RNS Number:9542H
First Artist Corporation PLC
19 November 2007
Date: 19 November 2007
On behalf of: First Artist Corporation plc ("First Artist" or "the Group")
Embargoed for: 0700hrs
First Artist Corporation plc
Preliminary Results for the year ended 31 August 2007
First Artist Corporation plc (AIM: FAN), the media, events and entertainment
management group, today announces its final results for the year ended 31 August
2007.
Highlights from last 12 month period include:
* Turnover up 411% to #48.6 million (compared to 10 month period to
31 August 2006)
* Adjusted EBITA* up 118% to #3.6 million (EBITA #3.2 million)
* Adjusted profit before tax** up 80% to #2.7 million (Profit before tax
#1.5 million)
* Adjusted basic EPS*** up 47% to 15.71 pence (Basic EPS 6.81p)
* Consolidated net assets up 43% to #7.3 million
* Total cash inflow of #2.7 million
*(Earnings before interest, tax and amortisation (EBITA) is stated before
exceptional administrative expenses and foreign exchange gains or losses)
**(Profit before tax is stated before goodwill amortisation, exceptionals and
discounted interest on deferred consideration)
***(EPS is stated before amortisation of goodwill, discounted interest on
deferred consideration and exceptional costs)
Key Operating Highlights:
* Successful acquisition and integration of Dewynters, the UK's leading
full-service entertainment marketing group
* Successful acquisition of Yell Communications and integration within the
Events division
* Successful launch of First Rights, First Artist's sponsorship and rights
ownership agency
* Three-year Public Sector Training and Development Agency contract awarded
to The Finishing Touch
Jon Smith, Chief Executive of First Artist Corporation commented:
"This has been a transformational year for First Artist. The Group now benefits
from eight diverse income streams, spread across our three divisions: Media,
Entertainment and Events.
"The focusing of the Group into three divisions will help to drive the synergies
that exist between the different businesses. Over the next year the Group will
continue to evolve, building on the high quality, diverse earnings streams and
strong cash generation.
"The emerging media landscape presents enormous opportunities and First Artist
has positioned itself to take full advantage of the changing marketplace."
Enquiries:
Jon Smith, Chief Executive
Richard Hughes, Group Managing Director www.firstartist.com
First Artist Corporation Tel: 020 7993 0000
Emma Kane / Samantha Robbins / Sanna Lehtinen
Redleaf Communications Tel: 020 7822 0200
David Floyd
Dawnay Day, NOMAD Tel: 020 7509 4570
Katie Shelton
Daniel Stewart, Broker Tel: 020 7776 6550
Notes to Editors:
* First Artist Corporation plc floated on AIM in 2002
* First Artist's group companies are among the leading brands in their
fields under the following categories:
o Media - advertising, marketing and signage for West End, Broadway
and Las Vegas shows via the Dewynters and Newman Displays brands,
and strategic sponsorship consulting via Sponsorship Consulting
and First Rights
o Entertainment - representation of media personalities and football
players/clubs across UK, Europe and the US via its First Artist
Sport and First Artist Entertainment companies together with
wealth management under its Optimal Wealth Management arm
o Events - offers a broad range of events such as conferences,
company activity days, venue finding, delegate management and
client events for private and public sector clients such as the
Training & Development Agency, under its Finishing Touch business
* First Artist is acting as a consolidator in the fragmented media,
entertainment and events sectors focusing on high quality brands with the
potential to cross sell to other Group companies
* First Artist has strong visibility of earnings across a diverse and
non-cyclical range of activities in both live and digital formats
* The Group benefits from a strong, experienced management team with
extensive expertise across all the sectors in which it operates
Chairman and Chief Executive's Statement
The nature of media and entertainment has changed rapidly over recent years,
with the shift away from traditional forms of media into digital web-based
multi-media, driven by the advent of new technologies. This landslide is
dramatically increasing the rate of media and audience fragmentation, and of the
diversification of entertainment channels. Conversely, it has also resulted in
significant growth in the live event sector and this growth is forecast to
continue for some time.
We believe that the emerging media landscape presents enormous opportunities for
those now entering the media and entertainment sectors, particularly if they can
introduce a business model that delivers stability when previously less flexible
and more established players now find their revenue streams exposed. A
low-risk, cash generative, reliably profitable and inherently stable but
expanding group will find itself in the ideal position to exploit emerging
opportunities within this changing marketplace.
This is exactly the position in which First Artist Corporation has placed
itself. The repositioning of the Group, which began three years ago, has now
delivered a media, entertainment/sport and events group that is notable for both
the diversity and stability of its revenue streams and its robust organic
growth. We have grown the business with an emphasis on synergistic, earnings
enhancing acquisitions, precisely to take advantage of the conditions in media
and entertainment today and in the future.
We have successfully integrated eight businesses in an environment that builds
on their strengths and has accelerated the growth on the majority of these
businesses. We have identified key current opportunities for expansion within
the Group, started to develop new forms of revenue stream that are evolved to
fit the opportunities of the current marketplace, and positioned ourselves to
respond to the next wave of opportunities in a dynamic rapidly changing sector.
Both the media and the analyst community have made frequent reference to First
Artist Corporation's past as primarily a football agency, and it is true that
when we began the process of expanding and repositioning the business, three
years ago, the majority of First Artist's revenues were derived from football.
As a result, the income stream was seasonal, and exposed to the amount of TV
revenue flowing into the game.
A comparative look at the structure of today's Group revenues tells a very
different story: 87 per cent of the enlarged group revenues, and 79 per cent of
operating profits (pre. Group central costs) now come through media,
non-football entertainment and event management services, with the acquisition
of Dewynters giving First Artist Corporation the dominant role in the marketing
of theatre and cinema in the UK, and opening up exciting avenues of opportunity
in the US and Asia Pacific.
The Group now benefits from eight diverse income streams, spread across our
three divisions: Media, Entertainment/Sport and Events. Within Entertainment and
Sport, changes to the nature of football contracts have further strengthened
year-round revenues by replacing traditional, up-front agency fees with regular
payments over the life of the contract, significantly increasing visibility
through contracted earnings. Within Events, The Finishing Touch's success in
landing a significant three-year contract for the Training and Development
Agency's schools training programme secures a rapidly expanding public service
revenue stream, whilst the addition of Yell Communications further strengthened
the corporate business following record trading periods during Christmas 2006
and June 2007.
Arguably the most significant Group achievement of the past three years is the
success in finding ways to deliver stable, growing revenues, in markets where
high risks are often perceived to accompany high rewards. We believe that the
management style and group structure, supported by strong information and
financial management systems will ensure that we will continue to deliver this
robust growth.
Stability breeds stability much as success breeds success. The strength of the
overall Group position is allowing us to explore new opportunities to develop
further, long-term, revenue streams through the ownership of media and event
rights. This year's launch of First Rights is a major step forward, leveraging
our expertise in sponsorship and media rights to take ownership of promising
sport and entertainment properties. As we expand further into media and
entertainment representation, through First Artist Management and build on this
year's tremendous advances by The Finishing Touch, we will remain alert to
further rights opportunities.
In concluding, we wish to thank all members of the First Artist Group for their
tremendous hard work over the past three years and, especially during the last
12 months. They have all contributed to the success of the Group, and to the
highly promising position in which we now find ourselves. Our Sharesave scheme,
launched this year, is designed to allow all employees to profit from success,
and we are pleased that such a large percentage took the opportunity to do so.
Jarvis Astaire & Jon Smith
16 November 2007
FIRST ARTIST MEDIA
Dewynters and Dewynters Advertising Inc.
Dewynters' leadership in the marketing of theatre and cinema in the UK has been
built on a deep passion for and understanding of its sector, consistently
original, award-winning creative and a full-service offer that incorporates all
the services required to connect audiences and performances. In addition to
print and digital development, e-business and media advertising, Dewynters works
through its subsidiaries Dewynters Advertising and Newman Displays to deliver
merchandising, souvenir programmes and spectacular front-of-house displays.
When an agency enjoys a dominant market position such as that of Dewynters, its
fortunes are closely linked to those of its sector. The company currently
supports some 26 West End shows compared to 18 in May 2006 with further shows
performing in Europe and the Far East. The UK's appetite for theatre appears
greater than ever; the pipeline of shows seeking theatres is extremely healthy,
and dedicated reality TV shows are further raising the profile of musical
theatre, in particular. Within this environment, the agency seeks continually
to protect its market position by raising its creative standards and
demonstrating its versatility, as shown in recent West End work for The Royal
Opera House, Equus, Spamalot, Grease and Lord of the Rings.
Steady growth from an extremely strong position indicates a very healthy
performance for Dewynters' core London theatre and cinema business and this year
has been its most successful in its 100-year plus history. The agency's main
opportunities for more rapid growth lie internationally, such as in the US and
Asia Pacific, in which it is also successfully developing its presence alongside
Newman Displays and Dewynters Advertising, and in expanding its role in cultural
tourism. Dewynters is the only UK agency to be a member of the Association of
British Travel Agents.
Dewynters Advertising is Dewynters' rapidly expanding merchandising and souvenir
programme operation, which has succeeded in tapping into the lucrative US
theatrical market through its offices in New York and Las Vegas.
Alongside Dewynters (UK), this company currently represents 7 shows on Broadway
and 4 in Las Vegas with further shows on US tours. Over the past year, the
company has delivered the merchandising to promote hit US shows such as The
Color Purple, Young Frankenstein and Stomp, providing a valuable tool for
extending brand awareness through word-of-mouth at the same time as ensuring a
valuable revenue stream for clients.
Live events and in particular theatre are an increasingly global business;
Broadway plays a vital role as an exporter of productions to London and around
the world. Dewynters Advertising's growing strength in the US market not only
helps to secure the broader marketing accounts for London staging of
international shows; it also plays a key role in opening up new markets such as
China to the skills and expertise of Dewynters and Newman Displays.
The creative skills and global reach of Dewynters Advertising are hugely
complementary to the strategic marketing skills, entertainment development and
event management expertise available through other divisions of the First Artist
Group.
FIRST ARTIST MEDIA
Year ended 31 10 months ended 31 Year ended 31
August August October
2007 2006 2005
#000 #000 #000
Turnover
Dewynters Group * 32,872 - -
Sponsorship Consulting ** 740 49 -
First Rights - - -
33,612 49 -
Operating Profit*** 2,428 - -
* These figures are since Acquisition in November 2006
** These figures are since Acquisition in August 2006
*** Prior to intergroup management fee and excluding foreign exchange gains or losses
DEWYNTERS GROUP
Period from Year ended 31 Year ended 31
1 November 2006 to March March
31 August 2007 2006 2005
#000 #000 #000
Turnover
Dewynters Limited 25,848 26,448 25,130
Dewynters Advertising Inc 2,633 2,696 2,862
Newman Displays Limited 4,391 4,386 2,236
32,872 33,530 30,228
Operating Profit* 2,571 864 304
* Prior to intergroup management fee and excluding foreign exchange gains or
losses
MEDIA - NEWMAN DISPLAYS
Newman Displays has pioneered the role of fascias, signage and front-of-house
displays in UK entertainment marketing and brand awareness, successfully
leveraging its 20-year record of innovation and creativity into a dominant role
in the theatre and cinema marketplace.
The West End has provided a hugely effective shop window for the company's
creativity and production expertise, with films such as Pirates of the Caribbean
At World's End, Harry Potter and the Order of the Phoenix, Shrek 3, The Simpsons
and 300; and musicals Spamalot and Wicked among the many productions benefiting
from displays during the last year. However, Newman Displays' expertise extends
beyond this: to brand campaigns, including the innovative neon signage on
display in London's Piccadilly Circus, and business-to-business and corporate
designs and exhibition stands.
The steady integration of the business within the First Artist Group offers
several new opportunities for growth, including considerable potential synergies
with First Artist's event business, The Finishing Touch, and with the
sponsorship, media rights and PR expertise of Sponsorship Consulting and First
Rights.
The business is already making considerable strides in the US, where the
strength of First Artist's Las Vegas-based operation, Dewynters Advertising,
provides opportunities to introduce its creative and production techniques to
new markets. This is also true in Europe at the Cannes Film Festival and in
China, where rapidly increasing demand for touring West End shows promises a
considerable market for its theatrical displays.
MEDIA - SPONSORSHIP CONSULTING
The approach of the 2012 Olympic games in London has done more than increase the
demand for sponsorship consultancy and implementation in the UK; it represents a
step-change in the way the industry conducts business, and in the way that
clients judge the services available. Since its arrival within the First Artist
Group just over a year ago, Sponsorship Consulting has been restructured and has
focused its future development to take full advantage of this shift and deliver
the level of brand expertise that clients will demand over the next five years
and beyond.
Sponsorship Consulting is a high-end, strategic sponsorship and corporate
responsibility consultancy with an instantly recognisable list of blue-chip
clients; the complementary range of skills available through the First Artist
Group allows it to work with First Rights on the implementation of sponsorship
sales and with The Finishing Touch on event management, whilst focusing on
delivering high-quality brand-orientated advice to both sponsors and rights
owners. At the same time, the company will continue to work on the detailed
activation and implementation of sponsorship deals for large corporates, on a
contracted basis, covering every element needed to bring sponsorship to life.
The next phase in the growth of the business will include building on its Public
Relations capabilities, in order to tap sponsorship's full potential for
creating brand experiences.
The past 12 months have delivered yet more examples of the value that the
business delivers to clients in this respect. Sponsorship Consulting has
renegotiated Unilever's relationship with The Tate Modern, including a
realignment of the sponsorship deal in 2012 to take advantage of the London
Olympics; the company has extended the value of Siemens' sponsorship of rowing
into internal communications, through an indoor rowing regatta for employees;
eight separate sponsorship deals have been secured for Shell, including a
partnership with the Royal Festival Hall and the support of a new children's
gallery for the Science Museum. Meanwhile, the consultancy's work for the shoe
brand, Ekko, culminating in a three-year sponsorship of the V&A's fashion
exhibitions, showcases the powerful potential role of sponsorship in the
repositioning of brands.
MEDIA - FIRST RIGHTS
Launched in May 2007, First Rights has been developed to build on the media
rights and sponsorship sales expertise which exists within the First Artist
Group, delivering new revenue streams through its sales-led representation of
rights owners and opening up new opportunities for the Group in the ownership of
media assets. During its first few months of operation, the business has
already made encouraging strides in both of these areas. Although no revenue was
recognised during the 4 months to 31 August, the Company has four contracted
clients who will be invoiced in the first few months of the coming year.
First Rights' core business focuses on the development of sponsorship strategies
for rights owners and the subsequent execution of these strategies through
sales. The company generates revenue through both fees and sales commissions and
has already landed high-profile clients such as Sheffield United and the
European Fighting Network.
In two further cases, First Rights has opted to waive its initial consultancy
fee in exchange for a share of media rights, securing longer-term revenue
streams through equity ownership. The rights in question, to the Ocean Racing
World Cup and Carousel, a business, which controls the rights to display artwork
from The Simpsons among other entertainment properties, were carefully selected
for their long-term potential. In addition to income through the rights
themselves, First Rights will handle ongoing sales on a commission basis in each
case.
Over the next year, the business will continue to focus on the organic growth of
its fee and commissions-based sales business, whilst continuing to monitor
opportunities for further rights ownership where the potential exists to create
long-term revenue streams. The activities of First Artist group companies such
as First Artist Management and the events business The Finishing Touch have the
potential to provide a further channel to rights ownership over the medium and
longer term.
EVENTS - THE FINISHING TOUCH
FIRST ARTIST EVENTS
Year ended 31 10 months ended 31 Year ended Year ended
August August 30 April 30 April
2007 2006 2007 2006
#000 #000 #000 #000
Turnover
Corporate 3,120 1,700 2,734 2,208
Public Sector 2,037 1,393 1,705 2,230
5,157 3,093 4,439 4,438
Operating Profit* 498 218 379 **353
* Prior to intergroup management fee and foreign exchange gains or losses
** Prior to one-off pension payment
A year of extremely strong organic growth for The Finishing Touch has been
largely defined by its success in securing the three-year contract for the
Training and Development Agency's schools training programme, with a
client-controlled option for a two-year contract extension. This win, the result
of a long-running tender process, represents major growth for the public sector
division of The Finishing Touch's business, secures a significant medium-term
income stream, and positions the company superbly to win additional public
sector work. The full event planning and management services offered by The
Finishing Touch are largely unique within the public sector market, and the
company has already been approached to develop projects for several other public
sector bodies. Recent announcements of additional funding for education are
likely to increase the value of the schools training programme account still
further, with indications for 2008 suggesting the number of events will
significantly exceed initial projections. The new Public Sector contract
commenced on 1 August full benefits of which will be seen over the coming years.
The corporate side of the business also delivered strong growth during 2007 with
like-for-like income growth in excess of 33 per cent, supplemented with the
acquisition of Yell Communications delivering a contract for Prudential and a
large-scale staff education roadshow for a leading insurance group. This new
business comes in addition to The Finishing Touch's ongoing preferred supplier
corporate contract with Accenture and strong record of repeat business through
successful client retention. Record trading periods during Christmas 2006 and
June 2007 testify further to the vitality of the corporate operation.
The immediate opportunity for additional growth lies in the further expansion of
the corporate business, building on the recent launch of a new brand, corporate
identity and website for The Finishing Touch. Following the long-term tender
process for the schools training programme, new business resources are now
increasingly available to the corporate operation. At the same time, The
Finishing Touch will remain alive to the possibilities for growth arising
through its delivery of the Training and Development Agency's programme.
The Finishing Touch continues to innovate within the events business, with a
number of new venues and bespoke corporate activities in creative and commercial
development. The business is also exploring the possibility of launching wholly
owned live event properties, such as awards dinners, with rights, sponsorship
opportunities and ticket sales controlled by the First Artist Group.
FIRST ARTIST ENTERTAINMENT/ SPORT MANAGEMENT
Year ended 31 10 months ended 31 Year ended 31
August August October
2007 2006 2005
#000 #000 #000
Turnover
Sport 6,481 4,162 4,171
Entertainment 744 331 241
Wealth 2,613 1,873 592
9,838 6,366 5,004
Operating Profit* 1,982** 2,054** 1,510
* Prior to intergroup management fee and foreign exchange gains or losses
** These figures only include the results for First Artist Scandinavia for the
2006 summer football trading window and do not include the losses which occur in
the non-trading periods of a financial year. The 2007 figures reflect a full 12
months trading from the business.
FIRST ARTIST MANAGEMENT (ENTERTAINMENT)
Within a fast-consolidating entertainment representation market, scale and
ownership hold the key to increasing influence and unlocking value. Following an
important year of consolidation, First Artist Management is now in a position to
advance in both of these areas.
With a strengthened management team and a strong track record for building
credible and valuable personality brands, the acquisition of NCI Management in
2006 has transformed the basis of First Artist's Entertainment division, now
renamed First Artist Management to reflect its particular strengths as a 'Total
Management' agency. The high profile of clients such as Gillian McKeith, Andrea
Mclean, Andy Gray, Amanda Lamb and Ruud Gullit, who we recently placed as
manager of the LA Galaxy soccer team, continue to build the credibility of First
Artist Management's offer in both sport and expert-led entertainment, and we
expect the company's reputation in both of these areas to continue to encourage
organic growth. The business has continued to expand its Corporate Speaking
division and recently introduced a Celebrity Booking arm, which recently
supplied all the stars for Sky TV's Premier League AllStars competition,
alongside its developing Public Relations team.
With the focus of the television industry shifting towards light entertainment,
following the success of formats such as Strictly Come Dancing, where we worked
closely with John Barnes which followed up on last year's success with Peter
Schmeichel, the key opportunity for additional growth comes through expansion of
First Artist Management's roster of clients in this area. Scale and breadth of
an entertainment portfolio is a key stone for success in the current climate,
and First Artist Corporation intends to target complementary, value-adding
acquisitions in order to build its presence in light entertainment more rapidly
over the coming year.
Going forward, the combination of First Artist Management's strong record for
developing original programming concepts around the particular expertise of its
clients, combined with additional reach in the pure entertainment and sporting
spheres, presents exciting opportunities for the development of new TV formats.
The media sales expertise and rights-ownership model developed by First Rights
positions the Group to develop such formats into secure, long-term owned revenue
streams.
FIRST ARTIST SPORT
First Artist Sport has delivered an extremely strong performance over the past
12 months, with substantial increases in revenue across Europe, following last
year's successful acquisition of First Artist Scandinavia, the continued success
of the agency's unique pan-regional offer, and emerging industry trends are
likely to strengthen the position of the business further. The operating profit
for the 10 months ended 31 August 2006 is ahead of the current year for sport,
due to the strategic acquisition of First Artist Scandinavia in June 2006. The
timing of this acquisition enabled the Group to account for the Company's
profits generated in the summer trading window of 2006 without the losses from
the previous 9 months, whereas the current year includes the full 12 months
figures.
Despite obstacles such as transfer windows and restrictions on player movements,
the transfer market is proving extremely buoyant, delivering more revenue during
two transfer windows in 2007 than it did when an entire year of trading was
available five years ago, delivering 126 deals including 17 international cross
border brokerage deals. The English Premiership is in the first year of a new
lucrative three-year TV Rights deal, ensuring a secure flow of revenue into the
game, with the increased trend towards foreign ownership likely to inject
further capital.
The international nature of the transfer market rewards First Artist Sport's
position as the only representation agency with a true international network.
Italy's World Cup victory has helped to underpin a strong performance in that
country, First Artist Scandinavia continues to grow, and the network is
conducting more deals than ever in Germany, France and Spain. With cross-border
transfers delivering higher commissions, First Artist's international reach
results in higher margins as well as increased revenues.
Within the UK, player representation is moving in the favour of larger,
transparent and responsible agencies and First Artist is working closely with
its peers in the first co-ordinated industry effort to raise standards and
define regulatory guidelines. First Artist Sport's credibility is further raised
by its prestigious work arranging matches and pre-season tournaments for clubs
such as Arsenal, Glasgow Rangers, Ajax and Sheffield Wednesday. First Artist
Sport currently boasts the youngest and broadest roster of player talent in its
history, further building the agency's credibility and helping to ensure the
sustainability of its success.
Changes to the industry's standard model for agency remuneration are another
extremely positive development, ensuring that agency payments are spread over
the life of a contract, rather than concentrated in a single, up-front lump sum.
For a business with a healthy cash flow, such as First Artist Sport, such a
development brings major benefits, improving the stability and transparency of
revenues and further encouraging responsible representation practices.
OPTIMAL WEALTH MANAGEMENT
Year ended 31 10 months ended 31 Year ended 30 Year ended
August August June 30 June
2007 2006 2007 2006
#000 #000 #000 #000
Turnover
Investments 2,007 1,533 2,026 1,672
Renewals 606 340 559 383
2,613 1,873 2,585 2,055
Operating Profit* 836 801 961 833
* After 'joint venture' set-up costs, prior to intergroup management fee and
foreign exchange gains or losses
In the wealth management market, a company's profitability derives from the
quality of its clients and the service levels it provides. Optimal Wealth
Management's highly successful 2007 is a case in point. The company has
succeeded both in increasing the share of high net-worth individuals in its
client mix, and establishing the mechanisms to support continued injection of
high-quality work in the future; it has done so in a year that was expected to
throw up tougher conditions following the demand for wealth management services
created by the 'A Day' changes to pension regulation.
It has been Optimal's long-term strategy to improve the quality of its client
base and dramatic strides have been made in the last two years, following the
integration of the company within the First Artist Group. Synergies with First
Artist Sport's high-earning football client base have increased exposure to
top-end clients; client satisfaction and referral have multiplied the effect.
At the same time, the management support available through the Group has
furthered the development of a consistent brand strategy, focused on client
quality and increasing margins. The company continues to invest in the
development of high quality Independent Financial Advisory staff through
recruitment and training at all levels specifically designed to further
strengthen Optimal's reputation for quality service.
Expanding access to high net-worth individuals will remain the central plank of
Optimal's strategy for growth, prioritising profit margins through the quality
of the client mix. The company's 'joint venture', Fisher Family Office, with the
accountancy firm, HW Fisher, began to deliver revenues during the year and forms
a key element of this strategy. Providing a key value service to HW Fisher's
high net worth clients will give Optimal the ability to target a new stream of
high-quality wealth management work.
The wealth management market will face challenges over the next 12 months: the
summer's credit crunch can be expected to have an impact on consumer confidence,
with some effects filtering through to the high-net-worth market; increased
government regulation will also play a role, although it should be hoped that
the more forceful measures will focus on the mass market for financial services
where most cases of mis-selling occur, and where they are most obviously needed.
Set against these trends is the market's ongoing product innovation, which has
ensured a lively interest in the high-net-worth market over the last two years,
Optimal's extremely strong record for client retention and the consistent
strengthening of its revenues through a quality client mix. With the possibility
of further partnerships and joint ventures following the HW Fisher model, the
outlook for the year ahead remains a firmly positive one.
THE FUTURE
No business can plan sensibly for the future without first securing stability
and consistent growing revenue streams in the present. First Artist
Corporation's success in doing so is what makes its position in the media,
events and entertainment sectors so exciting.
Without doubt during this decade media has undergone and continues to undergo
significant and rapid change. The influence of the internet on fragmenting
media channels, changing influence models and consumer demand for control of
information has been well documented. The web's share of media budgets has
increased in response; however, digital is far from the only marketing channel
to have increased in influence in the new media landscape.
Brand experience, particularly live events, is one of the most promising routes
to overcoming media fragmentation, ensuring connections with audiences over a
number of channels. Although the delivery method is less relevant; the
connection is equally valid no matter how the experience reaches consumers.
Sponsorship, live events and branded entertainment are disciplines with an
increasing role to play; the ability to develop and control different content
formats is likely to prove ever more important to marketers.
The music industry forms a fascinating comparative benchmark for the changes
currently sweeping media and entertainment. The decline of traditional sales
under pressure from legitimate and illegitimate online activity has triggered a
dramatic realignment in the relationship of musicians and record labels to their
audiences. The focus is increasingly shifting to live performance, and
associated merchandising, as the key to unlocking value, with the value of
online music distribution seeming to lie increasingly in its promotional effect
rather than in the revenues that it generates.
First Artist Corporation has been grown to succeed in an environment just such
as this, where no single media channel can be assured of a primary role for long
- or of a broadcast audience. In such an environment the skills required to
create compelling audience experiences, through live events, original
entertainment formats, sports and exhibitions, will prove increasingly
important. The complementary skills now residing in the First Artist Group
position it to take full advantage of opportunities in these areas as they
emerge. The group will continue to seek synergistic acquisitions in its three
divisional sectors acting as a consolidator in a fragmented marketplace.
Importantly, the Group is not a vision of the future waiting impatiently for
reality to catch up. By a strict policy of acquiring synergistic, value-adding,
profitable and growing businesses, First Artist Corporation has built up its
position of strength and potential without sacrificing stability or short-term
revenue. It is the strong track record for organic growth and the credibility
and expertise that come through success that position the Group so strongly for
the future.
OPERATING & FINANCIAL REVIEW
Competitive Performance
Year Ended 10 Months Ended Variance
31 August 31 August 2006
2007 (Restated)
#'000s % growth #'000s #'000s
Turnover 48,607 411% 9,508 39,099
Adjusted Operating Profit 3,533 118% 1,620 1,913
Exceptional items (322) (170) (152)
Goodwill (500) - (500)
Operating Profit 2,711 1,450 1,261
Net interest (1,220) (283) (937)
Profit before tax 1,491 28% 1,167 324
Taxation (639) (502) (137)
Retained Profit 852 665 187
EPS 6.81 pence 7.08 pence
(Basic earnings per share)
EPS 15.71 pence 10.66 pence
(Basic earnings per share
before goodwill and exceptional)
Outline
Our media division was the principal growth area for the financial year,
following on from the acquisition of the Dewynters Group in November 2006. The
number of shows currently being supported by Dewynters in the UK has grown to 26
(18 in May 2006), combined with the strong growth from the Dewynters' US
merchandising operation (11 shows on Broadway and in Las Vegas) and the theatre
and cinema display business Newman Displays this has led to a significant
increase in the division's performance, with the entire division now accounting
for 69% of Group turnover and 49% of Group operating profit (pre. group central
costs).
The events division, The Finishing Touch, experienced 60% like-for-like turnover
growth and successfully integrated the acquisition of event logistics business
Yell Communications. In August, the business also successfully gained a
significant three-year Public Sector event management contract for The Training
and Development Agency for Schools the true benefits of which will be enjoyed in
the coming year.
Group gross profit to adjusted operating profit margins have reduced to 18%
(2006: 26%) in the current year, due mainly to the additional central management
and support costs required to operate the considerably enlarged Group. These
costs will flatten in 2008 as the increased administrative costs will be spread
over a full twelve-month period. It is believed that margins could be improved
above current levels and a key aim of the group is to further rationalise the
supplier base and benefit from the associated economies of scale, along with
operational efficiencies improving gross profit margins. In September 2007 a
number of group companies consolidated into new West End offices. Although this
move will generate some savings and significant operational benefits from
businesses working in close proximity, there will be increased property costs
going forward. Despite this we believe that a gross to adjusted operating
profit margin in excess of 20% would be considered achievable in the short to
medium term.
Turnover
Group turnover for the year has increased 411% compared to the previous 10-month
period. This figure includes 10 months trading from Dewynters Group following
the acquisition during the year.
Adjusted Operating Profit
The adjusted operating profit for the Group, before goodwill amortisation and
exceptional costs, increased 118% to #3.53 million.
Accounting for foreign exchange gains or losses the adjusted operating profit is
#3.61 million (2006: #1.66 million).
Gross profits in the year increased by 210% compared to the previous ten-month
period, whilst Group administrative expenses, excluding goodwill amortisation,
foreign exchange gains or losses and exceptional charges, increased by 240% to
#16.04 million.
The acquisitions over the last 30 months have transformed the Group, resulting
in a broad based integrated media, events and entertainment/sport management
group, significantly increasing visibility of earnings, and generating positive
cash flow, although the group still remains slightly second-half weighted.
Foreign Exchange
Foreign exchange costs amounted to #0.08 million (2006: #0.04 million), mainly
due to the devaluation of the US dollar against Sterling.
Key Performance Indicators (KPI)
A number of percentage-based KPI's are used for internal reporting purposes,
relating to gross profit, operating profit and personnel costs. KPI's are also
calculated on staff numbers to give gross profit, operating profit and gross
profit per head.
As a summary the operating profit to gross profit margin was in line with
expectations, with personnel costs per gross profit better than expected due to
tight controls over rising personnel and recruitment costs.
Goodwill impairment, amortisation and exceptionals
The valuation of goodwill is subject to amortisation charges and annual
impairment reviews. Impairment provisions are made as appropriate. The
amortisation charge for the year of #0.50 million is a non-cash adjustment and
will be reversed in next year's financial statements as a result of the
implementation of International Financial Reporting Standards (IFRS). A new
non-cash charge based on the amortisation of identifiable intangible assets will
replace the existing goodwill amortisation under the reporting guidelines.
Exceptional costs incurred during the year resulted from the acquisitions in the
year.
Interest payable, funding and liquidity
Net interest payable was #1.22 million (2006: #0.28 million). A total of #0.29
million relates directly to the unwinding of the discounted deferred
consideration, in accordance with FRS7, "Fair value in acquisition accounting".
This FRS7 charge is a non-cash adjustment and relates to the provision of a net
present valuation on deferred consideration required under this standard.
The first drawdown on the new bank loans was in January 2007, with the interest
charge for the year in respect of these loans totalling #0.93 million. A bank
loan arrangement fee amounted to #0.25 million, which is also subject to a
non-cash unwinding adjustment, based over the seven year period of the loan and
accounting for #0.02 million during the year.
Taxation
The tax charge of #0.64 million (2006: #0.50 million) fully utilises the
Company's taxable losses for the year across the whole Group. The effective tax
rate for the year of 43% is particularly high due to the goodwill amortisation
charge of #0.50 million and the unwinding of discount on deferred consideration
of #0.29 million.
Earning per share
Basic earnings per share was 6.81p (2006: 7.08p) with earnings per share before
exceptional administrative items, deemed interest on deferred consideration and
goodwill amortisation being 15.71p (2006: 10.66p). The latter increase is due
to the significantly enhanced profitability (excluding goodwill amortisation,
deemed interest on deferred consideration and exceptional costs) of the enlarged
Group following the roll out of the acquisition programme from 2005 to present.
Divisional Performance
Year Ended 10 Months Ended 31 Year Ended
31 August August 31 October
2007 2006 2005
(Restated)
Division
#'000s #'000s #'000s
Media 33,612 69% 49 - - -
Events 5,157 11% 3,093 33% 857 15%
Entertainment / Sport Management* 9,838 20% 6,366 67% 5,004 85%
Turnover 48,607 9,508 5,861
Media 2,428 49% - - - -
Events 498 10% 218 10% 76 5%
Entertainment / Sport Management* 1,982 41% 2,054 90% 1,510 95%
Group Costs (1,296) (613) (588)
Adjusted Operating Profit** 3,612 1,659 998
*Incorporating Wealth Management
** Before exceptional administrative expenses, goodwill amortisation and foreign
exchange gains or losses
Turnover
Following the acquisition of Dewynters in the year group turnover of #48.61
million is heavily weighted in favour of the media division (#33.61 million),
with this sector accounting for 69% of turnover. The entertainment/sport
division now accounts for 20% of turnover compared to 85% two years ago. This
clearly indicates the transformation undertaken by the Group, moving away from
being predominantly reliant on seasonal sport income.
The events turnover has delivered a 67% increase in the main through organic
growth within the Corporate Sector.
Adjusted operating profit after adjusting for foreign exchange gains or losses
The media division has made a significant contribution in the period, with
operating profits of #2.43 million (before Group recharges) for the year covered
by this report, compared to nil contribution in the previous period.
The media operating profit generated equates to 49% of all profits and again
indicates the transformation undertaken with the acquisition strategy over the
past two financial periods. Indeed, two years ago the sport and entertainment
division accounted for 95% of operating profit, compared to 41% this year.
The events division has increased operating profits by 128% in comparison to the
prior 10-month period. This performance was significantly helped by the best
Christmas figures in The Finishing Touch's history, as well as a packed
programme over the summer months and the benefit of work derived from the Yell
Communications contracts.
Key Performance Indicators (KPI)
Within the media division Dewynters showed a favourable operating profit to
gross profit indicating efficiency within the Company. Personnel costs per head
were also within the KPI target. Sponsorship Consulting showed high personnel
costs to gross profit and low gross profits per head due to the losses made
during the year, although we are forecasting this to be reversed into profits in
the coming year.
The events division also showed operational efficiency, with operating profit to
gross profit beating the KPI target. Operating profit per head was slightly down
on target due to the need to 'staff up' in advance of the new TDA contract
beginning in August.
Within the entertainment/sport management division the gross profit for sport
was slightly down on the KPI target, due to a number of the larger deals
involving third parties. Personnel costs per head were better than KPI due to
sport not recruiting any further senior agents. Optimal beat the KPI target on
operating profit per head by some distance, emphasising the excellent set of
results.
Geographical Performance
Year Ended 10 Months Ended 31 Year Ended
31 August August 31 October
2007 2006 2005
(Restated)
Geographic Region
#'000s #'000s #'000s
United Kingdom 40,719 84% 7,419 78% 4,113 70%
Europe 3,490 7% 2,089 22% 1,738 30%
United States 4,398 9% - - 10 -
Turnover 48,607 9,508 5,861
United Kingdom 4,234 86% 1,780 78% 1,385 87%
Europe 550 11% 492 22% 201 13%
United States 124 3% - - - -
Group Costs (1,296) (613) (588)
Adjusted Operating Profit** 3,612 1,659 998
*Incorporating Wealth Management
** Before exceptional administrative expenses, goodwill amortisation and foreign
exchange gains or losses
Turnover
Group turnover is naturally heavily weighted in the United Kingdom, with
Dewynters Ltd largely accounting for the percentage split of 84% (2006: 78%).
European income although has grown some 67% this year whilst reducing as a
percentage of the total to 7% (2006: 22%). Turnover from the United States is a
growth area and relates purely to the merchandising operation, Dewynters
Advertising Inc. which now accounts for 9% of turnover (2006: Nil).
Adjusted operating profit after adjusting for foreign exchange gains or losses
The United Kingdom accounted for 86% of Group adjusted operating profits (2006:
78%), Europe 11% (2006: 22%) and US 3% (2006: Nil) . The above graphical
illustration above gives a snapshot view of the growing UK business as well as
the emergence of the US market over the year.
Review of Operations
Balance Sheet
Shareholders' funds
Shareholders' funds increased by 43% million to #7.27 million. The increase was
mainly due to net profit and foreign exchange of #0.89 million and net proceeds
from share issues of #0.81 million.
Cash Flow
During the year the Group secured a new seven-year banking loan facility of
#11.00 million and a new two-year banking loan facility of #2.79 million, both
with Allied Irish Bank. These were used to provide working capital and
facilitate the acquisition programme of the Group. The table below indicates the
split of net debt over 3 periods.
The Board believes that the level of gearing, at 133% (2006: 75%), that has
resulted from these transactions is acceptable given the cash generative nature
of the enlarged Group. The Board envisages that the current Group's borrowing
levels will steadily reduce whilst it retains sufficient financial flexibility
to continue to invest in developing its businesses. Interest cover of 3.6 times
underlines this assertion.
The Board has assessed the level of risk in the Group and feels that this has
been reduced significantly through the creation of a broad based integrated
group of individually trading profit centres.
31 August 31 August 31 October
2007 2006 2005
#m #m #m
One year bank loan - (1.00) -
Two year mezzanine bank loan (2.79) - -
Five year bank loans - (2.78) (1.55)
Seven year bank loan (9.98) - -
Other group net debts (0.48) (0.90) (0.37)
Cash in hand and bank overdrafts 3.55 0.88 1.27
(9.70) (3.80) (0.65)
The Group has become significantly more cash generative in the last year as can
be seen in the analysis below.
Year Ending 31 10 Months ended 31
August 2007 August 2006
Audit Audit (Restated)
#'000s #'000s
Operating Profit 2,711 1,450
Depreciation 416 73
Working capital & other movements (199) (1,443)
Goodwill amortization & impairment 500 -
Net interest paid & similar changes (1,167) (102)
Tax paid (535) (450)
Net cash generation 1,726 (472)
Capital Expenditure (823) (241)
Acquisition payments (7,566) (2,749)
Net share capital raised 812 900
Bank & other loans 8,525 2,171
Net cash inflow/(outflow) 2,674 (391)
Acquisitions
Two businesses were acquired and successfully integrated into the Group during
the last year. The full results of operational cost savings and increased income
through the cross-referral of business should be seen in next year's Report and
Accounts.
November 2006 Dewynters Limited (including Dewynters Advertising Inc & Newman
Displays Limited)
Media / Marketing
Total maximum consideration payable (excluding discount for Net
Present Value) #15.50 million
Initial consideration paid #9.60 million cash and 0.1 million
shares
May 2007 Yell Communications Limited
Event Management
Total maximum consideration payable (excluding discount for Net
Present Value) #1.00 million
Initial consideration paid #0.40 million cash
Risks associated with the Group
The Group is subject to a number of macro economic factors, as with other
businesses, such as interest rate and foreign exchange rate fluctuations, which
are outside the Group's control.
On a more specific basis the regulatory environments in football and wealth
management continue to change, impacting on risk. However, certainly in
football, the Group is well positioned for any changes due to its involvement
with the Agents Association. The loss of key personnel can also be considered a
risk, although the retention post earn-out of the key figures in Optimal
suggests that this risk is being managed effectively.
On a competitive basis, although Dewynters dominates its market it could be
argued that the business is reliant on the success of the West End Productions
and the general economic climate. In fact, Dewynters benefits two-fold in the
majority of cases as new productions have higher spends and hence profits,
whilst lower seat numbers often lead to higher marketing spends by the
production house.
Finally, the football market is saturated and dependent upon the agents securing
transfer contracts during the trading windows, often involving large sums of
money. This ensures period to period comparisons cannot be fully relied upon.
Here, the pipeline income generated in this area has grown considerably over the
last year, which helps to remove the uncertainty over income generation.
Richard Hughes
Group Managing Director
16 November 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 August 2007
Notes Continuing Acquisitions Total year Total 10 months
operations year ended ended ended
year ended 31 August 31 August 31 August
31 August 2007 2007 2006
2007 (restated)
#000 #000 #000 #000
TURNOVER 2 15,728 32,879 48,607 9,508
Cost of sales (5,664) (23,249) (28,913) (3,168)
GROSS PROFIT 10,064 9,630 19,694 6,340
Administrative expenses (9,639) (7,344) (16,983) (4,890)
OPERATING PROFIT before exceptional
administrative expenses 1,247 2,286 3,533 1,620
Exceptional administrative expenses (322) - (322) (170)
Goodwill amortisation (500) - (500) -
OPERATING PROFIT 425 2,286 2,711 1,450
Interest receivable 61 21
Interest payable (1,281) (304)
PROFIT ON ORDINARY ACTIVITIES BEFORE 1,491 1,167
TAXATION
Taxation 3 (639) (502)
RETAINED PROFIT FOR THE YEAR / PERIOD 852 665
EARNINGS PER SHARE
Basic earnings per share 4 6.81 pence 7.08 pence
Fully diluted earnings per share 6.26 pence 6.23 pence
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 August 2007
Year ended 10 months ended
31 August 31 August
2007 2006
(restated)
#000 #000
Profit for the financial year/period 852 665
Currency translation differences on net foreign currency 34 6
investments
Total recognised gains and losses relating to the year/period 886 671
Prior year adjustment (133)
Total recognised gains and losses since last financial statements 753
CONSOLIDATED BALANCE SHEET
31 August 2007
31 August 31 August
2007 2006
Notes (restated)
#000 #000
FIXED ASSETS
Intangible assets 21,847 9,517
Tangible assets 2,157 835
Investments 118 118
24,122 10,470
CURRENT ASSETS
Stock 1,074 -
Debtors 11,832 6,895
Cash at bank and in hand 3,914 1,108
16,820 8,003
CREDITORS: Amounts falling due within one year (14,609) (7,709)
NET CURRENT ASSETS 2,211 294
TOTAL ASSETS LESS CURRENT LIABILITIES 26,333 10,764
CREDITORS: Amounts falling due after more than one year (11,494) (2,252)
PROVISIONS FOR LIABILITIES (7,572) (3,423)
NET ASSETS 7,267 5,089
CAPITAL AND RESERVES
Called up share capital 328 270
Capital redemption reserve 5 15 15
Share premium account 5 10,011 8,849
Shares to be issued 5 - 5
Share option reserve 5 210 133
Profit and loss account 5 (3,297) (4,183)
EQUITY SHAREHOLDERS' FUNDS 7,267 5,089
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 August 2007
Notes Year ended 10 months ended
31 August 31 August
2007 2006
#000 #000
Cash inflow from operating activities 6a 3,428 80
Returns on investments and servicing of finance 6b (1,167) (102)
Taxation 6b (535) (450)
Capital expenditure and financial investment 6b (823) (241)
Acquisitions 6b (7,566) (2,749)
CASH OUTFLOW BEFORE FINANCING (6,663) (3,462)
Financing 6b 9,337 3,071
INCREASE / (DECREASE) IN CASH IN THE YEAR / PERIOD 2,674 (391)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Year ended 10 months ended
31 August 31 August
2007 2006
#000 #000
Increase / (decrease) in cash in the year / period 2,674 (391)
Cash from increase in debt financing (8,299) (2,173)
New finance leases (2) 34
Loan notes and additional funding (277) (623)
(5,904) (3,153)
NET DEBT AT START OF YEAR / PERIOD (3,801) (648)
NET DEBT AT END OF YEAR / PERIOD (9,705) (3,801)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 August 2007
1. BASIS OF ACCOUNTING
The financial information contained in this report does not constitute statutory
accounts within the meaning of Section 240 of the Companies act 1985.
The financial information contained in this report has been extracted from the
audited accounts of the Company for the year to 31 August 2007 for which the
auditors have given an unqualified report.
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards in the United Kingdom.
2. SEGMENTAL REPORT
The group's net assets, turnover and profit/(loss) before taxation were all
derived from activities in the following geographical markets:
Year ended 31 August 2007 10 Months ended 31 August 2006
Net assets Turnover Profit before Net assets Turnover Profit before
tax tax
#000 #000 #000 #000 #000 #000
United Kingdom 6,617 40,719 1,355 4,552 7,419 675
Europe 664 3,490 24 727 2,089 492
Other (14) 4,398 112 (190) - -
7,267 48,607 1,491 5,089 9,508 1,167
Net assets, turnover and profit before tax by destination are not materially
different from the above.
The group's net assets, turnover and profit before taxation originated from the
following activities:
Year ended 31 August 2007 10 Months ended 31 August 2006
Net assets Turnover Profit/(loss) Net assets Turnover Profit/(loss)
before tax before tax
#000 #000 #000 #000 #000 #000
Media 3,612 33,612 2,189 90 49 -
Events 121 5,157 298 776 3,093 230
Entertainment /Sport 1,903 9,838 1,099 2,837 6,366 1,994
Group Net Assets/ 1,631 - (2,095) 1,386 - (1,057)
Costs
7,267 48,607 1,491 5,089 9,508 1,167
3. TAXATION
Year ended 31 10 months ended 31
August 2007 August
#000 2006
#000
Current tax:
UK corporation tax charge on profits of the period 630 351
Foreign taxes 46 175
Adjustments in respect of previous periods 1 (24)
Current tax charge for the period 677 502
Deferred taxation:
Origination and reversal of timing differences (38) -
Tax charge on profit on ordinary activities 639 502
Factors affecting tax charge for period: 2007 2006
#000 #000
The tax assessed for the period differs from the standard rate of
corporation tax in the UK (30%). The differences are explained below:
Profit on ordinary activities before tax 1,491 1,167
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK 30% (2006: 30%)
447 350
Effects of:
Expenses not deductible for tax purposes 59 83
Capital allowances in excess of depreciation (15) (1)
Amortisation of goodwill 150 -
Tax losses (utilised) / not utilised - (46)
Differences in foreign tax rates 35 140
Adjustment to tax charge in respect of previous periods 1 (24)
Current tax charge for period 677 502
4. EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and
number of shares:
Year ended 31 10 months ended 31
August August
2007 2006
#000 #000
Profit on ordinary activities after taxation 852 665
2007 2006
No of Shares No of Shares
(restated)*
For basic earnings per share 12,506,588 9,392,581
Dilutive effect of share options 1,109,621 1,276,898
For diluted earnings per share 13,616,209 10,669,479
*The number of shares has been restated to show the effect of the 10 for 1 share
consolidation on 27 December 2006.
5. RESERVES AND RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Share Shares to Capital Share Share Profit and Total Total
capital be issued redemption premium option shareholders' shareholders'
reserve reserve Loss funds funds
(restated) account
(restated) 2007 2006
(restated)
#000 #000 #000 #000 #000 #000 #000 #000
GROUP
At start of year/ 270 5 15 8,849 - (4,050) 5,089 3,306
period
Prior year adjustment - - - - 133 (133) - -
At start of year/ 270 5 15 8,849 133 (4,183) 5,089 3,306
period restated
Retained profit for - - - - - 852 852 665
the financial period
Share placement issue 40 - - 960 - - 1,000 1,005
Shares issued to 3 - - 60 - - 63 71
vendors to acquire
subsidiary
undertakings
Shares issued to 14 - - 391 - - 405 36
vendors as deferred
consideration
Shares to be issued to - (5) - - - - (5) 5
vendors as deferred
consideration
Shares issued 1 - - 18 - - 19 15
Issue costs - - - (267) - - (267) (120)
Share based payment - - - - 77 - 77 100
charge
Exchange adjustments - - - - - 34 34 6
At end of year/period 328 - 15 10,011 210 (3,297) 7,267 5,089
Share Shares to Capital Share Share Profit and Total Total
capital be issued redemption premium option shareholders' shareholders'
reserve reserve Loss funds funds
(restated) account
(restated) 2007 2006
(restated)
#000 #000 #000 #000 #000 #000 #000 #000
COMPANY
At start of year/ 270 5 15 8,849 - (4,047) 5,092 2,695
period
Prior year adjustment - - - - 133 (133) - -
At start of year/ 270 5 15 8,849 133 (4,180) 5,092 2,695
period restated
Retained profit for - - - - - 1,116 1,116 1,285
the financial year
Share placement issue 40 - - 960 - - 1,000 1,005
Shares issued to 3 - - 60 - - 63 71
vendors to acquire
subsidiary
undertakings
Shares issued to 14 - - 391 - - 405 36
vendors as deferred
consideration
Shares to be issued to - (5) - - - - (5) 5
vendors as deferred
consideration
Shares issued 1 - - 18 - - 19 15
Issue costs - - - (267) - - (267) (120)
Share based payment - - - - 77 - 77 100
charge
At end of year/period 328 - 15 10,011 210 (3,064) 7,500 5,092
6. CASH FLOWS
a. Reconciliation of operating profit to net cash inflow from operating
activities
Year ended 31 10 months ended 31
August August
2007 2006
(restated)
#000 #000
Operating profit 2,711 1,450
Depreciation 416 73
Amortisation of goodwill 500 -
Profit on disposals of fixed assets - (9)
Share options charge 77 100
Increase in inventories (108) -
Decrease/ (increase) in debtors 223 (1,389)
Decrease in creditors (425) (151)
Exchange differences 34 6
Net cash inflow from operating activities 3,428 80
b. Analysis of cash flows for headings netted in the cash flow
Year ended 31 10 months ended 31
August August
2007 2006
(restated)
#000 #000
Returns on investments and servicing of finance
Interest received 61 21
Interest on bank loans (925) (99)
Issue costs of bank loan (226) -
Other interest paid (75) (20)
Interest element of finance lease rental payments (2) (4)
Net cash outflow from returns on investments and servicing of finance (1,167) (102)
Taxation
UK corporation tax paid (352) (450)
Overseas tax paid (183) -
Net cash outflow from taxation (535) (450)
Capital expenditure and financial investment
Purchase of tangible fixed assets (823) (129)
Sale of tangible fixed assets - 6
Other investments - (118)
Net cash outflow from capital expenditure and financial investment (823) (241)
Acquisitions
Consideration on acquisition of subsidiary undertakings 11,092 3,420
Cash on acquisition of subsidiary undertakings (3,526) (671)
Net cash outflow on acqusitions (7,566) (2,749)
b. Analysis of cash flows for headings netted in the cash flow (continued)
Year ended 31 10 months ended 31
August August
2007 2006
(restated)
#000 #000
Financing
Issue of share capital 1,019 1,020
Costs of issue of shares (207) (120)
New bank loans 12,999 2,500
Director's loans (33) (60)
Other loans (4,441) (258)
Capital element of finance lease rental payments - (11)
Net cash inflow from financing 9,337 3,071
c. Analysis of changes in net debt
At Cash flow Other non cash At
changes
1 September 31 August
2006 2007
#000 #000 #000 #000
Cash at bank and in hand 1,108 2,806 - 3,914
Bank overdrafts (231) (132) - (363)
877 2,674 - 3,551
Finance leases (48) - (2) (50)
Debt due within one year (2,411) 720 (277) (1,968)
Debt due after more than one year (2,219) (9,019) - (11,238)
(4,678) (8,299) (279) (13,256)
Total (3,801) (5,625) (279) (9,705)
Non cash changes include an amount of #432,000 relating to loan notes payable on
the acquisition of the Finishing Touch (Corporate Events) Limited. These are
payable in January 2008.
7. ANNUAL REPORT
Copies of the Annual report and Financial Statements will be will be circulated
to Shareholders shortly and may be obtained after the posting date from the
Company Secretary, First Artist Corporation plc, 3 Tenterden Street, London, W1S
1TD, or from the Company's website: www.firstartist.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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