RNS Number:1328S
Sterling Publishing Group PLC
18 November 2003
STERLING PUBLISHING GROUP PLC ("STERLING")
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003
Highlights:
* Turnover up 1.7% to #10.9 million
* Pre tax loss #(0.7) million (2002: loss #(1.5) million)
* Loss per share (0.82)p (2002: loss (2.51)p )
* Positive cash flow with net debt reduced to #1.8 million (2002: #2.1
million)
* Growth in Web, Forum and Conference businesses, offset sales decline in
Print Media.
* Fundamental review of business and reorganisation into business sectors
Christopher Haines, Chairman of Sterling, commented:
"Following a fundamental review of our business, we have now refocused our
strategy to create a more market-facing Group. We expect to see the benefits of
this new structure in the second half of next year.
With the management team strengthened and a restructured organisation I believe
that we are in the process of securing the foundations for exciting longer term
prospects for the Group. "
Further Enquiries:
Sterling Publishing Group Plc Tel. 020 7915 9660
Christopher Haines, Chairman Tel. 020 7915 9637
Steve Nicholson, Acting Chief Executive Tel. 020 7915 9731
Barrie Newton, Rowan Dartington Tel. 0117 9330011
STERLING PUBLISHING GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003
Chairman's Statement
Trading
Difficult trading conditions have persisted over the last six months. Compared
with the similar period in the prior year, sales in print media declined by
15.5% to #7.1 million. This reflected global economic uncertainty and the stage
of the advertising cycle. This sales reduction was offset by growth elsewhere
within the Group, from other forms of media, either acquired or from internal
business initiatives. The Forum revenue streams, our significant new business
development, contributed #0.4 million (2002: #nil), and a further 10.1% growth
in sales was recorded in the web-based business to #2.6 million (2002: #2.3
million). In addition, Analysis & Networking, our conference business, acquired
in March 2003, contributed #0.8 million to turnover, resulting in overall
turnover growth of #0.2 million for the Group.
Margins were maintained as we adjusted the number of products and the cost base
to the changing mix of revenues.
Operating costs decreased compared with the prior year. Cost savings were made
across the business to mitigate operating losses, particularly in print media,
including savings in staff costs achieved by not replacing some of our leavers.
In September 2003 we opened an office in India to service our web business.
There were a few redundancy payments including approximately #0.3 million in
compensation for loss of office to a departing director. These non-recurring
costs were offset by receipts from previously written-off bad debts.
Losses per share are (0.82)p (2002: losses - (2.51)p) and the board is,
therefore, not proposing an interim dividend but will review the position again
when the outcome for the full year is known.
Net debt and cash flow
The trading losses have been offset by reduced debtors, lower capital
expenditure and the positive effect of Forums and Conferences, which unlike
Print Media are strongly cash generative. As a result, in the period, net debt
was further reduced to #1.8m.
Strategy
Following a fundamental review of our business, we have now refocused our
strategy to create a more market-facing Group with a stronger affinity with
buyers. This will allow us to enhance the quality of the service to our
customers, the suppliers of products and services.
The first phase of these changes has already been implemented with the creation
of a sector based product development team. The next phase, which will take
place at the end of December, will be the reorganisation of the sales force,
currently structured around channels to market, into sector based units which
will have at their disposal skilled sales staff selling across different
channels.
We expect to see the benefits of this new structure in the second half of next
year.
Management Developments
I am delighted to announce that Mr Steven Nicholson has agreed to join the board
as full time executive chairman with effect from 1 December 2003. Mr Nicholson,
who has wide experience in change management and growing businesses, has played
an important part during his tenure as acting CEO in developing and implementing
our strategic vision. His skills will complement those of Simone Kesseler who
will be returning from maternity leave in early January 2004 to resume her role
as Group Chief Executive. I shall remain on the board as a non-executive
director.
Future prospects
Current trading suggests that we can expect further modest growth in our web
business for the remainder of the year, although Print Media is likely to be at
a similar level to the first half. The Forums business is heavily weighted
toward the second half when we have a further eight events planned in contrast
to the one event that fell in the first half. Analysis & Networking should do
slightly better in the second half with a greater number of events scheduled and
encouraging recent delegate registrations.
Overall I anticipate that we will achieve an operating profit in the second half
although it is difficult to determine at this early stage the extent to which it
will offset the first half loss.
With the management team strengthened and a restructured organisation I believe
that we are in the process of securing the foundations for exciting longer term
prospects for the Group.
Christopher Haines
Chairman
18 November 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended Six months Six months
31 March ended 30 ended 30
2003 September September
2003 2002
(audited) (unaudited) (unaudited)
#'000 #'000 #'000
24,709 Turnover (note 2) 10,947 10,769
(12,415) Cost of sales (5,536) (5,509)
12,294 Gross profit 5,411 5,260
(947) Distribution costs (459) (489)
(12,250) Administration expenses (5,666) (6,070)
(903) Operating loss (714) (1,299)
17 Interest receivable and similar income - -
(99) Amounts written back/ (off) investment in own shares 88 (79)
(note 3)
(181) Interest payable and similar charges (57) (73)
(1,166) Loss on ordinary activities before tax (683) (1,451)
(607) Taxation (note 4) - (607)
(1,773) Loss on ordinary activities after tax (683) (2,058)
(10) Dividends - non-equity - (10)
(1,783) Loss attributable to equity shareholders (683) (2,068)
- Dividends - equity - -
(1,783) Retained loss for the period (683) (2,068)
(2.16)p Basic loss per share (note 5) - Net basis (0.82)p ( 2.51)p
(2.16)p Diluted loss per share (note 5) - Net basis (0.82)p ( 2.51)p
There were no recognised gains or losses other than those included in the profit
and loss account. The results for each period are from continuing operations.
CONSOLIDATED BALANCE SHEET
As at 31 As at 30 As at 30 September
March 2003 September 2003 2002
(audited) (unaudited) (unaudited)
#'000 #'000 #'000
Fixed assets
6,274 Intangible assets 6,202 5,024
3,553 Tangible assets 3,346 3,401
86 Investment in own shares (note 3) 174 106
9,913 9,722 8,531
Current assets
4,149 Stocks and work in progress 4,836 5,142
7,002 Debtors 5,907 7,099
255 Cash at bank and in hand 166 55
11,406 10,909 12,296
Creditors - amounts falling due within one year
(7,126) Trade and other creditors (7,181) (7,498)
(1,962) Bank loans and overdrafts (1,856) (1,933)
(9,088) (9,037) (9,431)
2,318 Net current assets 1,872 2,865
12,231 Total assets less current liabilities 11,594 11,396
(307) (50)
Creditors - amounts falling due after more than
one year
(307)
(1,088) Provisions for liabilities and charges (note 8) (1,134) (1,254)
10,836 Net assets 10,153 10,092
Capital and reserves
4,223 Called up share capital 4,258 4,187
407 Shares to be issued 357 -
7,231 Share premium account (note 9) 7,246 7,215
7,874 Capital redemption reserve (note 9) 7,874 7,874
733 Other reserves (note 9) 733 733
(9,632) Profit and loss account (note 9) (10,315) (9,917)
10,836 Shareholders' funds 10,153 10,092
Comprising:
10,836 Equity interests 10,153 10,092
- Non-equity interests - -
10,836 10,153 10,092
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 Six months Six months
March 2003 ended 30 ended 30
September September
2003 2002
(audited) (unaudited) (unaudited)
#'000 #'000 #'000
3,080 Net cash inflow from operating Note 6 471 1,872
activities
Returns on investments and servicing of finance
17 Interest received and similar items - -
(89) Interest paid (22) (51)
(30) Dividends paid - non equity - (30)
(38) Interest element of finance lease payments (8) (22)
Taxation
336 Corporation tax repaid - 291
Capital expenditure and financial investment
(1,224) Payments to acquire tangible fixed assets (347) (531)
Acquisitions and disposals
(316) Payment to acquire subsidiary undertaking - -
65 Cash acquired with subsidiary undertaking - -
(83) Equity dividends paid - (83)
1,718 Net cash flow before financing 94 1,446
Financing
(203) Capital element of finance lease payments (77) (102)
(717) Redemption of preference shares - (717)
798 Decrease in net debt in the period 17 627
Reconciliation of net cash flow to movement in
net debt
798 Increase in cash in the period 17 627
203 Cash outflow from lease financing 77 102
1,001 Change in net debt resulting from cash flows 94 729
(2,860) Opening net debt (1,859) (2,860)
(1,859) Closing net debt (1,765) (2,131)
NOTES:
1. Preparation of Interim Financial Statements
The abridged profit and loss account and balance sheet for the previous
financial year do not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985 and are extracted from the latest
published statutory accounts for the year ended 31 March 2003 which have been
delivered to the Registrar of Companies. The auditors' report on these accounts
was unqualified and did not contain any statement under Section 237 of the
Companies Act 1985.
The interim financial statements have been prepared on the basis of the
accounting policies set out in the statutory accounts for the year ended 31
March 2003. These statements were approved by a committee of the Board of
Directors on 18 November 2003 and are neither audited nor reviewed.
2. Segmental reporting analysis
All of the turnover and operating profit is derived from international
business-to-business communication and originates in the UK.
The geographical analysis of turnover by destination is as follows:
2002/03 2003/04 2002/03
Full year Half year Half year
#'000 #'000 #'000
9,925 United Kingdom 2,600 2,681
8,844 Europe (other than UK) 4,966 4,862
4,503 United States of America 2,862 2,417
1,437 Other 519 809
24,709 10,947 10,769
3. Investment in own shares
The investment in own shares comprises 1,214,395 (30 September 2002: 1,214,395,
31 March 2003: 1,214,395) ordinary shares of 5p each in the company held by the
Sterling Publishing Group employee benefit trust.
2002/03 2003/04 2002/03
Full year Half year Half year
#'000 #'000 #'000
185 Market value at beginning of period 86 185
(99) Amounts written back/(off) in the period 88 (79)
86 Market value at end of period 174 106
4. Tax charge
The annual effective tax rate is 30% (six months to 30 September 2002: 30%,
year ended 31 March 2003: 30% ) but no credit has been taken for the operating
loss as there are currently no taxable profits against which it can be offset.
5. Earnings per share
The loss per share of (0.82)p (six months to 30 September 2002: loss per share
(2.51)p) and the diluted loss per share of (0.82)p (six months to 30 September
2002: loss per share (2.51)p) have been calculated based on the attributable
loss to shareholders of #(683,000) (six months to 30 September 2002: loss #
(2,058,000)) less preference dividends of #nil (six months to 30 September 2002:
#10,000).
FRS14 requires the presentation of diluted earnings per share when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share. Where a company is reporting a net loss and there are
outstanding share options the net loss per share could only be increased by the
exercise of out-of-the-money options. Since it is inappropriate to assume that
option holders would act irrationally no adjustment has been made to the diluted
loss per share for out-of-the-money options.
The weighted average number of shares in issue during the period (excluding
those held by the Sterling Publishing Group employee benefit trust) were:
2003/04 2002/03
Half year Half year
'000 '000
Basic 83,667 82,535
Share option adjustment - -
Diluted 83,667 82,535
6. Reconciliation of operating loss to net cash inflow
from operating activities
2002/03 2003/04 2002/03
Full year Half year Half year
#'000 #'000 #'000
(903) Operating loss (714) (1,299)
69 Amortisation of goodwill 72 33
1,008 Depreciation of tangible fixed assets 554 421
752 Stocks and work-in-progress (687) (241)
2,915 Debtors 1,095 2,615
(1,049) Creditors 132 (165)
288 Provisions for liabilities and charges 19 508
3,080 Net cash inflow from operating activities 471 1,872
7. Analysis of net debt
31 Mar 2003 30 Sep 2003 30 Sep 2002
#'000 #'000 #'000
255 Cash 166 55
(1,962) Borrowings (1,856) (1,933)
(152) Finance lease obligations (75) (253)
(1,859) Net debt (1,765) (2,131)
8. Provisions
The movement in provisions for the six months was as follows:
#'000
As at 31 March 2003 1,088
Utilised (150)
Adjustment arising from discounting 27
Charge for period - additional provision made 169
As at 30 September 2003 1,134
9. Reserves
The movement on reserves for the six months was as follows:
Share Capital Other Profit and Total
premium redemption reserves Loss
reserve account
#'000 #'000 #'000 #'000 #'000
As at 31 March 2003 7,231 7,874 733 (9,632) 6,206
Loss for the period - - - (683) (683)
Shares issued 15 - - - 15
As at 30 September 2003 7,246 7,874 733 (10,315) 5,538
This statement is being sent to all shareholders. It is available to the public
at Sterling Publishing Group PLC's registered office at 55 North Wharf Road,
London W2 1LA, and at the offices of Capita IRG Plc, the Company's registrars,
Bourne House, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
This information is provided by RNS
The company news service from the London Stock Exchange
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