Disposal and Trading Update
January 07 2004 - 6:53AM
UK Regulatory
RNS Number:9525T
CSS Stellar PLC
07 January 2004
Immediate Release 7 January 2004
CSS STELLAR PLC ("CSS Stellar" or "the Group")
DISPOSAL OF ARB FROM THE EVENTS DIVISION AND PRE- CLOSE TRADING UPDATE.
The Group today announces the disposal of the ARB Group of companies ("the
Disposal") from the Events Division. The Disposal was concluded at the end of a
year in which the Board has focussed on its stated strategy of integrating the
acquisitions made over the last three years into three core global divisions.
Prior to entering its closed period, the Board is also taking this opportunity
to update shareholders on Group trading in the second half of 2003 and to
comment on the outlook for 2004. The Group intends to release its preliminary
statement of results for the year ended 31 December 2003 on Monday, 22 March
2004.
Disposal of ARB
The Group has completed the Disposal of the ARB Group of companies (comprising
the entire issued share capital of Snaphold Limited together with its
subsidiaries ARB Audio and Visual Hire Limited, ARB (South) Limited and
Backporch Limited (together "ARB") to two individuals ("the Purchaser"), one of
whom had formerly owned the business. The Disposal was carried out in line with
the action promised and outlined at the time of the Group's interim announcement
released in late September 2003, due to the continuing disappointing results
from ARB.
The agreed consideration was #1 for the shares in ARB and the Purchaser assumed
responsibility for the hire purchase agreements formerly guaranteed by the
Group, amounting to #0.7million. In return, the Group has cancelled the
inter-company loan extended to ARB for #1.1million and repaid ARB's overdraft of
#1.4million.
In aggregate, the Disposal will result in an exceptional loss of #2.25million to
be taken at the year end, including a goodwill write-off of #0.5million. Based
on the 11 months management accounts to the end of November, ARB made a trading
loss of #0.75million. The Group will retain the benefit of any tax losses
arising.
In the year to 31 December 2002, ARB made a loss before taxation of #0.5million
on turnover of #4.3million. Net liabilities at that date were #0.3million.
Pre-close update
The Group has continued to experience difficult trading conditions during the
second half of 2003. Consequently, and after allowing for the weakness in the US
Dollar, the Board now expects to report adjusted operating profits of
approximately #2.4million for the year. The major causes for the shortfall
against market expectations are as follows:
*The continued weakness of the US Dollar impacting the income streams from
our North American operations;
*A lower than expected contribution from Stellar Financial Partners
("SFP"), our business providing tax planning and other financial services to
Group clients. Much of this can be attributed to the closure of the SFP
Newcastle office; and
*A lower than expected contribution from our television division.
When we reported our results for the first half of the year to shareholders in
September, we said that we would focus on tackling the non-performing areas of
the Group in the remainder of 2003 and also take any further actions or
financial measures necessary to integrate our operations in a more streamlined
way. The non-recurring items comprise three main elements: the exceptional costs
associated with the Disposal, which are detailed above (#2.25million); the
non-recurring costs associated with the closure of the Newcastle office of SFP
(#0.4million); and the costs of integrating both our sponsorship division into
GEM Europe and GEM and Echo in North America (#0.25million).
Talent Management
During the second half, we represented the commercial interests of the World Cup
winning England rugby team and we extended the contract we have with Formula
One's Juan Pablo Montoya, recently negotiating his move to the McLaren team for
the 2005 season. The US Dollar weakness affected the income streams from the
Division's North American operations (#0.2million) and, partly as a result of
the closure of our Newcastle financial operation, some of the revenues we
expected to contribute to the second half in Talent Management will now fall
into the first quarter of 2004.
Marketing
The US Dollar weakness was a factor in reducing our income streams in this
division, although second half trading was slightly below expectations. Against
this, there have been some notable new client wins and expansion in client work
in North America. These include Suntrust Bank and The Schwan Food Company. Our
Canadian business co-ordinated the global marketing of the highly successful
Rolling Stones DVD "Four Flicks" in the final quarter.
Television and Events
There are a number of exciting opportunities for our small television division
and we expect to be able to report a more solid year in 2004. We are encouraged
that the sole remaining Events subsidiary has made a promising start to 2004,
winning Sport England as a new client and new business from Wimbledon's All
England Club.
John Webber, Chairman of CSS Stellar, commented: "2003 was a year of transition
for the Group. There were a number of significant achievements during the year -
notably the focus on and bedding down of the global divisions, the disposal of
the non-profit making activities and the recruitment of some outstanding talent.
Whilst it has not been the best outcome in terms of trading results, 2003 has
proved to be a timely year for taking measures to restructure. I feel
particularly encouraged by the early signs of recovery in the Group's markets
and news of client gains has helped sentiment at this early stage of 2004."
Contacts:
CSS Stellar plc 020 7078 1400
Julian Jakobi, Joint Chief Executive
Sean Kelly, Joint Chief Executive
Kevin Rose, Finance Director
Bridgewell Limited 020 7003 3000
John Craven
Buchanan Communications 020 7466 5000
Bobby Morse
Catherine Miles
This information is provided by RNS
The company news service from the London Stock Exchange
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