Primorus Inv. Regulatory News (PRIM)

26 Sep 2005 07:02

CSS Stellar PLC26 September 2005 Immediate Release 26 September 2005 CSS Stellar plc ("CSS" or "the Group") Interim Results for the six months ended 30 June 2005 CHAIRMAN'S STATEMENT The first half of 2005 and the period running up to this announcement has seenthe Group focus on becoming a holding company specialising in the investment insports and entertainment businesses. Therefore the Board has considered thevaluation of the assets as well as the operating results. The results for the period to 30 June 2005 are an adjusted operating profit of£490,000 prior to goodwill amortisation compared with a loss of £552,000 in2004. The Board has carried out a review of the goodwill held on the balance sheet andhas concluded that an impairment provision of £13.7 million should be made. Thisgives a net asset value for the group of 76p per share. The Board of CSS intendto apply to restructure the share capital in the Company balance sheet to allowthe possibility to pay dividends more quickly in the future. A considerable amount of management time has been spent over the last year onworking to improve the operating performance of Group companies. In Europe thishas been successful; the operating profits in Europe have improved to £1.2million (2004: £0.9 million). Our European businesses, which are all ranked asnumber one or two in their sectors, will also be beneficiaries of the successfulLondon bid for the 2012 Olympics, with Europe becoming an increased centre offocus over the next five years. In North America the market is more competitive and GEM and Echo have foundtrading more difficult with a first half loss of £124,000 (2004: profit of£569,000). In an effort to streamline the business and reduce the cost base, theGroup is in the process of re-structuring its businesses so there are fourbusinesses in Europe and three in North America. Our European businesses areperforming well - Icon (events), PFD (talent agency) and CSS Sports (sportstalent) and CSS Presenters (TV management) are all performing in line with orabove expectation. We have made changes in North America. The global aspirations of GEM have beencurtailed and we closed the Atlanta office. This, combined with the sale of GEMEurope, has resulted in a reduction of GEM North America overhead andinfrastructure cost. Since 30th June 2005 GEM Chief Executive, Keith McCrackenhas resigned. Keith has been a significant part of the development of the GEMGroup in recent years and we wish him well for the future. In September 2005 we agreed to sell GEM's European operations for £2m, aspreviously announced. As part of our regular reviews of our businesses, it wasfelt that GEM Europe had reached a stage of maturity which indicated it was agood time and price to sell the business. DIVISIONAL REVIEW OF CONTINUING OPERATIONS EUROPE Talent Management In the six months to 30th June 2005, turnover was £5.9m (2004: £5.0m) and profitwas £645,000 (2004: £473,000), an increase of 18% in turnover and 36% in profit. Sport In motor racing we continue to manage Formula 1 star Juan Pablo Montoya who haswon two Grands Prix so far this season, confirming his potential as a future F1World Champion. Dan Wheldon is the 2005 winner of the Indy Racing LeagueChampionship during which he won the world famous Indy 500 - the first Briton todo so since Graham Hill. Sebastien Loeb, 2004 World Rally Champion, is on thepoint of retaining his title in 2005. In football, Sir Bobby Robson's book has become a best seller and number one inthe hardback sales list. In golf the growing list of talent managed by CSS wasconfirmed by the appearance of no fewer than 5 clients in the The 2005 OpenChampionship at St. Andrews. Entertainment At PFD, Keira Knightley is securing unprecedented media exposure on the back ofher starring role in the Hollywood blockbuster, Pride and Prejudice. The newseries by Ricky Gervais, Extras, has had rave reviews on both sides of theAtlantic. Novelist Julian Barnes has just been short listed for the 2005 BookerPrize for his new novel 'Arthur and George'. Nick Hornby's book 'A Long WayDown' also recently became a best seller. CSS Presenters' television stars continue to be prominent on our screens.Michael Parkinson's chat show on ITV is continuing to get excellent ratings.Anne Robinson continues to present a number of highly popular programmes andformer Daily Mirror editor, Piers Morgan, is becoming a regular presenter ontelevision. Events and Marketing In the six months to 30th June 2005 Events turnover was £4.3m (2004: £2.8m) andprofit was £554,000 (2004: £347,000), an increase of 53.6% on turnover and 59.7%on profit. Icon Display have had an outstanding period and continue to grow and establishthemselves as one of the leading event and signage companies in the sportssector, as well as branching out into other areas. Icon were responsible for the signage for the successful London 2012 Olympicbid. The company also continues its outstanding work branding all the UEFAChampions' League matches throughout Europe. Chelsea FC have also become a majorclient with the installation of their new perimeter advertising board system.The company successfully created and installed all the branded signage at theBMW Golf Championship at Wentworth in May. Icon are continuing to expand into other non-sports markets, notably in thecreation of branded signage and sets at major conferences and exhibitions forclients such as Neff. Prior to its sale GEM Europe had secured additional work on behalf of Powergenthrough their rugby league and rugby union sponsorships. The company also lookedafter Vodafone's sponsorship of the successful England cricket team. Profits inGEM Europe for the six months to 30th June 2005 were £40,000 (2004: profit of£38,000). NORTH AMERICA Marketing In the Marketing Division which dominates North American operations, in the sixmonths to 30th June 2005, turnover was £19.2m (2004: £25.5m) with an operatingloss of £136,000 (2004: profit of £576,000). In North America, trading conditions have been extremely hard, with our Canadianoperations finding trading particularly challenging. There have been severalclient losses and the company overall has not sustained the profitability of2004. Despite the client losses, GEM has begun to recover and has made business gains.In the USA GEM's New York office has had a fine start to the year and isincreasing its work on behalf of major client GE Lighting. GEM NY has justlaunched the largest GE North American lighting promotion in association withGE's Olympic programme. It is intended that the GEM US sports and promotional marketing operations willbe more focused around our New York office. GEM Minneapolis continues to be profitable, and Dave Kuettel has now beenappointed Chief Executive of GEM Minneapolis. The company secured a major 3 yearcontract with its biggest client, the catalogue specialists, Fingerhut. Thiswill secure long term revenues and profits but has resulted in some short termreductions in profitability due to a reduction in margin. Our Minneapolisbusiness operates in an area of marketing which is very different to any otherin the Group and it is therefore now being managed separately. Canadian operations have had a very difficult six months and our Toronto officeis only just beginning to recover from a poor start to the period. Echo Media, like the Minneapolis office, will also be separated out from therest of the North American companies to operate as a stand-alone company becauseit again operates in an area which is unique within the Group. A major partnerwill be secured to strengthen the business and help to realise shareholdervalue. Finally, we have continued to streamline the central overhead to £573,000 (2004:£601,000) and are looking to make further reductions in these costs goingforward. Looking forward, CSS will now concentrate entirely on being an investor in highquality businesses that operate in the sports and entertainment sector. Thestrategic development of the Group will see us focusing on the strengths of thebusiness and on expanding the valuable businesses that we own. This will includean increased focus on the ownership of proprietary content rather than on theservicing of rights holders. The Board remain extremely confident about the future of the Group as a platformfor growth. There has been considerable activity in both the sports andentertainment investment markets in recent months. The Group also continues toattract interest from investors and other groups within our areas ofspecialisation which reaffirms our confidence in this growing sector for thefuture. John Webber Chairman 26 September 2005 INDEPENDENT REVIEW REPORT TO CSS STELLAR PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprise the consolidated profit andloss account, the consolidated balance sheet, the consolidated cash flowstatement, the statement of total recognised gains and losses and the relatednotes. We have read the other information contained in the interim report whichcomprises only the Chairman's Statement and the Divisional review of continuingoperations and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Our responsibilities donot extend to any other information. This report is made solely to the company's members, as a body, in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusion we have formed. Directors' Responsibilities The interim report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The directors areresponsible for preparing the interim report in accordance with the AIM Ruleswhich require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where any changes, and the reasons for them,are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists primarily of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom auditing standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. GRANT THORNTON UK LLP CHARTERED ACCOUNTANTS London 26 September 2005 CSS STELLAR PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the period ended 30 JUNE 2005 Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December Note 2005 2004 2004 £'000 £'000 £'000Turnover- Continuing operations 29,430 33,354 67,812- Discontinued operations - 4,227 10,032Total Turnover 29,430 37,581 77,844Cost of Sales (15,809) (22,050) (46,215)Gross Profit 13,621 15,531 31,629 Impairment of goodwill (13,731) - -Amortisation of goodwill (1,193) (1,213) (2,438)Other administrative expenses (13,131) (16,083) (31,902)Total administrative expenses (28,055) (17,296) (34,340) Operating loss- Continuing operations (14,434) (418) (786)- Discontinued operations - (1,347) (1,925)Total operating loss (14,434) (1,765) (2,711) Exceptional items 3 (725) (321) - (15,159) (2,086)Interest receivable 65 47 112Interest payable (209) (175) (404) Loss on ordinary activities beforetaxation (15,303) (2,214) (3,003) Tax on loss on ordinary activities (72) (143) (267) Loss on ordinary activitiesaftertaxation (15,375) (2,357) (3,270)Equity minority interest - 241 331 Transferred from reserves (15,375) (2,116) (2,939) Loss per ordinary share 4Basic (53.19) (7.96) (10.61)Diluted (53.19) (7.96) (10.61) Adjusted earnings/(loss) perordinary share 4Basic 0.20 (0.53) 3.06Diluted 0.20 (0.53) 2.84 Statement of total recognisedgainsand losses £'000 £'000 £'000Loss for the financial year (15,375) (2,116) (2,939)Unrealised surplus on revaluationofinvestment properties - - 500Translation adjustment onopeningreserves (6) (58) 5 Total losses recognised sincelastannual report (15,381) (2,174) (2,434) CSS STELLAR PLC CONSOLIDATED BALANCE SHEET AT 30 JUNE 2005 Unaudited Unaudited Audited 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Fixed assetsIntangible assets 21,784 38,970 36,690Tangible assets 3,050 2,974 3,201Investments - other 1,074 1,056 1,056 25,908 43,000 40,947 Current assetsStocks and work in progress 650 405 173Debtors 13,009 16,594 12,470Cash at bank and in hand 516 4,554 1,220 14,175 21,553 13,863 Creditors: amounts falling duewithin one year (16,614) (26,668) (15,689) Net current liabilities (2,439) (5,115) (1,826) Total assets less current liabilities 23,469 37,885 39,121 Creditors: amounts falling dueafter more than one year (1,452) (828) (1,723) Minority interests - 417 - 22,017 37,474 37,398 Capital and reservesCalled up share capital 14,452 13,621 14,452Share premium account 28,025 25,866 28,025Shares to be issued 489 3,295 489Revaluation reserve 646 171 654Profit and loss account (21,595) (5,479) (6,222) Equity shareholders' funds 22,017 37,474 37,398 CSS STELLAR PLC CONSOLIDATED CASHFLOW STATEMENT For the period ended 30 JUNE 2005 Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December Note 2005 2004 2004 £'000 £'000 £'000 Net cash (outflow)/inflow fromoperating activities 1 (364) (233) 148 Returns on investments andservicing of financeInterest paid (209) (162) (392)Interest received 65 47 112Interest element of finance leasepayments - (13) (12)Net cash outflow from returns oninvestments and servicing of (144) (128) (292)finance Taxation - (208) (35) Capital expenditure andfinancialinvestmentPurchase of tangible fixed assets (267) (495) (848)Purchase of intangible fixed - (292) (440)assetsSale of tangible fixed assets - 86 170Net cash outflow from capitalexpenditure and financial (267) (701) (1,118)investment Acquisitions and disposalsPurchase of subsidiaries - (982) (970)Sale of subsidiaries 655 - (151)Purchase of investments (37) - - Net cash inflow/(outflow) fromacquisitions and disposals 618 (982) (1,121) Equity dividends paid - - - Net cash outflow before financing (157) (2,252) (2,418) FinancingReceipts from borrowings - - 3,900Repayment of borrowings (847) (1,057) (3,048)Capital element of finance leaserentals (3) (52) (75) Net cash (outflow)/inflow fromfinancing (850) (1,109) 777 Decrease in cash (1,007) (3,361) (1,641) CSS STELLAR PLC NOTES TO THE ACCOUNTS For the period ended 30 JUNE 2005 1. RECONCILIATION OF OPERATING LOSS TO NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Operating loss (14,434) (1,765) (2,711)Depreciation charge 419 476 820Impairment of goodwill 13,731 - -Amortisation of goodwill 1,193 1,213 2,478Increase in stocks (477) (153) 79(Increase)/decrease in debtors (1,213) (809) 1,326Increase/(decrease) in creditors 417 805 (1,844) Net cash (outflow)/inflow fromoperating activities (364) (233) 148 2. ANALYSIS OF TRADING BY CLASS OF BUSINESS Divisions Turnover Profit/(loss) before taxation 6 months 6 months Year 6 months 6 months Year to 30 to 30 to 31 to 30 to 30 to 31 June June December June June December 2005 2004 2004 2005 2004 2004 £'000 £'000 £'000 £'000 £'000 £'000Continuingoperations TalentManagement 5,896 5,024 10,924 645 473 1,236Marketing 19,237 25,516 50,321 (136) 576 920Television - - - - - -Events 4,297 2,814 6,567 554 347 687Central costs(1) - - - (573) (601) (1,191) 29,430 33,354 67,812 490 795 1,652Discontinued operations Talent Management - 304 229 - (512) (976)Marketing - 79 93 - (254) (369)Television - 3,844 9,710 - (581) (580)Events - - - - - - - 4,227 10,032 - (1,347) (1,925) Impairment ofgoodwill (13,731) - -Amortisationof goodwill (1,193) (1,213) (2,438)Operating loss (14,434) (1,765) (2,711)Net interest (144) (128) (292)Exceptionalitems (725) (321) -Group lossbeforetaxation (15,303) (2,214) (3,003) CSS STELLAR PLC NOTES TO THE ACCOUNTS For the period ended 30 JUNE 2005 2. ANALYSIS OF TRADING BY CLASS OF BUSINESS (cont...) Geographical Turnover Profit/(loss) before taxationanalysis 6 months 6 months Year 6 months 6 months Year to 30 to 30 to 31 to 30 to 30 to 31 June June December June June December 2005 2004 2004 2005 2004 2004 £'000 £'000 £'000 £'000 £'000 £'000Continuingoperations Europe 11,950 10,352 21,807 1,187 895 1,912North America 17,480 22,990 45,993 (124) 569 1,028Rest of theWorld - 12 12 - (68) (97)Central costs(1) - - - (573) (601) (1,191) 29,430 33,354 67,812 490 795 1,652Discontinuedoperations Europe - 4,148 9,938 - (1,093) (1,658)North America - 48 48 - (129) (128)Rest of theWorld - 31 46 - (125) (139) - 4,227 10,032 - (1,347) (1,925) (1) Central costs have been separately analysed to enable a direct comparison ofthe operating performance of each division in accordance with IFRS guidelines. 3. EXCEPTIONAL ITEMS 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Exceptional itemsCosts of restructuring (725) - -Loss on disposal of subsidiaryundertakings - (321) - (725) (321) - CSS STELLAR PLC NOTES TO THE ACCOUNTS For the period ended 30 JUNE 2005 4. (LOSS)/EARNINGS PER SHARE Basic Adjusted per per Weighted share share average no amount amount £'000 of shares pence pence6 months ended 30 June 2005Loss (15,375)Amortisation of goodwill 1,193Amounts written off goodwill 13,731Costs of restructuring 725Less: tax at 30% (217)Adjusted earnings 57Basic earnings per shareEarnings attributable to ordinaryshareholders 28,906,428 (53.19) 0.20Dilutive effect of securities- options and warrants -Diluted earnings per share 28,906,428 (53.19) 0.20 6 months ended 30 June 2004Loss (2,116)Amortisation of goodwill 1,213Exceptional loss on disposal 321Operating loss on discontinued 766activitiesLess: tax at 30% (325)Adjusted earnings (141)Basic earnings per shareEarnings attributable to ordinaryshareholders 26,574,359 (7.96) (0.53)Dilutive effect of securities- options and warrants 2,305,256Diluted earnings per share 28,879,615 (7.96) (0.53) Year ended 31 December 2004Loss (2,939)Amortisation of goodwill 2,438Operating loss on discontinued 1,925activitiesLess: tax at 30% (577)Adjusted earnings 847Basic earnings per shareEarnings attributable to ordinaryshareholders 27,692,271 (10.61) 3.06Dilutive effect ofsecurities - options and warrants 2,155,116Diluted earnings per share 29,847,387 (10.61) 2.84 The adjusted earnings per share is based on the retained profits adjusted by theamortisation of goodwill and the exceptional administrative expenses andexceptional items net of taxation at 30%. 5. PUBLICATIONS OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefigures from the year ended 31 December 2004 have been extracted from thestatutory financial statements which have been filed with the Registrar ofCompanies. The auditors' report was unqualified and did not contain a statementunder Section 237(2) of the Companies Act 1985. 6. BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards under the historical cost convention as modifiedby the revaluation of land and buildings. The principal accounting policies ofthe Group have remained unchanged from those set out in the Group's annualreport and accounts. END This information is provided by RNS The company news service from the London Stock Exchange