Primorus Inv. Regulatory News (PRIM)

20 Mar 2006 07:02

CSS Stellar PLC20 March 2006 For Immediate Release 20 March 2006 CSS Stellar plc ("CSS" or "the Group") Preliminary Results for the year ended 31 December 2005 CSS Stellar plc, the entertainment and sports management and marketing group,today announces its preliminary results for the year ended 31 December 2005. Highlights: • Operating profit adjusted for amortisation and impairment of goodwill of £0.8 million (2004: £1.5 million) • Strategy to be focused on Entertainment • Reduction in administrative expenses to £24.7 million (2004: £31.9 million) • Structured Bank debt reduced by 54% to £1.8 million, down from £3.8 million • Disposal of loss making North American operations • Disposal of GEM Europe generated £1.9 million in cash • Reduction in Central costs of 26% Commenting on the results Peter Owen, Chairman, stated: "I am delighted to report results that are ahead of the Board's expectationswhen we announced our interim results in September 2005. We believe that theGroup now has a stable operational platform and that it will deliver significantgrowth in the coming years to shareholders by focusing on the development of itsoperating base in the entertainment industry, where it has a leading marketposition." For further information please contact:CSS StellarSean Kelly, Chief Executive Tel: 020 7466 5000 (am)Kevin Rose, Finance Director Tel: 020 7078 1400 (thereafter) Buchanan CommunicationsBobby Morse/Rebecca Skye Dietrich Tel: 020 7466 5000 CHAIRMAN'S STATEMENT Overview and Strategy I am pleased to report the Group's 2005 results, which are ahead of the Board'sexpectations at the half-year. The Group achieved its key objectives, stabilising European operations,re-structuring North America, reducing debt and minimising central overheads.The Board is now focusing on improving margins this year and expanding thebusinesses which have the greatest potential for growth and improvingshareholder return. We anticipate that our leading market position in theentertainment sector of the media industry will provide the company with theopportunity to achieve these aims. Financial Results The year-end results were also ahead of market expectations with an operatingprofit before amortisation and impairment of goodwill of £781,000 (2004:£1,466,000). The major difference between 2004 and 2005 was in our NorthAmerican businesses, which recorded an operating loss of £83,000 (2004: profitof £615,000). We have now reduced our exposure to this lower margin business,and as reported in our Interim Results in September 2005, refocused the Group onits core markets. The Talent and Events businesses have both had pressure ontheir margins, as explained in the Chief Executive's Operational Review, whichwe expect to be redressed in 2006. The Group has undergone a significant amount of restructuring during the year,with the disposal or closure of several businesses, the net effect of which is aloss of £843,000, of which £725,000 was provided at the half year. Further tothis, the Board has reviewed the value of goodwill held in the Balance Sheet andconcluded that a write down in goodwill of £14.8 million was required, of which£13.7 million was provided for at the half year. Current Trading The Group's first two months of trading in 2006 are in line with the Board'sexpectations. In the Entertainment area of the business, trading is ahead of theprior year. Board Changes The Group has already announced the retirement of John Webber as Chairman andthanks him for his considerable contribution to the Board. John will leave theBoard at the end of March 2006. In addition, Kevin Rose intends to resign asGroup Finance Director on 24 March 2006 to take up a more senior positionoutside the Group; the Board also thanks him for his substantial contribution tothe Group. Sean Kelly, who previously was finance director, will oversee thefinances of the Group until a suitable appointment is made. Peter OwenChairman20 March 2006 CHIEF EXECUTIVE'S OPERATIONAL REVIEW The 2005 results clearly demonstrate the effect of the restructuring workundertaken in Europe in 2004, but also show how the lower margin North Americanbusinesses were vulnerable to client losses. These results are described in more detail below. Talent Management Overall revenues for the division rose to £12.1 million (2004: £10.9 million) anincrease of 11%. Operating profits prior to amortisation were £1.1 million(2004: £1.4 million), which is primarily due to a decrease in profit arising inthe Sports business which will be reversed in 2006, as some of the youngerclients such as Dan Wheldon and Andrea Dovizioso begin to generate significantlymore revenue. Sports The Group's clients continued to achieve success in 2005. Juan Pablo Montoya wonthree Formula 1 races during the year. Englishman Dan Wheldon, now US-based, wonboth the Indy 500 and the IRL championship. Sebastien Loeb retained his WorldRally Championship title. A number of commercial deals were handled by CSSStellar on behalf of their clients, most notably, Dan Wheldon's move to theGanassi race team and the management of the Citgo motorsports programme focusedon our client, Milka Duno. In football, the England football team qualified for the 2006 World Cup and SirBobby Robson's autobiography became a best-seller, reaching number one in thehard-back sales list. In golf, the Group's strategy continues to be to build up a representationbusiness that can manage clients on both the US and European Tours. The USrepresentation is through our associate Hambric Sports Management (HSM) and theEuropean business has been built up over the last three years. Although we havemade a provision against our investment in HSM of £1.0 million, the golfdivision has now built up a portfolio of outstanding young clients, and thispart of the Sports division is expected to make a profit in 2006. During 2005,Gonzalo Fernandez Castano won his first European PGA golf event, the Dutch Open,and both Oliver Wilson and Francesco Molinari continued to make progress on TheEuropean Tour. The strength and depth of the client base within Sports continues to grow and anumber of new clients were signed during 2005 including Indian cricket star,Sachin Tendulkar, round-the-world yachtsman, Alex Thomson and Formula 1 driver,Tiago Monteiro. Entertainment The management representation of television presenters continued to do verywell. Pamela Stephenson is the latest star to become a client and she joinsPiers Morgan, whose reputation as a presenter is growing all the time, andestablished TV stars Anne Robinson and Michael Parkinson, whose shows continueto attract excellent TV audience ratings. PFD's stable of acting and writing talent continues to go from strength tostrength. Keira Knightley's role in Pride and Prejudice saw her being nominatedfor a string of Awards. She was nominated for Best Actress both for an Oscar anda Golden Globe; she was awarded the Variety UK Personality at the BritishIndependent Film Awards. Several other clients had an outstanding year resultingin a string of nominations and awards. These included Emily Barclay, RosamundPike, Ewan McGregor, Douglas Hodge, Jenna Russell and finally, James McAvoy, whowon the 'Orange Rising Star' BAFTA award. Additionally, James Lomas has had ravereviews for his role in Billy Elliot and Dominic Monaghan won a Golden Globe forBest Television Series for Drama for his role in "Lost". Within the Literary Division: •Julian Barnes' latest book, Arthur and George was shortlisted for the 2005 Man Booker Prize; •Nick Hornby's book A Long Way Down was shortlisted for the 2005 Whitbread Novel Award; •John Mortimer received a lifetime achievement award at the British Book Awards; and •Other clients who enjoyed great success during the year included William Hague, Alan Bennett, Claire Sambrook and John Boyne. In Film, Television and Theatre: •Francesca Marciano, co writer on Don't Tell, was nominated for an Oscar for Best Foreign Language Film; •Avie Luthra was nominated for a BAFTA in the Best Short Category for Lucky; and •Amelia Bullmore, Nell Leyshon, Mike Leigh, Peter Oswald, Richard Bean and Tim Crouch received a variety of nominations and honours for their work; and Charles McDougall was nominated for a Golden Globe as director of the TV hit 'Desperate Housewives'. Overall the Board is pleased to note that the successes of this division are nowbroadly spread across the agents, and consequently recognises the benefit of theinvestment that has been made in sports and entertainment. Specifically, the twostart up operations, PFD's literary agency in New York and the golf division,are close to operating at a break-even and are expected to make a contributionto profits in 2006. Marketing The Marketing division has undergone some major changes in 2005; the Group is nolonger pursuing a strategy of building up a global marketing services divisionbut is instead realising value from disposing or shutting unprofitable operatingunits and continuing with a specialist sports and event promotional marketingunit in the USA. The 2005 result therefore partially reflects these changes with turnover on thecontinuing business falling to £6.4 million (2004: £9.9 million) and thedivision having a loss of £0.1 million (2004: profit of £0.6 million). Thisoperating result was largely due to the loss of several important clients, andthe management made some major changes to the existing operations which are asfollows: •Sale of GEM Europe for a profit of £1,887,000 before goodwill written off of £1,634,000; •Closure of the Atlanta Office in May as reported at the Interims; •Closure of GEM's CEO office and its infrastructure based in Minneapolis. The overall impact is to remove £1.1million ($2.0million) from the central running costs, and give both the Minneapolis and New York operations more control over their respective operational budgets; •Closure of the Canadian operations. The Canadian operations including the Echo Group of companies and GEM Canada have been wound up; and •Creation of an independent operating unit for Minneapolis. Dave Kuettel, the CEO of GEM Minneapolis, bought a 25% equity interest in the Minneapolis operation for £143,000, realising a profit to the Group of £30,000. The legal arrangements with Dave envisage the business being sold in three to five years time with Dave getting an increasing proportion of the proceeds as the sale price increases. In 2005 the on-going GEM business in New York and its client GE Consumer &Industrial worked together on the GE Olympic Marketing campaigns to create fullyintegrated, results-oriented, consumer and trade promotions. These included thehighly successful "Switch and Win" national consumer promotion representing GELighting's (NA) largest promotion to date. On the event marketing side GEM addedanother major Diageo brand in 2005, creating and activating a series of eventsfor Captain Morgan Original Spiced Rum. Events Operating profits prior to amortisation of goodwill were £623,000 (2004:£687,000) on a significantly increased turnover of £9.4 million (2004: £6.6million). The slight decrease in profits is as a result of expanding theoperating base of the business and the consequential short-term incentives givento staff to achieve this increase in market share. Additionally the Group nowaccounts for all pass-through income as revenue, which increases turnover andcost of sales without affecting gross profit. 2005 was a strong growth year for our Events division. Icon Display, our eventsoperating business, is now rightly regarded as one of the leading event signagespecialists in Europe. Undoubtedly one of the highlights for them was to beinvolved in producing all the signage and support display material for thesuccessful London 2012 Olympic bid. In football the credentials of the companycontinued to go from strength to strength. In addition to the work done withUEFA and TEAM on the world's biggest annual football tournament, The ChampionsLeague, Icon have managed Chelsea's new rotating board system as well as workingwith FIFA on this year's football World Cup. Icon continues to be heavilyinvolved with most major sports including cricket, golf, horse racing andsnooker and further strengthened its credentials in golf by being appointed tolook after the BMW Championship at Wentworth. Icon has just opened new representative offices in Germany and Qatar, the latteras a result of an increasing workload in the Middle East region which isdeveloping an impressive portfolio of major sporting events. Icon have recentlybeen heavily involved in the Qatar Open Golf - part of the European PGA Tour - and the Tour of Qatar cycling event. Central Costs The key achievements in the period have been a reduction in central overheads to£0.9 million (2004: £1.2 million) and a reduction in the amount of structuredbank debt to £1.8 million (2004: £3.8 million). There has also been a substantial reduction in the carrying value of the Group'sinvestments which is believed by the Board to more closely relate to theappropriate carrying value of the Group's assets. The charge to the profit andloss account is £14.8 million of which £13.7 million was announced at the halfyear. Discontinued Activities The Group has completed the process begun in 2004 of selling or closingbusinesses or parts of divisions which either no longer fitted in with theGroup's strategic aims or were unprofitable and, as noted above, revalued theremaining assets through a goodwill impairment charge. Future Prospects As outlined in the Chairman's statement, we believe that the best opportunitiesfor expanding the Group will come from those which are closely associated withthe entertainment industry and consequently will be focusing our attention onthe development of this area of the media business. Sean KellyChief Executive20 March 2006 FINANCIAL REVIEW The purpose of this review is to highlight matters of interest to shareholdersand to provide guidance on reasons for alterations in some of the key operatingareas of the business. Group Profit and Loss Account Turnover There has been a rise in turnover on continuing operations, which has increasedby 2% to £27.9 million (2004: £27.4 million). Turnover was split between Europe£20.8 million and North America £7.1 million. Talent Talent saw an 11% rise in turnover on continuing operations to £12.1 million(2004: £10.9 million) due largely to the continuing success of the entertainmentsector. Marketing Turnover on continuing operations fell by 36% to £6.4 million (2004: £9.9million), as a result of difficult trading conditions experienced in NorthAmerica. Events Turnover in the Events division increased by 43% to £9.4 million (2004: £6.6million). The Group now recognises pass through costs of £1.8 million withinturnover. Notwithstanding this, like on like turnover increased by 16% as aresult of a significant increase in new business won, both in the UK, with theLondon 2012 bid, and the BMW Golf Championship at Wentworth, and in Germany andthe Middle East. Cost of Sales Cost of Sales in 2005 was £29.3 million (2004: £46.2 million). The reduction isdue to the number of businesses closed or disposed of during the year, ashighlighted in the Chief Executive's Operational Review. Impairment of goodwill and investments The Board has reviewed the carrying value of goodwill and investments held onthe Balance Sheet and concluded that an impairment provision of £14.8 millionshould be made to more accurately reflect the value of the businesses held. 88% of the total provision for impairment related to the Group's Canadianoperations and GEM Europe. Within Canada, a number of significant client lossesoccurred in the first part of 2005, and the Board concluded that the value ofthe Canadian business should be fully written down. It had been the Board'sstated intention to sell GEM Europe, as it was felt that GEM Europe had reacheda stage of maturity, which indicated it was a good time and price to sell thebusiness. The goodwill of GEM Europe was therefore written down at the half yearto its expected net realisable value. This provision was necessary due to thehigh value of shares given as deferred consideration (a price of £1.80), as setout in the original sale and purchase agreement. The remainder of the provisionfor impairment was made based on discounted future cashflows against ongoingbusinesses or against businesses which are no longer trading. Of the total provision of £14.8 million, which had no cash impact on the Group,£13.7 million was provided at the time of the Interim Results. The additionalimpairment provision of £1.1 million was made against our investment in HambricSports Management, as detailed in the Chief Executive's Operational Review. Thedirectors consider that the current valuation of goodwill of £19.4 million isfairly stated and no further impairment provision is required. Other Administrative Expenses Other administrative expenses have fallen by 23% to £24.7 million (2004: £31.9million). The largest component is staff costs, which have fallen by 22% to£17.8 million (2004: £22.8 million). The average number of employees was 389(2004: 503). Discontinued Operations Operating losses on discontinued operations relate to GEM Europe, Echo and theAtlanta and Canadian operations of GEM North America, which have been disposedof or closed down. Amortisation of goodwill The charge for the year of £1.9 million has fallen by 23% (2004: £2.4 million)as a consequence of the decision to adjust the carrying value of goodwill in theBalance Sheet. The group has remaining goodwill of £19.4 million, which isamortised over periods of 5 to 20 years. Taxation The Group's tax charge was £0.1 million (2004: £0.3 million). The tax chargerelates predominantly to the UK operations. As far as possible the Group hastaken steps to minimise its overall tax liability. Earnings per Share Unadjusted earnings per share on a basic and fully diluted basis shows a loss of60.25p per share (2004: loss of 10.61p). The diluted loss per share isequivalent to the basic loss per share as any dilutive effect would decrease thenet loss per share. Once the figure is adjusted for amortisation andnon-recurring items the fully diluted earnings per share is 1p (2004: 2.84p).The basic adjusted earnings per share in 2005 is also 1p (2004: 3.06p). Thereduction on 2004 reflects the significant write down in goodwill. Foreign Exchange The Group's earnings are exposed to the movement in the US Dollar. The averageUS Dollar rate in 2005 was $1.82 to the Pound (2004: $1.83), although the rateat 31 December 2005 strengthened to $1.72 to the Pound (2004: $1.93). Bank Debt The Group's gross bank debt at 31 December 2005 was £3.4 million (2004: £5.4million) of which £1.8 million represents structured bank debt (2004: £3.8million), and the remainder an overdraft to finance working capital. During theyear £2.1 million of borrowings were repaid. This was financed through acombination of sale proceeds from disposals and cash from operations. The sale of Target Entertainment Ltd in 2004 and GEM Europe during 2005 realised£2.1 million net in cash which has partly been used to pay down bank debt. Cash Flow The cashflow statement shows a net cash inflow from operating activities of£284,000, an improvement on 2004 (net cash inflow from operating activities of£148,000) as the European operations have been stabilised and furtherimprovement was made to working capital. Share Capital and Acquisitions There were no acquisitions made during 2005. During 2005 70,153 shares were issued at an issue price of £2.40, for deferredconsideration provided for in 2003. No further deferred consideration isprovided for in the 2005 financial statements. Transition to International Financial Reporting Standards CSS Stellar has established a working party to timetable IFRS implementation.The London Stock Exchange has now confirmed its intention to mandateInternational Accounting Standards for AIM registered companies from 2007onwards. The working party is reviewing group accounting policies in order toassess the changes required under IFRS. The 2005 accounts will also be reviewedto understand and quantify the impact of IFRS adoption. Further, the financialreporting system will be reviewed to ensure that it is sufficient to captureIFRS data. The result of the above assignment by the working party will be theproduction of the 2006 opening balance sheet in preparation for the productionof the 2007 Interim Results. The remainder of the financial information is explained in the notes to theFinancial Statements. Kevin RoseGroup Finance Director20 March 2006 CSS STELLAR PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 31 December 2005 Unaudited Audited 2005 2004 Notes £000 £000Turnover - Continuing operations 27,854 27,363 - Discontinued operations 26,558 50,481 ________ ________Group Turnover 1 54,412 77,844Cost of sales (29,251) (46,215) ________ ________Gross profit 25,161 31,629 ________ ________Impairment of goodwill and 2 | (14,769)| | - |investments | | | |Amortisation of goodwill | (1,881)| | (2,438)|Other administrative expenses | (24,695)| | (31,902)| |________ | |________ |Administrative expenses - total (41,345) (34,340)Operating loss ________ ________ - Continuing operations | (2,476)| | (892)| - Discontinued operations | (13,708)| | (1,819)| | ________| | ________| 1 (16,184) (2,711) Exceptional non-operating items 2 (843) - ________ ________ (17,027) (2,711)Interest receivable 99 112Interest payable (447) (404) ________ ________Loss on ordinary activities before 1 (17,375) (3,003)taxationTax on loss on ordinary activities 3 (51) (267) ________ ________Loss on ordinary activities after (17,426) (3,270)taxationMinority interests - 331 ________ ________Transferred from reserves (17,426) (2,939) ======== ========Loss per Ordinary share (pence) 4 p. p.Basic (60.25) (10.61)Diluted (60.25) (10.61) ________ ________ CONSOLIDATED STATEMENT OF TOTALRECOGNISED GAINS AND LOSSESLoss for the financial year (17,426) (2,939)Unrealised surplus on revaluationof investment properties - 500Translation adjustment on opening 20 5reserves ________ ________Total losses recognised since last annual (17,406) (2,434)report ======== ======== CSS STELLAR PLCCONSOLIDATED BALANCE SHEETAs at 31 December 2005 Unaudited Audited 2005 2004 Notes £000 £000 £000 £000FIXED ASSETSIntangible assets 5 19,397 36,690Tangible assets 6 2,043 3,201Other investments 7 41 1,056 ______ _______ 21,481 40,947 CURRENT ASSETSStocks and work in progress 280 173Debtors 5,102 12,470Cash at bank and in hand 954 1,220 ______ ______ 6,336 13,863 CREDITORS: AMOUNTS FALLINGDUE WITHIN ONE YEAR (6,751) (15,689) ______ ______Net current liabilities (415) (1,826) ______ _______ Total assets less currentliabilities 21,066 39,121CREDITORS: AMOUNTS FALLINGDUE AFTER MORE THAN ONE YEAR (1,275) (1,723) Minority interests (120) - ______ _______ 19,671 37,398 ====== =======CAPITAL AND RESERVESCalled up share capital 8 14,487 14,452Share premium 8 28,158 28,025Shares to be issued 8 - 489Revaluation reserve 637 654Profit and loss account (23,611) (6,222) ______ _______Equity shareholders' funds 9 19,671 37,398 ====== ======= CSS STELLAR PLCCONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2005 Unaudited Audited 2005 2004 Note £000 £000 £000 £000Cash inflow from operatingactivities 10 284 148Returns on investments and servicing of financeInterest paid (447) (392)Interest received 99 112Interest element of finance leasepayments - (12) ______ ______Net cash outflow from returns on (348) (292)investments and servicing of financeTaxation (20) (35)Capital expenditure and financialinvestmentPurchase of tangible fixed assets (350) (848)Purchase of intangible fixedassets - (440)Sale of tangible fixed assets 15 170 ______ ______Net cash outflow from capitalexpenditure and financialinvestment (335) (1,118) Acquisitions and disposalsPurchase of subsidiaries - (970)Purchase of investments (41) -Disposal of subsidiaries 2,546 (151)Net cash disposed of withsubsidiaries (540) -Net cash inflow/(outflow) fromacquisitions and disposals 1,965 (1,121) _____ ______Net cash inflow/(outflow) beforefinancing 1,546 (2,418) FinancingReceipts from borrowings - 3,900Repayment of borrowings 12 (2,080) (3,048) New finance leases 12 57 -Capital element of finance leaserentals - (75) ______ ______Net cash (outflow)/inflow fromfinancing (2,023) 777 _____ ______Decrease in cash 12 (477) (1,641) ====== ====== CSS STELLAR PLCNOTES TO THE FINANCIAL INFORMATIONYear Ended 31 December 2005 1. Analysis of Trading and Net Assets Class of Business Profit/(Loss) BeforeDivisions Turnover Taxation Net Assets 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 Continuing operationsTalentManagement 12,088 10,888 1,128 1,355 (1,959) (2,796)Marketing 6,354 9,908 (83) 615 (2,154) (1,212)Television - - - - - -Events (1) 9,412 6,567 623 687 1,858 1,272Central costs(2) - - (887) (1,191) 21,926 38,960 ====== ====== ===== ====== ======= ====== 27,854 27,363 781 1,466 19,671 36,224 ====== ====== ======= ======DiscontinuedoperationsTalentManagement - 229 - (976) - -Marketing 26,558 40,542 (315) (183) - 1,174Television - 9,710 - (580) - -Events - - - - - - ====== ====== ===== ====== ======= ====== 26,558 50,481 (315) (1,739) - 1,174 ====== ====== ======= ======Impairment ofgoodwill (14,769) - Goodwillamortisation (1,881) (2,438) _______ ______Operating loss (16,184) (2,711) Net interest (348) (292)Exceptionalitem (843) - Group lossbeforetaxation (17,375) (3,003) ===== ====== Geographical Market Loss before Turnover Taxation Net Assets 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000ContinuingoperationsEurope 20,767 16,549 1,619 1,758 (102) (1,524)North America 7,087 10,814 49 899 (2,153) (1,212)Rest of the world - - - - - -Central costs (2) - - (887) (1,191) 21,926 38,960 ______ ______ _____ ______ _______ ______ 27,854 27,363 781 1,466 19,671 36,224 ====== ====== ===== ====== ======= ======DiscontinuedoperationsEurope 3,284 15,196 102 (1,504) - 638 North America 23,274 35,227 (417) 1 - 1,024Rest of theworld - 58 - (236) - (488) ______ ______ _____ ______ _______ ______ 26,558 50,481 (315) (1,739) - 1,174 ====== ====== ===== ====== ======= ====== (1) Turnover for the Events division in 2005 includes pass through costs. Thecomparable figure for 2004 was £8,141,000. (2) Central costs have been separately analysed to enable a direct comparison ofthe operating performance of each division. The origin and destination of turnover, profit before taxation and net assetsare not materially different. Cost of sales, amounts written off goodwill and administrative expenses areanalysed between continuing and discontinued operations below: Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total 2005 2005 2005 2004 2004 2004 £000 £000 £000 £000 £000 £000Cost of sales 8,083 21,168 29,251 7,807 38,408 46,215Impairment ofgoodwill 1,776 12,993 14,769 - - -Amortisationof goodwill 1,481 400 1,881 2,359 79 2,438Otheradministrationexpenses 18,990 5,705 24,695 18,089 13,813 31,902 ====== ====== ====== ====== ====== ====== 2. Exceptional ItemsImpairment of goodwill and investments 2005 2004 £000 £000Impairment of goodwill (note 5) 13,713 -Impairment of investments (note 7) 1,056 - ______ ____ 14,769 - ====== ====Exceptional non-operating items 2005 2004 £000 £000Cost of restructuring 649 -Loss on disposal of subsidiary 194 -undertakings ______ ____ 843 - ====== ==== 3. Tax on Loss on Ordinary Activities Analysis of charge in year 2005 2004Current tax £000 £000 United Kingdom corporation tax 243 2Overseas taxation 5 216 ______ ____ 248 218 ______ ____Deferred TaxUnited Kingdom- current year (39) 49- prior year (158) - ______ ____ (197) 49 ______ ____Total tax charge on loss on ordinary 51 267activities ====== ==== The tax charge assessed for the period is higher than the standard rate ofcorporation tax in the UK (30%). The differences are explained below: Tax charge reconciliation Loss on ordinary activities before (17,375) (3,003)taxation ====== ====Loss on ordinary activities multiplied bythe standard rate of corporation tax (30%) (5,213) (901) Goodwill amortisation 564 730Capital allowances in excess of 122 9depreciationExpenses not deductible for tax purposes 14 72Higher tax rate on overseas earnings - 61Losses in overseas subsidiaries 677 -Losses carried forward - 382Adjustment to tax charge in respect of - -previous periodUtilised losses (4) (105)Impairment of goodwill and loss on disposal of subsidiaries 4,078 (65)Deferred tax unprovided 10 -Other timing differences - 35 ______ ____Tax charge on loss on ordinary activities 248 218 ====== ==== 4. (Loss)/Earnings Per Share Weighted Basic Adjusted average per share per share Earnings no. of amount amount shares2005 £000 Shares Pence PenceAttributable to ordinary shareholders: Loss (17,426) Amortisation of goodwill 1,881Impairment of goodwill 14,769Loss on disposal ofsubsidiaries 843Operating loss ondiscontinued activities 315Less: tax at 30% (94) ______Adjusted earnings 288 ______(Loss) / earnings per share 28,922,957 (60.25) 1.00 ====== ====Dilutive effect of securitiesOptions, warrants and shares to be -issued __________(Loss) / earnings per share 28,922,957 (60.25) 1.00 ========== ====== ====2004Attributable to ordinary shareholders: Loss (2,939)Amortisation of goodwill 2,438Operating loss ondiscontinued activities 1,925Less: tax at 30% (577) ______Adjusted earnings 847 ______(Loss) / earnings per share 27,692,271 (10.61) 3.06 ====== ====Dilutive effect of securitiesOptions, warrants andshares to be issued 2,155,116 __________(Loss) / earnings per share 29,847,387 (10.61) 2.84 ========== ====== ==== 5. Intangible Assets Goodwill £000 Cost:At 1 January 2005 44,524Additions -Disposals (14,329) ______At 31 December 2005 30,195 ______Accumulated amortisation andimpairment: At 1 January 2005 7,834Amortisation charge for the year 1,881Impairment losses (note 2) 13,713Disposals (12,630) ______At 31 December 2005 10,798 ______Net book value at 31 December 2005 19,397 ======Net book value at 31 December 2004 36,690 ====== 6. Tangible Fixed Assets Furniture Freehold Motor Event and property vehicles equipment equipment Total £000 £000 £000 £000 £000The GroupCost or valuation:1 January 2005 985 509 474 6,241 8,209Translation - - - 129 129Additions - 70 47 233 350Disposals - (74) - (89) (163)Disposed of withsubsidiaries (155) - (2,539) (2,694) ____ ____ ___ ______ ______At 31 December 2005 985 350 521 3,975 5,831 ____ ____ ___ ______ ______Accumulateddepreciation:1 January 2005 32 286 311 4,379 5,008Charge for the year 32 95 85 398 610Disposals - (74) - (89) (163)Disposed of withsubsidiaries - (89) - (1,578) (1,667) ____ ____ ___ ______ ______At 31 December 2005 64 218 396 3,110 3,788 ____ ____ ___ ______ ______Net book value:At 31 December 2005 921 132 125 865 2,043 ==== ==== === ====== ======At 31 December 2004 953 223 163 1,862 3,201 ==== ==== === ====== ====== 7. Other Investments £000 Cost:At 1 January 2005 1,056Additions 41Disposals (19) _____At 31 December 2005 1,078 _____Provisions for impairment:At 1 January 2005 -Amounts written off during the year 1,056Disposals (19) _____At 31 December 2005 1,037 _____Net book value at 31 December 2005 41 =====Net book value at 31 December 2004 1,056 ===== 8. Called Up Share Capital The following is the movement in shares, share capital and share premium duringin the year: Date Shares Share Share Share Price Capital Premium No. £ £000 £000At 1 January 2005 28,906,428 14,452 28,025Acquisition of:The Echo group ofcompanies 7 October 70,153 2.40 35 133 __________ ______ ______At 31 December 2005 28,976,581 14,487 28,158 ========== ====== ====== 31 1 January DecemberShares to be issued 2005 Movements 2005 The Echo group ofcompanies Ordinary shares at £2.40 489 (489) - === ==== === 9. Reconciliation of Movements in Shareholders' Funds 2005 2004 £000 £000Loss for the financial year (17,426) (2,939) _______ ______Other recognised gains and losses relating to the 20 505yearNew shares issued (including share premium) 168 500Release of provision for shares to be issued (489) (316) _______ ______Net decrease in equity shareholders' funds (17,727) (2,250)Opening equity shareholders' funds 37,398 39,648 _______ ______Closing equity shareholders' funds 19,671 37,398 ======= ====== 10. Reconciliation of Operating Loss to Net Cash Inflow from OperatingActivities Operating loss (16,184) (2,711)Depreciation charge 610 820Amortisation of intangible assets 1,881 2,478Impairment of goodwill 14,769 -(Increase)/decrease in stocks (109) 79Decrease in debtors 106 1,326Decrease in creditors (789) (1,844) _______ ______Cash inflow from operating activities 284 148 ======= ====== 11. Reconciliation of net cash flow to movement in net debt Decrease in cash in period (477) (1,641)Cash outflow from decrease in net debt and lease 2,080 (777)financingNew finance leases (57) -Net debt eliminated on disposal 170 - _______ ______Change in net debt 1,716 (2,418)Net debt brought forward (4,179) (1,761) _______ ______Net debt carried forward (2,463) (4,179) ======= ====== 12. Analysis of net debt At 1 At 31 January December 2005 Cashflow Disposals 2005 £000 £000 £000 £000Cash at bank 1,220 (266) - 954Overdrafts (1,327) (211) - (1,538) ______ ____ ____ _____ (107) (477) - (584)Bank debt due after 1 (1,553) 330 - (1,223)yearBank debt due within 1 (2,283) 1,750 - (533)yearFinance leases (236) (57) 170 (123) ______ ____ ____ _____Total (4,179) 1,546 170 (2,463) ====== ==== ==== ===== 13. Principal Accounting Policies The principal accounting policies of the Group are set out in the Group's 2004Annual Report and Financial Statements. These policies have remained unchanged. 14. Financial Information The financial information set out in this preliminary announcement does notconstitute Statutory Accounts as defined in Section 240 of the Companies Act1985. The summarised Balance Sheet at 31 December 2005 and the summarised Profitand Loss Account, the summarised Cash Flow Statement and associated notes forthe year then ended have been extracted from the Group's unaudited FinancialStatements. Those Financial Statements have not yet been delivered to theRegistrar, nor have the auditors reported on them. The financial information relating to the period ended 31 December 2004 isextracted from the statutory accounts, which incorporated an unqualified auditreport and which has been filed with the Register of Companies. This information is provided by RNS The company news service from the London Stock Exchange