                    ---------  ---------
Operating loss
Continuing operations                               (10,663)   (19,005)
                                                    ---------  ---------
                                                    (10,663)   (19,005)

Income from interests in associated                      
undertakings                                             14         87

Profit on sale of discontinued                 
operations                                     1          -      1,141

Interest receivable and similar income                  608        880

Amounts written of fixed asset                 
investments                                    2          -     (1,760)

Interest payable and similar charges                 (1,134)    (1,603)
                                                    ---------  ---------

Loss on ordinary activities before                  
taxation                                            (11,175)   (20,260)

Tax on loss on ordinary activities                        -          -
                                                    ---------  ---------

Loss on ordinary activities after                   
taxation                                            (11,175)   (20,260)

Minority interests - equity interests         12       (217)      (113)
                                                    ---------  ---------

Retained loss for the year                    11    (11,392)   (20,373)
                                                    =========  =========

Basic loss per share:

Loss attributable to each ordinary share (£)          (0.12)     (0.21)
                                                    =========  =========

Loss attributable to each 'B' ordinary              
share (£)                                           (117.67)   (210.45)              
                                                    =========  =========
Basic loss per share before profit on
sale of discontinued operations:

Loss attributable to each ordinary share (£)          (0.12)     (0.22)
                                                    =========  =========

Loss attributable to each 'B' ordinary              
share (£)                                           (117.67)   (222.24)
                                                    =========  =========

There were no gains or losses during the year or the prior year other than the
losses reported above, accordingly no separate Statement of Total Recognised
Gains and Losses has been prepared.

The diluted loss per share is the same as the basic loss per share because the
share options are not dilutive as they would have the effect of reducing the
loss per share if exercised.




Unaudited Balance Sheets

                                        Group              Company
At 31 December        Notes        2003       2002      2003      2002
                                  £'000      £'000     £'000     £'000

Fixed assets

Intangible assets         3      33,074     47,368         -         -

Tangible assets           4       1,913      2,584        49        61

Investments               5       1,756      1,726     7,886     7,826
                                 --------   --------  --------  --------
                                 36,743     51,678     7,935     7,887
                                 --------   --------  --------  --------
Current assets

Debtors                   6       8,834      8,241    32,314    33,674

Loan notes                
receivable                7           -      6,000         -         -

Short term                
deposits                  8       1,025     15,449         -         -

Cash at bank and in                 
hand                                551        418       107        12
                                 --------   --------  --------  --------
                                 10,410     30,108    32,421    33,686
                                 --------   --------  --------  --------

Creditors: amounts
falling due within
one year

Bank and other            
borrowings                8      (3,776)   (11,287)        -         -

Loan notes                8      (1,025)   (15,449)        -         -

Other creditors           8     (13,704)   (13,082)     (776)     (620)
                                 --------   --------  --------  --------
                                (18,505)   (39,818)     (776)     (620)
                                 --------   --------  --------  --------
Net current                      
liabilities                      (8,095)    (9,710)   31,645    33,066
                                 --------   --------  --------  --------
Total assets less                
current
liabilities                      28,648     41,968    39,580    40,953

Creditors: amounts
falling due after
more than one year

Bank and other            
borrowings                9        (120)      (219)        -         -

Other creditors           9      (8,203)   (10,419)        -         -
                                 --------   --------  --------  --------
                                 (8,323)   (10,638)        -         -

Provisions for           
liabilities and                  
charges                  10        (296)      (158)        -         -
                                 --------   --------  --------  --------
Net assets                       20,029     31,172    39,580    40,953
                                 ========   ========  ========  ========

Capital and reserves

Called-up share                   
capital                           9,682      9,682     9,682     9,682

Share premium            
account                  11      35,064     35,064    35,064    35,064

Merger reserve           11      81,820     81,820         -         -

Profit and loss          
account                  11    (106,962)   (95,570)   (5,166)   (3,793)          
                                 --------   --------  --------  --------
Shareholders'                    
funds                            19,604     30,996    39,580    40,953

Equity minority          
interests                12         425        176         -         -       
                                 --------   --------  --------  --------
Total capital                    
employed                         20,029     31,172    39,580    40,953
                                 ========   ========  ========  ========




Unaudited Consolidated Cash Flow

For the year ended 31 December             Notes       2003       2002
                                                      £'000      £'000

Net cash inflow/(outflow) from operating      
activities                                    13      2,373     (3,656)

Dividends from associates                                 -          7

Return on investments and servicing of        
finance                                       14       (196)      (716)

Taxation                                      14       (116)         -

Capital expenditure and financial             
investment                                    14       (318)      (382)

Acquisitions                                  14          -        271

Disposals                                     14          -        999
                                                    ---------  ---------

Cash inflow /(outflow) before financing and           
management of liquid resources                        1,743     (3,477)

Financing and management of liquid            
resources                                     14     (2,217)     3,702     
                                                    ---------  ---------
(Decrease)/Increase in cash in the year       15       (474)       225
                                                    =========  =========




Reconciliation of Movements in Shareholders' Funds

                                                            Group
For the year ended 31 December                         2003       2002
                                                      £'000      £'000

Loss for the financial year                         (11,392)   (20,373)

Elimination of reserves on acquisition of                 
subsidiary (previously an associate)                      -       (194)

Proceeds from issue of new shares                         -          1
                                                    ---------  ---------
Net reduction to shareholders' funds                (11,392)   (20,566)

Opening shareholders' funds                          30,996     51,562
                                                    ---------  ---------
Closing shareholders' funds                          19,604     30,996
                                                    =========  =========




Notes

 1. •Profit on disposal of discontinued operations

                                                   2003           2002
                                                  £'000          £'000

        Profit on disposal of Big AM                  
        Limited licence                               -            235

        Profit on disposal of associate -             
        Kingdom FM Limited                            -            906
                                                ---------      ---------
                                                      -          1,141
                                                =========      =========


 2. •Amounts written off fixed assets investments

                                                    2003           2002
                                                   £'000          £'000

        Provision to write down fixed asset
        investments to lower of cost and net
        realisable value:

        Investment in own shares                      -             24

        Other investments                             -          1,736
                                                ---------      ---------
                                                      -          1,760
                                                =========      =========

 3. •Intangible fixed assets

    Group                         Goodwill        Licence           Total
                                     £'000          £'000           £'000

    Cost

    At 1 January 2003              91,209          15,500         106,709

    Additions                          76               -              76
                                  ---------       ---------       ---------
    At 31 December 2003            91,285          15,500         106,785
                                  ---------       ---------       ---------

    Amortisation

    At 1 January 2003              56,364           2,977          59,341

    Charge for the year            12,266           2,104          14,370
                                  ---------       ---------       ---------
    At 31 December 2003            68,630           5,081          73,711
                                  ---------       ---------       ---------

    Net book value

    At 1 January 2003              34,845          12,523          47,368
                                  =========       =========       =========
    At 31 December 2003            22,655          10,419          33,074
                                  =========       =========       =========


    During the year the Group acquired the remaining 6.0% shares in Wave 102 FM
    Limited for consideration of £44,000 resulting in goodwill of £76,000.

    Company

    The Company does not have any intangible fixed assets.

 4. •Tangible fixed assets



                    Land and   Transmitters      Studio     Fixtures,         Motor   Total
                   buildings                  equipment fittings and       vehicles
                                                           equipment
    Group              £'000          £'000       £'000        £'000          £'000   £'000

    Cost
    At 1 January       
    2003               1,976            123       3,257        2,708            179   8,243

    Additions              2              -          67          116             73     258

    Disposals             (3)             -          (8)         (48)             -     (59)
                      --------      ---------  ----------     --------      --------- -------

    At 31 December     
    2003               1,975            123       3,316        2,776            252   8,442
                      --------      ---------  ----------     --------      --------- -------
    Depreciation

    At 1 January         
    2003                 875            109       2,613        1,954            108   5,659

    Charge for the       
    year                 183              9         325          372             24     913

    Disposals              -              -          (1)         (42)             -     (43)
                      --------      ---------  ----------     --------      --------- -------

    At 31 December     
    2003               1,058            118       2,937        2,284            132   6,529
                      --------      ---------  ----------     --------      --------- -------
    Net book
    value

    At 1 January       
    2003               1,101             14         644          754             71   2,584
                      ========      =========  ==========     ========      ========= =======
    At 31 December       
    2003                 917              5         379          492            120   1,913
                      ========      =========  ==========     ========      ========= =======

    The net book value of fixed assets includes assets held under finance leases
    of £394,100 (2002: £513,700) and the depreciation charge on those assets
    during the year was £119,600 (2002: £182,400).

    Included in land and buildings are freehold land and buildings with a net
    book value of £Nil at 31 December 2003 (2002: £Nil); long leasehold land and
    buildings with a net book value of £137,000 at 31 December 2003 (2002:
    £144,000); and short leasehold improvements with a net book value of
    £780,000 at 31 December 2003 (2002: £957,000).

                                           Motor vehicles        Total
    Company                                         £'000        £'000

    Cost
    At 1 January 2003                                  68           68
                                                   --------      -------
    At 31 December 2003                                68           68
                                                   --------      -------

    Depreciation

    At 1 January 2003                                   7            7

    Charge for the year                                12           12
                                                   --------      -------
    At 31 December 2003                                19           19
                                                   --------      -------

    Net book value

    At 1 January 2003                                  61           61
                                                   ========      =======
    At 31 December 2003                                49           49
                                                   ========      =======


 5. •Fixed asset investments

                                                Group              Company
                                            2003      2002      2003      2002
                                           £'000     £'000     £'000     £'000

             Subsidiary undertakings           -         -     7,493     7,449

             Associated undertakings          61        47         -         -

             Investment in own shares        284       284       284       284

             Other investments             1,411     1,395       109        93
                                          --------  --------  --------  --------
                                           1,756     1,726     7,886     7,826
                                          ========  ========  ========  ========



    Associated undertakings

                                                  Group       Company
                                                  £'000         £'000

    Cost and net book value

    At 1 January 2003                                47             -

    Share of retained profit for the year            14             -
                                              -----------   -----------
    At 31 December 2003                              61             -
                                              ===========   ===========


    Investment in own shares

                                               Group           Company
                                               £'000             £'000

    Carrying amount
    At 1 January 2003                            284               284
                                             ---------         ---------
    At 31 December 2003                          284               284
                                             =========         =========



    The investment in own shares is held through an employee share option trust.
    On 15 May 2000, the Company established the Wireless Group Employee Benefits
    Trust (the 'Trust'). The trustee of the Trust is an independent trustee
    company resident in the Channel Islands. The Trust is used to manage the
    funding and delivery of Ordinary Shares under the Share Option Plans. At 31
    December 2003 the cost of investment in own shares is represented by 436,289
    ordinary shares acquired at an average cost of £1.75 per ordinary share. The
    nominal value of the shares at 31 December 2003 was £43,629 (2002: £43,629).
    The market value of the shares at 31 December 2003 based on the prevailing
    market price of 102.5 pence per share was £447,196 (2002: £283,588). The
    Trust has waived its right to receive dividends in excess of 0.0001 per cent
    of the dividend payable on each shre.

    In accordance with the Group's accounting policy the investment in own
    shares has been written down by £Nil in the year ended 31 December 2003
    (2002: £24,000).

    Other investments

                                               Group           Company
                                               £'000             £'000

    Carrying amount

    At 1 January 2003                          1,395                93

    Additions                                     16                16
                                             ---------         ---------
    At 31 December 2003                        1,411               109
                                             =========         =========



    Other investments include a 16.1% holding in Forever Broadcasting plc. The
    market value of the Group's interest in Forever Broadcasting plc as at 31
    December 2003 was £867,793 (2002: £1,301,960). In accordance with the
    Group's accounting policy, the investment is carried at the lower of cost
    and net realisable value. No write down in the carrying amount has been made
    in the year ended 31 December 2003 (2002: £1,736,000) as on 20 February 2004
    the Company acquired the outstanding share capital of Forever Broadcasting
    plc at an amount equivalent to the carrying value at 31 December 2002.
 
6. •Debtors

                                               Group              Company
                                            2003      2002      2003      2002
                                           £'000     £'000     £'000     £'000

            Amounts falling due within
            one year:

            Amounts due from Group             
            undertakings                       -         -    32,292    33,674

            Trade debtors                  6,361     5,827        14         -

            Other debtors                    309       457         -         -

            Prepayments and accrued        
            income                         2,164     1,957         8         -
                                          --------  --------  --------  --------
                                           8,834     8,241    32,314    33,674
                                          ========  ========  ========  ========



 7. •Loan notes receivable

    The £6,000,000 loan notes were issued by Guardian Media Group plc,
    guaranteed by the National Westminster Bank plc, as part of the purchase
    consideration on the sale of SCOT FM Limited. The loan notes carried an
    interest rate of LIBOR less 0.75%. They were redeemed on 6 January 2003.

 8. •Creditors: amounts falling due within one year


                                               Group              Company
                                            2003      2002      2003      2002
                                           £'000     £'000     £'000     £'000

        Bank and other borrowings

        Bank loans                         2,000    10,000         -         -

        Finance leases                        88       206         -         -

        Bank overdraft                     1,688     1,081         -         -
                                          --------  --------  --------  --------
                                           3,776    11,287         -         -
                                          ========  ========  ========  ========

        Loan notes                         1,025    15,449         -         -
                                          ========  ========  ========  ========

        Other creditors

        Trade creditors                    2,377     2,354         -         -

        Corporation tax payable              151       267         -         -

        Other taxation and social          
        security                           1,238     1,138         1         -

        Accruals and deferred income       7,559     7,048       686       526

        Licence fees                       2,216     2,104         -         -

        Other creditors                      163       171        89        94
                                          --------  --------  --------  --------
                                          13,704    13,082       776       620
                                          ========  ========  ========  ========

    The loan notes were issued as part consideration for the acquisition of The
    Radio Partnership Limited in 1999 and are guaranteed by Barclays Bank PLC in
    accordance with an agreement dated 23 July 1999, pursuant to which the
    Company has agreed to maintain sufficient funds to cover the outstanding
    liability from time to time, and has therefore deposited £1,025,000 (2002:
    £15,449,000) as guarantee collateral with Barclays Bank PLC to cover the
    liability. Repayment of the loan notes is at the option of the holder with a
    final maturity date of 2004. Interest is paid at 0.425% above LIBOR with an
    annual guarantee fee of 0.575%.

    The bank loans and overdrafts comprise:

      + •An overdraft of £1,688,000 drawn against an overdraft facility
        totalling £4,000,000. This borrowing is secured by the assets of the
        Group and bears interest at 1.75% above LIBOR.

      + •A loan of £2,000,000 drawn against the revolving credit facility
        totalling £4,500,000. This borrowing is secured by the assets of the
        Group and bears interest at 1.75% above LIBOR.

 9. •Creditors: amounts falling due after more than one year

                                            Group                Company
                                         2003       2002       2003       2002
                                        £'000      £'000      £'000      £'000

            Bank and other
            borrowings

            Finance leases                120        219          -          -
                                      =========  =========  =========  =========

            Other creditors

            Licence fees                8,203     10,419          -          -
                                      =========  =========  =========  =========


 10. •Provisions for liabilities and charges

                                      
                                       
                                       Deferred      Property                            
                                       taxation    provisions     Total
                                          £'000         £'000     £'000

    Group

    At 1 January 2003                         9           149       158

    Charge to profit and loss                
    account                                   -           138       138

    At 31 December 2003                       9           287       296
                                         ========      ========  ========



    The property provisions relate to estimated dilapidation costs and committed
    rental costs on currently unoccupied properties. The timing of these
    liabilities depends on each individual lease and the likelihood of
    subletting the relevant properties.

    No amounts have been discounted.

 11. •Reserves

                                                  Share         Profit
                                   Merger       premium       and loss
                                  reserve       account        account
                                    £'000         £'000          £'000

    Group

    At 1 January 2003              81,820        35,064        (95,570)

    Retained loss for the year          -             -        (11,392)
                                  ---------     ---------      ---------

    At 31 December 2003            81,820        35,064       (106,962)
                                  =========     =========      =========

                                                Share           Profit
                                              Premium         And loss
                                              Account          account
                                                £'000            £'000

    Company

    At 1 January 2003                          35,064           (3,793)

    Retained loss for the year                      -           (1,373)
                                              ---------        ---------

    At 31 December 2003                        35,064           (5,166)
                                              =========        =========



 12. •Minority interests - equity interests

                                                                 £'000

    At 1 January 2003                                              176

    Acquisition of minority interest                                32

    Share of profits on ordinary activities after taxation         217
                                                               ---------

    At 31 December 2003                                            425
                                                               =========



 13. •Reconciliation of operating loss to net cash inflow/(outflow) from 
operating activities

                                                       2003       2002
                                                      £'000      £'000

    Operating loss                                  (10,663)   (19,005)

    Depreciation charges                                913        942

    Profit on disposal of tangible fixed assets         (12)       (17)

    Goodwill amortisation                            12,266     13,076

    Goodwill impairment                                   -      2,128

    Licence amortisation                              2,104      1,654

    Loss on disposal of trade investments                 -         30

    (Increase)/decrease in debtors                     (848)     1,052

    Decrease in creditors                            (1,387)    (3,516)
                                                    ---------  ---------

    Net cash inflow/(outflow) from operating          2,373     (3,656)
    activities                                      =========  =========

 14. •Analysis of cash flows for headings netted in the cash flow statement

                                                       2003       2002
                                                      £'000      £'000

    Returns on investments and servicing of
    finance

    Interest received                                   802        598

    Dividends received                                   61         78

    Interest paid                                    (1,059)    (1,392)
                                                    ---------  ---------

    Net cash outflow                                   (196)      (716)
                                                    =========  =========

    Taxation

    UK corporation tax paid                            (116)         -
                                                    =========  =========

    Capital expenditure and financial investment

    Purchase of tangible fixed assets                  (258)      (596)

    Disposal of tangible fixed assets                     -        197

    Disposal of licence (note 1)                          -        235

    Purchase of fixed asset investments (note 5)        (16)       (81)

    Purchase of minority interest                       (44)      (137)
                                                    ---------  ---------

    Net cash outflow                                   (318)      (382)
                                                    =========  =========

                                                      2003        2002
                                                     £'000       £'000

    Acquisitions and disposals

    Acquisitions

    Purchase of subsidiary undertakings                  -        (766)

    Cash at bank and in hand acquired                    -       1,037
                                                   ---------    --------

    Net cash inflow                                      -         271
                                                   =========    ========

    Disposals

    Sale of associate                                    -         999
                                                   ---------    --------

    Net cash inflow                                      -         999
                                                   =========    ========



                                                        2003      2002
                                                       £'000     £'000

    Financing and management of liquid resources

    Financing

    Net (reduction)/increase in borrowings            (8,000)    4,000

    Proceeds on exercise of share options                  -         1

    Redemption of loan notes                          (8,424)     (103)

    Capital element of finance lease rental             
    payments                                            (217)     (299)
                                                     ---------  --------
                                                     (16,641)    3,599

    Management of liquid resources

    Decrease in short term deposits                   14,424       103
                                                     ---------  --------

    Net cash (outflow)/inflow                         (2,217)    3,702
                                                     =========  ========

 15. •Reconciliation of movement in net debt

                                                       2003       2002
                                                      £'000      £'000

    (Decrease)/increase in cash in the year            (474)       225

    Cash outflow/(inflow) from decrease/(increase)    
    in debt and lease financing                       2,217     (3,701)   
                                                    ---------  ---------
    Change in net debt resulting from cash flows      1,743     (3,476)

    Finance leases                                        -        (31)
                                                    ---------  ---------

    Decrease/(increase) in net debt in year           1,743     (3,507)

    Net debt at 1 January                            (5,088)    (1,581)
                                                    ---------  ---------

    Net debt at 31 December                          (3,345)    (5,088)
                                                    =========  =========



 16. •Analysis of net debt

                                 1 January                 31 December
                                      2003    Cash flow           2003
                                     £'000        £'000          £'000

    Bank overdraft                  (1,081)        (607)        (1,688)

    Cash at bank and in hand           418          133            551
                                    --------     --------       --------

                                      (663)        (474)        (1,137)

    Debt due within 1 year         (10,000)       8,000         (2,000)

    Loan notes receivable            6,000       (6,000)             -

    Loan notes                     (15,449)      14,424         (1,025)

    Short term deposits             15,449      (14,424)         1,025

    Finance leases                    (425)         217           (208)
                                    --------     --------       --------

    Net debt                        (5,088)       1,743         (3,345)
                                    ========     ========       ========

 17. •Post balance sheet events

    On 20 February 2004 the Company declared its offer to the shareholders of
    Forever Broadcasting plc unconditional in all respects. The offer was made
    as a share offer with a cash alternative. Based on the share offer Forever
    Broadcasting plc was valued at £8.1 million. The Group already owned 16.1%
    of the issued share capital of Forever Broadcasting plc.

    On 9 March 2004 the Company acquired an extra 6.6% of the issued share
    capital of Digital Radio Group (London) Limited for £238,000.




Preliminary results

These unaudited preliminary results do not constitute statutory accounts. The
preliminary results for the year ended 31 December 2003 are extracted from the
unaudited Group's accounts for the year, which will be delivered to the
Registrar of Companies in due course. The results for the year ended 31 December
2002 have been extracted from the accounts for The Wireless Group plc, which
have been delivered to the Registrar of Companies and on which the auditors gave
an unqualified report that did not contain a statement under Section 237 (2) or
(3) of the Companies Act 1985.

These preliminary results have been prepared on the basis of the accounting
policies set out in the Company's 2002 statutory accounts, which have been
updated for changes in Financial Reporting Standards and UITF Abstracts coming
into force during the year, the impact of which on the financial information has
not been material.




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