PTCM.L Regulatory News (PTCM)

RNS Number : 3789O

TSE Group PLC

29 June 2010

 

Embargoed for 7.00am on 29 June 2010

 

TSE GROUP PLC (the 'Company' or 'TSE')

AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2009

The Board of TSE is pleased to announce its audited results for the year ended 31 December 2009. The Report and Accounts are being posted to shareholders today and a copy is available from the Company's website, www.tsegroupplc.com.

Chairman's Statement

 

Group revenues increased by 43% in the year to £1,577,617 (2008: £1,103,053); in this difficult economic climate your Board considers this a very strong performance. Unfortunately, the margins associated with this revenue stream were not as high as expected and hence a loss before taxation of £165,885 (2008: profit £31,904) was generated. It is worth noting that during 2009 the Group decided to write off almost all of its development and start up costs relating to its international offices; this amounted to £77,000 (2008: nil).

 

During the year we set up and opened a new wholly owned office in Istanbul in Turkey and further associate offices in Cairo, Warsaw, and Dubai. Also during the year we set up four new business lines; 'Sports Performance', run out of TSE's new office in Colorado Springs, USA; 'Event Appraisal', which is being run out of our TSE Scandinavia office; 'Digital PR and Marketing', a joint venture with Washington DC based Chong + Koster; and 'Environmental Services', a joint venture with Indianapolis-based August Mack.

 

Revenues within all the international offices have grown during the period, despite the poor global economy, and 2010 has started very positively; importantly, we are also seeing an improvement in the margins associated with these revenues. We have won a number of high profile new clients this year, particularly in the area of Sports Performance and in April we announced that TSE Consulting SA had been appointed by the Russian Olympic Committee to conduct an in-depth internal review of Russia's winter Olympic sports performance. This major contract follows previous assignments from Saudi Arabia, Brazil and Turkey.

 

Over the past few months we have been approached by a number of sports related companies with a view to acquiring or merging with TSE Consulting SA and it is our opinion that TSE Consulting would benefit substantially by being part of a larger sports focused group. All shareholders will be kept fully informed on developments.

 

 

Adam Reynolds

Chairman

 

 

Consolidated statement of Comprehensive Income for the year ended 31 December 2009

 

		Notes			2009				2008
					£				£
Revenue		2			1,577,617				1,103,053
Operating costs					(1,741,712)				(1,073,650)
Operating (loss)/profit		4			(164,095)				29,403
Finance revenue					691				3,811
Finance costs		5			(2,481)				(1,310)
(Loss)/ profit before taxation					(165,885)				31,904
Taxation		6			45				(9,242)
(Loss)/profit for the year					(165,840)				22,662
Other comprehensive (losses)/income
Exchange differences on translating foreign operations					(199,698)				820,355
Total comprehensive (losses)/income for the year					(365,538)				843,017
(Loss)/earnings per share
Basic		13			(0.002p)				0.004p
Diluted		13			(0.002p)				0.003p

 

 

 Consolidated Statement of Financial Position as at 31 December 2009

 

	Notes	2009		2008
Non-current assets		£		£
Intangible assets	7	2,312,269		2,482,721
Property, plant, and equipment	8	54,925		38,219
		2,367,194		2,520,940
Current assets
Trade and other receivables	9	441,534		552,460
Cash and cash equivalents		48,997		155,523
		490,531		707,983
Current liabilities Trade and other payables	10	(371,615)		(394,727)
Net current assets		118,916		313,256
Total assets less current liabilities		2,486,110		2,834,196
Equity
Issued share capital	12	1,457,600		1,457,600
Shares to be issued reserve		136,000		136,000
Share premium account		2,791,920		2,791,920
Retained losses		(2,520,067)		(2,371,679)
Translation reserve		620,657		820,355
Total Equity		2,486,110		2,834,196

 

 

 

Consolidated Statement of Cash Flows for the year ended 31 December 2009

 

		2009		2008
		£		£
Cash flow from operating activities
Operating (loss)/profit		(164,095)		29,403
Adjusted for:
Depreciation		41,336		13,012
Decrease/(increase)in trade and other receivables		110,926		(97,171)
(Decrease)/increase in trade and other payables		(23,112)		5,213
Share based payments		17,452		19,506
Decrease in provisions		-		(35,114)
Foreign exchange loss		-		7,912
Tax refunded / (paid)		45		(50,983)
Net cash generated from/(used in) operating activities		(17,448)		(108,222)
Cash flows from investing activities
Purchase of property, plant and equipment		(60,645)		(28,171)
Acquisition of subsidiary, net of cash acquired		-		(17,432)
Interest received		691		3,811
Interest paid		(2,481)		(1,310)
Net cash used in investing activities		(62,435)		(43,102)
Cash flows from financing activities
Proceeds from the issue of shares (net of issue costs)		-		341,235
Repayment of deferred cash consideration relating to the acquisition of Wilton International Consulting Limited		-		(155,000)
Net cash generated from financing activities		-		186,235
Net (decrease)/increase in cash & cash equivalents		(79,883)		34,911
Cash & cash equivalents at 1 January 2009		155,523		97,945
Effect of exchange rate changes		(26,643)		22,667
Cash & cash equivalents at 31 December 2009		48,997		155,523

 

 

Notes to the Financial Statements

 

Accounting Policies

 

 

1. Basis of preparation of the financial statements

Financial information in this final announcement does not comprise statutory accounts for the purpose of section 435 of the Companies Act 2006 and has been extracted from the audited consolidated accounts for the period to 31 December 2009 which were approved by the Board of Directors on 29 June 2010. The statutory accounts of TSE Group Plc for the year to 31 December 2008 have been filed with the Registrar of Companies and those for the year to 31 December 2009 will be filed on or before 30 June 2010. The auditor's report on the 2009 statutory accounts is unqualified.

 

Whilst the information in this final announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards(IFRS), this statement in itself does not give sufficient information to comply with IFRS.

2. Segmental Reporting

 

The board considers that the Group has a single business segment which delivers international sports consultancy services. The revenue, expenditure and result reported in the income statement and the assets and liabilities reported in the balance sheet all relate to this single segment. An analysis of turnover by geographical destination is given below.

 

	2009		2008
	£		£
Europe (including Cayman Islands and Switzerland)	690,787		624,011
Africa	265,747		17,826
America	286,001		209,145
Asia	335,082		252,071
	1,517,617		1,103,053

3. Staff Costs

 

	2009		2008
	£		£
Wages and Salaries	287,942		191,741
Directors Remuneration and Fees	260,058		231,000
Social Security costs	45,799		39,364
Share based payment	17,452		19,506
	611,251		481,611

The remuneration of the highest paid Director included above was £119,000 (2008: £96,000).

 

The average monthly number of employees was as follows:

	2009 No.		2008 No.
Administration (including Directors)	10		12

 

The directors are considered to be the key management personnel. Directors' remuneration and fees comprises the whole of the compensation for these individuals. The directors hold no share options.

 

4. Operating (Loss)/Profit

 

The operating (loss)/profit is stated after charging:

	2009		2008
	£		£
Depreciation of owned tangible fixed assets	41,336		13,012
Staff costs (See note 3)	611,251		481,611
Foreign currency loss	22,531		7,411
Auditors remuneration
- Audit of the parent company and consolidated financial statements	16,251		13,500
- Audit of subsidiary company financial statements	10,151		4,550
- Tax compliance services	1,000		1,000

 

 

 

5. Finance Costs

	2009		2008
	£		£
	2,481		1,310

 

6. Taxation

	2009		2008
	£		£
Analysis of charge in the year:
Current tax	(45)		9,242

 

The tax assessed for the year differs from the standard rate of corporation tax in the UK at 28%.The differences are explained below:

 

(Loss)/profit before tax		(165,885)		31,904
(Loss)/profit before tax multiplied by the standard rate of corporation tax in the UK of 28%		(46,448)		8,933
Tax losses carried forward and disallowable items		46,403		309
		(45)		9,242

 

The total amount of unused tax losses for which no deferred tax asset is recognised in the balance sheet is approximately £500,000 (2008 - £373,000).

7. Intangible Fixed Assets - Group

			Goodwill
		£
Cost At 1 January 2008 Additions Translation difference		1,737,158 17,432 728,131
At 31 December 2008		2,482,721
Translation difference		(170,452)
At 31 December 2009		2,312,269

 

Impairment tests of goodwill

 

No impairment losses in respect of goodwill have been recognised in 2009 or 2008. An annual goodwill impairment review is performed as at 31 December. This review compares the carrying value of goodwill with the present value of future cash flows arising from TSE Consulting SA, the Swiss subsidiary and main operating unit. If the present value is less than the carrying value of the goodwill, an impairment loss is recognised immediately in the income statement.

 

Key assumptions used in the value in use calculations are as follows:

 

Cash flow projections are derived from financial plans approved by the Board and cover a twelve month period. They reflect management's expectations of revenue growth, operating cost and margin for TSE Consulting SA based on past experience.

 

A post-tax discount rate of 10% to 15% has been applied to cash flow projections reflecting management's view that this range of discount rates are suitable for the year.

 

8. Property, Plant and Equipment - Group

 

	Office Furniture and machinery		IT Equipment		Total
	£		£		£
Cost At 1 January 2008 Translation difference Additions	28,937 11,872 19,471		11,723 4,809 8,700		40,660 16,681 28,171
At 31 December 2008	60,280		25,232		85,512
Translation difference Additions	(4,106) 51,361		(1,718) 9,284		(5,824) 60,645
At 31 December 2009	107,535		32,798		140,333
Depreciation At 1 January 2008 Translation difference Charge for the year	11,428 6,182 5,296		10,278 6,393 7,716		21,706 12,575 13,012
At 31 December 2008	22,906		24,387		47,293
Translation difference Charge for the year	(1,559) 37,453		(1,662) 3,883		(3,221) 41,336
At 31 December 2009	58,800		26,608		85,408
Net Book Value At 31 December 2008	37,374		845		38,219
At 31 December 2009	48,735		6,190		54,925

 

9. Trade and other Receivables - Group

	2009		2008
	£		£
Trade debtors: Gross Less: provision for bad debts	633,613 (199,382)		528,608 (52,879)
	434,231		475,729
Other debtors	5,661		53,971
Prepayments and accrued income	1,642		22,760
	441,534		552,460

 

10. Trade and Other Payables - Group

	2009		2008
	£		£
Trade creditors Taxes and social security costs Other creditors Accrued expenses	196,907 1,564  15,004 158,140		151,267 - 243,460 -
	371,615		394,727

Trade and other creditors principally comprise amounts outstanding for trade purchases and on-going costs. The Directors

 

11. Provision for Liabilities & Charges - Group & Company

	2009		2008
	£		£
Provision for claim for breach of contract (see below):   Balance brought forward at 1 January 2009 Legal charges incurred in year Provision released in year	- - -		35,114 (12,910) (22,204)
Balance carried forward at 31 December 2009	-		-

In 2007 a provision was made to allow for a potential claim for breach of contract relating to J E Farmer, a former director of the company. In 2008 the provision wasreleased after Mr Farmer withdrew his request for a hearing.

 

12. Share Capital

	2009		2008
	£		£
Authorised:
1,352,000,000 Ordinary shares of 0.1p each	1,352,000		1,352,000
72,000,000 Deferred shares of 0.9p each	648,000		648,000
	2,000,000		2,000,000
Allotted, called up & fully paid:
809,600,000 Ordinary shares of 0.1p each	809,600		809,600
72,000,000 Deferred shares of 0.9p each	648,000		648,000
	1,457,600		1,457,600

Deferred Shares

The special rights, privileges, restrictions and limitations attached to the Deferred shares are as follows: 

a) A holder of Deferred shares shall have no right to receive notice of or to attend or vote at any General meeting of the company.

b) A holder of Deferred shares shall have no right to receive any dividend or distribution

c) A holder of Deferred shares shall on a return of capital in a liquidation, but not otherwise, be entitled to receive only the amount credited as paid up on each share but only after the holder of each Ordinary share shall have received the amount paid up or credited as paid up on such share, together with a payment of 0.1 pence per share but the holders of Deferred shares shall not be entitled to any further participation in the assets or profits of the Company.

 

Warrants

Neil McClure, a former Director of the Company, holds 8,800,000 Warrants. Each Warrant entitles Neil McClure to receive, upon exercise of the Warrants, one Ordinary Share at an exercise price of 0.1p per Ordinary Share. These warrants have expired since the year end.

 

 

Beaumont Cornish Limited currently holds 7,500,000 Warrants. Each Warrant entitles Beaumont Cornish to receive, upon exercise of the Warrants, one Ordinary Share at an exercise price of 0.85p per Ordinary Share. The Warrants may be exercised at anytime before the expiry of a five year period from the date of grant.

 

13. (Loss)/Earnings per Share

 

 

 

The basic earnings per share is calculated by dividing the profit for the financial year attributable to shareholders by the weighted average number of shares in issue.

	2009		2008
	Number		Number
Weighted average number of shares (ordinary)	809,600,000		645,685,714
Weighted average number of shares (dilutive)	809,600,000		682,985,714
	£		£
(Loss)/profit for the year	(165,840)		22,662
Basic (loss)/earnings per share	(0.002p)		0.004p
Diluted (loss)/earnings per share	(0.002p)		0.003p

In the current year the basic and diluted loss per share is the same, as the exercise of share options and warrants would increase the loss per share and is therefore, anti-dilutive. Details of the options and warrants which are outstanding and potentially dilutive are given in note 19.

 

 

14. Share Based Payments

 

As at 31 December 2009, the following share options and warrants were outstanding over the ordinary shares of the Company.

 

	Date of grant	Vesting date	Expiry date	Balance at 31 December 2009 Number	Exercise price Pence	Fair value of option at grant date Pence
Warrants
2007 Warrants	28/02/07	28/02/07	28/02/10	8,800,000	0.10p	0.0p
2007 Warrants	26/07/07	26/07/07	26/07/12	7,500,000	0.85p	0.0p
Total warrants outstanding				16,300,000
Share option scheme:
2007 Options	21/08/07	21/08/09	21/08/17	4,500,000	1.00p	0.325p
2009 Options	18/02/09	18/02/11	18/02/14	26,000,000	0.23p	0.735p
Total share options outstanding				30,500,000
Total equity instruments outstanding				46,800,000

 

In February 2009, the Company cancelled the existing options held by certain key employees over 16.5 million shares at an exercise price of 1p per Ordinary Share which had been previously awarded in 2007. At the same time, the Company awarded in aggregate options over 26 million New Ordinary Shares to key employees of its wholly owned subsidiary, TSE Consulting SA, in accordance with the terms of the Company's share option scheme. The options will vest on 18 February 2011 and must be exercised on or before 18 February 2014 at an exercise price of 0.23p per ordinary share.

 

The exercise price of the warrants is the lowest average closing price for a preceding quarter or the current exercise price, whichever is the lower.

 

 

The fair value of share options and warrants at grant date has been determined using the Black-Scholes formula. The assumptions and other inputs used in the models in respect of share options issued during the year were as follows:

 

	Share option scheme 2007	Share option scheme 2009
Share price on date of grant	0.395p	0.20p
Exercise price	1.00p	0.23p
Expected volatility	30%	30%
Expected dividends	Nil	Nil
Option life	3 years	5 years
Risk free interest rate	5.0%	5.0%

 

At the dates of issue of shares under the various share option schemes, there was insufficient historical data to calculate a reliable estimate of expected share volatility in respect of the Company itself and accordingly expected volatility has been based on the average volatility of a range of similar UK listed companies operating in similar markets.

The following tables reconcile the outstanding warrants and share options granted under the employee share option schemes at the beginning and end of the financial year.

 

 

	Number 2009	Weighted average exercise price 2009	Number 2008	Weighted average exercise price 2008
Balance at beginning of the financial year	37,300,000	0.76p	37,300,000	0.76p
Granted during the year	32,000,000	0.23p	-	-
Cancelled	(22,500,000)	0.79p	-	-
Balance at end of the financial year	46,800,000	0.38p	37,300,000	0.76p
Exercisable at end of the financial year	20,800,000	0.56p	16,300,000	0.45p

 

No warrants were exercised during the year and 8,800,000 unexercised warrants expired since the year end.

 

 

End

 

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