TIDMTLA
RNS Number : 6407P
TLA Worldwide PLC
30 May 2018
30 May 2018
TLA Worldwide plc
("TLA" or "the Group")
2017 Full Year Results
TLA Worldwide plc (AIM: TLA), a leading athlete representation
and sports marketing business, is pleased to announce its final
results for the year ended 31 December 2017.
HEADLINE RESULTS Year ended Year ended
31 December 31 December %
2017 2016
$000 $000 Change
Revenue 51,100 43,425 17.7
Gross profit 34,800 32,778 6.2
Headline EBITDA (before
provisions and FX) 6,240 5,978 4.4
Headline EBITDA(1) 4,673 (398) 1,274
Headline profit/(loss)
before tax(3) 2,999 (1,876) 259.9
Sports Marketing Headline
EBITDA 5,862 3,395 72.7
Baseball Headline EBITDA 3,351 470 613.0
--------------------------- ------------- ------------- -------
Headline EBITDA margin(2) 13.4% -1.2% 14.6pp
Headline diluted earnings
per share (cents)(4) 1.03 1.00 3.0
--------------------------- ------------- ------------- -------
STATUTORY RESULTS Year ended Year ended
31 December 31 December %
2017 2016
$000 $000 Change
Operating loss(5) (6,150) (6,978) 11.9
Loss before tax(5) (8,457) (9,259) 8.7
Loss per share (cents) (5.43) (4.32) (25.7)
Net debt at 31 December (16,495) (22,059) 25.2
Operational Highlights
Sports Marketing
-- Sports Marketing revenue grew 17.4% to $35.6 million (2016: $30.3 million)
-- Delivered 8 events in 2017, more than any previous year,
including Brazil vs. Argentina at the Melbourne Cricket Ground
("MCG") and New Zealand All Blacks ("All Blacks") vs. the
Barbarians at Twickenham
-- Awarded Sports Marketing Agency of the Year 2017 in Australia (Mumbrella Awards)
-- Almost 300,000 spectators attended TLA events in 2017, a record number for the Group
-- Talent Marketing group expanded to include the representation of tennis players
-- Golf continues its trend of recruiting the best young golfers in the US
-- US Sports Marketing restructuring completed creating a solid
foundation to return this business to growth
Baseball Representation
-- Baseball Representation revenue grew 18.3% to $15.5 million (2016: $13.1 million)
-- Offseason contracts negotiated by the division worth up to
$186 million (2016 offseason: $274 million)
-- 15 arbitration clients (2016: 20) and 6 MLB free agents
(2016: 17) agreed new contracts in the off season
-- 73 MLB clients on MLB teams 40-man roster (2016: 89)(6) , of
which 30 are fee paying (2016: 35)
-- Contract extensions for key management teams of TLA
Baseball's North American and Latin American businesses, contracted
out to 2021/22
-- Nine clients in the MLB All Star game - a TLA record (2016: four)
-- TLA had eight players playing in the MLB World Series
Client achievements
The Group has commercial relationships with 844 clients (2016:
884). A selection of achievements from TLA's clients include:
-- Adam Peaty retained his titles for 50m and 100m at the World Aquatics Championships
-- Sloane Stephens won her first major in the women's tennis singles at the 2017 US Open
-- Sam Burns awarded NCAA Division I Jack Nicklaus National
Player of the Year Award, before turning professional in 2017
-- George Springer voted World Series MVP in 2017
-- Jim Furyk appointed captain of the US Ryder Cup team
Key appointments
-- Richard Shamsi was appointed Group CFO in December 2017 and
started his role on 2 January 2018
-- Appointed Matthew Craig as North American CFO in October 2017
1 Headline EBITDA is defined as statutory operating profit
adjusted to add back depreciation, amortisation of acquired
intangible assets and any acquisition related charges, share-based
payment charges and exceptional items.
2 Headline EBITDA over gross profit
3 Headline EBITDA after bank interest and depreciation.
4 Headline earnings per share is defined as headline profit for
the year divided by the weighted average number of ordinary shares
in issue during the year. Headline profit for the year is defined
as profit for the year adjusted to add back amortisation of
acquired intangible assets and any other acquisition related
charges, share based payment charges, fair value movement on
financial derivatives, unwinding of discount on contingent
consideration and exceptional items.
5 After $10.8 million of charges relating to exceptional costs
($2.7 million), amortisation and depreciation ($3.8 million),
additional fair value movements on contingent consideration ($0.8
million), and revised baseball earnouts and other acquisition
related costs ($2.4 million); and after a charge in respect of
share based payments ($1.1 million).
6 As at the start of the 2017 or 2016 Baseball season.
Mike Principe, Group CEO of TLA, commented:
"It is pleasing to report double-digit revenue growth and 6%
growth in gross profit in 2017, which reflects the strong
performance across our Sports Marketing and Baseball Representation
divisions. In Sports Marketing we delivered our highest number of
events in one year, with events in the US, UK and Australia. The
Brazil vs. Argentina football game at the MCG and the All Blacks
vs. the Barbarians at Twickenham saw near capacity audiences watch
enthralling games. Baseball Representation continues to develop as
our young roster matures into a greater number of fee paying
clients.
"The historic accounting issues faced by the Group were
rectified in 2017 and resulted in TLA introducing a stronger
financial function at the Group level as well as in the US
subsidiary. As a result the business was stabilised in 2017 with
extended banking facilities and net debt reducing significantly
compared to the prior year. We believe the actions we have taken
have established a solid base from which to grow from and move
forward positively.
"In 2018, the fundamentals of the business remain sound and
trading has started well in both Baseball Representation and Sports
Marketing. In Baseball, TLA has a high-quality and maturing roster
of clients. Our Sports Marketing division organised its highest
number of events in 2017 and the Group expects to continue to
organise popular flagship live events in Soccer, Rugby and other
sports played in front of large audiences. The Board looks forward
to the future with confidence."
Enquiries:
TLA Worldwide plc
-----------------------------------------------
Bart Campbell, Executive +44 20 7618 9100
Chairman On the day
---------------------------- -----------------
Michael Principe, Chief +44 20 7618 9100
Executive Officer On the day
+1 212 645 2141
Thereafter
---------------------------- -----------------
Numis Securities
-----------------------------------------------
Nick Westlake and Oliver
Hardy (Nomad) +44 20 7260 1000
---------------------------- -----------------
Christopher Wilkinson
---------------------------- -----------------
Luther Pendragon
-----------------------------------------------
Harry Chathli, Alexis Gore +44 20 7618 9100
---------------------------- -----------------
About TLA
TLA is a leading athlete representation, sports marketing and
event management group quoted on London's AIM market. The Group
derives revenues from long term agency relationships with many
prominent US and international sports stars, broadcasters and media
personalities associated with major sports including the MLB, NFL,
NBA, PGA TOUR, AFL, Olympians and cricketers. In addition, it also
provides a range of services in respect of media consultancy,
sports sponsorship and event creation and ownership. With over 170
full-time personnel, TLA serves its clients from 10 locations
worldwide including its offices in London, UK; New York, Newport
Beach, Houston, Charleston, San Francisco, USA; Melbourne, Perth,
Adelaide and Sydney, Australia. For more information, please visit
www.tlaworldwide.com.
Overview
The Group's principal activity is that of a leading, fully
integrated talent representation and sports marketing business.
Despite the challenges, 2017 was a year of operational progress
delivering encouraging results with double-digit revenue growth for
the Group, reflecting positive performances in both Sports
Marketing and Baseball Representation.
The Group has expanded into representing tennis players such as
Sloane Stephens who won the US Open. The Group organised and
delivered more sporting events than ever before notably bringing
the All Blacks to Twickenham and American College Football and
Argentina vs Brazil soccer to Australia. Almost 300,000 spectators
attended live TLA events in 2017, a record number for the
Group.
The Group's banking agreement was revised in May 2018 where the
repayment schedule together with covenants were revised to provide
further funding flexibility. The debt rescheduling moved $2.6
million of repayments previously due before March 2019 to later in
2019.
The full year results reflect the work that the Group has put in
during the past year, not only to resolve the historic accounting
issues, but to put into place the resources and framework to
strengthen the finance and reporting functions in its US business.
The restructuring of the US finance team has been completed. In
addition, TLA strengthened its management team with the appointment
of Richard Shamsi as Group CFO. The Headline EBITDA, prior to
provisions and FX, of $6.2 million (2016: $6.0 million) is a
reflection of the hard work and effort of everyone in the
Group.
Operating Overview
Sports Marketing
The Sports Marketing division assists with the on-field and
off-field activities of athletes and represents broadcasters and
coaches in respect of their contract negotiations. The division
also manages and delivers events, primarily in sports, along with
the sale of merchandise and represents brands who invest in sport,
by helping to bring this investment to life.
The division performed well in 2017 as revenue increased 17.4%
to $35.6 million (2016: $30.3 million) due to the success of its
portfolio of popular sporting events and the strong performance of
TLA's Australian sports marketing business.
Our events division organised and delivered several large
events, including Brazil vs. Argentina at the MCG in front of
96,000 people in June 2017 and the All Blacks against the
Barbarians at Twickenham, in November 2017, in front of a crowd of
over 62,500.
Other events TLA organised included: USA against the Irish
national rugby team at Red Bull Stadium in June; the 2017 American
College Football season opener in Sydney in August, with Stanford
University playing Rice University; the Australian national rugby
union team against the Barbarians, in October; the Pasifika
Challenge featuring the All Blacks against Samoa and Wales vs.
Tonga in a doubleheader at Eden Park, New Zealand in Auckland in
June; and TLA's Ice Hockey Classic touring Australia in June. TLA
has now built a suite of successful recurring events, providing
greater revenue visibility for the Group. Recurring events
include:
-- Four years of rugby in the US;
-- Three years of top club and international football matches in Australia;
-- Three years of matches with the New Zealand All Blacks;
-- Three years of TLA's Ice Hockey Classic in Australia;
-- Two years of bringing NCAA College Football to Australia; and
-- Two years of international rugby for the Irish Rugby Football Union ("IRFU")
TLA is in discussions with all the above rights holders for
longer term arrangements based off an established track record of
delivery and has extended in 2018 its work with New Zealand Rugby
("NZR"), the IRFU and the Ice Hockey Classic for a further
year.
TLA Australia continues to go from strength to strength,
exceeding the Board's expectations. During the year, it performed
work for clients such as Emirates at the Australian Open and, with
the US sports marketing team, the US Tennis Open, Cricket Australia
for the Ashes Series and Big Bash League, the Australian Football
League ("AFL") and the National Australia Bank during the year.
The US Sports Marketing group completed its restructuring in
2017 with the recruitment of new personnel bringing TLA new
services and client opportunities. With a solid foundation in
place, management has been encouraged by progress and is focused on
a return to growth in the US business.
Baseball Representation
The Baseball Representation division advises the on-field
activities of baseball players, including all aspects of players'
contract negotiations throughout their careers.
The Group holds one of the largest rosters of baseball clients
in the US and is well positioned to benefit from a high quality and
maturing roster. TLA had several MLB free agent clients in the
current off-season and a number of clients eligible for arbitration
and market-related salaries, thereby enabling the Group to
negotiate these contracts and secure the accompanying agency fees.
In the 2017-2018 off-season, the division negotiated contracts
worth up to $186 million (2016-2017 offseason: $274 million). The
current off-season contracts year on year fall in value reflects
the balance of TLA's roster with its younger players maturing
through arbitration and towards free agency, when larger contracts
are earned, while certain older players on the roster have
approached the point in their career where their earning potential
is lower. It also reflects a trend of clubs, investing in younger
players instead of older ones, which going forwards bodes well for
TLA given its younger player base.
Nine of TLA's clients were selected for the 2017 Major League
Baseball All Star game held in July 2017, the highest number of All
Star selections in TLA's history, and an increase over the four
clients selected for last year's game.
As announced in March 2017, the Group extended its employment
and earn-out agreements with key personnel in its Baseball North
America and Baseball Latin American businesses, incentivising them
to remain at TLA for at least another four years.
Revenue in Baseball Representation increased 18.3% to $15.5
million and Headline EBITDA increased by $2.9 million to $3.4
million (2016: $0.5 million).
Corporate Developments
Key appointments
TLA has divided the roles of US CFO and Group CFO and recruited
a new Group CFO, Richard Shamsi, who started with TLA on 2 January
2018.
Richard has held senior finance roles for more than 15 years and
has considerable experience in both the media and agency spaces,
particularly working for UK based companies with extensive US
operations. Most recently, he served as Chief Financial Officer of
AKQA, a wholly-owned operating company of WPP PLC and a leading
full service digital agency where he was heavily involved in
improving the operating and financial performance of the business.
Prior to this, he was the CFO of Weve Limited, a market-leading
mobile media, data analytics, consultancy and technology solutions
business, which was established as a joint venture between O2,
Vodafone and EE. He was instrumental in improving the financial
controls and monitoring processes for Weve and overseeing O2's
buyout from the joint venture in 2015.
TLA also appointed Matthew Craig as North American CFO on the 31
October 2017. Prior to joining TLA, Matthew worked for two years as
the Director of Accounting and Analysis at Disney Theatrical Group,
the live events division of Disney which includes theme parks,
Broadway productions and cruise ships. Previously he was Director
of Finance for ten years at the leading sports and entertainment
agency, WME, (formerly International Management Group ("IMG")). In
his role at IMG Matthew supervised the reporting of all North
American Media properties including entertainment, archive,
digital, licensing, consulting, international distribution, post
production facilities and various acquisitions.
Outlook
In 2018 the fundamentals of the business remain sound and
trading has started well, particularly in Sports Marketing
Australia. In Baseball, TLA has a high-quality and maturing roster
of clients. TLA's Sports Marketing division organised the Group's
highest number of events in 2017 and TLA expects to continue to
organise popular flagship events in American Football, Soccer,
Rugby and other sports played in front of large audiences. As a
result, the Board looks forward to the future with confidence.
FINANCE REVIEW
Review of the Group's financial performance for the year ended
31 December 2017.
Summary of RESULTS
Year ended
31 December
2016
Total
2016
Year ended 31 December 2017 $000
-------------
Total
Sports
Baseball Marketing Central 2017
$000 $000 $000 $000
---------- ------------ -------- -------- -------------
Headline EBITDA
prior to provisions
and foreign exchange 4,259 6,521 (4,540) 6,240 5,978
Provision adjustments
(1) (908) (659) - (1,567) (5,923)
One-off forex
charge (2) - - - - (453)
Headline EBITDA 3,351 5,862 (4,540) 4,673 (398)
Amortisation of
intangibles (2,431) (1,165) - (3,596) (4,863)
Depreciation - (81) (167) (248) (179)
Exceptional and
acquisition related
(costs)/income (2,503) (433) (2,977) (5,913) 1,597
Share based payments - - (1,066) (1,066) (3,135)
---------- ------------ -------- -------- -------------
Statutory operating
profit/(loss) (1,583) 4,183 (8,750) (6,150) (6,978)
---------- ------------ -------- -------- -------------
2017 AND 2016 Headline ebitda
Year ended Year ended %
31 December 31 December
2017 2016
Baseball (3) 4,259 3,940 8.1
Sports Marketing (3) 6,521 5,848 11.5
Central (4,540) (3,810) (19.2)
Headline EBITDA pre-provisions
and one-off forex charge 6,240 5,978 4.4
Provisions (1,567) (5,923) 73.5
One-off forex charge - (453) -
Headline EBITDA 4,673 (398) 1,274
The increase in central costs primarily relate to the finance
team and the aligning of the central cost base.
1 Provisions relate to irrecoverable trade and other receivables
in the US business.
2 The one-off foreign exchange charge in 2016 related
predominately to a loss on a forward currency contract relating to
the International Champions Cup ("ICC") which had to be settled
before the ICC proceeds were received.
3 Prior to provisions for irrecoverable trade and other
receivables in the US business.
STATUTORY LOSS BEFORE TAX
For the period ended 31 December 2017, the Group reported a
statutory loss before tax of $8.5 million (2016: loss of $9.3
million). This loss includes the impact of:
-- $2.1 million exceptional costs relating to the adjustment for
an amended, integrated earn out for the Baseball businesses;
-- $1.4 million relating to additional external resources to support the detailed review into the misappropriation of funds by the former CFO Donald Malter; including the costs of forensic accountants, the interim CFO and legal counsel. As set out in prior announcements the Group continues to pursue historic misapproiated funds under its insurance policy;
-- charges for amortisation and impairment totalling $3.6 million (2016: $4.9 million);
-- non-cash costs for share-based payment charges of $1.1
million (2016: $3.1 million), the long-term incentive plan which
this charge relates to lapsed in September 2017;
-- provisions for irrecoverable trade and other receivables in
the US business (both Baseball and Sports Marketing) of $1.6
million (2016: $5.9 million); and
-- impairment $0.8 million of loans to other ventures.
Performance at the operating level, before interest, tax,
depreciation, amortisation and exceptional charges showed a Group
Headline EBITDA of $4.7 million (2016: loss of $0.4 million). Group
Headline EBITDA margin of 13.4%. (2016: -1.2%). 2017 and 2016 was
materially impacted by provisions (that relate to a final cleaning
up of historical issues relating to irrecoverable trade debtors and
other receivables within the US business), and Group Headline
EBITDA, prior to these charges, was $6.2 million (2016: $6.0
million).
The improvement in Headline EBITDA reflects:
-- Baseball Representation's continued profitability;
-- The beginning of the turnaround in the US sports marketing business;
-- The continued excellent performance of the Australian sports marketing business;
-- The increased profitability of events; and
-- Higher central costs both in the US and the UK;
- In the US this related to increasing the US finance function; and
- In the UK the investment into a Global Head of Events to drive new events for the Group.
Headline diluted earnings per share using Headline profit
attributable to owners of the company was 1.03 cents (2016:
earnings 1.00 cents).
Statutory diluted loss per share attributable to owners of the
company was 5.43 cents (2016: loss 4.32 cents).
STATUTORY RESULTS Year ended Year ended %
31 December 2017 31 December 2016
$000 $000 Change
Revenue 51,100 43,425 17.7
Operating loss (6,150) (6,978) 11.9
Statutory loss before tax (8,457) (9,259) 8.7
Statutory diluted loss per share (cents) (5.43) (4.32) (25.7)
HEADLINE RESULTS %
Year Year ended
ended 31 December
31 December 2016
2017
$000 $000 Change
Revenue 51,100 43,425 17.7
Gross profit 34,800 32,778 6.2
Headline EBITDA 4,673 (398) 1,274
Headline EBITDA margin
(1) 13.4% -1.2% 14.6pp
Headline profit/(loss)
before tax (2) 2,999 (1,876) 259.9
Headline diluted earnings
per share (cents) 1.03 1.00 3.0
(1) Headline EBITDA over gross profit
(2) Headline EBITDA after bank interest and depreciation
TLA segments its operations into Sports Marketing and Baseball
Representation as follows:
Year ended 31 December 2017
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 15,476 35,624 - 51,100
Cost of sales (499) (15,801) - (16,300)
---------------- ----------- -------- ---------
Gross profit 14,977 19,823 - 34,800
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (11,626) (13,961) (4,540) (30,127)
Headline EBITDA 3,351 5,862 (4,540) 4,673
Amortisation of
intangibles (2,431) (1,165) - (3,596)
Depreciation - (81) (167) (248)
Exceptional items
and acquisition
related costs (2,503) (433) (2,977) (5,913)
Share based payments - - (1,066) (1,066)
Operating (loss)/profit (1,583) 4,183 (8,750) (6,150)
Finance income and
costs (2,307)
Loss before tax (8,457)
Tax 671
Loss for the year (7,786)
Year ended 31 December 2016
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 13,078 30,347 - 43,425
Cost of sales (57) (10,590) - (10,647)
---------------- -----------
Gross profit 13,021 19,757 - 32,778
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (12,551) (16,362) (4,263) (33,176)
Headline EBITDA 470 3,395 (4,263) (398)
Amortisation and
impairment of intangibles (3,127) (1,736) - (4,863)
Depreciation - (78) (101) (179)
Exceptional items
and acquisition
related costs 4,795 (1,439) (1,759) 1,597
Share based payment - - (3,135) (3,135)
Operating profit/
(loss) 2,138 142 (9,258) (6,978)
Finance costs (2,281)
Loss before tax (9,259)
Tax 3,101
Loss for the year (6,158)
DIVISIONAL PERFORMANCE
Sports Marketing
2017 2016 %
$000 $000 Change
------- ------- -------
Revenues 35,624 30,347 17.4
Gross profit 19,823 19,757 0.5
Headline EBITDA 5,862 3,395 72.7
Headline EBITDA Margin 29.5% 17.2% 12.3pp
Operating profit 4,183 142 2,845
Sports Marketing for the year ending 31 December 2017 delivered
revenue of $35.6 million, Headline EBITDA of $5.9 million and
operating profit of $4.2 million. The division's reported revenues
grew by 17.4%. This growth was partly due to increases in revenues
from events, where TLA acted as principal, and revenue increases in
the merchandise business within TLA Australia.
Due to the high cost of sales in delivering events or
merchandise within TLA Australia, a more effective measure of
performance is gross profit which increased by 0.5% to $19.9
million. This reflects the strong performance of the Australian
sports marketing and TLA's events businesses, off-set by lower
gross profit in the Group's US Sports Marketing business.
Headline EBITDA margin increased from 17.2% to 29.5% during the
year; driven by profit increases in Events and the Australia Sports
Marketing business.
Baseball Representation
2017 2016 %
$000 $000 Change
-------- ------- --------
Revenue 15,476 13,078 18.3
Gross profit 14,977 13,021 15.0
Headline EBITDA 3,351 470 613.0
Headline EBITDA Margin 22.4% 3.6% 18.8pp
Operating (loss)/profit (1,583) 2,138 (174.0)
Performance for the year ended 31 December 2017 saw revenue
increase to $15.5 million, Headline EBITDA of $3.4 million and
gross profit of $15.0 million. The Headline EBITDA reflects a more
normal level of provisioning. Gross profit increased by 15% and the
statutory operating loss was $1.6 million. The statutory operating
profit is higher than the Headline EBITDA in 2016 because of an
exceptional credit relating to the adjustment to expected
contingent consideration payable in the future. The statutory
operating loss in 2017 is stated after amortisation ($2.4 million);
fair value adjustments to contingent consideration ($0.4 million);
and accounting of performance related contingent consideration
extensions ($2.1 million).
CASH FLOW AND BANKING ARRANGEMENTS
Cash balances as at 31 December 2017 were $11.6 million (31
December 2016: $8.6 million), with net debt of $16.5 million (31
December 2016: $22.1 million).
The Group's banking facilities were renewed on 3 November 2017
with Sun Trust Bank, its existing bankers. The facilities comprise
an amortising term loan of $23.75 million and a revolving facility
of $5 million. The facilities mature in March 2020. The interest
margin varies between 3% and 5.5% over US LIBOR, depending on the
Group's leverage ratio and it is secured against the assets of the
Group. The term loan has quarterly repayments over the life of the
loan together with a final bullet repayment. In May 2018 the
repayment schedule together with covenants were revised to provide
further funding flexibility. The debt rescheduling moved $2.6
million of repayments previously due before March 2019 to later in
2019.
Changes in the US tax rate announced in the year incentivised a
number of clients to prepay their commissions earlier than they
might otherwise have done, which improved cash inflows and
contributed to the reduction in net debt.
$5.4 million of cash earn-out is payable for 2017 and prior year
performance which were due to be paid in 2018 and which have been
rescheduled under pre-existing subordination agreements. The timing
of these earnout payments will be governed by when the Board
believes it has sufficient cash headroom to make such payments;
current expectation is late 2019. These relate to the vendors of
ESP (TLA's Australian sports marketing business) and the vendors of
PEG (part of TLA's Baseball business). In addition, the vendors of
ESP will be issued $1.2 million of TLA shares to settle the share
portion of their earn-out payment. The Group has the option to also
pay $0.6 million of the cash earn-out in shares of the Company to
the vendors of PEG, which it intends to exercise.
BALANCE SHEET POSITION
The Group has Net Assets at the end of December 2017 of $18.6
million (31 December 2016: $24.7 million). Furthermore, Current
Assets at 31 December 2017 of $24.8 million (31 December 2016:
$25.1million), with total liabilities (current and on-current) of
$58.0 million (31 December 2016: $52.9 million) however the
Directors' forecasts and sensitivity analysis indicate that the
Group is expected to have adequate financial resources to meet its
liabilities as they fall due for the foreseeable future.
FUTURE DEVELOPMENTS
The Group intends to continue its strategy of organic growth.
This strategy is focused on geographic expansion, whereby TLA
offers its current services in new geographies; hires senior fee
earners; or expands into complementary services that TLA provides
to its clients.
DIVIDS
The board does not propose a final dividend for the year and
will review the dividend policy at the half year 2018 (2017:
nil).
Key Performance Indicators ("KPI's")
The Group manages its operational performance using a number of
KPIs. Performance against these KPIs was as follows:
KPI Year ended Year ended
31 December 31 December
2017 2016
Headline EBITDA $4.7 million $(0.4) million
Headline EBITDA Margin 13.4% (1.2)%
Loss before tax $(8.5) million $(9.3) million
Off-season contracts negotiated $186 million $274 million
Debtor collection days 70 days 83 days
TLA Worldwide plc
Group Income Statement
For the year ended 31 December 2017
Year ended Year ended
31 December 2017 31 December 2016
Note $000 $000
Revenue 1 51,100 43,425
Cost of sales (16,300) (10,647)
Gross profit 34,800 32,778
Administrative
expenses (40,950) (39,756)
Operating loss (6,150) (6,978)
Headline EBITDA 4,673 (398)
Amortisation and
impairment of
intangibles (3,596) (4,863)
Depreciation (248) (179)
Exceptional and
acquisition related
(costs)/income 3 (5,913) 1,597
Share based payments (1,066) (3,135)
Operating loss (6,150) (6,978)
Net Finance costs 4 (2,307) (2,281)
Loss before taxation (8,457) (9,259)
Taxation 5 671 3,101
(7,786) (6,158)
Loss for the year
Loss for the period from continuing
operations attributable to:
Owners of the company (7,786) (6,189)
Non-controlling
interest - 31
_______________ _______________
(7,786) (6,158)
Loss (pe per share from continuing
operations:
Basic (cents) 2 (5.43) (4.32)
Diluted (cents) 2 (5.43) (4.32)
TLA Worldwide plc
Group Statement of Comprehensive Income
For the year ended 31 December 2017
Year ended Year ended
31 December 2017 31 December 2016
$000 $000
Loss for the year (7,786) (6,158)
Exchange differences on translation of overseas operations 624 (5,085)
Total comprehensive expense (7,162) (11,243)
Total comprehensive expense attributable to:
Owners of the company (7,162) (11,274)
Non-controlling interests - 31
____________________ _______________
(7,162) (11,243)
TLA Worldwide plc
Group Balance Sheet
31 December 2017
31 December 2017 31 December 2016
Note $000 $000
Non-current assets
Goodwill 6 43,259 42,156
Intangible assets 1,106 4,581
Property, plant and equipment 544 480
Deferred tax asset 6,875 5,324
Derivative financial instruments 15 -
51,799 52,541
Current assets
Trade and other receivables 13,199 16,491
Cash and cash equivalents 11,630 8,566
24,829 25,057
Total assets 76,628 77,598
Current liabilities
Trade and other payables (19,693) (15,612)
Borrowings 7 (6,250) (30,625)
Contingent consideration 8 (6,552) -
(32,495) (46,237)
Net current liabilities (7,666) (21,180)
Non-current liabilities
Borrowings 7 (21,875) -
Contingent consideration 8 (3,671) (6,602)
Derivative financial instruments - (76)
(25,546) (6,678)
Total liabilities (58,041) (52,915)
Net assets 18,587 24,683
Equity
Share capital 4,473 4,473
Share premium 46,079 46,079
Merger reserve 309 309
Foreign currency reserve (6,263) (6,887)
Share based payments reserves - 3,859
Employee share reserve - (9,633)
Retained loss (26,011) (13,517)
Total equity attributable to owners of the Company 18,587 24,683
TLA Worldwide plc
Group Statement of Cash Flows
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Note $000 $000
Net cash from operating activities 9 7,583 1,897
Investing activities
Purchases of property, plant and equipment (297) (389)
Contingent consideration paid 8 (750) (1,600)
Purchase of other intangible assets (42) (21)
Net cash used in investing activities (1,089) (2,010)
Financing activities
Interest paid 4 (1,426) (1,299)
Repayment of borrowings (2,500) (2,500)
Increase in borrowings - 10,071
Dividend paid - (2,375)
Acquisition of non-controlling interest - (1,143)
Net cash from financing activities (3,926) 2,754
Net increase in cash and cash equivalents 2,568 2,641
Cash and cash equivalents at beginning of the year 8,566 6,312
Foreign currency translation effect 496 (387)
Cash and cash equivalents at end of the year 11,630 8,566
TLA Worldwide plc
Group Statement of Changes in Equity
For the year ended 31 December 2017 and 2016
Share Share Merger Foreign Non-controlling Share Employee Retained Total
Capital Premium Reserve Currency interest based share Loss
Reserve payment reserve
reserves
----------------- -------- -------- -------- --------- ---------------- --------- --------- --------- ---------
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1
January
2016 4,461 46,079 - (1,802) 134 724 (9,633) (4,068) 35,895
Total
comprehensive
income for the
year - - - (5,085) 31 - - (6,189) (11,243)
Dividend - - - - - - - (1,949) (1,949)
Equity issued
during
the year 12 - 309 - - - - - 321
Credit to equity
for
share based
payments - - - - - 3,135 - - 3,135
Acquisition of
non-controlling
interest - - - - (165) - - (1,311) (1,476)
Balance at 1
January
2017 4,473 46,079 309 (6,887) - 3,859 (9,633) (13,517) 24,683
Total
comprehensive
income for the
year - - - 624 - - - (7,786) (7,162)
Credit to equity
for
share based
payments - - - - - 1,066 - - 1,066
Share options
expired - - - - - (4,925) - 4,925 -
Transfer to
retained
earnings - - - - - - 9,633 (9,633) -
Balance at 31
December
2017 4,473 46,079 309 (6,263) - - - (26,011) 18,587
Notes to the announcement of final results
Principal accounting polices
While the financial information included in this final results
announcement has been prepared in accordance with the recognized
and measurement criteria of International Financial Reporting
Standards (IFRS), this announcement does not itself contain
sufficient information to comply with IFRSs.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2017,
or year ended 31 December 2016, but is derived from those accounts.
Statutory accounts for 2016 have been delivered to the Registrar of
Companies and those for 2017 will be delivered following the
Company's annual general meeting. The auditor has reported on those
accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under s498(2) or (3) Companies Act
2006.
Going concern
The Directors have reviewed forecasts for the years ending 31
December 2018 and 31 December 2019 and these forecasts covered both
a base case and also consideration of reasonable downside
scenarios. The forecasts show that in the base case and reasonable
downside scenarios, there are adequate facilities available to meet
liabilities, and also satisfy financial covenants requirements.
Key factors taken into account in assessing going concern
include:
-- The revised banking facilities agreed in May 2018 which
reflect deferral of $2.6 million of repayments to the second half
of 2019 and revised covenant levels; together with deferral of
earn-outs of $4.8 million under the subordination agreements as the
Group had insufficient resources to meet them. These payments are
deferred until late 2019, to outside of the going concern
assessment period, although they remain a liability of the Group to
be paid in the future when the Group has adequate financial
resources to make those payments;
-- Recognition of circumstances in the US business in 2016 and
2017, and revenue assumptions made around US performance in
Baseball and Sports Marketing;
-- Events revenue is contingent on success of events, which
inherently carry risk and therefore the Group has had mixed past
success, and this is therefore reflected in downside scenario;
-- Certain cost saving initiatives have been commenced in the US
and factored into forecasts and need to be achieved, and therefore
the risk of non-ahievement is reflected in downside scenerio;
and
-- The forecasts assume no further acquisitions and no further material investments.
Considering the above, at the time of approving the financial
statements, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future although on a
downside scenario basis has little headroom on either a cash or
covenant basis. The Group's revised banking facilities, as outlined
in note 7, are no longer disclosed as repayable within 12 months,
as was required in the 31 December 2016 Group balance sheet, and
the revised repayment terms and loan covenants are such that the
Directors do not anticipate any future loan covenant issues arising
in the forecast period. The Board therefore continues to adopt the
going concern basis of accounting in preparing the financial
statements.
1. Segmental Analysis
The Group reports its business activities in two areas: Baseball
Representation and Sports Marketing. Unallocated represents the
Group's costs as a public company, certain exceptional items and
acquisition related costs (see note 3). The Group derives its
revenues in the United States of America.
Baseball Representation - primarily assists the on-field
activities of baseball players, including all aspects of a player's
contract negotiation.
Sports Marketing - primarily assists with the on-field and
off-field activities of athletes; it represents broadcasters and
coaches in respect of their contract negotiations; manages,
produces events, primarily in sports, PR and activation, media
consultancy and the selling of merchandise, primarily in sport
All of the Group's revenue arises through the rendering of
services. In the year ended 31 December 2017, there were no clients
who generated in excess of 5 percent of total revenue (31 December
2016: nil).
Year ended 31 December 2017
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 15,476 35,624 - 51,100
Cost of sales (499) (15,801) - (16,300)
Gross profit 14,977 19,823 - 34,800
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (11,626) (13,961) (4,540) (30,127)
Headline EBITDA 3,351 5,862 (4,540) 4,673
Amortisation and
impairment of intangibles (2,431) (1,165) - (3,596)
Depreciation - (81) (167) (248)
Exceptional items
and acquisition
related costs (2,503) (433) (2,977) (5,913)
Share based payments - - (1,066) (1,066)
Operating profit/
(loss) (1,583) 4,183 (8,750) (6,150)
Finance income and
costs (2,307)
Loss before tax (8,457)
Tax 671
Loss for the year (7,786)
Assets 30,535 38,663 7,430 76,628
Liabilities (9,897) (18,878) (29,266) (58,041)
Capital employed 20,638 19,785 (21,836) 18,587
1. Segmental Analysis (Continued)
Year ended 31 December 2016
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 13,078 30,347 - 43,425
Cost of sales (57) (10,590) - (10,647)
Gross profit 13,021 19,757 - 32,778
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (12,551) (16,362) (4,263) (33,176)
Headline EBITDA 470 3,395 (4,263) (398)
Amortisation of
intangibles (3,127) (1,736) - (4,863)
Depreciation - (78) (101) (179)
Exceptional items
and acquisition
related costs 4,795 (1,439) (1,759) 1,597
Share based payments - - (3,135) (3,135)
Operating profit/
(loss) 2,138 142 (9,258) (6,978)
Finance costs (2,281)
Loss before tax (9,259)
Tax 3,101
Loss for the year (6,158)
Assets 39,215 32,290 6,093 77,598
Liabilities (2,086) (5,987) (44,842) (52,915)
Capital Employed 37,129 26,303 (38,749) 24,683
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in the principal
accounting policies. Segment profit represents the profit earned by
each segment, central administration costs including Directors'
salaries, exceptional, acquisition and finance costs, and income
tax expense. This is the measure reported to the Group's Chief
Executive for the purpose of resource allocation and assessment of
segment performance.
2. Loss per share
Year ended Year ended
31 December 31 December
2017 2016
cents per cents per
share share
Basic loss per share (5.43) (4.32)
Diluted loss per share (5.43) (4.32)
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for calculating diluted earnings
per ordinary share are identical to those used for basic loss per
ordinary share. At 31 December 2017 all share options had expired.
In 2016 the exercise of share options that were out of the money
would have had the effect of reducing the loss per ordinary share
and were therefore not dilutive under the terms of the IAS 33.
The calculation of loss per share is based on the following
data:
2017 2016
$000 $000
Loss for the purposes of
basic earnings per share
being net loss attributable
to owners of the Company (7,786) (6,189)
Number of Shares
Weighted average number of
shares in issue: 143,427,199 143,193,261
There were no shares with a dilutive, or potentially dilutive,
impact (2016: nil).
Headline earnings per share (see below)
Year ended Year ended
31 December 31 December
2017 2016
cents per cents per
share share
Basic headline earnings per
share 1.03 1.00
Diluted headline earnings
per share 1.03 1.00
Headline earnings is defined as profit or loss for the year
adjusted to add back amortisation of acquired intangible assets and
any other acquisition related charges, share based payment charges,
fair value movement on financial derivatives, unwinding of discount
on contingent consideration and exceptional items.
The Headline profit attributable to owners of the Company used
in calculating the basic and diluted adjusted earnings per share is
reconciled below:
Year ended Year ended
31 December 31 December
2016
2017 $000
$000
Loss attributable to shareholders (7,786) (6,189)
Adjusted for
Exceptional and acquisition
related costs/(income) (see
note 3) 5,913 (1,597)
Share based payments 1,066 3,135
Amortisation and impairment
of intangible assets 3,596 4,863
Fair value (profit)/loss
on interest rate swap (91) 62
Amortisation of discount
on deferred consideration 972 617
Tax effect of adjusting items (2,196) 543
Headline profit attributable
to owners of the Company 1,474 1,434
3. Exceptional and acquisition related costs
The exceptional and acquisition related costs/ (gains) relate
to:
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Exceptional items:
Impairment of loans to TLA rights
business * - 1,230
Legal and professional costs
** 1,422 286
Loan refinancing costs 496 -
Impairment of loans in other
ventures *** 803 -
2,721 1,516
Acquisition related costs/(gains):
Costs related to potential acquisition 121 -
Integration costs relating to
ESP acquisition - 252
Costs relating to offer by potential
investors 135 1,473
Revised earn out agreement costs
(note 8) 2,088 -
Loyalty bonus arising on acquisition - 250
Fair value movement on valuation
of contingent consideration
(note 8) 848 (5,088)
3,192 (3,113)
Total exceptional and acquisition
related costs / (gains) 5,913 (1,597)
* The Loan impairment relates to the rights business in which
the Group invested to establish "TLA sales". The loan was written
off when the business was closed in December 2016.
** Legal and professional costs incurred as a consequence of the
misappropriation of funds and accounting issues, including the
costs of forensic accountants, the interim CFO and legal counsel
(note 10).
*** The impairment of loans in other ventures relates to working
capital provided to a start-up business.
4. Net Finance Costs
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Interest on bank overdrafts and other loans (1,426) (1,299)
Fair value loss on interest rate swaps - (62)
Amortisation of borrowing costs over the term of the loan - (303)
Amortisation of discount on contingent consideration (972) (617)
Total finance costs (2,398) (2,281)
Fair value gain on interest rate swaps 91 -
Total finance income 91 -
Net Finance Cost (2,307) (2,281)
5. Taxation
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
UK Taxes
Current year (373) (286)
Adjustments in respect
of prior year 36 (47)
US Taxes
Current year (115) 3,122
Adjustments in respect
of prior year 153 (89)
Australian Taxes
Current year (618) (461)
Adjustments in respect
of prior year - (12)
Total current tax (917) 2,227
Deferred tax - current
year 3,081 (66)
Deferred tax - adjustments
in respect of prior year (1,493) 940
1,588 874
Total tax credit 671 3,101
Taxation is calculated at the rates prevailing in the respective
jurisdiction.
6. Goodwill
Cost and net book value $000
At 1 January 2016 and 2017 42,156
Exchange differences 1,103
At 31 December 2017 43,259
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGUs) that are expected
to benefit from that business combination. The carrying amount of
goodwill had been allocated as follows:
2017 2016
$000 $000
Baseball representation 22,902 22,902
Sports Marketing USA 6,120 6,120
Sports Marketing Australia 14,237 13,134
Total TLA Worldwide 43,259 42,156
7. Borrowings
2017 2016
$000 $000
Secured borrowing at amortised
cost
Bank loans 23,125 15,625
Revolving credit facilities 5,000 15,000
28,125 30,625
Total borrowings
Amount due for settlement within
1 year 6,250 30,625
Amount due for settlement between
1 - 5 years 21,875 -
28,125 30,625
All borrowings are denominated in US dollars. The other
principal features of the Company's borrowings as at 31 December
2017 are as follows:
-- the interest margin varies between 3% and 5.5% over US LIBOR,
depending on the Group's leverage ratio;
-- fees of between 1.0% to 2.0% are payable on any payments made
over and above the quarterly agreed repayment schedule;
-- the facilities are secured against trade receivables and contracted revenue;
-- covenants are in place encompassing an agreed fixed charge
ratio and EBITDA being equal to or greater than 80%-85% of
quarterly budget;
-- the loan repayments are made quarterly over the life of the
loan plus a final bullet repayment; and
-- the facilities are renewable in March 2020.
8. Contingent Consideration
Under the terms of the acquisition agreements in relation to
Legacy, PEG and ESP (including ESPM) the Group has obligations to
the vendors of those businesses as set out below:
2017 2016
$000 $000
Payable in less than one year 6,552 -
Payable in one to two years 1,651 5,774
Payable in two to five years 900 1,821
Payable in more than 5 years 1,820 -
Impact of discounting on provisions
payable in cash (700) (993)
Total contingent consideration
payable 10,223 6,602
In March 2017, the Group extended its employment and earn-out
agreements with key personnel in its Baseball North America and
Baseball Latin American businesses incentivising them to remain at
TLA for at least another four years.
There are subordination agreements in place that govern when the
contingent consideration become payable. The timing of these
earnout payments will be determined when the Board believes it has
sufficient cash headroom to make such payments and those payments
are in accordance with any banking covenants. Based on current
financial projections and after assessing the sensitivities within
those projections, the current expectation is these cash earnouts
will not be paid until late 2019.
The Group has estimated the fair value of this liability based
on the anticipated future EBIT of each underlying business. This
value has then been discounted back using 10.69% in the case of
ESPM and 4.76% in the case of Legacy and PEG.
The cash contingent consideration requires the achievement of
certain EBIT targets over the period of each agreement.
In addition, the achieved EBIT must be converted into cash. To
the extent that the conversion of EBIT to cash has not been
achieved for each year, the Legacy and PEG earn-outs are reduced by
a proportion of the cash shortfall in that year.
The Group has the option to settle 30% of an estimated amount up
to $1,600,000 payable to PEG in shares in TLA (NY) Inc. In
accordance with the terms of the exchange Agreement, these shares
can be exchanged for Ordinary Shares in the capital of TLA
Worldwide plc at any time at the option of the vendors.
9. Notes to the Statement of Cash Flow
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Operating loss for the year (6,150) (6,978)
Adjustments for:
Amortisation and impairment
of intangible assets 3,596 4,863
Depreciation of tangible assets 248 179
Loss on disposal of property,
plant and equipment - 110
Share based payment charges 1,066 3,135
Fair value movement on valuation
of contingent consideration 848 (5,088)
Additional contingent consideration 2,088 -
Provision for irrecoverable
receivables 1,567 5,923
Operating cash flows before
movements in working capital 3,263 2,144
Decrease in inventory - 117
Decrease/(Increase) in receivables 1,214 (1,145)
Increase in payables 2,134 1,341
Cash generated by operations 6,611 2,457
Income taxes received / (paid) 972 (969)
Other non-cash movements (foreign
exchange) - 409
Net cash from operating activities 7,583 1,897
Cash and cash equivalents
Cash and bank balances 11,630 8,566
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets is approximately equal to their
fair value.
10. Related parties
Brian Peters is deemed to be a related party as a beneficiary of
the agreement relating to the acquisition of LS Legacy Sports LLC.
During 2017 Brian Peters received a payment of $375,000 against his
earn out extension and this has been offset against that future
liability (see note 8). As at 31 December 2017 he owed $375,000
(2016: $nil) to the Company.
Greg Genske is deemed to be a related party as a director and
beneficiary of the agreement relating to the acquisition of LS
Legacy Sports LLC. During 2017 Greg Genske received a payment of
$375,000 against his earn out extension and this has been offset
against that future liability (see note 8). Also during 2017, Greg
Genske received an advance of $55,639 which was repaid in January
2018. As at 31 December 2017 he owed $430,639 to the Company (2016:
$163,756).
Donald Malter is deemed to be a related party as a director of
the Company during the year. As at 31 December 2017 Bungalow
Entertainment LLC, a company in which Donald Malter is the sole
shareholder, owed the company $355,000 (2016: $355,000). In
addition, Donald Malter owed the company $333,737 (2016: $333,737).
These items have arisen as a result of funds misappropriated from
the Group and an insurance claim has been submitted in respect of
recovering the funds owed by Donald Malter, but which has not been
recognised in these financial statements.
During the year the group repurchased shares in the subsidiary
undertaking, TLA Acquisitions Limited, from the International
Sports Pty Ltd, a company controlled by Bart Campbell, Michael
Principe and Dwight Mighty, as legally required under the Group's
LTIP scheme which expired on 30 September 2017, for consideration
of $78,777, $78,777 and $39,389 respectively for a total of
14,597,821 LTIP shares.
11. Annual report and accounts
The Company will shortly be publishing its annual report and
accounts including a notice of AGM. These will be made available on
the Company's investor relations website at www.tlaworldwide.com.
The AGM is to be held at the offices of DAC Beachcroft, at 100
Fetter Lane, EC4A 1BN at 11 am on 25 June 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LIFFEETIIVIT
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