TIDMFAN
RNS Number : 2312M
First Artist Corporation PLC
20 May 2010
Date: 20 May 2010
On behalf of: First Artist Corporation plc
For immediate release
First Artist Corporation plc
"First Artist" or "the Company" or "the Group"
Preliminary Results for the 15 months ended 30 November 2009
First Artist Corporation plc (AIM: FAN), the media, events and entertainment
management group, today announces its full unaudited results for the 15 months
ended 30 November 2009.
The Group's performance of the continuing operations has been satisfactory with
adjusted EBITDA* of GBP3.51m (12 months ended 31 August 2008: GBP2.25m).
Highlights from the last 15 month period include:
· Turnover up to GBP90.6m (12 months ended 31 August 2008: GBP44.5m)
· Adjusted EBITDA* of GBP3.51m (12 months ended 31 August 2008: GBP2.25m)
· Operating profit of GBP1.05m (12 months ended 31 August 2008: GBP0.90m)
· Net cash generated from operating activities GBP7.01m (12 months ended 31
August 2008: GBP1.98m)
* Earnings before interest, tax, depreciation and amortisation (EBITDA) is
stated before exceptional administrative expenses.
The results for the period of the continuing operations include Spot & Company
of Manhattan, Inc. which was acquired with effect from 1 October 2008.
As already announced to the market on 12 February 2010 the Group is implementing
its strategic objective in disposing of its non-core businesses which include
Optimal Wealth Management, First Artist Management and the Sports Division to
allow the Group to focus on its Media and Events Divisions.
The effect of this strategy has been to crystallise a total pre-tax loss on the
re-measurement of assets held for sale of GBP5.2m at the balance sheet date.
The trading results of the non-core businesses are disclosed within discontinued
operations - profit before tax of GBP0.56m (12 months ended 31 August 2008:
GBP1.04m).
The Group continues to be focussed on debt reduction.
Post Period End Activity:
· The disposal of Optimal Wealth Management Limited on 2 February 2010 for a
total consideration of GBP1.5m, to be satisfied wholly in cash.
· The disposal of First Artist Management Limited on 12 February 2010 for a
total consideration of GBP200,000, less a post completion working capital
adjustment of up to GBP25,000.
For further information:
+------------------------------------------------+-----------------------+
| First Artist Corporation plc | tel: 020 7993 |
| Jon Smith, Chief Executive | 0000 |
| Julianne Coutts, Director & Company Secretary | www.firstartist.com |
| | |
+------------------------------------------------+-----------------------+
| Seymour Pierce Limited, Nominated Adviser and | tel: 020 7107 |
| Broker | 8000 |
| Mark Percy | www.seymourpierce.com |
| Tom Sheldon | |
| | |
+------------------------------------------------+-----------------------+
I am pleased to report the results of the First Artist Group ("the Group") for
the 15-month financial period ended 30 November 2009. Shareholders will be
aware that the accounting period was extended in connection with the ongoing
review of strategic options.
The period on which we now report has coincided with the height of the global
recession, and inevitably presented significant challenges for the Group. In
addition, the Group has undergone major change through acquisition and
divestment activity. As a consequence, the financial statements contain a
complex series of disclosures which I will comment on further below.
Adjusted EBITDA (EBITDA pre exceptional administrative expenses), for the 15
month period from continuing operations, was GBP3.507m compared with GBP2.251m
for the 12 months ended 31 August 2008. These results were satisfactory
considering the difficult economic circumstances. Profit before tax from
discontinued operations amounted to GBP0.564m for the period, (12 months ended
31 August 2008: GBP1.042m).
The acquisition of Spot and Company of Manhattan, Inc. ("SpotCo"), which was
completed in October 2008, (contributing GBP2.29m EBITDA for the period) is a
natural strategic fit with Dewynters, and has given the Group a prominent
position in live entertainment advertising in the world's two most important
markets - London's West End and New York's Broadway. The successful integration
of SpotCo and the shaping of the enlarged Group has been a key activity
throughout the period.
In a difficult market for M&A activity, in February 2010 we completed the
disposals of Optimal Wealth Management ("OWM") and First Artist Management
("FAM"). As these transactions completed after the period end, the results of
OWM and FAM for the period are included within discontinued operations. In
addition, the results of the Sport division, which has been treated as an asset
held for sale, are also included in discontinued operations.
The disposals of OWM and FAM have given rise to losses on re-measurement of the
assets of the operations being divested of GBP1.98m and GBP0.628m respectively,
and the re-classification of the Sport division as an asset held for sale has
given rise to a pre-tax loss of GBP2.605m.
Following these disposals, the Group is in negotiations with its bankers
concerning the recalibration of the bank covenants and the restructure of Group
debt.
The Media division, which generated adjusted EBITDA of GBP5.749m for the period
(12 months ended 31 August 2008: GBP2.783m) is made up of the Dewynters Group,
(Dewynters Limited, Dewynters Advertising Inc., and Newman Displays ), SpotCo
and First Rights Limited.
On a like for like basis, the Dewynters Group revenue and EBITDA for the period
were slightly down on the previous financial year. However, West End audiences
showed remarkable resilience to the global recession, with theatres enjoying
record attendances during 2009. Productions supported by Dewynters included the
musicals Mamma Mia!, Wicked, Priscilla Queen of the Desert, La Cage Aux Folles
and Spring Awakening, and plays such as Calendar Girls, Cat on a Hot Tin Roof
and Breakfast at Tiffany's. Productions at the O2 Arena included Ben Hur and
Star Wars: A Musical Journey. Clients within the subsidised sector include the
English National Opera, the Royal Shakespeare Company and the National Portrait
Gallery.
Newman Displays continued to trade well, undertaking many front of house
displays including signage for the West End musicals Sister Act and Hairspray.
Numerous film events included the premieres of Sex and the City, Nine, Bruno,
Harry Potter and the Half-Blood Prince and the late Michael Jackson's This is
It, as well as galas throughout the London Film Festival and the Cannes Film
Festival.
As previously reported, SpotCo has delivered a very satisfactory performance
since its acquisition. The agency's work spans a broad base of categories from
theatre and live entertainment, to cultural institutions, museums, film,
television, publishing and music. In the 2009 awards season, productions
supported by the agency received 72 Tony Award nominations and won numerous
awards, ten of which went to the London hit Billy Eliot which was later staged
on Broadway. Highlights in the period included All My Sons, A Steady Rain, West
Side Story, Reasons to be Pretty, Hair, 9 to 5, Shrek, Ragtime and Memphis.
First Rights, our small rights business, whilst yet to demonstrate its full
potential, achieved a breakthrough into theatre sponsorship in the period. By
developing a successful sponsorship model for West End theatre productions, the
company negotiated a first ever presenting sponsorship in the West End, with
Chambord sponsoring Breakfast at Tiffanys. Following this success, First Rights
are now working with a number of other producers and theatre owners in
implementing their commercial sponsorship programme.
Turning to our event management division, the events industry was hit hard by
the recession, with many established companies being forced out of the market,
and The Finishing Touch inevitably had a difficult period in 2008-2009.
However, it was also a period of consolidation and investment into key parts of
the business, in particular VenuesFirst, the company's venue finding service,
which has enjoyed commercial success since its inception in 2008. With its
strong reputation and range of innovative products, we are confident that the
company will return to growth this year.
During the period the Sport division was instrumental in a number of significant
deals, including manager Harry Redknapp's GBP5 million transfer from Portsmouth
to Tottenham Hotspur, one of the highest in premier league history; Russian star
Andrey Arshavin's transfer to Arsenal from Zenit St Petersburg for a club record
fee of GBP16.5 million; and Emmanuel Adebayor's transfer from Arsenal to
Manchester City for GBP25 million, culminating in a record summer trading
window. However, as previously reported the January 2010 window was very
disappointing and will affect the current year's results.
In the current economic climate we remain focused on tight cash management and
in addition are now undertaking a further detailed review of costs and processes
across the Group to eradicate unnecessary operating expenses and identify
further integration opportunities.
Robert Baldock
Chairman
Chief Executive's Statement
In my statement in the 2008 Annual Report, I said that we were in uncertain
times which was a bit of an understatement! But whilst trading continues to be
precarious across all markets, I am confident that the reshaping of this group
as illustrated in this announcement will result in a group of companies that are
leaner, more competitive and well groomed to meet the challenges that face us
all.
We have spent a lot of time, effort and resource this last few months focusing
on integrating and systemising our two major marketing service agencies
Dewynters and SpotCo. The success we have had is evident from a dramatic rise of
SpotCo's profitability and the sustaining of Dewynters income stream through the
worst economic climate this country has witnessed for many years.
Notwithstanding, this group was predicated on a delivery of sport to
entertainment, with the exception of our wealth management business which
primarily focused on being able to cater for the needs of our high net worth
individuals in the sport and entertainment division. It became evident some time
ago that if we were to pursue the acquisition of SpotCo in New York that our
ownership of Optimal Wealth Management could become defocused.
The shape of the new group was, by necessity in these markets, becoming narrow
focused - that, and our continual desire to reduce debt were the reasons for the
sale of Optimal and First Artist Management.
From my own perspective and on behalf of the Board, I would like again to thank
each and every member of staff for the contribution they have made. The talent,
energy, hard work, professionalism and commitment that have been demonstrated
through these difficult times have been an enormous credit to them and are
greatly appreciated.
The material strength of the component parts of this group going forward, I
believe, will enable us to steer First Artist to a consolidated position in our
market place.
Jon Smith
Chief Executive
Operating and Financial Review
+--------------------------------------------------+----------+---------+--+------------------+-+----------+-+---------------+
| | 15 months to | | Year | | |
| | | | ended | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | 30 November | | 31 | | Variance |
| | | | August | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | 2009 | | 2008 | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | (restated) | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Continuing Operations | | | | | |
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Turnover | 90,635 | | 44,455 | | 46,180 |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Gross Profit | 22,671 | | 13,180 | | 9,491 |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Gross profit % | 25.01% | | 29.65% | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Adjusted EBITDA | 3,507 | | 2,251 | | 1,256 |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Exceptional items | (493) | | (456) | | (37) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Depreciation | (831) | | (535) | | (296) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Amortisation and impairment | (1,135) | | (364) | | (771) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Operating Profit | 1,048 | | 896 | | 152 |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Finance costs | (2,439) | | (1,549) | | (890) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Loss before tax | (1,391) | | (653) | | (738) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Taxation | (225) | | (71) | | (154) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Loss after tax | (1,616) | | (724) | | (892) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Discontinued operations | (4,701) | | 720 | | (5,421) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Loss for the period/year | (6,317) | | (4) | | (6,313) |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| EPS | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Basic (loss)/earnings per share - pence | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| From continuing operations | (8.43) | | (5.38) | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| From discontinuing operations | (24.52) | | 5.35 | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Total operations | (32.95) | | (0.03) | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| EPS | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| Adjusted basic earnings per share before | | | | | |
| exceptionals, depreciation, | | | | | |
| amortisation and deemed interest on deferred | | | | | |
| consideration - pence | | | | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| From continuing operations | 18.3 | | 16.7 | | |
+--------------------------------------------------+--------------------+--+------------------+--------------+---------------+
| | | | | | |
+--------------------------------------------------+----------+---------+-----------------------+----------+-----------------+
| | | | | | | | | |
+--------------------------------------------------+----------+---------+--+------------------+-+----------+-+---------------+
Outline of the continuing operations
The media division, comprising the Dewynters group, Spotco (since its
acquisition with effect from 1 October 2008) and First Rights Limited, continued
to trade successfully providing an adjusted EBITDA of GBP5.75 million (12 months
ending 31 August 2008: GBP2.78 million). The majority of the increase of the
adjusted EBITDA of the media division arose from the inclusion of Spotco's
EBITDA of GBP2.29 million (2008: GBPNil) for the financial period.
The EBITDA for the Dewynters group for the 15 months to November 2009 was
GBP3.30 million; restated on a 12 month basis for comparison purposes the EBITDA
was GBP2.64 million, (12 months ending 31 August 2008: EBITDA of GBP2.87
million).
First Rights has yet to demonstrate its full potential by achieving a break
through into the theatre sponsorship industry. EBITDA for the 15 months to
November 2009 was a loss of GBP103k (12 months ending 31 August 2008: loss of
GBP14k). The company continues to believe that being able to offer this service
is very valuable to our clients.
The Events Division comprising Finishing Touch experienced a difficult financial
period due to the client companies cutting back heavily on corporate activity in
reaction to the economic downturn.
The turnover and gross profit for the 15 months to November 2009 are GBP3.1
million and GBP1.1 million respectively ( 12 months ending 31 August 2008:
turnover of GBP8.1million and gross profit of GBP2.4 million). Restated on a 12
month basis for comparison purposes, the turnover and gross profit are GBP2.5
million and GBP0.88 million, which are down against the prior year by 69% and
63% respectively.
The Finishing Touch is already seeing signs of increased turnover and activity.
This activity coupled with the action which has already been taken to reduce its
overheads through redundancies and the closure of the Manchester office means
that the company should revert to being profitable in the forthcoming year.
Turnover
The group turnover for the 15 months to November 2009 was GBP90.64 million.
Restated on a 12 month basis the turnover is GBP72.5 million, which is a 63%
increase on the prior year turnover of GBP44.5 million. This increase in
turnover is principally due to the acquisition of Spotco with effect from 1st
October 2008.
Gross profit
The Group gross profit margin decreased from 29.65% to 25.01% - which is mainly
as a result of acquiring Spotco which operates on lower gross profit margins of
20% due to the higher levels of bought in services.
Gross profit for the 15 months to 30 November 2009 was GBP22.67 million (12
months ended 31 August 2008; GBP13.18 million), restated on a 12 month basis the
gross profit was GBP18.136 million which is a 37.6% increase compared to the
previous year. The administrative expenses, excluding amortisation, depreciation
and exceptional charges for the 15 months were GBP21.62 million (12 months
ending 31 August 2008: GBP12.3 million). Restated on a 12 month basis the
administrative costs are GBP17.3 million which are an increase of 41% compared
with the previous year as a result of the acquisition of Spotco.
Adjusted EBITDA
The EBITDA for the Group, before exceptional administrative expenses, for the 15
months to 30 November 2009 was GBP3.51 million (12 months ending 31 August 2008:
GBP2.25 million). The EBITDA restated on a 12 month basis is GBP2.81 million,
which is a 24.9% increase on the previous year.
Foreign Exchange
Foreign exchange loss amounted to GBP52k (12 months ended 31 August 2008: gain
of GBP0.281 million), mainly due to the devaluation of sterling against the US
dollar and the euro.
Amortisation and exceptionals
The charge for the 15 months to November 2009 was GBP0.99 million compared with
the previous year of GBP0.36 million. This increase is due to the amortisation
of intangibles of GBP0.65 million arising from the acquisition of Spotco.
Exceptional costs incurred during the 15 month period resulted largely from
acquisition related payments, restructuring costs and redundancy costs totalling
GBP0.49 million (12 months ending 31 August 2008: GBP0.45million).
Interest payable, funding and liquidity
Net interest payable was GBP2.439 million (12 months ending 31 August 2008:
GBP1.549 million). A total of GBP0.88 million (12 months ending 31 August 2008:
GBP0.32 million) relates directly to the unwinding of the discounted deferred
consideration. This charge is a non-cash adjustment and relates to the
provision of a net present valuation on deferred consideration .
Taxation
The tax charge was GBP0.225 million (12 months ending 31 August 2008: GBP0.07
million), which fully utilises the Company's taxable losses for the period
across the whole Group. The effective tax charge of 16.1% on a pre tax loss (12
months ending 31 August 2008: 10.9 %) is higher than the prior year due to the
unwinding of discounted deferred consideration of GBP0.878 million (12 months
ending 31 August 2008: 0.315 million) and the amortisation of intangible assets
of GBP0.985m (12 months ending 31 August 2008: GBP0.364 million).
The deferred tax credit of GBP0.073 million (12 months ending 31 August 2008:
GBP0.086 million) arises primarily from the amortisation of the intangibles.
Earnings per share from continuing operations
Basic loss per share was 8.43p (12 months ending 31 August 2008: 5.38p; whilst
earnings per share before exceptional administrative items, deemed interest on
deferred consideration, depreciation and amortisation was 18.3p (12 months
ending 31 August 2008: 16.7p).
Divisional Key Performance Indicators (KPI)
A number of percentage-based KPIs are used for internal reporting purposes,
relating to gross profit, operating profit and personnel costs. KPIs are also
calculated on staff numbers to give gross profit, operating profit and gross
profit per head.
The media division showed increasing operating profit per head and gross profit
per head, indicating the productivity of individuals has improved. The whole of
the staff of Dewynters Limited undertook a salary sacrifice of 10% for the
period 1 March to 30th November 2009, which generated a cost saving of GBP0.32m.
The EBITDA of the media division as a % of gross salaries increased to 49%
(2008: 38%).
The KPI in respect of gross profit and EBITDA for Spotco were considered to be
satisfactory and ahead of target whilst the Events Division showed a loss
emphasising the need to increase turnover and gross profit and to reduce the
costs appropriately.
Discontinued Operations
The discontinued operations comprise the Entertainment/Sports Division, Wealth
Management and Sponsorship Consulting Limited:
+------------------------------------------+------------+----+-----------------+
| | 15 | | 12 |
| | months | | months |
| | ended | | ended |
+------------------------------------------+------------+----+-----------------+
| | 30 Nov | | 31-Aug |
+------------------------------------------+------------+----+-----------------+
| | 2009 | | 2008 |
+------------------------------------------+------------+----+-----------------+
| | GBP'000 | | GBP'000 |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Revenue | 8,186 | | 9,429 |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Expenses | (7,622) | | (8,387) |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Profit before tax | 564 | | 1,042 |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Tax | (103) | | (322) |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Profit after tax | 461 | | 720 |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Pre-tax loss on re-measurement of assets | (5,213) | | - |
| of disposal group | | | |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| Tax | 51 | | - |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
| (Loss)/profit for the period/year | (4,701) | | 720 |
+------------------------------------------+------------+----+-----------------+
| | | | |
+------------------------------------------+------------+----+-----------------+
Sport Division
The Sport Division is made up of First Artist Sport Limited, First Artist
Scandinavia A/S and Promosport Srl.
The revenue for the Sports Division for the 15 months to 30 November 2009 was
generated from two football transfer trading windows whilst there were 15 months
of operating expenses which has resulted in additional costs on a pro rata basis
compared to income.
The revenue for the 15 months was GBP4.94 million, which was GBP1.1 million
behind the revenue generated during the 12 months in 2008. The decrease in
revenue was partly due to a significant number of football transfer deals being
subject to future conditions which required the relevant income to be deferred
to future periods.
Inorder to comply with the change in Italian football regulations the corporate
structure of Promosport would have to be substantially changed. The Board
decided to wind up Promosport with effect from the period end which has resulted
in a GBP1.1million restructuring charge in respect of accrued income being
written off.
The group recognised an impairment charge in respect of its goodwill in First
Artist Scandinavia of GBP1.2 million.
Optimal Wealth Management (OWM)
The EBITDA for OWM for the 15 months to November 2009 was GBP0.51 million,
restated on a 12 month basis for comparison purposes was GBP0.41 million which
is GBP250,000 behind the EBITDA for the year ended 31 August 2008.
The group recognised an impairment charge of GBP1.9 million in respect of its
goodwill in OWM.
First Artist Management (FAM)
The EBITDA for FAM for the 15 months to November 2009 of GBP45k (restated on a
12 month basis for comparison purposes was GBP36k) is GBP39k behind the EBITDA
for the year ended 31 August 2008 on a like for like basis.
The group recognised an impairment charge of GBP0.628m in respect of goodwill in
FAM.
Sponsorship Consulting Limited (SCL)
SCL ceased trading during the period and showed a loss of GBP22k within
discontinued operations.
The group recognised an impairment charge of GBP0.253m in respect of its
goodwill in SCL
Review of Operations
Shareholders' funds
Shareholders' funds have decreased by GBP4.82 million from GBP7.90 million
(restated) to GBP3.08 million. This decrease includes the GBP5.21 million loss
on the re-measurements of the assets of the operations being held for sale.
Cash Flow
The company generated GBP6.21 million of cash from operating activities (2008:
GBP1.53 million).
During the period new Banking Facilities were made available under the banking
facility agreement dated 28 August 2008 between the Company (as the borrower)
and Allied Irish Bank GB ("AIB") following the successful completion of the
Spotco acquisition:
+-------------------+--------------------+-------------+------------+
| Loan Type | Repayment | Interest | Loan |
+-------------------+--------------------+-------------+------------+
| | Details | Margin | Value |
+-------------------+--------------------+-------------+------------+
| | | | |
+-------------------+--------------------+-------------+------------+
| Senior Term Loan | In full within 5 | LIBOR + | 7,200,000 |
| A | years | 2.25% | |
+-------------------+--------------------+-------------+------------+
| Senior Term Loan | Bullet payment | LIBOR + | 5,000,000 |
| B | after 5 years | 2.75% | |
+-------------------+--------------------+-------------+------------+
| Mezzanine | Bullet payment | LIBOR + | 3,728,000 |
| Facility | after 2 years | 10.00% | |
+-------------------+--------------------+-------------+------------+
| Short Term | Bullet payment | LIBOR + | 500,000 |
| Mezzanine Loan | after 1 year | 10.00% | |
+-------------------+--------------------+-------------+------------+
| | | | 16,428,000 |
+-------------------+--------------------+-------------+------------+
| The repayment for the Senior Term Loan | | |
| A is as follows: | | |
+----------------------------------------+-------------+------------+
| | | Year | |
+-------------------+--------------------+-------------+------------+
| | | 1 | |
| | | | - |
+-------------------+--------------------+-------------+------------+
| | | 2 | 750,000 |
+-------------------+--------------------+-------------+------------+
| | | 3 | 1,000,000 |
+-------------------+--------------------+-------------+------------+
| | | 4 | 1,200,000 |
+-------------------+--------------------+-------------+------------+
| | | 5 | 4,250,000 |
+-------------------+--------------------+-------------+------------+
| | | | 7,200,000 |
+-------------------+--------------------+-------------+------------+
A total of 4% per annum of the margin is payable quarterly and 6% per annum of
the margin is capitalised at the end of each consecutive period of 3 months and
added to the principal amount of the Loans.
A working capital facility in the sum of GBP1,000,000 was made available as part
of the new banking facility agreement, with an interest rate of 2.50% above
AIB's base rate being applied. This interest rate in respect of this facility
was increased to 4.00% over AIB's base rate with effect from 30 November 2009.
The Group repaid the Short Term Mezzanine debt of GBP500,000 on 31st August
2009.
+-------------------------------------+----------------+-----------+------------+----------+
| Bank Net Debt | 30-Nov | 31-Aug | 31-Aug |
+------------------------------------------------------+-----------+------------+----------+
| | | 2009 | 2008 | 2007 |
+-------------------------------------+----------------+-----------+------------+----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+----------------+-----------+------------+----------+
| | | | | |
+-------------------------------------+----------------+-----------+------------+----------+
| One year Bank Loan | (4,888) | (5,039) | (1,968) |
+------------------------------------------------------+-----------+------------+----------+
| Two Year Bank Loan | (960) | (1,536) | (4,321) |
+------------------------------------------------------+-----------+------------+----------+
| Five Year Bank Loan | (10,724) | (6,107) | (4,607) |
+------------------------------------------------------+-----------+------------+----------+
| Seven Year Bank Loan | | (774) | (2,310) |
+------------------------------------------------------+-----------+------------+----------+
| Other group net debts | | | |
+------------------------------------------------------+-----------+------------+----------+
| Cash in hand and bank overdrafts | 3,177 | 464 | 3,551 |
+------------------------------------------------------+-----------+------------+----------+
| | | (13,395) | (12,992) | (9,655) |
+-------------------------------------+----------------+-----------+------------+----------+
The level of gearing has increased to 81% (2008: 62%). The level of net debt has
increased from GBP13.0 million to GBP13.39 million. The disposal proceeds
arising from the sale of the companies after the balance sheet date are being
used to reduce debt.
Deferred Consideration
+----------------------+---------+---------------------+-+---------------+-+---------------+
| | | 30 | | 31 | | 31 |
| | | November | | August | | August |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| Deferred | | 2009 | | 2008 | | 2007 |
| Consideration | | | | | | |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| | | | | | | |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| | | | | | | |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| Due within 1 year | | (4,042) | | (2,205) | | (3,397) |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| Between one and two | | (2,772) | | (1,451) | | (1,463) |
| years | | | | | | |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| Between two and five | | (2,123) | | (1,195) | | (2,712) |
| years | | | | | | |
+----------------------+---------+---------------------+-+---------------+-+---------------+
| | | (8,937) | | (4,851) | | (7,572) |
+----------------------+---------+---------------------+-+---------------+-+---------------+
On the acquisition of Spotco the group recognised a net present value of the
deferred consideration of GBP7.6 million in respect of the total gross deferred
consideration of $15.8 million payable over 5 years.
Dewynters achieved the third and final year performance targets detailed under
the terms of the acquisition agreement dated 29th November 2006. As a result the
consideration of GBP1,971,272 is payable to the Vendors of Dewynters. A loan
note for GBP1,500,000 was issued for payment on 30th June 2010 and a loan note
for GBP471,272 was issued for payment in January 2011.
Spotco achieved the first year performance targets detailed under the terms of
the acquisition agreement dated 8 August 2008. As a result the consideration of
$2,500,000 is payable to the Vendors of Spotco.
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 Group's bank borrowings are subject to various
financial covenants based upon EBITDA-based interest cover, the ratio between
total borrowings and adjusted EBITDA and the ratio between cash flow and total
borrowings. As a result of the disposal of Optimal and the business of FAM and
the intended disposal of the Sports Division the existing terms of the bank
borrowings are currently being renegotiated with the lender being Allied Irish
Bank.
The Group is not currently subject to any material legal or economic
restrictions on the ability of its subsidiaries to transfer funds to the Company
in the form of dividends, loans of advances.
The theatrical entertainment sectors of the West End in London and Broadway in
New York are important to the success of the Group. Both sectors continue to
thrive with wide range of musical productions, high audience figures within the
sector and several productions waiting to open later this year and next year.
Jon Smith
Chief Executive
+--------------------------------------------+------+----------+---+----------+
| |Note | | | Restated |
| | | 15 | | 12 |
| | | months | | months |
| | | ended 30 | | ended 31 |
| Continuing operations | | November | | August |
| | | 2009 | | 2008 |
| | | GBP000 | | GBP000 |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| REVENUE | 2 | 90,635 | | 44,455 |
+--------------------------------------------+------+----------+---+----------+
| Cost of sales | | (67,964) | | (31,275) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| GROSS PROFIT | | 22,671 | | 13,180 |
+--------------------------------------------+------+----------+---+----------+
| Administrative expenses | | (21,623) | | (12,284) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| EBITDA before exceptional administrative | | 3,507 | | 2,251 |
| expenses | | | | |
+--------------------------------------------+------+----------+---+----------+
| Exceptional administrative expenses | | (493) | | (456) |
+--------------------------------------------+------+----------+---+----------+
| Depreciation | | (831) | | (535) |
+--------------------------------------------+------+----------+---+----------+
| Amortisation of intangible assets | | (985) | | (364) |
+--------------------------------------------+------+----------+---+----------+
| Impairment of goodwill and | | (150) | | - |
| available-for-sale investments | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| OPERATING PROFIT | | 1,048 | | 896 |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| Finance income | | 61 | | 59 |
+--------------------------------------------+------+----------+---+----------+
| Finance costs | | (2,500) | | (1,608) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| LOSS BEFORE TAXATION | | (1,391) | | (653) |
+--------------------------------------------+------+----------+---+----------+
| Taxation | 4 | (225) | | (71) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| LOSS FOR THE PERIOD/YEAR FROM CONTINUING | | (1,616) | | (724) |
| OPERATIONS | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| Discontinued operations | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| (Loss)/profit for the period from | 6 | (4,701) | | 720 |
| discontinued operations | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| LOSS FOR THE PERIOD/YEAR | | (6,317) | | (4) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| The loss is attributable to the owners of | | | | |
| the parent | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| (Loss)/earnings per share (pence) | | | | |
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| Basic (loss)/earnings per share | | | | |
+--------------------------------------------+------+----------+---+----------+
| From continuing operations | | (8.43) | | (5.38) |
+--------------------------------------------+------+----------+---+----------+
| From discontinued operations | | (24.52) | | 5.35 |
+--------------------------------------------+------+----------+---+----------+
| Total operations | 5 | (32.95) | | (0.03) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
| Diluted (loss)/earnings per share | | | | |
+--------------------------------------------+------+----------+---+----------+
| From continuing operations | | (8.43) | | (5.38) |
+--------------------------------------------+------+----------+---+----------+
| From discontinued operations | | (24.52) | | 5.22 |
+--------------------------------------------+------+----------+---+----------+
| Total operations | 5 | (32.95) | | (0.03) |
+--------------------------------------------+------+----------+---+----------+
| | | | | |
+--------------------------------------------+------+----------+---+----------+
+-----------------------------------------+--------+---------------+--+----------+
| | Note | 30 November | | Restated |
| | | 2009 | | 31 |
| | | GBP000 | | August |
| | | | | 2008 |
| | | | | GBP000 |
+-----------------------------------------+--------+---------------+--+----------+
| NON-CURRENT ASSETS | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| Goodwill and intangible assets | | 25,170 | | 23,294 |
+-----------------------------------------+--------+---------------+--+----------+
| Property, plant and equipment | | 1,822 | | 1,961 |
+-----------------------------------------+--------+---------------+--+----------+
| Available-for-sale investments | | 58 | | 142 |
+-----------------------------------------+--------+---------------+--+----------+
| Trade and other receivables | | - | | 602 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | 27,050 | | 25,999 |
+-----------------------------------------+--------+---------------+--+----------+
| CURRENT ASSETS | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| Inventories | | 1,122 | | 534 |
+-----------------------------------------+--------+---------------+--+----------+
| Trade and other receivables | | 9,695 | | 11,369 |
+-----------------------------------------+--------+---------------+--+----------+
| Cash and cash equivalents | | 4,116 | | 1,212 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | 14,933 | | 13,115 |
+-----------------------------------------+--------+---------------+--+----------+
| Assets of disposal group classified as | 6 | 5,707 | | - |
| held-for-sale | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | 20,640 | | 13,115 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| TOTAL ASSETS | | 47,690 | | 39,114 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| CURRENT LIABILITIES | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| Trade and other payables | | (13,544) | | (9,854) |
+-----------------------------------------+--------+---------------+--+----------+
| Current taxation liabilities | | (439) | | (1,242) |
+-----------------------------------------+--------+---------------+--+----------+
| Obligations under finance leases | | - | | (7) |
+-----------------------------------------+--------+---------------+--+----------+
| Borrowings | 7 | (5,827) | | (5,787) |
+-----------------------------------------+--------+---------------+--+----------+
| Provisions | | (4,042) | | (2,205) |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | (23,852) | | (19,095) |
+-----------------------------------------+--------+---------------+--+----------+
| Liabilities of disposal group | 6 | (2,001) | | - |
| classified as held-for-sale | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | (25,853) | | (19,095) |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| NET CURRENT LIABILITIES | | (5,213) | | (5,980) |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| NON-CURRENT LIABILITIES | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| Trade and other payables | | - | | (81) |
+-----------------------------------------+--------+---------------+--+----------+
| Deferred taxation | | (2,178) | | (974) |
+-----------------------------------------+--------+---------------+--+----------+
| Borrowings | 7 | (11,684) | | (8,417) |
+-----------------------------------------+--------+---------------+--+----------+
| Provisions | | (4,895) | | (2,646) |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| | | (18,757) | | (12,118) |
+-----------------------------------------+--------+---------------+--+----------+
| TOTAL LIABILITIES | | (44,610) | | (31,213) |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| NET ASSETS | | 3,080 | | 7,901 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| EQUITY | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| Called up share capital | | 748 | | 347 |
+-----------------------------------------+--------+---------------+--+----------+
| Share premium | | 7,768 | | 6,598 |
+-----------------------------------------+--------+---------------+--+----------+
| Capital redemption reserve | | 15 | | 15 |
+-----------------------------------------+--------+---------------+--+----------+
| Share option reserve | | 246 | | 285 |
+-----------------------------------------+--------+---------------+--+----------+
| Retained earnings | | (5,480) | | 816 |
+-----------------------------------------+--------+---------------+--+----------+
| Own shares held | | (259) | | (259) |
+-----------------------------------------+--------+---------------+--+----------+
| Foreign exchange reserve | | 42 | | 99 |
+-----------------------------------------+--------+---------------+--+----------+
| | | | | |
+-----------------------------------------+--------+---------------+--+----------+
| TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS | | 3,080 | | 7,901 |
| OF THE PARENT | | | | |
+-----------------------------------------+--------+---------------+--+----------+
Unaudited Consolidated Cash Flow Statement for the 15 months to 30 November 2009
+---------------------------------------------+-------+------------+---+------------+
| | | 15 months | | Restated |
| | | ended | | 12 months |
| | | 30 | | ended |
| | | November | | 31 August |
| | | 2009 | | 2008 |
| | | GBP000 | | GBP000 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Cash generated from operating activities | | 7,013 | | 1,976 |
+---------------------------------------------+-------+------------+---+------------+
| Income taxes paid | | (800) | | (441) |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Net cash inflow from operating activities | | 6,213 | | 1,535 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Investing activities | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Finance income | | 61 | | 59 |
+---------------------------------------------+-------+------------+---+------------+
| Purchases of property, plant and equipment | | (331) | | (461) |
+---------------------------------------------+-------+------------+---+------------+
| Acquisition of subsidiaries (net of cash | | (3,418) | | - |
| acquired) | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Payment of deferred consideration | | (2,849) | | (2,030) |
+---------------------------------------------+-------+------------+---+------------+
| Additions to available-for-sale investments | | - | | (24) |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Net cash used in investing activities | | (6,537) | | (2,456) |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Financing activities | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Repayments of borrowings | | (523) | | (1,571) |
+---------------------------------------------+-------+------------+---+------------+
| Repayments of obligations under finance | | (7) | | (45) |
| leases | | | | |
+---------------------------------------------+-------+------------+---+------------+
| New bank loans raised | | 4,076 | | 1,500 |
+---------------------------------------------+-------+------------+---+------------+
| Repayment of loan notes | | (594) | | (445) |
+---------------------------------------------+-------+------------+---+------------+
| Purchase of own shares | | - | | (259) |
+---------------------------------------------+-------+------------+---+------------+
| Net cash proceeds from issue of shares | | 1,333 | | - |
+---------------------------------------------+-------+------------+---+------------+
| Interest paid | | (1,243) | | (1,355) |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Net cash generated by/(used in) financing | | 3,042 | | (2,175) |
| activities | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Net increase/(decrease) in cash and cash | | 2,718 | | (3,096) |
| equivalents | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Cash and cash equivalents at the beginning | | | | |
| of the period/year | | 464 | | 3,551 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
| Effect of foreign exchange rate changes | | (5) | | 9 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Cash and cash equivalents and bank | | | | |
| overdrafts at the end of the period/year | | 3,177 | | 464 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
| Cash and cash equivalents | | 4,116 | | 1,212 |
+---------------------------------------------+-------+------------+---+------------+
| Bank overdrafts | | (939) | | (748) |
+---------------------------------------------+-------+------------+---+------------+
| | | 3,177 | | 464 |
+---------------------------------------------+-------+------------+---+------------+
| | | | | |
+---------------------------------------------+-------+------------+---+------------+
Unaudited Statement of Changes in Equity
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | Capital | Share | | | Foreign | |
| | | Share | Share | redemption | | Retained | Own | exchange | Total |
| | | capital | premium | reserve | option | earnings | shares | reserve | Equity |
| | | GBP000 | GBP000 | GBP000 | | GBP000 | held | GBP000 | GBP000 |
| | | | | | reserve | | GBP000 | | |
| | | | | | GBP000 | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| ATTRIBUTABLE TO EQUITY HOLDERS OF | | | | | | | | | |
| THE PARENT | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| At 1 September 2007 as previously | | 328 | 10,011 | 15 | 210 | (3,048) | - | 90 | 7,606 |
| reported | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Prior year adjustment | | - | - | - | - | (119) | - | - | (119) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| At 1 September 2007 as restated | | 328 | 10,011 | 15 | 210 | (3,167) | - | 90 | 7,487 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Deferred taxation on share options | | - | - | - | - | (60) | - | - | (60) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Currency translation differences | | - | - | - | - | - | - | 9 | 9 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| (Expense)/income recognised | | - | - | - | - | (60) | - | 9 | (51) |
| directly in equity | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Loss for the year (restated) | | - | - | - | - | (4) | - | - | (4) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Total recognised income and | | - | - | - | - | (64) | - | 9 | (55) |
| expense for the year | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Transfer from share premium to | | - | (4,047) | - | - | 4,047 | - | - | - |
| retained earnings | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Payment to acquire own shares | | - | - | - | - | - | (259) | - | (259) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Shares issued to vendors as | | 19 | 634 | - | - | - | - | - | 653 |
| deferred consideration | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Share-based payment charge | | - | - | - | 75 | - | - | - | 75 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Total change in equity | | 19 | (3,413) | - | 75 | 4,047 | (259) | - | 469 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| At 1 September 2008 (as restated) | | 347 | 6,598 | 15 | 285 | 816 | (259) | 99 | 7,901 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Deferred taxation on share options | | - | - | - | - | (63) | - | - | (63) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Currency translation differences | | - | - | - | - | - | - | (57) | (57) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| (Expense)/income recognised | | - | - | - | - | (63) | - | (57) | (120) |
| directly in equity | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Loss for the period | | - | - | - | - | (6,317) | - | - | (6,317) |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Total recognised income and | | - | - | - | - | (6,380) | - | (57) | (6,437) |
| expense for the period | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Transfer from share option reserve | | - | - | - | (84) | 84 | - | - | - |
| to retained earnings | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Proceeds of share issues (net of | | 343 | 990 | - | - | - | - | - | 1,333 |
| costs) | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Shares issued to vendors as | | 27 | 86 | - | - | - | - | - | 113 |
| deferred consideration | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Shares issued to redeem loan notes | | 31 | 94 | - | - | - | - | - | 125 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Share-based payment charge | | - | - | - | 45 | - | - | - | 45 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| Total change in equity | | 401 | 1,170 | - | (39) | 84 | - | - | 1,616 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| At 30 November 2009 | | 748 | 7,768 | 15 | 246 | (5,480) | (259) | 42 | 3,080 |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------------------------+-----+---------+---------+------------+---------+----------+--------+----------+---------+
Notes to the Accounts
1. BASIS OF PRESENTATION
The financial information has not been audited and does not constitute statutory
financial statements as defined by section 435 of the Companies Act 2006 for the
period ended 30 November 2009 and for the year ended 31 August 2008.
The statutory financial statements for the 15 months to 30 November 2009 will be
finalised and signed on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
The financial information for the year ended 31 August 2008 is derived from the
statutory accounts for that year. The auditor reported on those statutory
accounts which have been delivered to the Registrar of Companies. The audit
report was unqualified, did not include references to matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
This announcement is prepared applying International Financial Reporting
Standards and IFRIC Interpretations ('IFRS') as adopted by the European Union,
with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS and using accounting policies that are consistent with those as
stated in the previous year's financial statements.
This preliminary announcement was approved by the Board of Directors on 19 May
2010.
GOING CONCERN
The company's financial position, its cash flows, liquidity position and
borrowing facilities, together with the factors likely to affect its future
development, performance and position are set out in the Operating and Financial
Review and in Note 7.
The company is currently in breach of its current banking covenants governing
the terms of the loans owing to Allied Irish Bank (GB) as detailed in Note 7.
The covenant breaches occurred following the disposal of certain subsidiary
undertakings and consequently the company has entered preliminary discussions
with the bank with a view to renegotiating its covenants and its banking
facilities in respect of its Mezzanine debt of GBP3.728 million together with
rolled up interest of GBP347,000 which falls due for payment on 31 August 2010.
The Mezzanine debt repayment has partially been satisfied by the proceeds
arising from the disposal of Optimal Wealth Management Limited and the business
of First Artist Management Limited. The Vendors of Dewynters are due to receive
payment on 30th June 2010 in respect of a loan note of GBP1,500,000 and the
Vendors of SpotCo are due to receive payment in respect of the deferred
consideration of $2,500.000 due in October 2010. The company is currently in
negotiations with the vendors to restructure the payment schedule of loan note
and deferred considerations. Based on negotiations conducted to date, the
directors have a reasonable expectation that the financial obligations will be
restructured satisfactorily.
The company has received a further overdraft facility from Allied Irish Bank to
provide additional working capital to compensate for the cash shortfall arising
from the poor January 2010 football trading window and general trading
conditions.
Whilst the directors believe the going concern basis is appropriate, the
combination of these circumstances represents a material uncertainty which may
cast significant doubt upon the company's ability to continue as a going concern
and that, therefore, the company may be unable to realise its assets and
discharge its liabilities in the normal course of business. Nevertheless, after
making enquiries and considering the uncertainties described above, the
directors have a reasonable expectation that the company has adequate resources
to continue operating for the foreseeable future. For these reasons, they
continue to adopt the going concern basis of accounting in preparing the annual
financial statements.
It is anticipated that the audit opinion on the final financial statements will
include an emphasis of matter in regard to this issue.
PRIOR YEAR ADJUSTMENT
Following a review of the application of the Group's revenue recognition policy
to the Sport division, a prior year adjustment has been made to correct errors
highlighted in previous periods. The adjustment has resulted in a reduction in
revenue and accrued income in 2008 of GBP218k (2007: GBP165k) and a reduction in
profit and retained earnings in 2008 totalling GBP151k (2007: GBP119k).
Total earnings per share in 2008 was restated from 1.09p basic and 1.07p diluted
to a loss per share of 0.03p (basic and diluted).
Opening retained earnings as at 1 September 2008 have been restated from
GBP1,086k to GBP816k.
2 BUSINESS AND GEOGRAPHICAL SEGMENTS
Business segments
For management purposes, the Group is currently organised into two operating
divisions - Media and Events. These divisions are the basis on which the Group
reports its primary segment information. During the period the
Entertainment/Sport division was discontinued and has been presented as
held-for-sale.
Principal continuing activities are as follows:
Media - marketing, design, advertising, promotions, digital media services,
publishing and merchandising and sponsorship.
Events - full event planning and management services, venue finding.
+--------+-------------+
| | Segment |
| | information |
| | for |
| | continuing |
| | operations |
| | of the |
| | Group for |
| | the period |
| | ended 30 |
| | November |
| | 2009 is |
| | presented |
| | below: |
+--------+-------------+
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | | | | Media | Events | Unallocated | | Group |
| | | | | | | | | |
| | | | | GBP000 | GBP000 | GBP000 | | GBP000 |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Revenue | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Revenue | | | 87,537 | 3,098 | - | | 90,635 |
| | revenue | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Result | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Adjusted EBITDA | | 5,749 | (56) | (2,186) | | 3,507 |
+--------+--------------------+--------+---------+--------+-------------+--------+---------+
| | Exceptional | (216) | - | (277) | | (493) |
| | administrative expenses | | | | | |
+--------+-----------------------------+---------+--------+-------------+--------+---------+
| | Depreciation | (742) | (16) | (73) | | (831) |
+--------+-----------------------------+---------+--------+-------------+--------+---------+
| | Amortisation and | (1,075) | - | (60) | | (1,135) |
| | impairment | | | | | |
+--------+-----------------------------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Operating profit/(loss) | 3,716 | (72) | (2,596) | | 1,048 |
+--------+-----------------------------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Finance income | | - | - | 61 | | 61 |
+--------+--------------------+--------+---------+--------+-------------+--------+---------+
| | Finance costs | | - | - | (2,500) | | (2,500) |
+--------+--------------------+--------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
| | Profit/(loss) before tax | 3,716 | (72) | (5,035) | | (1,391) |
| | and discontinued | | | | | |
| | operations | | | | | |
+--------+ +---------+--------+-------------+--------+---------+
| | | | | | | |
+--------+-----------------------------+---------+--------+-------------+--------+---------+
| | | | | | | | | |
+--------+-----------+--------+--------+---------+--------+-------------+--------+---------+
+--------+-------------------+
| | Unallocated |
| | (expenses)/income |
| | above include all |
| | Head Office costs |
| | (such as |
| | directors |
| | remuneration, |
| | wages and |
| | salaries, office |
| | rentals and other |
| | corporate |
| | administrative |
| | overheads). |
+--------+ +
| | |
+--------+-------------------+
+--------+-+-+----------+--------+-+--------+--+-----+--+----------+----+---+---+------+--------+-+--------+-------+-+-+----------+-+---------+
| | |
+------------+--------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | |
+------------+---------------------------------------+------------------+--------------+-------------------+-----------+----------------------+
| | | Media | Events | Discontinued | Unallocated | | Group |
| | | | | operations | | | |
| | | GBP000 | GBP000 | GBP000 | GBP000 | | GBP000 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Capital additions: | | | | | | |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Intangible assets | 10,502 | - | - | - | | 10,502 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Property, plant and equipment | 277 | 11 | - | 43 | | 331 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Balance sheet: | | | | | | |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Segment assets | 37,004 | 3,992 | 5,707 | 987 | | 47,690 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Total assets | 37,004 | 3,992 | 5,707 | 987 | | 47,690 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Segment liabilities | 15,261 | 1,155 | 2,001 | 26,193 | | 44,610 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Total liabilities | 15,261 | 1,155 | 2,001 | 26,193 | | 44,610 |
+--------+-------------------------------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | | | | | | | | |
+--------+-----------------------+-------------+-------------------+--------+-------------------+------------------+--------------+-----------+
| | Restated segment information for the year ended 31 August 2008 is presented below: |
| | |
+-----------------------+---------------------------------------------------------------------------------------------------------------------+
| | | | | Media | Events | Unallocated | | Group |
| | | | | | | | | |
| | | | | GBP000 | GBP000 | GBP000 | | GBP000 |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Revenue | | | 37,776 | 6,679 | - | | 44,455 |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Result | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Adjusted EBITDA | | 2,783 | 775 | (1,307) | | 2,251 |
+----------+--------------------------------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Exceptional administrative expenses | - | (164) | (292) | | (456) |
+----------+--------------------------------------------+-----------------------+-----------------+------------------+--------------+---------+
| | Depreciation | | | (412) | (6) | (117) | | (535) |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Amortisation | | | (364) | - | - | | (364) |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Operating profit/(loss) | 2,007 | 605 | (1,716) | | 896 |
+----------+--------------------------------------------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Finance income | | - | - | 59 | | 59 |
+----------+--------------------------------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Finance costs | | - | - | (1,608) | | (1,608) |
+----------+--------------------------------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | |
+----------+-----------------------+--------+-----------+-----------------------+-----------------+------------------+--------------+---------+
| | Profit/(loss) before tax and discontinued | 2,007 | 605 | (3,265) | | (653) |
| | operations | | | | | |
+----------+ +-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | |
+----------+--------------------------------------------+-----------------------+-----------------+------------------+--------------+---------+
| | | | | | | | | | | | | | | | | | | | | | | | |
+--------+-+-+----------+--------+-+--------+--+-----+--+----------+----+---+---+------+--------+-+--------+-------+-+-+----------+-+---------+
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Unallocated corporate (expenses)/income above include all |
| | Head Office costs (such as directors remuneration, wages and |
| | salaries, office rentals and other corporate administrative |
| | overheads). |
+--------+---------------------------------------------------------------------------+
| | | Media | Events | Entertainment | Unallocated | Group |
| | | | | /Sport | | |
| | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | | | |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | Capital | | | | | |
| | additions | | | | | |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | Property, plant | 201 | 1 | 77 | 182 | 461 |
| | and equipment | | | | | |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Balance | | | | | | |
| | sheet | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Segment assets | 22,098 | 4,017 | 10,851 | 2,148 | 39,114 |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Total assets | 22,098 | 4,017 | 10,851 | 2,148 | 39,114 |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Segment | 6,583 | 465 | 3,209 | 20,956 | 31,213 |
| | liabilities | | | | | |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
| | Total | 6,583 | 465 | 3,209 | 20,956 | 31,213 |
| | liabilities | | | | | |
+--------+------------------+--------+--------+---------------+-------------+--------+
| | | | | | | | |
+--------+---------+--------+--------+--------+---------------+-------------+--------+
Geographical segments
The Group's operations are located in the UK and the USA.
The following table provides an analysis of the Group's sales by geographic
market:
+--------+---------+--------+--------+--------+--------+----------+----------+
| | | | | | | Revenue by |
| | | | | | | geographical |
| | | | | | | market |
+--------+---------+--------+--------+--------+--------+---------------------+
| | | | | | | 15 | Restated |
| | | | | | | months | 12 |
| | | | | | | ended | months |
| | | | | | | 30 | ended 31 |
| | | | | | | November | August |
| | | | | | | 2009 | 2008 |
| | | | | | | GBP000 | GBP000 |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | | | | | | | |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | United | | | | | 42,312 | 39,262 |
| | Kingdom | | | | | | |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | USA | | | | | 48,323 | 5,193 |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | | | | | | | |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | | | | | | 90,635 | 44,455 |
+--------+---------+--------+--------+--------+--------+----------+----------+
| | | | | | | | |
+--------+---------+--------+--------+--------+--------+----------+----------+
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | The following is an analysis of the carrying amount of |
| | segment net assets/(liabilities), and additions to property, |
| | plant and equipment and intangible assets analysed by the |
| | geographical area in which the assets/(liabilities) are |
| | located: |
+--------+----------------------------------------------------------------------+
| | | | | Carrying amount | Capital |
| | | | | of segment net | additions |
| | | | |assets/(liabilities) | |
+--------+---------+--------+--------+----------------------+-------------------+
| | | | | | | 15 | 12 |
| | | | | 30 | 31 | months | months |
| | | | | November | August | ended | ended |
| | | | | 2009 | 2008 | 30 | 31 |
| | | | | GBP000 | GBP000 | November | August |
| | | | | | | 2009 | 2008 |
| | | | | | | GBP000 | GBP000 |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| - | United | | | (6,982) | 7,367 | 110 | 366 |
| | Kingdom | | | | | | |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | Rest | | | - | 439 | - | 55 |
| | of | | | | | | |
| | Europe | | | | | | |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | USA | | | 10,062 | 95 | 10,723 | 40 |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | | | | | | | |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | | | | 3,080 | 7,901 | 10,833 | 461 |
+--------+---------+--------+--------+-------------+--------+----------+--------+
| | | | | | | | |
+--------+---------+--------+--------+-------------+--------+----------+--------+
Included within USA segment net assets is goodwill totalling GBP6,552k and
intangibles totalling GBP3,052k in respect of the acquisition of Spot and
Company of Manhattan Inc. Deferred consideration and borrowings for this
acquisition are deemed to be liabilities of the United Kingdom segment.
+--------+----------+-----------------------------------+--+---------+-+--+-+----------+----------+
| 3 | EXCEPTIONAL ADMINISTRATIVE | | | | |
| | EXPENSES | 15 months | | 12 months | |
| | | ended 30 | | ended | |
| | | November | | 31August | |
| | | 2009 | | 2008 | |
| | | GBP000 | | GBP000 | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | | | | | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | Acquisition related costs and | 283 | | 273 | |
| | bonuses | | | | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | Restructuring costs | 97 | | - | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | Redundancy costs | 90 | | 147 | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | Relocation costs | 23 | | 36 | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | | | | | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | | 493 | | 456 | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | | | | | |
+-------------------+-----------------------------------+------------+----+------------+----------+
| | Included within redundancy costs are GBP90,000 (2008: GBP120,000) payable |
| | as compensation for loss of office. |
+-------------------+-----------------------------------------------------------------------------+
| | | | | | |
+--------+-------------------------------------------------+-----------+----+----------+----------+
| | | | | | | | | | |
+--------+----------+-----------------------------------+--+---------+-+--+-+----------+----------+
4 TAXATION
+-----+-------------------------------------+------------+----+----------+
| | | | | Restated |
| | | 15 months | | 12 |
| | | ended 30 | | months |
| | | November | | ended 31 |
| | | 2009 | | August |
| | | GBP000 | | 2008 |
| | | | | GBP000 |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | Current tax: | | | |
+-----+-------------------------------------+------------+----+----------+
| | UK corporation tax on losses of the | 181 | | 90 |
| | period/year | | | |
+-----+-------------------------------------+------------+----+----------+
| | Overseas tax on losses of the | 117 | | 67 |
| | period/year | | | |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | Total current tax | 298 | | 157 |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | Deferred tax: | | | |
+-----+-------------------------------------+------------+----+----------+
| | Deferred tax credit for the | (73) | | (86) |
| | period/year | | | |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | Total deferred tax | (73) | | (86) |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | Tax on loss of ordinary activities | 225 | | 71 |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
| | | | | |
+-----+-------------------------------------+------------+----+----------+
+----+-----------------------------------+----------+--+---------+
| | Factors affecting the tax charge | 15 | | 12 |
| | for the period/year: | months | | months |
| | | ended | | ended |
| | | 30 | | 31 |
| | | November | | August |
| | | 2009 | | 2008 |
| | | GBP000 | | GBP000 |
+----+-----------------------------------+----------+--+---------+
| | The tax assessed for the year is | | | |
| | higher than the standard average | | | |
| | rate of corporation tax in the UK | | | |
| | 28% (29.17%). The differences are | | | |
| | explained below: | | | |
+----+-----------------------------------+----------+--+---------+
| | Loss on ordinary activities | (1,391) | | (653) |
| | before tax | | | |
+----+-----------------------------------+----------+--+---------+
| | | | | |
+----+-----------------------------------+----------+--+---------+
| | | | | |
+----+-----------------------------------+----------+--+---------+
| | Loss on ordinary activities | | | |
| | multiplied by standard average | (389) | | (190) |
| | rate of corporation tax in the UK | | | |
| | 28% (2008: 29.17%) | | | |
+----+-----------------------------------+----------+--+---------+
| | Effects of: | | | |
+----+-----------------------------------+----------+--+---------+
| | Expenses not deductible for tax | 283 | | 109 |
| | purposes | | | |
+----+-----------------------------------+----------+--+---------+
| | Depreciation on non-qualifying | 62 | | 33 |
| | assets | | | |
+----+-----------------------------------+----------+--+---------+
| | Unwinding of discount on deferred | 246 | | 92 |
| | consideration | | | |
+----+-----------------------------------+----------+--+---------+
| | Difference in tax rates on | 19 | | 9 |
| | overseas earnings | | | |
+----+-----------------------------------+----------+--+---------+
| | Share-based payments | 13 | | 19 |
+----+-----------------------------------+----------+--+---------+
| | Other movements | (9) | | (1) |
+----+-----------------------------------+----------+--+---------+
| | | | | |
+----+-----------------------------------+----------+--+---------+
| | Total tax charge for the | 225 | | 71 |
| | period/year | | | |
+----+-----------------------------------+----------+--+---------+
| | | | | |
+----+-----------------------------------+----------+--+---------+
Taxation is calculated at the rates prevailing in the respective jurisdictions.
The standard tax rates in each jurisdiction are 40% in the United States, 28% in
the United Kingdom, 28% in Denmark and 35% in Italy.
5 EARNINGS PER SHARE
The calculations of (loss)/earnings per share are based on the following
(losses)/profits and number of shares:
+--------+------------------+----------+--------+----------+
| | (Loss/)/earnings | | | Restated |
| | attributable to | 15 | | 12 |
| | equity holders | months | | months |
| | of the company | ended | | ended 31 |
| | | 30 | | August |
| | | November | | 2008 |
| | | 2009 | | GBP000 |
| | | GBP000 | | |
+--------+------------------+----------+--------+----------+
| | For | | | |
| | basic | | | |
| | and | | | |
| | diluted | | | |
| | loss | | | |
| | per | | | |
| | share | | | |
| | | | | |
+--------+------------------+----------+--------+----------+
| | | | | |
+--------+------------------+----------+--------+----------+
| | (Loss)/profit | (4,701) | | 720 |
| | from | | | |
| | discontinued | | | |
| | operations | | | |
+--------+------------------+----------+--------+----------+
| | | | | |
+--------+------------------+----------+--------+----------+
| | Loss | (1,616) | | (724) |
| | from | | | |
| | continuing | | | |
| | operations | | | |
+--------+------------------+----------+--------+----------+
| | | | | |
+--------+------------------+----------+--------+----------+
| | Loss | (6,317) | | (4) |
| | for | | | |
| | the | | | |
| | financial | | | |
| | period/year | | | |
+--------+------------------+----------+--------+----------+
| | | | | |
+--------+------------------+----------+--------+----------+
+--------+----------+------------+--------+------------+
| | Number | 15 | | 12 |
| | of | months | | months |
| | shares | ended | | ended |
| | | 30 | | 31 |
| | | November | | August |
| | | 2009 | | 2008 |
| | | Number | | Number |
| | | | | |
+--------+----------+------------+--------+------------+
| | Weighted | | | |
| | average | 19,172,788 | | 13,454,959 |
| | number | | | |
| | of | | | |
| | ordinary | | | |
| | shares | | | |
| | for the | | | |
| | purposes | | | |
| | of basic | | | |
| | earnings | | | |
| | per | | | |
| | share | | | |
+--------+----------+------------+--------+------------+
| | Dilutive | - | | 327,329 |
| | effect | | | |
| | of share | | | |
| | options | | | |
+--------+----------+------------+--------+------------+
| | | | | |
+--------+----------+------------+--------+------------+
| | Weighted | | | |
| | average | 19,172,788 | | 13,782,288 |
| | number | | | |
| | of | | | |
| | ordinary | | | |
| | shares | | | |
| | for the | | | |
| | purposes | | | |
| | of | | | |
| | diluted | | | |
| | earnings | | | |
| | per | | | |
| | share | | | |
+--------+----------+------------+--------+------------+
| | | | | |
+--------+----------+------------+--------+------------+
The dilutive effect of share options in 2008 does not impact loss per share. In
the event of the Group becoming profitable, the share options in issue would
have a dilutive effect for those options 'above water'.
6 DISPOSAL GROUP CLASSIFIED AS HELD-FOR-SALE AND DISCONTINUED OPERATIONS
The assets and liabilities related to First Artist Sport Limited, Promosport
Limited, First Artist Scandinavia A/S, Sponsorship Consulting Limited, Optimal
Wealth Limited and First Artist Management Limited have been presented as held
for sale following the approval by the Group's management and shareholders to
sell the companies (or in the case of Sponsorship Consulting Limited,
liquidate). Optimal Wealth Limited and First Artist Management Limited were
sold in February 2010. Sponsorship Consulting Limited is in the process of
being liquidated and the completion date for the disposal of the remaining three
companies is expected before 30 November 2010.
The Sport division consists of First Artist Sport Limited, Promosport Srl, First
Artist Scandinavia A/S and Sponsorship Consulting Limited.
+--------+-----------+----------+---------+------------+--------+
| | 15 | | | First | |
| | months | Sports | Optimal | Artist | |
| | ended | division | Wealth | Management | Total |
| | 30 | | Limited | Limited | |
| | November | GBP000 | | GBP000 | GBP000 |
| | 2009 | | GBP000 | | |
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | Operating | 103 | 85 | 63 | 251 |
| | cash | | | | |
| | flows | | | | |
+--------+-----------+----------+---------+------------+--------+
| | Investing | (3) | - | - | (3) |
| | cash | | | | |
| | flows | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | 100 | 85 | 63 | 248 |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
+--------+-----------+----------+---------+------------+--------+
| | Year | | | First | |
| | ended | Sports | Optimal | Artist | |
| | 31 | division | Wealth | Management | Total |
| | August | | Limited | Limited | |
| | 2008 | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | Operating | (358) | (48) | (317) | (723) |
| | cash | | | | |
| | flows | | | | |
+--------+-----------+----------+---------+------------+--------+
| | Investing | (8) | (44) | 35 | (17) |
| | cash | | | | |
| | flows | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
| | | (366) | (92) | (282) | (740) |
+--------+-----------+----------+---------+------------+--------+
| | | | | | |
+--------+-----------+----------+---------+------------+--------+
a) Assets of disposal group classified as held-for-sale
+--------+------------+----------+---------+------------+--------+
| | | | | First | |
| | | Sports | Optimal | Artist | |
| | | division | Wealth | Management | Total |
| | | | Limited | Limited | |
| | | GBP000 | GBP000 | GBP000 | GBP000 |
+--------+------------+----------+---------+------------+--------+
| | | | | | |
+--------+------------+----------+---------+------------+--------+
| | Property, | 93 | 17 | 8 | 118 |
| | plant and | | | | |
| | equipment | | | | |
+--------+------------+----------+---------+------------+--------+
| | Available | - | 24 | - | 24 |
| | for sale | | | | |
| | investment | | | | |
+--------+------------+----------+---------+------------+--------+
| | Intangible | 937 | 1,066 | 129 | 2,132 |
| | assets - | | | | |
| | goodwill | | | | |
+--------+------------+----------+---------+------------+--------+
| | Other | 2,757 | 288 | 388 | 3,433 |
| | current | | | | |
| | assets | | | | |
+--------+------------+----------+---------+------------+--------+
| | | | | | |
+--------+------------+----------+---------+------------+--------+
| | | 3,787 | 1,395 | 525 | 5,707 |
+--------+------------+----------+---------+------------+--------+
| | | | | | |
+--------+------------+----------+---------+------------+--------+
b) Liabilities of disposal group classified as held-for-sale
+--------+-------------+----------+---------+------------+--------+
| | | Sports | Optimal | First | |
| | | division | Wealth | Artist | Total |
| | | | Limited | Management | |
| | | GBP000 | GBP000 | Limited | GBP000 |
| | | | | GBP000 | |
+--------+-------------+----------+---------+------------+--------+
| | | | | | |
+--------+-------------+----------+---------+------------+--------+
| | Trade | 1,243 | 92 | 366 | 1,701 |
| | and | | | | |
| | other | | | | |
| | payables | | | | |
+--------+-------------+----------+---------+------------+--------+
| | Other | 79 | 207 | 14 | 300 |
| | current | | | | |
| | liabilities | | | | |
| | (including | | | | |
| | tax) | | | | |
+--------+-------------+----------+---------+------------+--------+
| | | | | | |
+--------+-------------+----------+---------+------------+--------+
| | | 1,322 | 299 | 380 | 2,001 |
+--------+-------------+----------+---------+------------+--------+
| | | | | | |
+--------+-------------+----------+---------+------------+--------+
Analysis of the result of discontinued operations, and the result on the
re-measurement of assets of disposal group, is as follows:
+--------+----------------+----------+---------+------------+---------+
| | 15 | Sports | Optimal | First | |
| | months | division | Wealth | Artist | Total |
| | ended | | Limited | Management | |
| | 30 | GBP000 | GBP000 | Limited | GBP000 |
| | November | | | GBP000 | |
| | 2009 | | | | |
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
| | Revenue | 4,944 | 2,652 | 590 | 8,186 |
+--------+----------------+----------+---------+------------+---------+
| | Expenses | (4,950) | (2,125) | (547) | (7,622) |
+--------+----------------+----------+---------+------------+---------+
| | (Loss)/profit | (6) | 527 | 43 | 564 |
| | before tax of | | | | |
| | discontinued | | | | |
| | operations | | | | |
+--------+----------------+----------+---------+------------+---------+
| | Tax | - | (103) | - | (103) |
+--------+----------------+----------+---------+------------+---------+
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
| | (Loss)/profit | (6) | 424 | 43 | 461 |
| | after tax of | | | | |
| | discontinued | | | | |
| | operations | | | | |
+--------+----------------+----------+---------+------------+---------+
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
| | Pre-tax | | | | |
| | loss | (2,605) | (1,980) | (628) | (5,213) |
| | recognised | | | | |
| | on | | | | |
| | re-measurement | | | | |
| | of assets of | | | | |
| | disposal group | | | | |
+--------+----------------+----------+---------+------------+---------+
| | Tax | 51 | - | - | 51 |
+--------+----------------+----------+---------+------------+---------+
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
| | Loss | (2,560) | (1,556) | (585) | (4,701) |
| | for | | | | |
| | the | | | | |
| | period | | | | |
| | from | | | | |
| | discontinued | | | | |
| | operations | | | | |
+--------+----------------+----------+---------+------------+---------+
| | | | | | |
+--------+----------------+----------+---------+------------+---------+
+--------+--------------+----------+---------+------------+---------+
| | Year | Sports | Optimal | First | |
| | ended | division | Wealth | Artist | Total |
| | 31 | | Limited | Management | |
| | August | GBP000 | GBP000 | Limited | GBP000 |
| | 2008 | | | GBP000 | |
| | | | | | |
+--------+--------------+----------+---------+------------+---------+
| | | | | | |
+--------+--------------+----------+---------+------------+---------+
| | Revenue | 6,042 | 2,662 | 725 | 9,429 |
+--------+--------------+----------+---------+------------+---------+
| | Expenses | (5,402) | (2,336) | (649) | (8,387) |
+--------+--------------+----------+---------+------------+---------+
| | Profit | 640 | 326 | 76 | 1,042 |
| | before | | | | |
| | tax of | | | | |
| | discontinued | | | | |
| | operations | | | | |
+--------+--------------+----------+---------+------------+---------+
| | Tax | (157) | (153) | (12) | (322) |
+--------+--------------+----------+---------+------------+---------+
| | | | | | |
+--------+--------------+----------+---------+------------+---------+
| | Profit | 483 | 173 | 64 | 720 |
| | for | | | | |
| | the | | | | |
| | year | | | | |
| | from | | | | |
| | discontinued | | | | |
| | operations | | | | |
+--------+--------------+----------+---------+------------+---------+
| | | | | | |
+--------+--------------+----------+---------+------------+---------+
7 BORROWINGS
+--------------+--------+----------+--------+---------+
| | | 30 | | 31 |
| | | November | | August |
| | | 2009 | | 2008 |
| | | GBP000 | | GBP000 |
+--------------+--------+----------+--------+---------+
| Current: | | | | |
+--------------+--------+----------+--------+---------+
| Bank | | 939 | | 748 |
| overdrafts | | | | |
+--------------+--------+----------+--------+---------+
| Term | | - | | 719 |
| loans | | | | |
+--------------+--------+----------+--------+---------+
| Bank | | 4,888 | | 4,320 |
| loans | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| | | 5,827 | | 5,787 |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| Non-current: | | | | |
+--------------+--------+----------+--------+---------+
| Bank | | 11,684 | | 8,417 |
| loans | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| Analysis | | | | |
| of due | | | | |
| dates | | | | |
| for | | | | |
| borrowings: | | | | |
+--------------+--------+----------+--------+---------+
| On | | | | |
| demand | | | | |
| or | | | | |
| within | | | | |
| one | | | | |
| year | | | | |
+--------------+--------+----------+--------+---------+
| | | 939 | | 748 |
| Bank | | | | |
| overdrafts | | | | |
+--------------+--------+----------+--------+---------+
| | | - | | 719 |
| Term | | | | |
| loans | | | | |
+--------------+--------+----------+--------+---------+
| | | 1,000 | | 1,535 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| variable | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | 3,888 | | 2,785 |
| Mezzanine | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| | | 5,827 | | 5,787 |
+--------------+--------+----------+--------+---------+
| In the | | | | |
| second | | | | |
| year | | | | |
+--------------+--------+----------+--------+---------+
| | | 960 | | 215 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| variable | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | - | | 1,321 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| fixed | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| | | 960 | | 1,536 |
+--------------+--------+----------+--------+---------+
| In the | | | | |
| third | | | | |
| to | | | | |
| fifth | | | | |
| years | | | | |
| inclusive | | | | |
+--------------+--------+----------+--------+---------+
| | | 5,200 | | - |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| variable | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | - | | 4,607 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| fixed | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | 5,524 | | 1,500 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| term | | | | |
| loan B | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| | | 10,724 | | 6,107 |
+--------------+--------+----------+--------+---------+
| After | | | | |
| five | | | | |
| years | | | | |
+--------------+--------+----------+--------+---------+
| | | - | | 774 |
| Bank | | | | |
| loan - | | | | |
| senior | | | | |
| fixed | | | | |
| rate | | | | |
| loan | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| Amounts | | 17,511 | | 14,204 |
| due for | | | | |
| settlement | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| Less | | (5,827) | | (5,787) |
| amounts | | | | |
| due | | | | |
| within | | | | |
| one | | | | |
| year | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
| Amounts | | 11,684 | | 8,417 |
| due for | | | | |
| settlement | | | | |
| after one | | | | |
| year | | | | |
+--------------+--------+----------+--------+---------+
| | | | | |
+--------------+--------+----------+--------+---------+
+--------+--------+--------+--------+--------+--------+
| | | | | | |
+--------+--------+--------+--------+--------+--------+
+--------+--------------------+-----------+----------+--------+---+----------+----------+
| | |
| | Analysis of borrowings by currency |
+--------+------------------------------------------------------------------------------+
| | | | Sterling | USD | Total |
| | | | GBP000 | GBP000 | GBP000 |
+--------+--------------------+-----------+----------+-----------------------+----------+
| | 2009 | | | | |
+--------+--------------------+-----------+----------+------------+---------------------+
| | Bank overdrafts | | 939 | - | 939 |
+--------+--------------------+-----------+----------+------------+---------------------+
| | Bank loans | | 13,220 | 3,352 | 16,572 |
+--------+--------------------+-----------+----------+------------+---------------------+
| | | | 14,159 | 3,352 | 17,511 |
+--------+--------------------+-----------+----------+------------+---------------------+
| | | | | | | |
+--------+--------------------+-----------+----------+--------+--------------+----------+
| | | | | | | | |
+--------+--------------------+-----------+----------+--------+---+----------+----------+
+--------+------------+--------+----------+--------+--------+
| | | | | | |
+--------+------------+--------+----------+--------+--------+
| | | | Sterling | Euros | Total |
| | | | GBP000 | GBP000 | GBP000 |
+--------+------------+--------+----------+--------+--------+
| | 2008 | | | | |
+--------+------------+--------+----------+--------+--------+
| | Bank | | 679 | 69 | 748 |
| | overdrafts | | | | |
+--------+------------+--------+----------+--------+--------+
| | Term | | 719 | - | 719 |
| | loans | | | | |
+--------+------------+--------+----------+--------+--------+
| | Bank | | 12,737 | - | 12,737 |
| | loans | | | | |
+--------+------------+--------+----------+--------+--------+
| | | | 14,135 | 69 | 14,204 |
+--------+------------+--------+----------+--------+--------+
| | |
| | The term loans were unsecured and related |
| | to loan notes payable to the principals of |
| | The Finishing Touch (Corporate Events) |
| | Limited. Loan notes of GBPnil (2008: |
| | GBP400,000) bear interest at the rate of |
| | the UK bank base rate. Loan notes of |
| | GBPnil (2008: GBP319,000) bear no |
| | interest. |
| | |
| | The bank loans and overdraft are secured |
| | against the assets of the Group. The |
| | overdraft limit is GBP1m (temporarily |
| | extended to GBP1.7m post period end) and |
| | interest is payable at 2.5% above the |
| | lender's base rate. The facility is |
| | reviewed annually. |
| | |
| | The senior variable rate loan is repayable |
| | over five years as disclosed above. |
| | Interest is payable at 2.25% above LIBOR. |
| | |
| | The mezzanine facility is repayable by |
| | August 2010 and interest is payable at 10% |
| | above LIBOR. |
| | |
| | The senior term loan B is repayable within |
| | five years and interest is payable at 10% |
| | above LIBOR. |
| | |
| | Under the terms of the bank loans the |
| | Group is tested quarterly on five loan |
| | covenants: |
| | |
| | Interest Cover: 12 month rolling adjusted |
| | EBITDA, |
| | Leverage: Debt as a ratio of 12 month |
| | adjusted EBITDA, |
| | Debt Service: 12 month rolling adjusted |
| | EBITDA to 30 November 2009 as a ratio of |
| | debt service |
| | Cash Flow to Cash Interest: 12 month |
| | rolling cashflow as a ratio of cash |
| | interest, |
| | Cash Flow to Cash Debt Service: 12 month |
| | rolling cashflow as a ratio of cash debt |
| | service. |
| | |
| | |
| | |
| | |
+--------+------------+--------+----------+--------+--------+
8 BUSINESS COMBINATIONS
On 1 October 2008 the group acquired 100% of the share capital of Spot and
Company of Manhattan Inc ("SpotCo") and obtained the control of the company, a
leading US-based live entertainment advertising agency. The acquired business
contributed revenues of GBP42,547k and net profit before tax of GBP2,087k to the
Group for the period from 1 October 2008 to 30 November 2009.
If the acquisition had occurred on 1 September 2008, group revenue would have
been GBP92,708k, and loss before tax and discontinued operations would have been
GBP1,058k.
Details of net assets acquired and goodwill are as follows:
+----+---------------------------------------+---------------+--------+
| | Purchase consideration: | | GBP000 |
+----+---------------------------------------+---------------+--------+
| | | | |
+----+---------------------------------------+---------------+--------+
| | - Cash paid | | 2,982 |
+----+---------------------------------------+---------------+--------+
| | - Direct costs relating to the | | 710 |
| | acquisition | | |
+----+---------------------------------------+---------------+--------+
| | - Deferred consideration - cash | | 7,451 |
+----+---------------------------------------+---------------+--------+
| | - Deferred consideration - equity | | 100 |
+----+---------------------------------------+---------------+--------+
| | | | |
+----+---------------------------------------+---------------+--------+
| | Total purchase consideration | | 11,243 |
+----+---------------------------------------+---------------+--------+
| | | | |
+----+---------------------------------------+---------------+--------+
The number of shares to be issued to settle the equity deferred consideration is
calculated by reference to the share price at the date that the liability falls
due.
The assets and liabilities as of 1 October 2008 arising from the acquisition are
as follows:
+----------------------------------+---------+-------------+---------+
| | Book | Fair | Fair |
| | value | value | value |
| | | adjustments | |
+----------------------------------+---------+-------------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Brand | - | 1,819 | 1,819 |
+----------------------------------+---------+-------------+---------+
| Customer relationships | - | 2,074 | 2,074 |
+----------------------------------+---------+-------------+---------+
| Property, plant and equipment | 587 | - | 587 |
+----------------------------------+---------+-------------+---------+
| Trade and other receivables | 2,515 | - | 2,515 |
+----------------------------------+---------+-------------+---------+
| Cash and cash equivalents | 274 | - | 274 |
+----------------------------------+---------+-------------+---------+
| Trade and other payables | (1,421) | - | (1,421) |
+----------------------------------+---------+-------------+---------+
| Deferred tax liabilities | (114) | (1,557) | (1,671) |
+----------------------------------+---------+-------------+---------+
| Deferred tax asset | - | 457 | 457 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Fair value of net assets | 1,841 | 2,793 | 4,634 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Goodwill | | | 6,609 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Total purchase consideration | | | 11,243 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Purchase consideration settled | | | 3,692 |
| in cash | | | |
+----------------------------------+---------+-------------+---------+
| Cash and cash equivalents in | | | (274) |
| subsidiary acquired | | | |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
| Cash outflow on acquisition | | | 3,418 |
+----------------------------------+---------+-------------+---------+
| | | | |
+----------------------------------+---------+-------------+---------+
Deferred consideration has been discounted at 9.5%.
Deferred consideration is payable on 12 months figures for the various Group
companies, with estimates based on Company budgets. Although these estimates are
based on management's best knowledge of the amount, actual results may
ultimately differ from these estimates.
The following table indicates the decreases to deferred consideration on
previous acquisitions:
+---------------+-----------+----------------+-------------+--------+
| | Dewynters | Yell | Sponsorship | |
| | Limited | Communications | Consulting | |
| | | Limited | Limited | Total |
| | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | |
+---------------+-----------+----------------+-------------+--------+
| | | | | |
+---------------+-----------+----------------+-------------+--------+
| Deferred | 945 | 22 | 285 | 1,252 |
| consideration | | | | |
| - cash | | | | |
+---------------+-----------+----------------+-------------+--------+
| | | | | |
+---------------+-----------+----------------+-------------+--------+
9 POST BALANCE SHEET EVENTS
Disposal of subsidiaries
On 2 February 2010 the Company completed the sale of the company of Optimal
Wealth Management Limited to Conforto Financial Management Limited for a total
consideration of GBP1.5 million to be satisfied wholly in cash. GBP1.3 million
of the consideration was paid on completion, with two further payments of
GBP100,000. The first GBP100,000 payment was paid in April and the second
GBP100,000 payment is due in July 2010.
On 12 February 2010 the Company announced the completion of the sale of business
of First Artist Management Limited to James Grant Media for a total cash
consideration of GBP200,000, less a post completion working capital adjustment
of up to GBP25,000.
Banking facilities
Subsequent to the period end the Group entered into discussions with its main
lender, Allied Irish Bank (GB), concerning banking covenants. Details have been
described in full in the going concern section within note 1.
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ALMFTMBBBBJM
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