R4E.L Regulatory News (R4E)

22 May 2009 07:00

FIRST ARTIST CORPORATION PLC

("First Artist" or "the Company")

Interim results for the six months ended 28 February 2009

First Artist Corporation plc (AIM:FAN), the media, events and entertainment management group, today announces its interim results for the six months ended 28 February 2009.

Highlights from the last six month period include:

Turnover up 38% to £37.8 million* (2008: £27.4 million).

Gross profit up 18% to £11.7 million* (2008: £9.9 million).

EBITDA (before exceptional items) increased by 3% to £1.1 million* (2008: £1 million)

Acquisition of Spot and Co of Manhattan, Inc ("SpotCo") in October 2008.

* Includes SpotCo's results from acquisition in October 2008

Key operating highlights:

SpotCo has performed ahead of budget since its acquisition in October 2008.

Theatre audiences remain strong, with Dewynters continuing to support many major West End productions.

Andrey Arshavin's transfer to Arsenal and Harry Redknapp's move to Tottenham Hotspur negotiated by First Artist Sport.

Jon Smith, Chief Executive of First Artist, commented:

This has been a challenging start to the financial year, and with the country now firmly in recession we remain in uncertain times. We have focused closely on the integration of SpotCo, whose performance has exceeded expectations, and have continued our drive for greater efficiencies and cost controls, taking decisive action where necessary.

First Artist Corporation plc Jon Smith, Chief Executive Julianne Coutts, Director & Company Secretary	tel: 020 7993 0000 www.firstartist.com
Daniel Stewart & Company plc, Nominated Adviser and Broker Stewart Dick/Graham Webster	tel: 020 7776 6550 www.danielstewart.co.uk

  

Notes to Editors:

First Artist Corporation plc was admitted to AIM in 2002.

First Artist's group companies are among the leading brands in their fields under the following categories: 

Media - entertainment advertising, marketing, design, promotions, digital media, merchandising, signage and front of house displays for the West End, Broadway and Las Vegas via the Dewynters, SpotCo and Newman Displays brands. Sponsorship rights marketing through First Rights Limited.

Events - offers a broad range of events such as conferences, company activity days, parties, venue finding, delegate management and client events for private and public sector clients through The Finishing Touch.

Entertainment/Sport - representation of media personalities and football players/clubs across the UK, Europe and the US by First Artist Management, First Artist Sport, Promosport and First Artist Scandinavia, together with wealth management through the Independent Financial Advisory firm, Optimal Wealth Management.

CHAIRMAN'S STATEMENT

I am pleased to present our results for the six months ended 28 February 2009, the first set of results the Group has announced since I became Chairman.

The Group has traded in line with management expectations and the results include the very positive contribution made by SpotCo, the US-based live entertainment advertising agency which we acquired in October 2008.

In common with the majority of UK companies, the recession has set us many challenges, to which the Group has responded positively and decisively. Paramount to our strategy in the current financial period has been the further improvement of cash collection, and the continued interrogation of our business model and scrutiny of our cost base. Restructuring and rationalisation have taken place where appropriate in a drive to ensure that our operational gearing is correct.

The acquisition of SpotCo has redefined the Group, putting the media business at its very heart and signposting its future focus. Considerable time has been spent by the management team to ensure a full understanding of SpotCo's unique offering and to achieve its successful integration into the Group. The acquisition gives First Artist a dominant position in live entertainment advertising in the world's two most important markets - London's West End and New York's Broadway - and, whilst SpotCo and Dewynters remain two distinct brands, they are now working together more closely than ever whenever the opportunities for joint projects arise.

The acquisition of SpotCo also changes the Group's financial dynamic, since for the first time in our history we have a material exposure to foreign exchange fluctuations. Whilst our borrowings now include a US$5.5 million bank loan, our US earnings and assets give us some natural hedging against our US dollar liabilities, including this loan. We are required for reporting purposes to reflect foreign exchange gains or losses arising not only from the US dollar loan but also from deferred consideration liabilities to the Vendor of SpotCo. At the six month period end this amounted to a non-cash charge of £950,349, calculated on the movement between the US dollar/sterling exchange rate on the acquisition of SpotCo in October 2008, and the rate prevailing at the period end on 28 February 2009. The foreign exchange volatility on these two significant items will be a feature of our financial reporting until the US dollar loan is repaid in 2013 and the deferred consideration liabilities are settled over the next three years.

The Group is currently benefiting in cash terms from the strength of the US dollar as it repatriates its earnings from its US subsidiaries, and foreign exchange, particularly US dollars, will also be a significant feature of our treasury management going forward.

The Group has recently become aware of an unanticipated potential additional tax liability of approximately US$800,000, which arises from the change of SpotCo's tax status on its acquisition by First Artist. This is being treated as a contingent liability whilst further investigations are made. If the liability is confirmed it is expected that it will be an increase to the cost of our investment in SpotCo.

In addition to the integration of SpotCo, we have continued to focus and reshape our three divisions.

SUMMARY OF RESULTS BY DIVISION

	Unaudited  6 months ended 28 February 2009 £'000s	%	Unaudited  6 months ended 29 February 2008 £'000s	%	Audited 12 months ended 31 August 2008 £'000s	%
Revenue by Division
Media	32,689	87%	20,308	74%	38,568	69%
Events	2,343	6%	4,066	15%	6,679	11%
Entertainment / Sport Management	2,730	7%	2,993	11%	8,855	20%
Total Revenue	37,762		27,367		54,102
EBITDA by Division
Media	1,750		1,546		2,875
Events	338		503		775
Entertainment / Sport Management	(199)		(571)		1,550
Group Costs	(824)		(748)		(1,376)
Adjusted EBITDA*	1,065		730		3,824
*Adjusted EBITDA is stated before exceptional administrative expenses

 

Media

The Media division, which now comprises the Dewynters Group, SpotCo, and First Rights, accounted for over 87% of revenue in the period.

The West End continues to confound the recession by attracting record theatre audiences, with Dewynters supporting many of the major shows, including Wicked, The Lion King, We Will Rock You, the recent massive hit Oliver!, and Priscilla Queen of the Desert, which opened in March to great acclaim. However, new business has been below expectations, reflecting the postponing or curtailing of investment in new productions.

As previously stated, SpotCo is trading well ahead of budget and has won market share, even in what has been reported as a difficult time for Broadway. It currently supports such blockbuster musicals as Shrek, Roundabout, Guys & Dolls, Billy Elliott, Hair, Nine to Five and Westside Story. Shows with which SpotCo is associated received a total of 72 of the recently announced 2009 Tony awards nominations.

During the period Newman Displays has worked on such events as the London Film Festival and the British Film Awards, and numerous film premieres including Slumdog Millionaire, Revolutionary Road, The Reader, Australia and Marley & Me.

Sponsorship Consulting Limited suffered in the period from much reduced sponsorship budgets, and with the very uncertain outlook for corporate sponsorship the decision was taken in February 2009 to cease trading. Included in these results is a loss of £325,000 relating to the closure of the business.

Events

Our full-service event management business, The Finishing Touch, enjoyed a good start to the year. However, the second half of the year will be affected by the loss of revenue from the TDA contract, which came to an end in April 2009. In response to this, the company has restructured and right sized.

Events businesses have, inevitably, been hit hard by the economic turmoil, with many established companies being forced out of the market. However, enquiries are showing signs of picking up, and The Finishing Touch is well placed to take advantage of new opportunities as and when they arise.

Sport and Entertainment Management

Despite the well-publicised turmoil in the broadcast media market, First Artist Management, our celebrity and media personality agency, saw plenty of activity in the period. Highlights included signing Natalie Pinkham for a new prime-time series of Five's Police Interceptors, Ruthie Henshall appearing as a judge on ITV's Dancing on Ice, and a new North American TV series, Eat Yourself Sexy, for Gillian McKeith. We are also delighted that TV presenters Eamonn Holmes and Ruth Langsford, and Sky News anchor Kay Burley, have recently become clients of the agency.

The Sport division enjoyed notable successes with the high-profile Andrey Arshavin and Harry Redknapp signings, and otherwise performed in line with expectations, revenue of course being heavily weighted towards the second half of the year due to the summer football transfer window. A restructuring programme, which is ongoing, was implemented across all Football operations and cash collection was much improved.

Optimal Wealth Management, the Group's independent financial advisory firm, proved resilient in a very difficult environment as it sought innovative investment solutions for its clients. The firm has also implemented a restructuring programme in order to realign its operational gearing.

People

I would like to say a few words about our people.

The corporate team, in particular Chief Executive Jon Smith, have continued to work very hard to manage the peculiar challenges thrown up by the current recession, driving through reforms which have not always been easy. We continue to refresh the Board and have been actively recruiting a Group Finance Director, a role we expect to fill shortly. Julianne Coutts, the Company Secretary, was also a welcome addition to the Board in March.

The directors of our subsidiary companies have also risen to the current challenges by redoubling their efforts and implementing careful change management, and we cannot overstate our appreciation of them.

Last but not least, I would like to thank all our employees for their hard work, enthusiasm and commitment, which has continued unabated and is vital to our future success.

Bob Baldock

Chairman

  Consolidated Income Statement

For the six months ended 28 February 2009

 

	Notes	6 months ended 28 February 2009 (Unaudited) £000's		6 months ended 29 February 2008 (Unaudited) £000's		12 months  ended  31 August  2008 (Audited) £000's
Continuing Operations
Revenue		37,762		27,367		54,102
Cost of sales		(26,032)		(17,445)		(32,411)
Gross Profit		11,730		9,922		21,691
Administrative expenses		(11,761)		(9,458)		(19,535)
EBITDA before exceptional administrative expenses		1,065		1,036		3,824
Exceptional administrative expenses	2	(248)		(108)		(697)
Depreciation		(435)		(306)		(607)
Impairment of Investment		(100)		-		-
Amortisation of intangibles		(313)		(158)		(364)
Operating (loss) / profit		(31)		464		2,156
Finance income		137		37		59
Finance costs	3	(2,348)		(782)		(1,608)
(Loss) / profit on ordinary activities before taxation		(2,242)		(281)		607
Taxation (charge) / credit		(8)		91		(460)
(Loss) / profit for the period/year from continuing operations		(2,250)		(190)		147
Loss on cessation of business		(325)		-		-
(Loss) / profit for the period / year		(2,575)		(190)		147
(Loss) / earnings per share Basic (loss) / earnings per share (pence)	4	(18.52)		(1.42)		1.09
Fully diluted (loss) / earnings per share (pence)		(18.52)		(1.42)		1.07

  Consolidated Balance Sheet

As at 28 February 2009

 

	Notes	As at 28 February 2009  (Unaudited)  £000's		As at  29 February 2008  (Unaudited)  £000's		As at  31 August  2008 (Audited) £000's
Non-current assets
Goodwill		26,319		19,261		19,625
Brands		4,208		2,265		2,265
Other intangible assets		3,401		1,610		1,404
Property, plant and equipment		2,385		2,100		1,961
Available for sale investments		45		118		142
Trade and other receivables		-		-		602
		36,358		25,354		25,999
Current assets
Inventories		308		1,106		534
Trade and other receivables		12,648		10,334		11,639
Cash and cash equivalents		2,558		3,230		1,212
		15,514		14,670		13,385
Current liabilities
Trade and other payables		(11,034)		(9,785)		(9,854)
Tax liabilities		(526)		(866)		(1,242)
Obligations under finance leases		-		(13)		(7)
Borrowings		(2,520)		(4,613)		(5,787)
Provisions		(4,070)		(2,580)		(2,205)
		(18,150)		(17,857)		(19,095)
Net current liabilities		(2,636)		(3,187)		(5,710)
Non-current liabilities
Trade and other payables		(47)		(117)		(81)
Deferred tax liabilities		(2,825)		(982)		(974)
Borrowings		(16,704)		(10,469)		(8,417)
Provisions		(7,248)		(2,839)		(2,646)
		(26,824)		(14,407)		(12,118)
Total liabilities		(44,974)		(32,264)		(31,213)
Net assets		6,898		7,760		8,171
Equity
Share capital		349		344		347
Share premium		6,609		6,492		6,598
Capital redemption reserve		15		15		15
Share option reserve		366		248		285
Own shares		(259)		(243)		(259)
Retained earnings		(1,489)		809		1,086
Foreign exchange reserve		1,307		95		99
Total equity	8	6,898		7,760		8,171

Consolidated Statement of Recognised Income and Expense

For the six months ended 28 February 2009

 

	6 months ended  28 February 2009  (Unaudited)  £000's		6 months ended  29 February 2008  (Unaudited)  £000's		12 months ended 31 August  2008  (Audited) £000's
Exchange differences on translation of foreign operations	1,208		5		9
Net income recognised directly in equity	1,208		5		9
(Loss) / profit for the period	(2,575)		(190)		147
Total recognised income and expense for the period	(1,367)		(185)		156

 

 

  Consolidated Cash Flow Statement

For the six months ended 28 February 2009

 

	Notes	6 months ended 28 February 2009 (Unaudited)  £000's		6 months ended 29 February 2008 (Unaudited)  £000's		12 months ended  31 August 2008  (Audited) £000's
Cash generated by operations	5	2,338		1,041		1,723
Income taxes paid		(772)		(73)		(188)
Net cash inflow / (outflow) from operating activities		1,566		968		1,535
Investing activities
Interest received		137		37		59
Purchase of property, plant and equipment		(262)		(255)		(461)
Acquisition of subsidiaries	6	(2,724)		(990)		(2,030)
Additions to available for sale investments		-		-		(24)
Net cash used in investing activities		(2,849)		(1,208)		(2,456)
Financing activities
Repayments of borrowings		(13,177)		(786)		(1,571)
Repayments of obligations under finance leases		(7)		(38)		(45)
New bank loans raised		17,546		-		1,500
Other loans		-		-		(445)
Purchase of own shares		-		(243)		(259)
Interest paid		(1,090)		(624)		(1,355)
Net cash generated /(used) by financing activities		3,272		(1,691)		(2,175)
Net (decrease) / increase in cash and cash equivalents		1,989		(1,931)		(3,096)
Cash and cash equivalents at the beginning of the period		464		3,551		3,551
Effect of foreign exchange rate changes		105		5		9
Cash and cash equivalents at end of the period		2,558		1,625		464
Cash and cash equivalents		2,558		1,625		464
Overdraft		-		1,605		748
Cash at bank		2,558		3,230		1,212

Notes to the Interim Information

For the six months ended 28 February 2009

 

1. Basis of Preparation

 

This unaudited half yearly report does not constitute statutory accounts of the Group within the meaning of section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 August 2008, which were prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations adopted for use in the European Union, have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 237 of the Companies Act 1985.

The accounting policies applied in these unaudited half yearly financial statements are consistent with those that the Group used in the Annual Report for the year ended 31 August 2008 and expects to apply in its annual financial statements for the year ending 31 August 2009.

The unaudited half yearly financial statements are presented in pounds sterling as this is the currency of the primary economic environment in which the Group operates.

2. Exceptional administrative expenses

 

	6 months ended  28 February 2009  (Unaudited)  £000's		6 months ended  28 February 2008  (Unaudited)  £000's		12 months ended 31 August  2008  (Audited) £000's
Acquisition related costs	143		60		273
Redundancies and other restructuring costs	105		48		147
Bad debt written off	-		-		241
Relocation costs	-		-		36
	248		108		697

  

3. Finance Costs

	6 months ended  28 February 2009  (Unaudited)  £000's		6 months ended  28 February 2008  (Unaudited)  £000's		12 months ended 31 August  2008  (Audited) £000's
Unwinding of discounts on deferred consideration	308		157		315
Foreign exchange movement on deferred consideration	674		-		-
Foreign exchange movement on loan	276		-		-
Interest on bank loans	728		582		1,129
Bank interest	31		19		13
Amortisation of issue costs of bank loan	210		18		35
Interest on finance leases	-		-		2
Other interest	121		6		114
	2,348		782		1,608

4. (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  28 February 2009  (Unaudited)		6 months ended  29 February 2008  (Unaudited)		12 months ended 31 August  2008  (Audited)
Weighted average number of 2.5 pence ordinary shares in issue during the period
For basic (loss) / earnings per share	13,901,700		13,368,576		13,454,959
Dilutive effect of share options	-		-		327,329
For diluted (loss) / earnings per share	13,901,700		13,368,576		13,782,288
	£000's		£000's		£000's
(Loss) / profit on ordinary activities after taxation	(2,575)		(190)		147

 

Due to losses made during the period there is no dilutive effect as at 29 February 2008 and 28 February 2009.

  5. Reconciliation of profit from operations to net cash inflow from operations

 

	6 months ended  28 February 2009  (Unaudited)  £000's		6 months ended  29 February 2008  (Unaudited)  £000's		12 months ended 31 August 2008  (Audited) £000's
Operating (loss)/profit before tax	(2,567)		(281)		607
Finance costs	2,348		782		1,608
Finance income	(137)		(37)		(59)
Loss on cessation of business	325		-		-
Depreciation	435		306		607
Impairment of investment	100		-		-
Amortisation of intangibles	313		158		364
(Profit)/loss on disposal of fixed assets	(5)		7		21
Share options charge	81		39		75
Decrease/(increase) in inventories	348		(32)		36
Decrease in debtors	1,509		1,498		95
Decrease in creditors	(412)		(1,399)		(1,631)
Net cash inflow from operating activities	2,338		1,041		1,723

6. Acquisitions and disposals

 

	6 months ended 28 February 2009 (Unaudited) £000's		6 months ended 29 February 2008 (Unaudited) £000's		12 months ended 31 August 2008  (Audited) £000's
Consideration on acquisition of subsidiary undertakings and other investments	(3,000)		-		-
Cash held by acquired subsidiary undertakings	276		-
Payment of deferred consideration	-		(990)		(2,030)
Net cash outflow	(2,724)		(990)		(2,030)

  

7. Acquisitions

During October 2008, the Group acquired SpotCo for a total consideration of £10,995,000. As a result of the acquisition of SpotCo, there have been significant changes to the balance sheet; in particular to goodwill, brands, other intangibles and provisions. The acquisition is summarised as follows:

	Book value £'000		Fair value adjustments £000		Fair value £'000
Net assets acquired:
Intangible assets:-
Brands	-		1,819		1,819
Customer relationships	-		2,074		2,074
Property,plant and equipment	589		(77)		512
Inventory	122		(16)		106
Trade and other receivables	2,570		(102)		2,468
Cash at bank	276		-		276
Trade and other payables	(1,550)		195		(1,355)
Deferred tax	-		(1,701)		(1,701)
	2,007		2,192		4,199
Goodwill					6,796
					10,995
Satisfied by:
Cash consideration					3,000
Deferred consideration - cash					7,280
Expenses of acquisition					715
					10,995

8. Reconciliation of changes in equity

 

	28 February 2009  (Unaudited)  £000's		29 February 2008  (Unaudited)  £000's		31 August 2008  (Audited) £000's
Net (loss) / profit for the financial period	(2,575)		(190)		147
Shares issued to acquire subsidiary undertakings	13		543		653
Shares issued			-		-
Share options charge	81		39		75
Deferred taxation on share options	-		-		(60)
Own shares	-		(243)		(259)
Exchange gain on foreign currency translation recognised directly in equity	1,208		5		9
Increase in equity	(1,273)		154		565
Opening equity	8,171		7,606		7,606
Closing equity	6,898		7,760		8,171

 

Shareholders' funds are entirely attributable to equity interests.

  

9. Interim Report

This document is available on the Company's website at www.firstartist.com

END 

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