Final Results

World Sport Group PLC 26 November 2001 Embargoed until: 0700hrs Date: 263 November 2001 On behalf of: World Sport Group plc ('WSG' or the 'Company' formerly Orchard Furniture plc) WORLD SPORT GROUP PLC Current Trading Update and Preliminary Results Chairman's Statement This is my first report to shareholders as Chairman of World Sport Group and follows the acquisition of World Sport Group (Jersey) by Orchard Furniture ('Orchard') on 15th August this year. This transaction transformed the old Orchard from a cash shell into an international sports marketing, media and management business which controls the commercial and media rights to a number of major sporting properties, with a particularly strong position in Asia. The results for the year to 30th June 2001 relate to a period prior to the above transaction, when the Company's sole source of income was represented by interest receivable on its cash balances. Pre-tax profits of £441,000 were achieved after taking account of exceptional costs of £181,000 which related almost entirely to professional costs incurred in conducting due diligence on abortive acquisitions. Current Trading Since the end of the financial year, the Company has undergone a fundamental transformation with the acquisition of the World Sport Group Limited and Parallel Media Group International Limited. The Company has been re-branded World Sport Group plc and is a leading sports marketing, media and management company. In particular, World Sport controls the commercial and media rights to a number of major sporting properties with a major preserve in Asia. I am delighted to report that the integration of the businesses has proceeded swiftly and I would like to take this opportunity to thank all the staff and my fellow Board members for all their efforts in making the integration so successful. Since the completion of the acquisition, the Board has undertaken a strategic review of the business in order to achieve the objectives of maximising its leading position in the Asian market place, leveraging strategic relationships with sports bodies and developing a fully integrated media sales platform. In addition, the Board has been looking at ways of increasing operational efficiencies by reducing the cost base across the entire Group. The Board has also identified a number of non-core activities that it will be discontinuing. This review has not been completed but it is expected that the Group will incur certain one-off costs in this financial year as a result of the restructuring and the expenses associated with the reverse takeover. While market conditions in the aftermath of the events of 11 September have not adversely affected the overall prospects of the business, they have caused timetables for negotiations with sponsorship partners to be extended. Furthermore, a number of events organised by the Group have been postponed or cancelled. Notwithstanding this, financial performance for the year to 31 December 2001, the new accounting reference date for the Group, is expected to be broadly in line with market expectations. The eventual level of operating profitability achieved in the period remains dependent on the successful conclusion of certain major sponsorship contracts that management had originally hoped to finalise in the autumn. The Board is confident that they will be signed before the year-end. Given the sponsorship and broadcast deals that have been signed post 11 September 2001, and the high visibility of revenue going forward, the Board is confident that the revenues from continuing businesses should show an improvement next year. In our experience, that business in Asia has been less adversely affected than it has in Europe and North America. More than 80 per cent of our revenues are from Asia and we are experiencing a heightened interest by multi-nationals in sports events in this region ahead of the World Cup in Japan and South Korea in 2002 and the Asian Cup in China in 2004. This, combined with the anticipated reduction in our cost base as referred to above, leaves us confident that we will show good organic growth next year. In addition, the Group will continue to look at a number of add-on acquisitions to accelerate our growth. A further statement regarding the outcome of the Board's restructuring plans, strategic review and trading for the period to 31 December will be made in the new year. J D N Ciclitira Chairman 23 November 2001 Enquiries to: Emma Kane, Chief Executive Tel: 020 7955 1410 Redleaf Communications Ltd Mob: 07876 338339 Notes to Editors: * World Sport Group plc (WSG) listed on AIM on 15 August 2001, following the reverse takeover of Orchard Furniture plc by the combined businesses of World Sport Group Limited and Parallel Media Group International Limited. * Current shareholders include News Corporation and Nomura. * The Company is currently capitalised at £53m. * The Company offers a full one-stop shop for advertisers and sponsors: television programming, airtime sales, outdoor marketing opportunities, Internet services, exposure in print publications and bespoke event management plus sponsorship in football, cricket, rugby and golf. * WSG owns the media and marketing rights to the Asian Professional Golfers' Association (Asian PGA) for 90 years and rights to Asian Professional Football until 2009 (with matching rights to 2013). In partnership with News Corporation, it also has the rights to ICC International Cricket, including the World Cups in 2003 (South Africa) and 2007 (West Indies).end Consolidated profit and loss account for the year ended 30 June 2001 2001 2000 Notes £'000 £'000 Turnover - - Administration expenses - exceptional 3 (181) 15 Administration expenses - other (198) (112) (379) (97) Other operating income - 92 Operating loss (379) (5) Interest receivable 820 84 Profit on ordinary activities before tax 441 79 Tax on profit on ordinary activities 2 - Profit for the financial year 439 79 Earnings per share - basic and diluted 4 4.14p 3.51p There were no recognised gains or losses other than disclosed above and there have been no discontinued activities or acquisitions in the current or preceding period. Consolidated Balance sheet at 30 June 2001 2001 2000 Note £'000 £'000 Fixed assets Investments - - - - Current assets Debtors 487 63 Cash 15,147 13,108 15,634 13,171 Creditors: amounts falling due within one year (235) (337) Net current assets 15,399 12,834 Capital and reserves Called up share capital 5 7,182 6,965 Share premium account 20,247 18,338 Other reserve 557 557 Profit and loss account (12,587) (13,026) Shareholders' funds - equity 15,399 12,834 Consolidated cash flow statement for the year ended 30 June 2001 2001 2000 Notes £'000 £'000 Net cash (outflow) from operating activities 6 (585) (24) Returns on investments and servicing of finance Interest paid - - Interest received 703 84 703 84 Capital expenditure and financial investment Receipts from sales of tangible fixed assets - - Net cash inflow before management of liquid resources 118 60 and financing Management of liquid resources Increase in short term deposits (2,182) (12,831) Financing Proceeds from new share issues 2,000 13,420 Expenses of share issues (79) (377) 1,921 13,043 (Decrease)/increase in cash 7 (143) 272 Reconciliation of movements in consolidated shareholders' funds for the year ended 30 June 2001 2001 2000 £'000 £'000 Profit for the financial year 439 79 Proceeds from issue of shares 2,126 13,043 Net increase in shareholders' funds 2,565 13,122 Opening shareholders' funds 12,834 (288) Closing shareholders' funds 15,399 12,834 Notes The preliminary announcement has been prepared on the basis of the accounting policies set out below, which are substantially the same as in the Group's annual financial statements for the year ended 30 June 2001. The financial information in this statement does not constitute statutory accounts within the meaning of S.240 Companies Act 1985. The figures for the year ended 30 June 2001 are extracted from the Group's audited financial statements to that date which were approved on 23 September 2001 and on which the auditors issued an unqualified opinion. The financial information for the year ended 30 June 2000 is extracted from the Group's financial statements to that date which have been filed with the Registrar of Companies and were unqualified and did not contain a statement under S.237 of the Companies Act 1985. 1 Accounting policies The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The following principal accounting policies have been applied: Basis of consolidation The consolidated financial statements incorporate the results of the Company and all of its subsidiary undertakings as at 30 June 2001 using the acquisition method of accounting. Under the acquisition method the results of subsidiary undertakings are included from the date of acquisition. On disposal, the results are included up to the date of disposal. Deferred taxation Provision is made for timing differences between the treatment of certain items for taxation and accounting purposes to the extent that it is probable that a liability or asset will crystallise. Leases Annual rentals for operating leases losses are charged to the profit and loss account on a straight line basis over the term of the lease. Pension costs Contributions to the Company's employee personal pension schemes are charged to the profit and loss account in the year in which they fall due. Liquid resources For the purposes of the cash flow statement, liquid resources are defined as short term deposits. Financial instruments It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken. 2 Exceptional items The exceptional item for the year to 30 June 2001 of £ 181,000 comprises primarily legal costs in respect of abortive take-overs. The exceptional items for the year to 30 June 2000 of £ 15,263 comprise a write-back of £122,113 in respect of creditors as a result of approval of the company voluntary arrangement that took place on 10 January 2000 and a charge of £106,850 in respect of pension and compensation payments made to former directors and employees for loss of office. 3 Exceptional operating expenses The actuarial assessment of the pension fund as at 30 September 1999 identified a funding deficit of £1,200,000. The actuary recommended total contributions payable by the company in the years ending 30 September 2001 to April 2007 amounting in aggregate to £1,590,000. Full provision for the funding deficit has been made in the year as the group no longer has any employees who are members of the scheme which was closed following the disposal of the motor dealerships in 2000. Further details of the scheme are given in note 22. Tax The tax charge represents corporation tax on the element of interest received, not covered by excess management charges brought forward. 4 Earnings per share 2001 2000 Profit for the financial year £439,000 £79,000 Number of shares in issue (weighted average as adjusted 10,590,232 2,229,528 for the 1 : 200 consolidation in August 2001) Earnings per share 4.14p 3.51p Diluted earnings per share 4.14p 3.51p 5. Called up share capital 2001 2000 £'000 £'000 Authorised 6,253,679,353 ordinary shares of 0.1p each 6,254 6,254 25,295,753 deferred shares of 19.9p each 5,034 5,034 11,288 11,288 Issued and fully paid 2,147,544,645 (2000 - 1,931,093,829 ) ordinary shares of 0.1p 2,148 1,931 each 25,295,753 deferred shares of 19.9p each 5,034 5,034 7,182 6,965 On 16 August 2000 200,000,000 shares of 0.1p each were placed at a price of 1p. On 7 September 2000 9,146,058 shares of 0.1p were issued to creditors at a price of 1.25p On 22 March 2001 the company issued 7,304,758 shares of 0.1p in respect of outstanding amounts owed to creditors at a price of 1.25p. Deferred shares The deferred shares have no rights to receive dividends, have no voting rights and entitle their holders on a return of assets on a winding up of the Company or otherwise only to the repayment of the amount paid up on the deferred shares which they hold and only after repayment of the capital paid up on the ordinary shares and the payment of a further £100,000 on each ordinary share. The deferred shares may at any time be cancelled for no consideration by means of a reduction of capital effected in accordance with Companies Act 1985 without the sanction or consent of the holders of the deferred shares. Share options Under the Company's Executive Share Option Scheme, the following share options have been granted and were outstanding at 30 June 2001: Exercise price Number Exercisable between: March 2002 and March 2009 1.25p 650,000 Share warrants On 10 August 2000, the Company issued warrants to subscribe for 25,000,000 shares at a price of 4p per share. These warrants are exercisable by 4 February 2002. On the same date, the company also issued the warrant holder with warrants to subscribe for up to an additional 75,000,000 ordinary shares of 0.1p each at a price of 4p per share, exercisable by 30 June 2002. These warrants are only exercisable if the company utilises a facility of up to £10 million made available by the warrant holder by way of a loan or subscription for shares in the company. The precise number of shares issued under this warrant will be determined by a pro rata basis by the amount of the facility utilised. Capital re-organisation Subsequent to the year end, a capital re-organisation of the company's capital was approved on 10 August 2001 whereby the existing ordinary shares were consolidated into Ordinary Shares of 20p each on a 1 for 200 basis. The deferred shares were redeemed by the company for an aggregate price of 1p on 20 August 2001. The terms of the warrants have been amended in accordance with the share consolidation, resulting in warrants over 125,000 and 375,000 shares respectively at £8.00 per share. The terms of the share options have similarly been amended to be options over 3,250 Ordinary Shares of 20p each exercisable at £2.50 each. The authorised share capital was increased by £9,746,322 by the creation of 48,731,609 new Ordinary Shares of 20p each. 6 Reconciliation of operating loss to net cash outflow from operating activities 2001 2000 £'000 £'000 Operating loss (379) (5) (Increase) in debtors (309) (63) Increase in creditors 103 44 (585) (24) Included above is £92,000 cash outflow and £89,000 increase in creditors in respect of exceptional operating costs. 7. Reconciliation of net cash flow to movements in net funds 2000 Cash flow 2001 £'000 £'000 £'000 Analysis of net funds Cash at bank and in hand 277 (143) 134 Investment in short term deposits 12,831 2,182 15,013 Net funds 13,108 2,039 15,147 Decrease in cash during the year (143) Increase in liquid resources 2,182 Change in net funds resulting from cash flows 2,039 Net funds at 1 July 2000 13,108 Net funds at 30 June 2001 15,147 8. Contingent liability During September and October 2000 the Company was in negotiations to acquire, by way of a reversal, a target company (the 'Target Company') to which Arthur Andersen were auditors and financial advisers. The directors of the Company have been advised by the Company's solicitors, Bircham Dyson Bell, that it was agreed between the Company and the Target Company, subject to contract, that Arthur Andersen were, on completion of the transaction, also to be nominated advisers to the enlarged group comprising the Company and the Target Company. The proposed transaction did not proceed. On 6 November 2000 Arthur Andersen wrote to the Company to say that it had allocated and proposed to bill the Company £598,650 (excluding VAT) for its share of Arthur Andersen's costs and expenses in the aborted matter. Included in the £598,650 was a sum of £11,375 plus VAT which the Company acknowledged was due for advice given by Arthur Andersen to the Company in relation to the preparation of the Company's audited accounts. The sum of £11,375 plus VAT has been duly paid to Arthur Andersen, although to date no invoice has been rendered to the Company and no acknowledgement of receipt has been received. The Company, after seeking advice from Bircham Dyson Bell, has denied that it agreed, except as above, to be responsible for any of Arthur Andersen's costs and expenses and, in particular, denies that it has any further liability to Arthur Andersen in respect of the balance of the sum which they have proposed should be billed by them, namely £587,275. To date Arthur Andersen has not commenced any legal proceedings against the Company. 9 Post balance sheet events On 16 July 2001 the Company announced it had concluded negotiations to acquire The World Sport Group Limited and Parallel Media Group International Limited and World Sport Group (Jersey) Limited for a consideration of some £65.7m, to be satisfied by the issue of 42,950,892 Ordinary Shares of 20p each. This was approved at an Extraordinary General meeting on 10 August 2001. At the same time the Company made a Placing and Open Offer of 8,847,772 Ordinary Shares of 20p each, of which 5,268,531 were in respect of a vendor placing of the consideration shares, resulting in a net £3.58m being raised.

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