R4E.L Regulatory News (R4E)

22 Jul 2005 10:11

First Artist Corporation PLC22 July 2005 22 July 2005 First Artist Corporation Plc Interim results for the six months ended 30 April 2005 First Artist Corporation Plc ("First Artist" or "the Group"), one of the world'sleading football management groups, announces unaudited interim results for thesix months ended 30 April 2005. Highlights • Gross profit rose 2.4% to £977,000 (2004: £954,000) due to a reduction in deals involving third parties and margins improved from 77% to 93% • Operating cost base was reduced 14% resulting in a smaller operating loss, pre goodwill and exceptional costs, of £246,000 (2004 operating loss: £462,000) • Acquired Mel Stein's Team Sports Management Ltd in January 2005 and merged the operation into the London office • Appointed Tim Chadwick as non executive Chairman in April 2005 • Opened a new office in Qatar in March 2005 to capitalise on the exciting Middle East growth market and in April 2005 closed the Singapore office Commenting on the results, Jon Smith, Chief Executive, said: "The Group produced a commendable performance during the period, assisted by asuccessful cost cutting regime and a reduction in the number of player dealsinvolving third parties. As previously stated, our strategy is to diversify andreduce our dependence on the football market by developing a business utilisingour skills in personality and player management, plus wealth and eventmanagement and promotions. We also still firmly believe that the globalfootball market offers exciting growth potential and through our leading FirstArtist brand we are extremely well positioned to capture this growth." For further information, please contact: First Artist Corporation PLCJon Smith, Chief Executive 020 8900 1818Richard Hughes, Finance Director Smithfield ConsultantsJohn Kiely / George Hudson 020 7360 4900 Chairman's Statement In February 2005, when we announced our preliminary results for the year ended31 October 2004, we confirmed our continued confidence in the upturn of thesummer trading windows and that the Group had returned to operatingprofitability; I am pleased to report that this confidence remains. The UK market continues to improve strongly and is well supported by aregenerated European market. We have refocused our non-European activitytowards the Middle East, opening an office in Qatar in March and closing theSingapore office in April. We also continue to look for opportunities todevelop soccer in the US, whilst maintaining a minimal drain on the group'scentral resources. In January, we acquired the goodwill, assets and players' contracts of MelStein's Team Sports Management Ltd., which increases our UK player base andimproves contact with the South American market. In view of the transferwindows, the effect of this acquisition on the Group's turnover and operatingresult for the period to 30 April 2005 is immaterial and the full benefit of theacquisition will be enjoyed in future periods. The commercial marketing division continues to grow with increased activitywithin the corporate event market. For the first 6 months of this financial year, which only includes the one monthJanuary trading window, like for like continuing gross profit rose slightly inthe period compared to last year, with overheads falling 14% to £1.2 million.After exceptional charges, this resulted in an operating loss for the period of£0.3 million compared to a loss of £0.49 million in the corresponding periodlast year. The Group loss for the period was £0.28 million after deducting a£0.05 million loss incurred due to the closure of the Swiss and Singaporeoffices (2004: loss £0.39 million). Group and financial review Turnover Revenue for the Group continues to be derived primarily from the transfer ofprofessional football players between clubs. The Group generated sales of £1.05million in the period, of which £1.03 million was generated from continuingactivities, down 13% from £1.19 million in 2004, though gross profit increased2% due to a reduction in deals involving third parties, improving margins to 93%from 77% in the corresponding period. Operating profit before exceptional costs The operating loss, before exceptional costs of £0.05 million, was £0.25 million(2004: loss of £0.46 million) and is stated after deducting cost of sales of£0.07 million (2004: £0.28 million), and operating expenses of £1.22 million(2004: £1.42 million). Liquidity and capital resources At 30 April 2005 the net borrowing of the Group was £0.67 million (including£0.38 million of bank debt), up from a net borrowing balance of £0.15 million asat 31 October 2004. £0.03 million was paid in reducing finance lease balancesand there was £0.48 million operating cash outflow, derived from the Groupoperating losses before amortisation and depreciation of £0.27 million and andecrease in non-cash working capital of £0.21 million. Outlook and current operations Trading conditions in the UK and European football markets have continued toimprove and the Board remains confident for the remainder of 2005. However,there remains a natural level of uncertainty in the marketplace and visibilityof earnings continues to be unpredictable. The Board is actively seeking to diversify and expand First Artist's activitiesthrough a series of strategic acquisitions in synergistic, non-football relatedmarket areas, including: • Financial Wealth Management • Corporate Event Management and Media/Branding Rights • Entertainment and Artist Representation • Global Sports Management This diversification strategy will help reduce the dependency on the cyclicalfootball sector, but at the same time will enable the Group to benefit from theopportunities created through the connections in the sport. Our objective is togenerate stability of income, grow profits and enhance shareholder value. On behalf of the Board, I would like to thank Alex Johnston, who stepped down asChairman in March 2005, for the considerable support he gave the Group over thelast few years and we wish him well in his future activities. Tim ChadwickChairman Consolidated Profit and Loss AccountFor the six months ended 30 April 2005 Six months ended Six months ended Total Year Ended to 30 April 2005 30 April 2004 31 October 2004 (Unaudited) (Unaudited) (Audited) £000's £000's £000's Notes Sales Continuing 1,034 1,185 3,739 Discontinued 11 48 236 1,045 1,233 3,975Cost of sales (68) (279) (1,143)Gross profit 977 954 2,832 Administrative expenses (1,223) (1,416) (2,796)Exceptional administrative expenses 2 (51) (28) (391)Operating loss before goodwill Continuing (268) (337) (56) Discontinued (29) (153) (299) (297) (490) (355) Administrative expenses - goodwill - - (92)impairment and amortisationGroup operating loss (297) (490) (447) Share of operating loss of - - -associatesTotal operating loss (297) (490) (447) Loss on disposal of investment - - - (297) (490) (447) Investment income 2 - 8Interest payable (17) (17) (54) Loss on ordinary activities before (312) (507) (493)taxationTaxation 3 28 120 167Loss on ordinary activities after (284) (387) (326)taxationDividends - - -Retained loss for the period (284) (387) (326) (LOSS) EARNINGS PER SHARE Basic (loss) per share 4 (0.59) p (0.72) p (0.63) pFully diluted (loss) per share 4 (0.59) p (0.72) p (0.63) pBasic (loss) earnings per share(before goodwill and exceptional) 4 (0.48) p (0.67) p 0.30 pFully diluted (loss) earnings pershare (before goodwill andexceptional) 4 (0.48) p (0.67) p 0.30 p Statement of Total Recognised Gains and LossesFor the Six months ended 30 April 2005 Six Months Ended Six Months Ended Year Ended 30 April 2005 30 April 2004 31 October 2004 (Unaudited) (Unaudited) (Audited) £000's £000's £000's Loss for the financial period (284) (387) (326) Currency translation differences on net foreign (28) 128 (73)currency investmentsTotal recognised gains and losses (312) (259) (399) Consolidated Balance SheetAs at 30 April 2005 As at As at As at 31 October 2004 30 April 2005 30 April 2004 (Audited) (Unaudited) (Unaudited) £000's Notes £000's £000'sFIXED ASSETSIntangible assets 50 - -Tangible assets 715 775 755Investments - - - 765 775 755 CURRENT ASSETSDebtors 2,140 3,287 2,243Cash at bank and in hand 197 143 310 2,337 3,430 2,553 CREDITORS: Amounts falling due within (2,201) (2,960) (2,133)one year NET CURRENT ASSETS 136 470 420 TOTAL ASSETS LESS CURRENT LIABILITIES 901 1,245 1,175CREDITORS: Amounts falling due after (136) (28) (98)more than one year NET ASSETS 765 1,217 1,077 CAPITAL AND RESERVESCalled up share capital 7 120 135 120Capital redemption reserve 15 - 15Share premium account 7 6,217 6,217 6,217Profit and loss account 7 (5,587) (5,135) (5,275) 765 1,217 1,077 Consolidated Cash Flow StatementFor the Six Months ended 30 April 2005 Notes Six months ended Six months ended Year Ended 30 April 2005 30 April 2004 31 October 2004 (Unaudited) (Unaudited) (Audited) £000's £000's £000'sCash (outflow) / inflow from operatingactivities 5 (477) (441) 313 Returns on investments and servicing offinance (15) (17) (46) Taxation - 136 87 Capital expenditure and financial 6 (3) 22investment Acquisitions and disposals (25) - (92) Cash (outflow) / inflow before (511) (325) 284financing FINANCING:Payments of deferred cash consideration - - (17)Term Loan 50 - 100 Capital element of finance lease rental (30) (35) (76)payments 20 (35) 7 Decrease in cash in the period (491) (360) 291 Cash used to (increase) / decrease debt (20) 35 (7)financing New finance leases - - (32) (511) (325) 252 Net debt at the beginning of the period (151) (403) (403) Net debt at the end of the period (662) (728) (151) Notes to the Interim Accounts: For the six months ended 30 April 2005 1. Basis of preparation The financial information contained within this interim report does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The interim financial information has been prepared on the basis ofthe accounting policies set out in the Group's statutory accounts for the periodended 31 October 2004. The figures for the six months ended 30 April 2005 and 30 April 2004 areunaudited. The figures for the year ended to 31 October 2004 have been extractedfrom the statutory accounts which have been filed with the Registrar ofCompanies and did not contain a statement required under Section 237 (2) or (3)of the Companies Act 1985. In their report on the accounts the auditors drewreaders' attention to the disclosures made by the Directors regarding theCompany's ability to continue as a going concern but their opinion was notqualified in that respect. In view of the continuing losses during the period to 30 April 2005, theDirectors have prepared and considered detailed trading and cash flow forecastsfor the next twelve months. Costs continue to be closely monitored andcontrolled and the company remains in regular contact with its bankers and othermajor creditors. The Directors cannot predict the future trading and funding requirements of theGroup with certainty, but believe that the above actions together with thecontinued support of the Company's bankers will provide sufficient finance toenable the Group to meet its liabilities as they fall due. The Directorstherefore believe that it is appropriate for the financial statements for theperiod to 30 April 2005 to be prepared on a going concern basis. 2. Exceptional Administrative Expenses Six months Ended Six Months Ended Year Ended 30 April 2005 30 April 2004 31 October (Unaudited) (Unaudited) 2004 £000's £000's (Audited) £000'sCosts of Abortive Acquisitions 12 - 9Strategic Review - - 29Restructuring costs and Redundancies 39 28 353 51 28 391 3. Tax credit The tax credit is based on the estimated effective rate for the period as awhole. Six months Ended Six Months Ended Year Ended 30 April 2005 30 April 2004 31 October (Unaudited) (Unaudited) 2004 £000's £000's (Audited) £000'sUK corporation tax credit/(charge) - - -Adjustments in respect of prior periods - 9 56Foreign taxes (2) (29) 91Current tax credit/(charge) for the period (2) (20) 147Deferred Taxation: 30 140 20 Origination and reversal of timing differencesTax credit/(charge) on ordinary activities 28 120 167 4. Loss per share The calculations of loss per share are based on the following profits andnumbers of shares: The adjusted loss per share is based on loss after tax before goodwillimpairment, amortisation and exceptional items. Share options are non-dilutive in view of the loss for the period Six months Ended Six Months Ended Year Ended 30 April 2005 30 April 2004 31 October (Unaudited) (Unaudited) 2004 Number Number (Audited) NumberWeighted average number of 0.25 pence ordinaryshares in issue during the periodFor basic earnings per share 47,906,523 53,903,537 51,784,044Exercise of share options 3,481,347 - 625,383For diluted earnings per share 51,387,870 53,903,537 52,409,427 £'000s £'000s £'000s Loss for the financial period (284) (387) (326)Adjustment for goodwill impairment and - - 92amortisationInterest adjustment on conversion of term loan 5 - -Adjustment for exceptional costs 51 28 391(Loss) earnings for adjusted earnings per share (228) (359) 157 5. Reconciliation of operating loss to net operating cash flow Six months Six Months Ended Year Ended Ended 30 April 2004 31 October 30 April 2005 (Unaudited) 2004 (Unaudited) £000's (Audited) £000's £000's Operating loss (297) (490) (447)Depreciation 29 39 67Impairment and amortisation of goodwill - - 92Loss on disposal of fixed assets 4 1 (1)Decrease in debtors 133 230 1,208(Decrease) in creditors (318) (349) (533)Exchange (28) 128 (73)Net cash outflow from operating activities (477) (441) 313 6. Analysis of changes in net debt At 1 November Non-Cash At 30 April 2004 changes 2005 Cash flow £'000s £'000s £'000s £'000s Cash at bank and in hand 310 (113) - 197Bank overdrafts - (378) - (378) 310 (491) - (181) Finance Leases (71) 30 - (41)Debt due within one year (315) (11) - (326)Debt due after more than one year (75) (39) - (114) (461) (20) - (481) Total (151) (511) - (662) 7. Reconciliation of movement in shareholders' funds Six Months Six Months ended Year Ended ended 30 April 2004 31 October 2004 30 April 2005 (Unaudited) (Audited) (Unaudited) £000's £000's £000's Loss for the financial period (284) (387) (326)Foreign exchange adjustment (28) 128 (73) Decrease in shareholders' funds (312) (259) (399) Opening shareholders' funds 1,077 1,476 1,476 Closing shareholders' funds 765 1,217 1,077 Shareholders' funds are entirely attributable to equity interests. 8. Interim Report Copies of this interim report are being sent to all shareholders and areavailable to the public at the Company's registered office, First Artist House,87 Wembley Hill Road, Wembley, Middlesex HA9 8BU. This information is provided by RNS The company news service from the London Stock Exchange