Interim Results
First Artist Corporation PLC
13 March 2003
Embargoed until 0700, 13 March 2003
First Artist Corporation Plc
('First Artist' or 'the Company')
Interim Results for the six months ended 31 December 2002
First Artist Corporation is a leading European management and representation
company looking after the commercial interests of footballers and other high
profile personalities in the football and television market.
Summary
* Regulatory trading constraints contribute to decline in football related
activity
* Evidence of financial constraints within our football customer base
* Operating loss before goodwill amortisation and restructuring of £1.5
million versus a profit of £1.0 million in the prior year
* Geographical expansion mitigates effect of European regulatory constraints.
* FIFA agents employed by First Artist increases from 7 to 10
* Cost base restructured resulting in annualised savings of around £1 million
* Business diversification strategy implemented and ongoing
Jon Smith, Chief Executive of First Artist Corporation plc, comments:
'As anticipated, the Group suffered a loss in the first six months of the
current financial period, largely as a result of a decline in activity in the
football management division. This was partly due to the trading restrictions
imposed by FIFA, which effectively resulted in only two-months worth of deal
activity being presented in this reporting period, and partly as a result of a
general economic down-turn in the football sector across Europe.
'Despite this, we remain confident in the viability of the football sector both
during the next transfer window, in which we expect to see an improvement in
deal based activity, and in the medium to long term. We intend to position our
business to take maximum advantage of this upturn. We already have strong
international representation and have increased our number of FIFA agents from 7
to 10. Notwithstanding this, we have restructured our cost base and achieved
annualised savings of around £1 million. In addition, IPS, in which we hold a
33% stake, is attracting an impressive client base with encouraging initial
sales and we recently announced the formation of First Artist Wealth Management.
Both of these developments enhance our services offering to the football
industry.
'As previously stated, it is our intention to be less reliant on the traditional
deal based revenue stream. Our media division, which was formed in September
2001, now has 36 personalities including Andy Gray, Ruud Gullit, Alan Parry and
Ron Atkinson, and we are actively seeking targets to grow this business through
acquisition. We are also constantly reviewing opportunities within sports other
than football.'
Headline numbers Six months ended 31 Six months ended 31 Year ended 30 June
December 2002 December 2001 2002
(Unaudited) (Unaudited)
£m £m £m
Sales 1.4 3.0 6.7
Operating (loss)/profit* (1.6) 1.0 2.0
(Loss)/profit before tax* (1.6) 1.0 2.0
(Loss)/earnings per share (pence)* (2.39) 1.91 3.45
Fully diluted earnings per share* - 1.81 3.39
* Stated before goodwill amortisation of £732,000 (2001: £653,000)
For further information please contact:
Scott Learmouth / Jo Livingston
WMC Communications
020 7591 3999
Chairman's Statement
For the six months ended 31 December 2002
Only two years ago, First Artist was a small, UK focused company. Today we are
represented in offices across Continental Europe and Asia. We have an excellent
and committed workforce who are passionate in their determination to serve our
clients in this exciting sector. The football industry attracts an ever
expanding global television audience and First Artist is well positioned
internationally to service this audience and take full advantage of any growth.
In addition, we are expanding our business both within football services and
into non-football sectors.
In December 2001 we acquired the largest football agency in Europe to take
advantage of the burgeoning cross-border market place. In the short-term this
growth has not occurred. Indeed it has, we believe, temporarily reversed as
premier clubs across Europe dramatically reduce their expenditure and shore up
their financial defences following the TV rights debacle and introduction of the
FIFA imposed trading windows. It is difficult to comprehend how trading windows
can be for the larger good of the industry and we would welcome a legal
challenge by the UK football authorities. In anticipation of the trading
constraints in Europe we have invested in an infrastructure within Asian
territories unaffected by the transfer windows.
As a result of market conditions within the football sector, sales in the Group
have declined to £1.4 million from £2.9 million in the corresponding period last
year. During the period to 31 December 2002 we rationalised our unprofitable
units taking an exceptional charge of £141,000. We incurred an operating loss
before exceptional restructuring costs and goodwill amortisation of £1.5 million
versus an operating profit of £1.0 million in the corresponding period last
year. Since December, we have carefully reviewed the company's activities,
further reducing our fixed cost structure by around £1 million on an annualised
basis, the benefits from which will accrue in 2003. The Board has reviewed its
forecasts and believes it has adequate facilities to finance the existing plans
of the business.
I believe 2003 will be a year of stabilisation for First Artist's core football
business. We believe that our strength lies in our partnership with the clubs
and, for the good of the industry, we need to work together to achieve a more
certain financial future. We will continue to offer our clients the best
possible service and are continually seeking ways to broaden our offering - as
demonstrated with the creation of First Artist Wealth Management.
We will also continue to build our business outside of football. The media
division has become an important part of the business in only 15 months, and we
intend to seek further ways to grow this, both organically and through
acquisition thus leveraging our core representation skills away from football.
Group and financial review
Sales
The Group generated sales of £1.4 million in the period, down 52% from £2.9
million last year. There were 21 deals in the period versus 50 deals last year.
Conditional revenues to be recognised in future accounting periods increased
from £1.3 million at 30 June 2002 to £1.4 million at 31 December 2002.
Operating profit before goodwill amortisation
The operating loss before goodwill amortisation of £1.6 million (2001:profit of
£1.0 million) is stated after deducting fees payable to third-parties of £0.5
million (2001:£0.6 million), operating expenses of £2.4 million (2001:£1.4
million) and associated company costs of £0.1 million (2001:£nil). The operating
expenses include an unrealised foreign exchange loss of £0.15 million incurred
as a result of the strengthening Swiss franc versus the primary trading
currencies and a restructuring charge of £0.15 million incurred following the
closure of our agent apprenticeship scheme.
The remainder of the increase occurred in the second half of last year and
relates to the cost of running an AIM listed company and the cost of an
increased head-count.
Liquidity and capital resources
At 31 December 2002 the cash balance of the Group was £0.2 million, down from
£1.5 million as at 30 June 2002. £0.5 million was paid as deferred consideration
to the vendors of FIMO, £0.1 million was spent on investments and capex, and
there was a £0.7 million operating cash outflow, derived from the group
operating losses before amortisation, depreciation and associate costs of £1.45
million and a reduction in the non-cash working capital of £0.75. Net current
assets include £3.0 million of net receivables of which £2.3 million is due
within twelve months.
Net debt at 31 December 2002 was down from £1.1 million at 30 June 2002 to £1.0
million, comprising of £1.1 million of deferred consideration, £0.1 million of
finance leases less £0.2 million of cash.
Outlook and current operations
Whilst the Board remains confident about the level of business available to be
written during the next window (ending 31 August 2003), with the uncertainty in
the market, the visibility of earnings is less predictable. As previously
announced the Company has changed its year-end to 31 October. Therefore, there
will be a second interim report for the six months to 30 June 2003, which will
be reported on after the end of this window, when we will be in a position to
provide investors with a more meaningful review of the Group's performance. The
Board remains confident in the long-term viability of world-wide football and
intends to position itself to take maximum advantage of this through expansion
of the football business. In addition, a strategy of leveraging core skills into
non-football related sectors will continue to be a priority.
Chairman
Brian Baldock
13 March 2003
Consolidated Profit and Loss Account
For the six months ended 31 December 2002
Notes Six months ended 31 Six months ended 31 Year ended 30 June
December 2002 December 2001 2002
(Unaudited) £000's (Unaudited) £000's (Audited)
£000's
Sales Continuing 1,420 1,037 2,327
Acquisitions - 1,915 4,373
1,420 2,952 6,700
Cost of sales (537) (616) (1,246)
Gross profit 883 2,336 5,454
Operating expenses (2,301) (1,360) (3,445)
Restructuring charge (141) - -
Operating (loss)/profit
before goodwill
Continuing (1,559) 223 352
Acquisitions - 753 1,657
(1,559) 976 2,009
Goodwill amortisation (732) (653) (1,376)
Group operating (loss)/
profit (2,291) 323 633
Share of operating loss
of associates (87) - (45)
Total operating (loss)/
profit (2,378) 323 588
Investment income 9 53 82
(2,369) 376 670
Interest payable (12) (10) (28)
(Loss)/profit on ordinary
activities before
taxation (2,381) 366 642
Taxation 2 355 (174) (321)
(Loss)/profit on ordinary
activities after taxation (2,026) 192 321
Dividends - - -
Retained (loss)/profit
for the period (2,026) 192 321
Adjusted (loss)/earnings
per share 3 (2.39) pence 1.91 pence 3.45 pence
Adjusted fully diluted
(loss)/earnings per share 3 - 1.81 pence 3.39 pence
Basic (loss)/earnings per
share 3 (3.74) pence 0.43 pence 0.65 pence
Diluted (loss)/earnings
per share 3 - 0.41 pence 0.64 pence
Consolidated Balance Sheet
As at 31 December 2002
Notes As at As at As at
31 December 2002 31 December 2001 30 June 2002
(Unaudited) (Unaudited) (Audited)
£000's £000's £000's
FIXED ASSETS
Intangible assets 11,124 12,157 12,062
Tangible assets 962 732 957
Investments 45 75
-
12,131 12,889 13,094
CURRENT ASSETS
Debtors 5,422 4,572 6,832
Cash at bank and in hand 553 4,237 1,480
5,975 8,809 8,312
CREDITORS: Amounts falling due
within one year (3,841) (4,739) (4,668)
NET CURRENT ASSETS 2,134 4,070 3,644
TOTAL ASSETS LESS CURRENT
LIABILITIES 14,265 16,959 16,738
CREDITORS: Amounts falling due
in greater than one year (176) (1,066) (672)
Provision for liabilities and
charges - (11) (7)
NET ASSETS 14,089 15,882 16,059
CAPITAL AND RESERVES
Called up share capital 5 135 134 134
Shares to be issued 5 50 - 150
Share premium account 5 14,500 14,485 14,401
Profit and loss account 5 (596) 1,263 1,374
14,089 15,882 16,059
Consolidated Cash Flow Statement
For the six months ended 31 December 2002
Notes Six months ended 31 Six months ended 31 Year Ended
December 2002 December 2001 30 June 2002
(Unaudited) (Unaudited) (Audited)
£000's £000's £000's
Cash (outflow)/inflow from
operating activities 4 (689) 680 131
Returns on investments and
servicing of finance (3) 43 54
Taxation - (183) (934)
Capital expenditure (12) (464) (671)
Acquisitions and investments
(54) (2,862) (3,074)
Cash (outflow)/inflow before
financing (758) (2,786) (4,494)
FINANCING:-
Issue of shares (net of costs) - 4,351 4,176
Payments of deferred cash
consideration (530) (810) (1,628)
Repayment of directors loans - 1,088 1,043
Capital element of finance lease
rental payments (22) (8)
-
(552) 4,629 3,583
(Decrease)/increase in cash in
the period (1,310) 1,843 (911)
Cash used to decrease debt
financing.... 552 810 1,636
New finance leases (67) - (74)
Deferred consideration 905 (4,107) (4,107)
80 (1,454) (3,456)
Net (debt)/funds at the
beginning of the period (1,065) 2,391 2,391
Net (debt)/funds at the end of
the period (985) 937 (1,065)
Statement of Total Recognised Gains and Losses
For the six months ended 31 December 2002
Six months ended Six months ended Year ended
31 December 2002 31 December 2001 30 June 2002
(Unaudited) (Unaudited) (Audited)
£000's £000's £000's
(Loss)/profit for the financial
period (2,026) 192 321
Exchange adjustments 56 138 120
Total recognised gains and
losses (1,970) 330 441
Notes to the Interim Accounts:
For the six months ended 31 December 2002
1. Basis of preparation
The financial information contained in this interim report does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year ended
30 June 2002.
The figures for the six months ended 31 December 2002 and the six months ended
31 December 2001 are unaudited. The figures for the year ended 30 June 2002
have been extracted from the statutory accounts filed with the Registrar of
Companies which contained an unqualified audit report and no adverse statement
under Section 237(2) or (3) of the Companies Act 1985.
2. Tax credit
The tax credit is based on the estimated effective rate for the year as a whole.
The tax credit for the period consists of a UK taxation credit of £332,000 (six
months ended 31 December 2001, a charge of £102,000; year ended 30 June 2002, a
charge of £130,000) less an adjustment of £43,000 in respect of previous periods
(30 June 2002 £8,000), and an overseas taxation credit of £66,000 (six months
ended 31 December 2001, a charge of £72,000; year ended 30 June 2002, a charge
of £187,000).
3. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
The adjusted earnings per share is based on profit after tax before the goodwill
amortisation charge.
Six months ended Six months ended Year ended
31 December 31December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
Number Number Number
Weighted average number of 0.25 pence ordinary
shares in issue during the period
For basic earnings per share 54,236,870 44,247,826 49,241,709
Exercise of share options - 2,500,000 860,254
For diluted earnings per share 54,236,870 46,747,826 50,101,963
(Loss)/profit for the financial period £000's £000's £000's
(Loss)/profit for adjusted earnings per share (1,294) 845 1,697
Adjustment for goodwill amortisation (732) (653) (1,376)
(Loss)/profit for earnings per share (2,026) 192 321
4. Reconciliation of operating profit to net operating cash flow
Six months ended Six months ended Year ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£000's £000's £000's
Operating (loss)/profit (2,378) 323 588
Depreciation 64 37 89
Amortisation of goodwill 732 653 1,376
(Loss)/profit on disposal of fixed assets (5) (1) 3
Decrease/(increase) in debtors 994 (411) (3,010)
(Decrease)/increase in creditors (237) 79 920
Share of operating loss of associates 87 - 45
Exchange 56 - 120
Net cash (outflow)/inflow from operating activities 689 680 131
5. Reconciliation of movement in shareholders' funds
Six months ended Six months ended Year ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£000's £000's £000's
(Loss)/profit for the financial period (2,026) 192 321
Foreign exchange adjustment 56 138 120
(1,970) 330 441
New share capital subscribed net of costs - 12,585 12,651
Increase in shareholders' funds (1,970) 12,915 13,092
Opening shareholders' funds 16,059 2,967 2,967
Closing shareholders' funds 14,089 15,882 16,059
Shareholders' funds are entirely attributable to equity interests.
6. Interim Report
Copies of this interim report are being sent to all shareholders and will be
available 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
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