R4E.L Regulatory News (R4E)

30 Nov 2006 07:04

First Artist Corporation PLC30 November 2006 30 November 2006 First Artist Corporation Plc Preliminary Results for the period ended 31 August 2006 First Artist Corporation Plc (AIM:FAN) is one of the leading marketing andentertainment management agencies in the UK today, with a full-service groupthat includes wealth management, events, sponsorship, media marketing and sportsand entertainment representation. Further acquisitions in the period, along with continued organic and synergisticgrowth from ongoing businesses has seen the group transformed, in particularinto the Entertainment and Media sectors, whilst strategically growing itsSports representation business to become a leading force in all the majorEuropean markets. KEY POINTS The performance highlights from the last 10 month period compared to theprevious 12 months are: • Turnover up 62% to £9,508,000 • EBITA* up 63% to £1,720,000 • Profit before tax up 57% to £1,267,000 • EPS before taxation, amortisation of goodwill and exceptional costs 1.01p, • Net assets per share up 27% to 4.7 pence • Consolidated net assets up 54% to £5,089,000 *(Earnings before interest, tax and amortisation (EBITA) is stated beforeexceptional administrative expenses) We have successfully completed the acquisition and integration of threebusinesses that have strengthened the representation division and extended therange of services that we offer into new business areas: • ProActive Scandinavia A/S (renamed First Artist Scandinavia A/S) - Sport Representation • NCI Management Limited - Entertainment Representation Agency • Sponsorship Consulting Limited - Corporate Sponsorship Advisors Jon Smith, Chief Executive of First Artist Corporation commented: 'Another strong performance during the period has seen our acquisition strategy,focussed on acquiring earnings enhancing businesses that will generate newrevenues through synergy with the rest of the group, transform a company, with asignificant dependency on a single source of revenue, to a broad-based groupwith stable and growing, year-round income streams. The synergies within theGroup are not only revenue-generating; they also position First Artist as a keyplayer in the media marketplace through its involvement at different stages inthe content generation process.' For further information please contact: FIRST ARTIST CORPORATION PLC Jon Smith, Chief Executive: +44 (0) 208 900 1818Richard Hughes, Group Managing Director Dawnay Day Corporate FinanceDavid Floyd: +44 (0) 0207 509 4570 Hudson Sandler Financial & Corporate CommunicationsMichael Sandler: +44 (0) 207 710 8916 CHAIRMAN'S STATEMENT I am happy to report on another strong set of results, which demonstrates justhow exciting the future is for First Artist Corporation. This is now afully-fledged media, representation and management Group, rooted in high-qualitypersonal service. We enjoy strong relationships with our clients from the worldsof sport and entertainment and this is a highly valuable asset in today's medialandscape. STABLE GROWTH FROM A BROADER BASE The strength and stability of our broader business model is shown by a 63% risein EBITA*, and the fact that the Group was able to report a profit at itsinterim results for the first time. The Group is benefiting from a deliberatestrategy to reduce its dependence on football and the seasonal revenues that itprovides whilst continuing to grow this profitable and highly regarded divisionand strengthen its position within its market. Non-football businesses nowaccount for 56% of the Group's turnover and strong growth is evident in ourwealth management, entertainment and events businesses. We are proud to have developed a corporate culture dedicated to supportingsuccessful businesses and providing them with opportunities for further growth.The synergies within the Group have already resulted in significantcross-referral of new business, whilst First Artist Corporation's infrastructureand international network provides our newly acquired businesses with importantstrategic opportunities. The three new acquisitions made this period have further broadened the Group'sincome base, increasing the size of our entertainment division, opening upexciting new opportunities in the field of sponsorship, and establishing a trulypan-European player representation network. TAKING A LEAD IN CORPORATE RESPONSIBILITY A responsible approach to business is a key element of the First Artistpositioning, and provides us with a valuable competitive edge in each of ourmarkets. First Artist Sport has long argued for stricter regulation of the playerrepresentation business, and is co-operating fully with the English PremierLeague inquiry. We believe that this will hasten the consolidation of the playerrepresentation business around professional, respected and credible agents andthat our reputation for honesty and integrity will therefore become a majorasset in the medium-term. It is a firm principle of our player representation business that sportsmen andwomen should never be exploited beyond their own best interests. We carefullymanage commercial activities to allow rest and recuperation, and protect ourclients' most important asset: their performance on the field. This sensitiveapproach to representation ensures quality service and strong clientrelationships. Sponsorship Consulting has a proud record advancing the role of sponsorship inCorporate Responsibility (CR) strategy and we look forward to this continuing aspart of First Artist Corporation. DEWYNTERS We look forward to a successful EGM confirming the acquisition of Dewynters.This will be a significant milestone in our Group's growth and development. Welook forward to working with Anthony Pye-Jeary and his team over the comingyears Jarvis AstaireChairman29 November 2006 *(Earnings before interest, tax and amortisation (EBITA) is stated beforeexceptional administrative expenses) CHIEF EXECUTIVE'S STATEMENT I would like to thank all at First Artist Corporation for their diligent effortsin a hugely important period. We have successfully integrated the events andwealth management businesses acquired at the end of last year, boosted ouroffering in entertainment and opened up major new opportunities in sponsorship.The result is a broad, full-service and highly profitable media andentertainment management group and the strength of this positioning is clearlydemonstrated by this period's results. First Artist has been transformed in the last two periods to become a strong andgrowing integrated business benefiting from strong synergies and increasingcross referral of business between group companies. This strength has allowed usto now take that quantum leap forward with the acquisition of marketing servicesand advertising group Dewynters, which we hope to be confirmed at theforthcoming Extraordinary General Meeting. Led by Anthony Pye-Jeary, Dewynters is the UK's leading entertainment andtheatre media business, dominating London's West End theatre marketing, but alsoworking with a considerable number of clients in the Arts and Culture sector,all of which have natural synergies with the rest of the group, in particularevents and sponsorship. The group has a rapidly expanding US merchandisingoperation based in New York and Las Vegas and with the increasing number ofshows moving east and west across the Atlantic the future looks very good forthis business and the benefits it can bring to First Artist. Upon the successful completion of this acquisition and to reflect the level ofexpansion of First Artist, Richard Hughes will become Group Managing Director,whilst Simon Bent will step up to become our Prospective Group Finance Director.Julianne Coutts will also join us and become Group Company Secretary and Head ofHuman Resources. Phil Smith will remain as Chief Operating Officer with special responsibilityfor the Sport and Entertainment divisions. I would very much like to thank Vincenzo Morabito for his significant andcontinuing contribution to this group. Vincenzo is stepping down as a GroupBoard Director to become Group Head of Football, concentrating his talents andefforts co-ordinating the development of and communications between our 3 mainfootball offices and associated agents worldwide. Vincenzo will join the Executive Management Board, which consists of theDirectors of each divisional group company. This Board has direct responsibilityto promote cross referral opportunities, ensure the quality of internalcommunications and promote group management responsibilities. 2006 Divisional Performance Optimal Wealth Management (formerly ABG Financial Management) is now establishedas a cornerstone of the Group delivering a 35% increase in turnover and a 95%increase in operating profit on the like for like audited 12 month periods endedJune 2006 and 2005. The changes in pension regulation introduced in April on "Aday" have resulted in significant new business, the benefits of which we believewill continue for sometime. Optimal has also benefited sizably from increasingcross referral of business from within the group. Our joint venture with the Top25 audit firm HW Fisher will provide a new market for the high quality, in-depthfinancial advice offered by the company. Optimal is now a vital part of theintegrated service provided by our sport and entertainment representationbusinesses. Our event management company, The Finishing Touch, also enjoyed a strong period,with turnover increasing by 11% on the like for like audited 12 month periodsended April 2006 and 2005. Our joint venture with Lord Coe's Complete LeisureGroup is a significant transaction that we believe will deliver sizable benefitsto each company in the coming years. The acquisition of NCI Management has transformed the scale of First ArtistEntertainment. The enlarged company's expertise in discovering talent anddeveloping the media brand of clients such as Dr. Gillian McKeith, Amanda Lamband Peter Schmeichel will be a key element in First Artist Entertainment'sstrategy going forward. Sponsorship Consulting, which was acquired in August 2006, will play a key rolein the future development of the First Artist Group. Our activities in sport andentertainment have always produced significant opportunities to refersponsorship-related business and Sponsorship Consulting will allow us to providethese services from within the Group. Finally, the arrival of First Artist Scandinavia (formerly ProactiveScandinavia) completes the establishment of a truly pan-European First ArtistManagement network, with our operations centred in Denmark and Italy as well asthe UK. This will produce both a broader income base and new strategicopportunities for our player management business. We fully support the English Premier League inquiry into the way footballtransfers are conducted and are working to introduce more transparency to theindustry through discussions with the FA and FIFA, and our role as a foundingBoard Member of the Football Agents Association. We believe that theconsolidation of the industry around professional, credible agents will deliverlong term benefits to First Artist Management. Ongoing Group Development Our approach to building the Group has centred on finding strong, successfulbusinesses and then providing them with a rich environment for findingadditional revenues. The natural synergies of the Group have delivered major newbusiness opportunities for Optimal Wealth Management and The Finishing Touch,and First Artist's existing international network will give a significantstrategic advantage to Sponsorship Consulting. We will look to make further acquisitions over the next year, where we identifybusinesses that will find similar opportunities to grow within the Group. Thetransformation of our business will allow us to expand our offer into TVproduction and other areas of sponsorship and management, producing still moresynergies and opportunities for growth. It is a disappointment to us that the share price of the Group has yet toreflect the transformation of our business. Our profits growth, continuedexpansion, earnings enhancing acquisitions, diversity and visibility ofearnings, strong balance sheet and cash flows we hope, will lead to astrengthening share price on the Market, where the Group currently trades at a p/e ratio significantly below the sector average. We are actively working with analysts and the media to correct any outdatedperceptions of our business in the city and we look forward to seeing theadvances made by the Group more closely reflected in future trading. Jon SmithChief Executive Officer29 November 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 31 AUGUST 2006 Continuing operations Acquisitions Total 10 months 10 months 10 months Year ended ended ended ended 31 August 31 August 31 August 31 October 2006 2006 2006 2005 £000 £000 £000 £000 TURNOVER 8,402 1,106 9,508 5,861Cost of sales (3,086) (82) (3,168) (1,325) -------- -------- -------- --------GROSS PROFIT 5,316 1,024 6,340 4,536Administrative expenses (4,231) (559) (4,790) (3,686)-------------------------- -------- -------- -------- --------EBITA before exceptionaladministrative expenses 1,255 465 1,720 1,054Exceptional administrativeexpenses (170) - (170) (161)Goodwill impairment andamortisation - - - (43)-------------------------- -------- -------- -------- --------OPERATING PROFIT 1,085 465 1,550 850 ======== ======== Interest receivable 21 11Interest payable (304) (52) -------- --------PROFIT ON ORDINARYACTIVITIES BEFORE TAXATION 1,267 809Taxation (502) (299) -------- --------RETAINED PROFIT FOR THE PERIOD / YEAR 765 510 ======== ========EARNINGS PER SHARE 0.83 0.89Basic earnings per share pence pence ======== ========Fully diluted earnings pershare 0.81 0.88 pence pence ======== ======== CONSOLIDATED BALANCE SHEETAS AT 31 AUGUST 2006 31 August 31 October 2006 2005 £000 £000 FIXED ASSETSIntangible assets 9,517 5,295Tangible assets 835 719Investments 118 - -------- -------- 10,470 6,014 -------- --------CURRENT ASSETSDebtors 6,895 4,746Cash at bank and in hand 1,108 1,527 -------- -------- 8,003 6,273 CREDITORS: Amounts falling due within one year (7,709) (5,055) -------- --------NET CURRENT ASSETS 294 1,218 -------- --------TOTAL ASSETS LESS CURRENT LIABILITIES 10,764 7,232 CREDITORS: Amounts falling due after more than oneyear (2,252) (1,303) PROVISIONS for liabilities and charges (3,423) (2,623) -------- --------NET ASSETS 5,089 3,306 ======== ========CAPITAL AND RESERVESCalled up share capital 270 224Capital redemption reserve 15 15Share premium account 8,849 7,888Shares to be issued 5 -Profit and loss account (4,050) (4,821) -------- --------EQUITY SHAREHOLDERS' FUNDS 5,089 3,306 -------- -------- CONSOLIDATE CASH FLOW STATEMENTFOR THE PERIOD ENDED 31 AUGUST 2006 10 months Year ended ended 31 August 31 October 2006 2005 £000 £000 Cash inflow/(outflow) from operating activities 80 (12) Returns on investments and servicing of finance (102) (35) Taxation (450) (4) Capital expenditure and financial investment (241) (3) Acquisitions and disposals (2,749) (2,126) ------- -------CASH OUTFLOW BEFORE FINANCING (3,462) (2,180) Financing 3,071 3,095 ------- -------(DECREASE) / INCREASE IN CASH IN THE PERIOD / YEAR (391) 915 ======= ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 10 months Year ended ended 31 August 31 October 2006 2005 £000 £000 (Decrease)/increase in cash in the period (391) 915 Cash from increase in debt financing (2,173) (1,412) New finance leases 34 - Loan notes and additional funding (623) - ------- ------- (3,153) (497) NET DEBT AT 1 NOVEMBER 2005 (648) (151) ------- -------NET DEBT AT 31 AUGUST 2006 (3,801) (648) ======= ======= STATEMENT OF RECOGNISED GAINS AND LOSSESFOR THE PERIOD ENDED 31 AUGUST 2006 10 months Year ended ended 31 August 31 October 2006 2005 £000 £000 Profit for the financial period/year 765 510Currency translation differences on net foreigncurrency investments 6 (56) ------- -------Total recognised gains and losses relating to theperiod/year 771 454 ======= ======= NOTES 1. BASIS OF ACCOUNTING The financial information contained in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies act 1985. The financial information contained in this report has been extracted from the audited accounts of the Company for the year to 31st August 2006 for which the auditors have given an unqualified report. The financial statements have been prepared under the historical cost conventionand in accordance with applicable accounting standards in the United Kingdom. 10 months Year ended ended 31 August 31 October 2006 20052. TAXATION £000 £000 Current tax: UK corporation tax charge on profits of the period 351 106 Foreign taxes 175 118 Adjustments in respect of previous periods (24) - ------- ------- Current tax charge for the period 502 224 Deferred taxation: Origination and reversal of timing differences - 75 ------- ------- Tax charge on profit on ordinary activities 502 299 ======= ======= 3. EARNINGS PER SHARE The calculation of earnings per share are based on the following profits andnumber of shares: 10 months Year ended ended 31 August 31 October 2006 2005 £000 £000 Profit on ordinary activities after taxation 765 510 ======= ======= 2006 2005 No of Shares No of Shares For basic earnings per share 92,664,723 57,034,181Dilutive effect of share options 2,181,826 1,005,773 ---------- -----------For diluted earnings per share 94,846,549 58,039,954 ========== =========== 4. RESERVES AND RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Profit Shares Capital and Total Share to be redemption Share Loss shareholders' capital issued reserve premium account funds £000 £000 £000 £000 £000 £000 GROUP 1 November 2005 224 - 15 7,888 (4,821) 3,306 Retained profit for the financial period - - - - 765 765 Share placement issue 42 - - 963 - 1,005 Shares issued to vendors to acquire subsidiary undertakings 2 - - 69 - 71 Shares issued to vendors as deferred consideration 1 - - 35 - 36 Shares to be issued to vendors as deferred consideration - 5 - - - 5 Shares issued 1 - - 14 - 15 Issue costs - - - (120) - (120) Exchange adjustments - - - - 6 6 ------- ------- ------- ------- ------- ------- 31 August 2006 270 5 15 8,849 (4,050) 5,089 ======= ======= ======= ======= ======= ======= Profit Shares Capital and Total Share to be redemption Share Loss shareholders' capital issued reserve premium account funds £000 £000 £000 £000 £000 £000 COMPANY 1 November 2005 224 - 15 7,888 (5,432) 2,695 Retained profit/(loss) for the financial period - - - - 1,385 1,385 Share placement issue 42 - - 963 - 1,005 Shares issued to vendors to acquire subsidiary undertakings 2 - - 69 - 71 Shares issued to vendors as deferred consideration 1 - - 35 - 36 Shares to be issued to vendors as deferred consideration - 5 - - - 5 Shares issued 1 - - 14 - 15 Issue costs - - - (120) - (120) ------- ------- ------- ------- ------- ------- 31 August 2006 270 5 15 8,849 (4,047) 5,092 ======= ======= ======= ======= ======= ======= 10 months Year ended ended 31 August 31 October 5. CASH FLOWS 2006 2005 £000 £000 Reconciliation of operating profit to net cash inflow / (outflow) from operating activities Operating profit 1,550 850 Depreciation 73 65 Impairment of goodwill - 43 (Profit)/loss on disposals of fixed assets (9) 5 (Increase) in debtors (1,389) (1,608) (Decrease)/increase in creditors (151) 689 Exchange differences 6 (56) ------- ------- Net cash inflow / (outflow) from operating activities 80 (12) ------- ------- 6. ANNUAL REPORT Copies of the Annual report and Financial Statements will be will be circulated to Shareholders shortly and may be obtained after the posting date from the Company Secretary, First Artist Corporation plc, First Artist House, 87 Wembley Hill Road, Middlesex, HA9 8BU, or from the Companies Website www.firstartist.com This information is provided by RNS The company news service from the London Stock Exchange