R4E.L Regulatory News (R4E)

14 Apr 2008 07:00

First Artist Corporation PLC14 April 2008 Date: 14 April 2008 On behalf of: First Artist Corporation plc ("First Artist" or "the Group") Embargoed for: 0700hrs First Artist Corporation plc Interim Results for the six months ended 29 February 2008 First Artist Corporation plc (AIM: FAN), the media, events and entertainmentmanagement group, today announces its interim results for the six months ended29 February 2008. Highlights from last six month period include: • Revenue increased 48% to £27.4 million (2007: £18.5 million) • Gross profit rose 39% to £9.9 million (2007: £7.1 million) • Operating profit rose 92% to £464,000 (2007: £242,000) • Adjusted Earnings before Interest, Tax and Amortisation* up 6% to £730,000 (2007: £687,000) • Net cash generated from operations of £1.0 million (2007: £191,000) • Adjusted Earnings per Share** reduced to 1.75 pence (2007: 4.93 pence) *Excluding exceptional costs **Excluding amortisation of intangibles, discounted interest on deferredconsideration and exceptional costs Key Operating Highlights: • All Group companies trading well, with strong new business generation and organic growth from current clients • Dewynters has a significant pipeline of future shows including Gone with the Wind, Oliver and Sleeping Beauty • Successful football trading window with 19 deals completed • Diverse income streams, with a good pipeline of forward contracted income and cash generation Jon Smith, Chief Executive of First Artist, commented: "The first half of the year to February 2008 has seen all Group companiestrading well, with strong new business generation and organic growth fromcurrent clients, despite the challenging market conditions. First Artist hasgrown and will continue to be grown for success in the new media and live eventera through the interaction between businesses allied within the media, events,entertainment and sport sectors. We are focused in delivering organic growthsupported by cross referral of income between Group companies and continue toseek opportunities to expand the Group through acquisition. The Board remainsconfident about our future prospects." Enquiries: Jon Smith, Chief ExecutiveRichard Hughes, Group Managing Director www.firstartist.comFirst Artist Corporation plc Tel: 020 7993 0000 Emma Kane / Samantha Robbins / Sanna Sumner / firstartist@redleafpr.com Mike WardRedleaf Communications Tel: 020 7822 0200 David FloydDawnay, Day Corporate Finance Limited, NOMAD Tel: 020 7509 4570 Katie SheltonDaniel Stewart & Company plc, Broker Tel: 020 7776 6550 Notes to Editors: • First Artist Corporation plc floated on AIM in 2002 • First Artist's group companies are among the leading brands in their fields under the following categories: o Media - advertising, marketing and signage for West End, Broadway and Las Vegas shows via the Dewynters and Newman Displays brands, and strategic sponsorship consulting via Sponsorship Consulting and First Rights o Entertainment - representation of media personalities and football players/clubs across UK, Europe and the US via its First Artist Sport and First Artist Management companies together with wealth management under its Optimal Wealth Management arm o Events - a broad range of events such as conferences, company activity days, venue finding, delegate management and client events for both private and public sector clients, such as the Training & Development Agency, are offered through its company The Finishing Touch • First Artist is acting as a consolidator in the fragmented media, entertainment and events sectors focusing on high quality brands with the potential to cross sell to other Group companies • First Artist has strong visibility of earnings across a diverse and non-cyclical range of activities in both live and digital formats • The Group benefits from a strong, experienced management team with extensive expertise across all the sectors in which it operates CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT We are pleased to present our results for the six months ended 29 February 2008.The results show an interim Operating Profit of £464,000, up 92% on the previoushalf year, which is in line with our expectations. Revenue for the periodcompared with the same period last year increased 48% to £27.4 million,reflecting strong organic growth and the inclusion of a full six-month tradingfrom Dewynters following its acquisition in November 2006. First Artist has grown and will continue to be grown for success in the newmedia and live event era through the interaction between businesses alliedwithin the media, events, entertainment and sport sectors. Our approach is toprovide the support for independent, economic growth in each of our divisions,whilst allowing these companies to profit from the tangible benefits availablethrough cross referral of business within the Group. Since 2005 we have transformed First Artist from a single source income businessinto a fast growing, focused, profitable marketing services group deploying ourmarketing skills across the entertainment, leisure and media sectors. We havemoved swiftly and decisively to identify and acquire robust, growing andprofitable businesses in our key strategic areas, successfully integrating themwithin the Group and providing the environment to support their continuedorganic growth. First Artist has high visibility of earnings and a low-risk acquisition modeldelivering high incomes, strong cash generation and organic growth. The Group'sfinancial and management systems have played a key role in driving operationalefficiencies and supporting the expansion of businesses into new areas. Organic growth and acquisitions have led to significantly increased certainty ofincome streams although the Group continues to be second half weighted, with theSport division in particular weighted heavily toward the summer trading window. The Group will continue its drive to improve profit margins and reduceseasonality, whilst taking advantage of the opportunities for growth throughcross referrals between different divisions and opening up new revenue streamsthrough the ownership of media and event rights. The reduction in the adjusted earnings per share reflects the inclusion of afull six months acquisition finance charges and associated central costs, asopposed to the two months commencing January 2007 in the comparative period. The financial highlights of the Group compared with the six month period to 28February 2007: • Revenue increased 48% to £27,367,000 (2007: £18,480,000) • Gross profit rose 39% to £9,922,000 (2007: £7,128,0000) • Operating profit rose 92% to £464,000 (2007: £242,000) • Adjusted Earnings before Interest, Tax and Amortisation* up 6% to £730,000 (2007: £687,000) • Net cash generated from operations of £1,041,000 (2007: £191,000) • Adjusted Earnings per Share** reduced to 1.75 pence (2007: 4.93 pence) *Excluding exceptional costs **Excluding amortisation of intangibles, discounted interest on deferredconsideration and exceptional costs OUTLOOK The strength of the Group's income streams, pipeline of forward contractedincome and cash generation gives us confidence for the remainder of this yearand beyond, despite the prevailing challenges of the marketplace. All group companies are trading well, with strong new business generation andorganic growth from current clients. Increasingly, the Group is presenting toprospective and current clients as an integrated entity rather than asindividual businesses, enabling us to offer a wider range of services within therelationship at the outset. Management continues to invest in systems andreporting structures, which will improve operating performance, efficiencies andcost savings. We are continuing to seek opportunities to expand the Group within our threetrading divisions both organically and through acquisition. The first half of the year has been in line with management expectations and allacquisitions have been fully and successfully integrated into the Group. Wefirmly believe in our strategy of creating a fast growing, focused, profitablemarketing services group deploying our marketing skills across theentertainment, leisure and media sectors and are confident about the Group'sperformance for the remainder of the year and beyond. Jarvis Astaire Jon SmithChairman Chief Executive Officer 14 April 2008 BUSINESS REVIEWS MEDIA 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August 2007 £000's £000's £000'sRevenueDewynters Group 19,827 12,221 32,872Sponsorship Consulting 440 335 740First Rights 41 - - 20,308 12,556 33,612 Gross Profit 6,060 3,887 10,071 EBITA* 1,546 836 2,428 *Prior to intercompany management fees Dewynters (UK) and Dewynters Advertising Inc. (US) Dewynters, the leading entertainment and theatre industry marketing group, hashad a good first half performance with strong revenue streams being maintainedin this robust marketplace. Contracted future revenues are significant with newshow openings including Gone with the Wind, Oliver, Sleeping Beauty and theeight Tony Award-winning Broadway musical hit, Spring Awakening continuing toenhance this division's pre-eminent market position. The US merchandisingoperation has also traded strongly with shows, including Young Frankenstein,outperforming expectations. The business has continued to invest in and expand its client offering with theappointment of a Head of Digital to consolidate current web and other digitalcapabilities and attract new business opportunities. Currently there are overtwenty live web projects being managed by this rapidly expanding division. Inaddition, Dewynters continues to strengthen its outdoor positioning with therecent announcement of its exclusive deal with JCDecaux for digital displayadvertising at the newly opened Heathrow Terminal 5. The Group continues to seek new opportunities to expand its entertainment andtheatre reach and in particular is considering opportunities for furtherdevelopment into the Broadway and wider US market. Newman Displays Newman Displays, the leading front of house and fascia display manufacturing anddesign company, also had a strong first half in its core theatre and film eventsector. In the period, the company undertook many theatre front of housedisplays, including signage for the new West-End musical Jersey Boys and alsonumerous film events, in particular The BAFTA Film Awards at the Royal OperaHouse, The Other Boleyn Girl, Atonement and Sweeney Todd along with the LondonFilm Festival held in November 2007. Newman Displays has increased its new business resource, driving expansion intonew areas where the company's creative skills can be best utilised, winningsignage business for one of the UK's leading department store groups andinternal window graphics refurbishment work with the lead contractor for theDepartment of Children Schools & Family. Sponsorship Consulting Sponsorship Consulting ("SCL") is one of the UK's most respected sponsorshipstrategy and corporate responsibility consultancies, and following on from lastyear's restructuring and relocation of the agency, performance has been veryencouraging. New term contracts have been signed with existing multi-nationalclients, including Unilever, and several new business gains have been developedto fruition. In particular, SCL worked with Deloitte on their new sponsorshipof the Royal Opera House, Deloitte Ignite Festival and helped expand Shell'ssponsorship portfolio by successfully negotiating their relationship with theGeographical Society of London and launching Shell's sponsorship of Launchpad atthe Science Museum. First Rights First Rights, newly established in May 2007 to develop sponsorship opportunitieson behalf of rights holders, has already gained in excess of six clients in itsfirst nine months of operation, including appointment by LindstrandAeroPlatforms to source sponsors for their Hiflyer tourist carrying heliumballoons. In addition, First Rights has been appointed exclusive sales agent tosecure a new shirt sponsor for Sheffield United Football Club and also appointedto run the sponsorship programme for the Special Olympics GB National SummerGames to be held in 2009. EVENTS 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August 2007 £000's £000's £000'sRevenueCorporate 1,786 1,878 3,120Public Sector 2,280 1,024 2,037 4,066 2,902 5,157Gross Profit 1,122 617 1,186 EBITA* 503 339 498 *Prior to intercompany management fees Our full-service events management business, The Finishing Touch, is tradingsignificantly ahead of last year following its successful tender in August 2007for the three year contract to supply event management services to the TrainingDevelopment Agency for Schools, which has provided a significant expansionplatform for the company. The company's success has also enabled it to tenderfor further public sector work and term contracts, which should lead to greaterexpansion opportunities in the future. Continued investment in the development of The Finishing Touch's systems andpersonnel enabled the business to successfully launch a new venue findingservice in January. The Corporate division has performed well in a challenging market, successfullystaging some 40 Christmas events and has expanded its new business managementteam resulting in, amongst others, a new business win from Debenhams to launchtheir Spring & Autumn preview to the fashion press in November. The Finishing Touch continues to invest in senior personnel to develop itscorporate divisional offering, in particular targeting long term corporatecontracts. In addition, recent appointments will lead to the significantstrengthening of the live events offering in the Spring of 2008. Following the completion and maximisation of the company's earn-out followingacquisition by the Group in 2005, The Finishing Touch has successfully retainedthe services of the key individuals post sale and the Group looks forward toworking with them as this exciting business continues to expand. ENTERTAINMENT AND SPORT MANAGEMENT 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August 2007 £000's £000's £000'sRevenueSport 1,271 1,471 6,481Entertainment 412 387 744Wealth 1,310 1,164 2,613 2,993 3,022 9,838 Gross Profit 2,740 2,625 8,393 EBITA* (571) (235) 1,982 *Prior to intercompany management fees ENTERTAINMENT First Artist Management, the 'total management' celebrity and media agency whichrepresents actors, sport and TV presenters and other media personalities, hasperformed close to expectations. Activities in the period include successfullypromoting clients in TV programmes, for example Natalie Pinkham in "Dancing onIce" (ITV), Andrea McLean as the main anchor for ITV's "Loose Women" and KrisMurrin for Channel 4's "The Woman Who Stops Traffic". The agency has recently completed a new two-book deal on behalf of GillianMcKeith and developed a new programme format for her in the US. Sportspresenters Andy Gray, Martin Tyler and Andy Townsend also signed new voiceovercontracts for EA Sports on new computer gaming products. SPORT First Artist Sport, the market leading football representation agency group, hasexperienced a strong January trading window, completing 19 deals in the period,including Felipe Caicedo from FC Basel to Manchester City, Leigh Bromby fromSheffield United to Watford FC, Jean-Alain Boumsong from Juventus to Lyon andShaun Derry from Leeds United to Crystal Palace. Recruitment has also been strong, particularly the recruitment of youngerplayers. New manager additions to the division's roster include Harry Redknappand Billy Davies. First Artist Sport is a firm supporter of strong industry regulation and isactively working with the Football authorities to this end; it is hoped that aworkable and enforceable resolution will be arrived at soon. WEALTH Optimal Wealth Management, the high net worth Independent Financial Advisoryfirm, continues to provide strong revenue generation into the Group, despite anunsettled market. Due to the nature of the client base and a strategy ofadvising on long term, low risk investments generating sizeable renewal andtrail income, the company has been able to adapt successfully to the challengingenvironment. In January, the company gained Chartered status from the Chartered InsuranceInstitute. This is an exclusive title only awarded to firms that meetappropriate quality and compliance criteria relating to professionalism andcapability. OPERATING AND FINANCIAL REVIEW This Review covers the activities of First Artist during the six months to 29February 2008. Following the conversion to International Financial ReportingStandards (IFRS), the comparative figures have been adjusted to reflect thischange. Summary Results for the period Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 Variance 31 August 2007 £'000s £'000s £'000s £'000s Revenue 27,367 18,480 48% 48,607Gross Profit 9,922 7,128 39% 19,694Adjusted EBITA* 730 687 6% 3,533Exceptional administrative expenses (108) (312) (322) Amoritisation of intangibles (158) (133) (339)Operating Profit 464 242 92% 2,872Net finance costs (745) (422) (1,220)(Loss)/profit on ordinary activities 1,652before taxation (281) (180)Taxation credit/ (charge) 91 188 (527)(Loss)/profit for the period/year (190) 8 1,125 EPS (1.42)p 0.07p 9.00p (Basic (loss)/earnings per share)Adjusted EPS** 1.75p 4.93p 16.60p (Basic earnings per share beforeexceptional items) *Adjusted EBITA is stated before exceptional administrative expenses **Adjusted EPS is stated before amortisation of intangibles, discounted interest on deferred considerationand exceptional costs SUMMARY OF RESULTS The Board of First Artist is pleased to report the unaudited interim results forthe six months ended 29 February 2008. These represent record levels ofperformance throughout the business, with operating profits up 92%. Revenue was up 48% at £27.4 million. Gross profit was up 39% at £9.9 million. This was also 2.3% ahead of internalbudget and therefore in line with corporate objectives. Headline earnings before interest, tax, amortisation and exceptionaladministrative expenses ("Adjusted EBITA") were up 6.3% to £730,000. Headlineoperating profit was up 92% to £464,000 from £242,000. Headline operatingmargins (Adjusted EBITA to gross profit) were in line with objectives after thesix month period and reflect the second half weighting of the Group's income.Objectives were set lower than the prior six month period due to the first halfimpact of additional space and staff costs. On a reported basis, the Group's staff cost to gross profit was 67%, in linewith objectives and again reflecting the second half weighting of the Group'sincome. The adjusted EBITA per head of £2,700 for the six month period isslightly ahead of expectations. The average number of employees in the Group,excluding consultants, was 269 in the first half of the year, compared to 231 in2007, an increase of 16%. Net finance costs were £745,000 for the six month period (which included thenon-cash cost of £158,000 deemed interest on deferred consideration) comparedwith £422,000 in the comparative period (which also included the non-cash costof £135,000 deemed interest on deferred consideration). This reflects a full sixmonths of loan interest on the bank facilities granted in December 2006, withinterest rates also rising over the comparative periods. Reported losses before tax and losses after the above loan interest charges, are£281,000 (2007: 180,000) and £190,000 (2007: profit of £8,000) respectively forthe first half. These losses arise as a consequence of the loan interestrepayments noted above, and again emphasise the second half weighting of theGroup's profits. Adjusted earnings per share (before exceptional items) were 1.75p for the firsthalf compared to 4.93p in the comparative six month period. This reductionreflects the inclusion of a full six months acquisition finance charges andassociated central costs, as opposed to the two months commencing January 2007in the comparative period. Unaudited Unaudited Audited 6 months ended 29 6 months ended 28 12 months ended February 2008 February 2007 31 August 2007 £'000s £'000s £'000s % % %DivisionMedia 20,308 74% 12,556 68% 33,612 69%Events 4,066 15% 2,902 16% 5,157 11%Entertainment / Sport Management 2,993 11% 3,022 16% 9,838 20%Revenue 27,367 18,480 48,607 DivisionMedia 1,546 895 2,342Events 503 339 498Entertainment / Sport Management (571) (235) 1,982Group Costs (748) (312) (1,289) Adjusted EBITA* 730 687 3,533 *Adjusted EBITA is stated before exceptional administrative expenses OPERATING COMPANIES Specific highlights during the period included the Adjusted EBITA (£503,000) ofthe Events division for the six month period exceeding the comparative figure(£498,000) for the whole of the previous financial year, and the Adjusted EBITAof the Media division being 73% ahead of the comparative six month period. A more detailed composition of the results by division can be seen in thebusiness reviews. GROUP COSTS Group costs for the first half of £748,000 are ahead of objectives by 14%, withthe annualised position 3.9% ahead of objectives. The rise in comparison to thesix month period in 2007 is due to the need for additional space and staffcosts, following the acquisition of Dewynters in December 2006 and the full sixmonth effect of these increases. CASH FLOW AND BALANCE SHEET In the first half of 2008, operating profit was £464,000, depreciation, losseson disposals and amortisation £471,000, non-cash share option charges £39,000and working capital movements £67,000, leaving a cash generated by operations of£1,041,000. The cash and cash equivalents available, including the openingbalance was therefore £4,592,000. This available cash was absorbed by £587,000of net interest paid, £73,000 of tax paid, £255,000 of capital expenditure,£990,000 of acquisition related costs, a £5,000 clawback in foreign exchangerate changes and £1,067,000 in financing costs, leaving a net cash and cashequivalents position of £1,625,000 as at 29 February 2008. Net debt of £11.87 million (2007: £11.14 million) at the period end wascomprised of: 29 February 2008 28 February 2007 31 August 2007 £millions £millions £millionsTwo year mezzanine bank loan (2.79) (2.79) (2.79)Seven year bank loan (9.22) (10.75) (9.98)Other group net debts (1.49) (0.07) (0.48)Cash in hand and bank overdrafts 1.63 2.47 3.55Group net debt (11.87) (11.14) (9.70) The Board believes that the resultant level of net gearing, at around 153% as at29 February 2008, will be acceptable given the cash generative nature of thesignificantly enlarged Group and will reduce sizeably by the end of thefinancial year due to the Group's second half weighting. Interest cover, at 29February 2008 was 3.27 times and the Board envisages that the current Groupborrowing requirement will steadily reduce whilst retaining sufficient financialflexibility for the continued investment in the Group. Shareholders' funds increased from £7.61 million to £7.76 million over the last6 months. Due to the implementation of IFRS Shareholders' funds were increasedfrom £7.27 million to £7.61 million as at 31 August 2007, with the significantmovement being an increase in retained profit of £273,000 due to deferred taxand amortisation charges on intangible assets. ACQUISITIONS On 30 September 2007, the previous owners of Optimal Wealth Management Limitedwere paid £450,000 and issued a total of 391,700 shares, being the secondinstalment of the earn-out in relation to the acquisition by the Group. Thisinstalment was also the final payment as the company reached its maximumearn-out target one year early. On 31 January 2008, the previous owners of The Finishing Touch (CorporateEvents) Limited were paid £445,000, being the second instalment of the earn-outin relation to the acquisition by the Group. This payment was satisfied by theredemption of six month loan notes. On 5 February 2008, the previous owners of Dewynters Limited were given sixmonth loan notes to the value of £1,466,000, and issued a total of 236,379shares, being the first instalment of the earn-out in relation to theacquisition by the Group. Richard Hughes Group Managing Director 14 April 2008 THE FUTURE The media and entertainment sector has become and will continue to beincreasingly fragmented in this new digital, multi-channel global age. Brandexperience, particularly through sponsored live entertainment events, supportedby associated merchandising and online activity, is one of the most promisingroutes to overcome this fragmentation, ensuring that connections with audiencesare achieved in a controlled environment. The ability to develop rights ownership and the creation of own managed contentprogramme formats are also opportunities with considerable growth potential andlongevity of earnings. First Artist's mission is to become the UK's leading integrated media, eventsand entertainment management group and our strategic transformation into arobust, broad-based and growing media, live events and entertainment group,positions us perfectly to take advantage of the changes occurring within thisdiverse environment and to achieve our ambition. Significant opportunities exist for the Group to grow both organically andthrough acquisition within these sectors. Expansion of the Group'sentertainment and theatre offering into new markets particularly Broadway andthe wider US market and the strengthening of The Finishing Touch's live eventsdivision will assist the Group to deliver on its strategy. In summary First Artist will continue to develop by: • Delivering organic growth across all divisions supported by cross referral of income between Group companies • Generating own managed entertainment content programme formats • Creating, acquiring and managing rights ownership opportunities • Delivering brand experience through live events, supported by associated merchandising and online activity • Expanding its pre-eminent position in the entertainment and theatre media market • Working on an increasingly global basis • Continuing to act as a market consolidator through synergistic, earnings enhancing acquisitions within all three of the Group's operating divisions Consolidated Income Statement For the six months ended 29 February 2008 Notes 6 months ended 6 months 12 months 29 February ended ended 2008 28 February 31 August (Unaudited) 2007 2007 £000's (Unaudited) (Audited) £000's £000'sContinuing OperationsRevenue 27,367 18,480 48,607Cost of sales (17,445) (11,352) (28,913) Gross Profit 9,922 7,128 19,694Administrative expenses (9,458) (6,886) (16,822) EBITA before exceptional administrativeexpenses 730 687 3,533Exceptional administrative expenses 4 (108) (312) (322)Amortisation of intangibles (158) (133) (339) Operating profit 464 242 2,872 Finance income 37 66 61Finance costs (782) (488) (1,281) (Loss) / profit on ordinary activitiesbefore taxation (281) (180) 1,652Taxation 5 91 188 (527) (Loss) / profit for the period / year (190) 8 1,125(Loss) / earnings per shareBasic (loss) / earnings per share (pence) 6 (1.42) 0.07 9.00Fully diluted (loss) / earnings per share(pence) (1.42) 0.06 8.26 Consolidated Balance Sheet As at 29 February 2008 As at As at As at 29 February 2008 28 February 2007 31 August (Unaudited) (Unaudited) 2007 Notes £000's £000's (Audited) £000'sNon-current assetsGoodwill 19,261 18,951 19,191Brands 2,265 2,265 2,265Other intangible assets 1,610 1,973 1,768Property, plant and equipment 2,100 2,012 2,157Investments in associates 118 123 118 25,354 25,324 25,499 Current assetsInventories 1,106 1,133 1,074Trade and other receivables 10,334 9,659 11,832Cash and cash equivalents 3,230 2,471 3,914 14,670 13,263 16,820 Current liabilitiesTrade and other payables (9,785) (9,086) (11,307)Tax liabilities (866) (583) (970)Obligations under finance leases (13) (27) (39)Borrowings (4,613) (1,597) (2,331)Provisions (2,580) (3,037) (3,397) (17,857) (14,330) (18,044) Net current liabilities (3,187) (1,067) (1,224) Non-current liabilitiesTrade and other payables (117) - (245)Deferred tax liabilities (982) (1,107) (1,000)Obligations under finance leases - (14) (11)Borrowings (10,469) (11,970) (11,238)Provisions (2,839) (4,844) (4,175) (14,407) (17,935) (16,669) Total liabilities (32,264) (32,265) (34,713) Net assets 7,760 6,322 7,606 EquityShare capital 344 326 328Share premium 10 6,492 9,945 10,011Capital redemption reserve 15 15 15Share option reserve 248 175 210Own shares (243) - -Retained earnings 10 809 (4,223) (3,048)Foreign exchange reserve 95 84 90 Total equity 11 7,760 6,322 7,606 Consolidated Statement of Recognised Income and Expense For the six months ended 29 February 2008 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August (Unaudited) (Unaudited) 2007 £000's £000's (Audited) £000'sTax taken directly to equity - - 60 Exchange differences on translation of foreignoperations 5 28 34 Net income recognised directly in equity 5 28 94 (Loss) / profit for the period (190) 8 1,125 Total recognised income and expense for theperiod (185) 36 1,219 Consolidated Cash Flow Statement For the six months ended 29 February 2008 Notes 6 months ended 6 months ended 12 months ended 29 February 28 February 31 August 2007 2008 2007 (Unaudited) (Audited) (Unaudited) £000's £000's £000's Cash generated by operations 7 1,041 191 3,394Income taxes paid (73) (247) (535)Interest paid (624) (260) (1,228) Net cash inflow / (outflow) from operatingactivities 344 (316) 1,631 Investing activitiesInterest received 37 65 61Purchase of property, plant and equipment (255) (438) (823)Acquisition of subsidiaries 8 (990) (8,298) (7,566) Net cash used in investing activities (1,208) (8,671) (8,328) Financing activitiesRepayments of borrowings (786) (3,631) (786)Repayments of obligations under finance leases (38) (9) -New bank loans raised - 13,541 13,785Directors' loans - (35) (33)Other loans - (50) (4,441)Purchase of own shares (243) - -Net cash proceeds from issue of shares - 737 812 Net cash (used) / generated by financingactivities (1,067) 10,553 9,337 Net (decrease) / increase in cash and cashequivalents 9 (1,931) 1,566 2,640 Cash and cash equivalents at the beginning ofthe period 3,551 877 877 Effect of foreign exchange rate changes 5 28 34 Cash and cash equivalents at end of the period 9 1,625 2,471 3,551 Notes to the Interim Information For the six months ended 29 February 2008 1. Basis of Preparation Companies listed on the AIM market are required to adopt IFRS for financialperiods commencing on or after 1 January 2007. The Group's first annual report under IFRS will be for the year ending 31 August2008 and these financial statements will include figures under IFRS for the yearended 31 August 2007. The Group's date of transition to IFRS is 1 September2006, being the start of the previous period that will be presented ascomparative information. The accounting policies which the group expects toadopt in its financial statements for the year ending 31 August 2008 are set outin the IFRS Re-statement, released to the AIM Market on 28 January 2008. 2. Financial Information The UK GAAP financial information contained in this document does not constitutefull financial statements within the meaning of Section 240 of the Companies Act1985. Full financial statements for the year ended 31 August 2007, which wereprepared under UK GAAP, have been delivered to the Registrar of Companies. Theauditor's report on those financial statements was unqualified, did not includereferences to any matters to which the auditor drew attention by way of emphasiswithout qualifying their report, and did not contain a statement under section237(2)-(3) of the Companies Act 1985. 3. Reconciliation of UK GAAP to IFRS The following disclosures are required in the year of transition. The lastfinancial statements under UK GAAP were for the year ended 31 August 2007. Shareholders equity Notes 31 August 2007 1 September 2006 28 February 2007 £000 £000 £000Presented under UK GAAP 7,267 5,089 6,383 Goodwill amortisation A 500 - -Other intangibles amortisation B (339) - (133)Deferred tax on share options C 85 6 72Deferred tax on intangibles C 93 - - Total equity presented under IFRS 7,606 5,095 6,322 Profit for the financial year / period 12 months ended 31 August 2007 6 months ended 28 February 2007 £000 £000 Presented under UK GAAP 852 76 Goodwill amortisation A 500 -Other intangibles amortisation B (339) (133)Deferred tax on share options C 19 28Deferred tax on intangibles C 93 37 Total profit presented under IFRS 1,125 8 3. Reconciliation of UK GAAP to IFRS (continued) (A) Goodwill amortisation (IFRS 3 - Business combinations) In accordance with IFRS 3 goodwill is no longer amortised but is subject toannual impairment reviews. An adjustment has been made to remove the goodwillamortisation charged under UK GAAP. (B) Intangible assets (IFRS 3 - Business combinations) In accordance with IFRS 3 customer relationships and customer contracts arerecognised on any businesses purchased since the date of transition. The valueof these relationships is included at fair value and amortised over theestimated useful economic life. Provision is made for impairment. Brand intangibles have been recognised at fair value and are deemed to have anindefinite life and are not amortised. These are subject to an annual impairmentreview. (C) Deferred taxation (IAS 12 - Income taxes) IAS 12 takes a balance sheet approach to deferred tax whereby deferred tax isrecognised in the balance sheet by applying the appropriate rate of tax to thetemporary differences arising between the carrying value of assets andliabilities and their tax base. This contrasts to UK GAAP (FRS 19) thatconsiders timing differences arising in the profit and loss account.Accordingly, an adjustment has been made to recognise a deferred tax asset/liability, principally in relation to share options and recognition of Otherintangibles, with a corresponding adjustment to retained earnings. 4. Exceptional administrative expenses 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August (Unaudited) (Unaudited) 2007 £000's £000's (Audited) £000'sAcquisition related costs 60 297 322Redundancies and other restructuring costs 48 15 - 108 312 322 5. Tax (credit) / charge The tax (credit) / charge for the period as set out below: 6 months ended 29 6 months ended 12 months ended February 2008 28 February 2007 31 August (Unaudited) (Unaudited) 2007 £000's £000's (Audited) £000's UK corporation tax charge 73 286 630Adjustments in respect of prior periods - (50) 46Foreign taxes (146) (207) (111)Current tax charge for the period (73) 29 565Deferred Taxation: Origination and reversal of timing differences (18) (217) (38)Tax (credit) / charge on ordinary activities (91) (188) 527 6. (Loss) / earnings per share The calculations of (loss) / earnings per share are based on the following(losses) / profits and numbers of shares. 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 31 August (Unaudited) 2007 2007 (Unaudited) (Audited)Weighted average number of 2.5 pence ordinaryshares in issue during the periodFor basic (loss) / earnings per share 13,368,576 11,920,892 12,506,588Dilutive effect of share options - 343,011 352,324Dilutive effect of earn-out shares - - 757,297For diluted (loss) / earnings per share 13,368,576 12,263,903 13,616,209 £000's £000's £000's(Loss) / profit on ordinary activities after (190) 8 1,125taxation Due to losses made during the period there is no dilutive effect as at 29February 2008. 7. Reconciliation of profit from operations to net cash inflow from operations 6 months ended 6 months ended 12 months ended 29 February 2008 28 February 2007 31 August 2007 (Unaudited) (Unaudited) (Audited) £000's £000's £000'sOperating profit 464 242 2,872Depreciation 300 166 416Amortisation of intangibles 158 133 339Profit on disposal of fixed assets 13 - -Share options charge 39 25 77Increase in inventories (32) (232) (108)Decrease in debtors 1,498 2,422 223Decrease in creditors (1,399) (2,565) (425) Net cash inflow from operating activities 1,041 191 3,394 8. Acquisitions and disposals 6 months ended 6 months ended 12 months ended 31 August 2007 29 February 2008 28 February 2007 (Audited) (Unaudited) (Unaudited) £000's £000's £000'sConsideration on acquisition of subsidiaryundertakings and other investments - (10,424) (10,541)Cash held by acquired subsidiary undertakings - 3,255 3,525Payment of deferred consideration (990) (1,129) (550)Net cash outflow (990) (8,298) (7,566) 9. Analysis of changes in net debt At 1 September 2007 Cash flow Non-Cash Exchange At 29 February £'000s changes movements 2008 £'000s £'000s £'000s £'000s Cash at bank and in hand 3,914 (689) - 5 3,230Bank overdrafts (363) (1,242) - - (1,605) 3,551 (1,931) - 5 1,625 Finance leases (50) 38 (1) - (13)Debt due within one year (1,968) 445 (1,485) - (3,008)Debt due after more thanone year (11,238) 786 (17) - (10,469) (13,256) 1,269 (1,503) - (13,490) Total (9,705) (662) (1,503) 5 (11,865) 10. Reclassification of equity On 24 October 2007, following an application by First Artist Corporation, areduction of the share premium account in the Company's balance sheet by£4,046,557 and set off against the Company's retained losses brought forward,was approved by the High Court. 11. Reconciliation of changes in equity 29 February 2008 28 February 2007 31 August 2007 (Unaudited) (Unaudited) (Audited) £000's £000's £000'sNet (loss) / profit for the financial period (190) 8 1,125Shares issued to acquire subsidiary undertakings 543 412 482Shares issued - 1,000 1,000Share options charge 39 42 77Issue costs - (263) (267)Deferred taxation on share options - - 60Own shares (243) - -Exchange gain on foreign currency translation 5 28 34recognised directly in equityIncrease in equity 154 1,227 2,511 Opening equity 7,606 5,095 5,095 Closing equity 7,760 6,322 7,606 Shareholders' funds are entirely attributable to equity interests. 12. Interim Report Copies of this interim report are being sent to all shareholders and areavailable to the public at the Company's registered office, 3 Tenterden Street,London, W1S 1TD. This information is provided by RNS The company news service from the London Stock Exchange