Wireless Group PLC
30 April 2002
30 April 2002
THE WIRELESS GROUP PLC ('TWG')
PRELIMINARY UNAUDITED RESULTS FOR THE YEAR ENDED
31 DECEMBER 2001
Financial results
• Pre-tax losses reduced by 70.5 per cent to £10.1 million (2000: £34.3
million)
• Operating loss before amortisation reduced by 31.4 per cent to £10.5
million (2000: £15.3 million)
• Group turnover increased by 5.6 per cent to £31.1 million (2000: £29.4
million) despite difficult trading conditions in national market
• Strong performance by ILRs - turnover overall up 3.2 per cent;
sponsorship and promotion income up 20.9 per cent
• Locally generated revenue accounts for 78 per cent of ILR revenue
(2000: 67 per cent)
• Successful sale of loss-making ILRs, Scot FM and Wave 105 FM, for a
total of £43.5 million, reflecting TWG's valuable asset base
• Bank debt repaid. Year end overdraft £1.0 million: facility £12.5
million December 2003
Operating achievements
• Successful implementation of cost reduction programme, reducing
operating spend (before digital, one off costs and goodwill
amortisation) by 6.2 per cent equating to £2.7 million savings per annum
• Highest ever ratings achieved for talkSPORT with audience topping 2.4
million per week. Total hours per week, average hours per week and
market share all at record levels (RAJAR Q4)
• talkSPORT breakfast show achieved record audience of one million
listeners; signed industry record sponsorship deal
Outlook
• Indications of market improvement - strong sales in April 2002 for
talkSPORT, up year on year by 9 per cent excluding contra sales, and
flat year on year in May
• ILRs performing ahead of expectation - locally generated revenue
sheltered from global fall in advertising and marketing expenditure
• Further benefits from continuing cost reduction to be fully reflected
in 2002
• Alternative audience level research based on real time measurement
reveals significant increase in talkSPORT's total audience. Initial
indications from second phase of research (north west England) reinforce
identified trend
• Investment in Digital radio to continue (multiplex operation and
gaining analogue licence rollovers). Major shareholdings established in
London, Scotland and north of England
Kelvin MacKenzie, Chairman and Chief Executive of TWG, said:
'After a strong start to 2001, like our competitors, our total market was
adversely affected from the second half onwards by a global fall in advertising
and marketing spend. The events of September 11 exacerbated the decline.
However, we have very recently seen a significant pick-up in demand for
talkSPORT with April 2002 showing a nine per cent like-for-like increase in cash
turnover, excluding contra revenue. Forward bookings for May are also positive.
'The tough trading conditions of 2001 should not mask the significant
achievements made by the Group. We repaid our indebtedness, implemented an
effective cost cutting programme and achieved record audience levels at a number
of our key radio stations, especially at talkSPORT. I look forward with
confidence to the future performance of TWG.'
- ends -
For further information, please contact
Kelvin MacKenzie,
The Wireless Group plc 0207 959 7800
David Rydell/Luke Morton
Bell Pottinger Financial 0207 861 3232
Chairman's Statement
In what was a very demanding year for the radio sector, I am pleased to announce
that the Group has continued to make progress and passed some noticeable
milestones during the last 12 months. Importantly, we have reduced operating
losses before amortisation by 31.4 per cent to £10.5 million from £15.3 million
in the previous year.
We began the year with strong growth in revenues, talkSPORT for instance was 41
per cent up in the first quarter of 2001. However, along with our peers we saw a
fall in national revenue during the second and third quarters of 2001. The
effect of September 11 compounded the underlying reduction in advertising spend
in the marketplace. Despite this, we had some encouraging results with increases
in listener levels at stations throughout the group, most noticeably at
talkSPORT which saw a jump in both audience numbers and total hours listened.
Despite the difficult trading environment, Group turnover increased by 3.9 per
cent, on a like for like basis, which reflected a weaker national market, down
7.1 per cent, but offset by a strong nine per cent increase in the local
advertising markets. The robust local markets have continued to produce
excellent results with sponsorship and promotion income up 20.9 per cent year on
year. Locally generated revenue accounted for 78 per cent of ILR revenue (67 per
cent last year). This mix has sheltered the Group from the full effects of the
global fall in advertising and marketing expenditure.
The Group embarked upon a cost reduction programme which resulted in a
significant saving in operating costs, before digital, one off costs and
goodwill amortisation, of £2.7 million (a reduction of 6.2 per cent) for the
year. We continue to review the Group's cost base and to seek opportunities for
reductions wherever possible and are confident that the full benefit of these
savings will be fully reflected in 2002.
We also took the opportunity to dispose of a number of loss-making local radio
stations which resulted in a total exceptional gain of £22.2 million. These
transactions underlined the significant value of the Group's assets and allowed
us to repay the Group's indebtedness, placing us on a stronger financial
footing.
Our belief is that talkSPORT has been under recorded using the industry standard
measurement system (RAJAR) and has embarked upon a test, which in the areas
tested exceeded the sample used by RAJAR, using real time measurement of
audience listening. This uses the latest technology adopted for measuring
audiences in other countries and is based on real time information rather than
human memory. Initial results from the second phase of the test, being conducted
in the north west of England, reveal a startling difference between current
audience figures from RAJAR and those indicated by this independent research.
The cost of the completed test has been provided in the results to December
2001. If we were to adopt the system and roll it out nationally it could cost
the group in excess of £1.0 million per annum. It is therefore important that we
gain the support of the rest of the industry for this system and to share the
cost. I have no doubt this measurement system will be adopted in the future. The
results of the test are shown in detail in the operational review.
Outlook
The first four months of 2002 have been in line with our expectations. Cash
revenue is down some 2.8 per cent (including contra 5.5 per cent) against the
comparative period in 2001 as a result of continuing underperformance in the
national market. However, this is being offset by stronger local markets, which
for the first four months of 2002 show a year on year increase of 9.3 per cent.
We have noticed in recent weeks what we hope is the first sign of a change in
overall market sentiment with like for like cash sales for talkSPORT in April
increasing by nine per cent. Forward orders for May 2002 are also encouraging
compared to our industry peers who have indicated they will suffer a fall in
revenues of between five and ten percent.
Nevertheless, we remain cautious regarding current advertising demand and will
continue to manage the cost base of the business on the assumption that the
advertising market will remain under pressure for the rest of the year.
I look forward with confidence to the future performance of TWG.
Kelvin MacKenzie
Chairman and Chief Executive
30 April 2002
Operational Review
Results
Group turnover for the year ended 31 December 2001 rose 5.6 per cent to £31.1
million from £29.4 million. On a like for like basis, turnover increased 3.9 per
cent to £28.0 million from £26.9 million.
The operating loss before goodwill amortisation, digital development and one-off
costs fell from £12.3 million for 2000 to £8.1 million for 2001, a reduction of
34.1 per cent.
The table below sets out the operating performance for the group entities. The
discontinued activities relate to the sale of Scot FM and Wave 105 FM. The one
off costs have been analysed separately and relate to severance costs incurred
throughout the Group.
Year ended 31 December 2001 31 December 2000
£m £m
Turnover
talkSPORT 11.2 10.6
ILR - continuing 16.8 16.3
ILR - discontinued 3.1 2.5
----------- -----------
Total turnover 31.1 29.4
----------- -----------
Operating (loss)/profit before goodwill amortisation, digital development and
one-off costs
talkSPORT (2.9) (7.9)
ILR - continuing 2.3 2.5
ILR - discontinued (0.7) (0.6)
ILR - profit on sale of fixed asset - 0.4
Impact - national sales house (2.6) (2.3)
Central costs (4.2) (4.4)
---------- ----------
Operating loss before goodwill amortisation, digital development (8.1) (12.3)
and one-off costs
Digital development (1.8) (1.3)
One-off costs (0.6) (1.7)
---------- ----------
Operating loss before goodwill amortisation (10.5) (15.3)
Goodwill amortisation (17.9) (16.3)
---------- ----------
Reported operating loss (28.4) (31.6)
---------- ----------
talkSPORT
talkSPORT continues to improve its performance with the losses before allocation
of central costs down from £7.9 million to £2.9 million for the year ended 31
December 2001, a 63.3 per cent reduction in losses. This has been achieved
through increases in revenue but also cost reduction.
The year to 31 December 2001 was difficult for all the Group's stations.
talkSPORT began very strongly, posting revenue growth for the first six months
up £0.5 million, or 9.4 per cent. However, the second six months were more
difficult with no growth in revenue in that period over the first six months.
Overall the revenue for talkSPORT grew by £0.6 million or 4.9 per cent for the
full year. This achievement is against one of the worst advertising downturns in
recent history. The radio advertising market as a whole was down 9 per cent for
2001 vs. 2000, of which agency revenue was down 12 per cent.
talkSPORT continues to develop its programming in a creative way that is winning
listeners in the very important 25-44 male age group. Our breakfast show hosted
by Alan Brazil and Mike Parry proves more popular with listeners every quarter.
The show also attracts sponsorship revenue with John Smiths Bitter being the
present sponsor.
The audience for talkSPORT continues to grow and we were pleased to report a
record audience for the fourth quarter of 2001 of 2.4 million listeners, 11.7
per cent up over the fourth quarter of 2000. The reach for the station was 5 per
cent. However, we are convinced that the measurement of radio audiences in the
UK does not reflect talkSPORT's real audience. The current method is by an
individual keeping a diary of listening during the day, recorded in 15 minute
blocks. As a result of the increase in the number of stations broadcasting, the
heritage or station that markets heavily tends to receive the most recognition.
This made the Group undertake a test of an electronic method of recording
listening, which has been adopted in other countries. All television and radio
is recorded by this method in Switzerland. This method eliminates the need for
the individual to remember what they listened to as it is recorded digitally for
analysis. The trial we adopted was the Swiss method, where a watch is worn by an
individual for a week and is then analysed by a research company, in this case
Gfk which operates the Swiss research.
Although we funded the trial, it was carried out independently of the Group and
the sample chosen reflected the demographic of the UK. Gfk sampled more people
in the test area than RAJAR does and ran the test for 12 weeks parallel to the
diary method. A total of 28 radio stations and four TV channels were recorded.
The test showed that all radio listening increased but people listened for fewer
hours. Speech-based stations appeared to do well in the test, with the BBC
improving its weekly reach across all stations. talkSPORT increased its reach to
20.4 per cent (the diaries report 5 per cent reach). We accept that a single
test cannot be relied upon. Gfk are completing a further test in the north west
of England and we will publish the overall results in due course. This
measurement method changes the profile of talkSPORT and the Group regards it as
important to continue this form of measurement.
talkSPORT continues to work as a format and will deliver improving results in
the future. We have begun to exploit the potential for talkSPORT and it will be
well placed to take advantage of any improvement in the advertising market, and
a more accurate audience measurement system.
We have pioneered the use of digital message carriage on digital radio by using
it to complement an on air promotion. The data spectrum for digital receivers
was used to carry a promotion for golf holidays. The promotion was a success
and, although it is difficult to establish whether any sales of the holidays
were due to the data transmission, we are convinced of the impact.
Regional and local radio (ILRs)
Our ILR stations have performed well in difficult market conditions. Although we
made two disposals during the year the management kept their focus on the
businesses and issues they faced. It was again a story of the two revenue
streams with local revenue doing well and national revenue suffering. Revenue
from continuing activities (excluding the sale of Scot FM and Wave 105 FM)
increased by 3.2 per cent to £16.8 million, with local revenue improving by 20.1
per cent but national revenue in our local markets falling by 31.0 per cent.
National revenue fell as a proportion of ILR total revenue, accounting for 22
per cent.
Before allocation of central costs and Impact sales costs, the ILRs performance
on a like for like basis was marginally down on the previous year from an
operating profit of £2.5 million for 2000 to an operating profit of £2.3 million
for the year ended 31 December 2001. The operating performance was better in the
second half of the year with the operating profit benefiting from cost
reductions implemented earlier and also the first half marketing expenditure
supporting the local stations.
The Group has invested in Town & Country Broadcasting which is a vehicle for
investing in small local stations. It has successfully applied for two licences
for Pembrokeshire and Chester. The Group has a 20 per cent shareholding.
The Group disposed of Scot FM and Wave 105 FM during the year. These disposals
raised some £43.5 million for the Group and removed the Group's indebtedness.
The Group now has in place a normal banking facility which is in place until 31
December 2003. Although the intention for the Group is to grow and be part of
future consolidation, due to adverse market conditions these disposals were
essential.
Digital radio
We continue to support digital radio development in the UK. We broadcast our
national service, talkSPORT, on Digital One at a cost of £0.4 million per annum
and have invested in multiplex operations. The Group's digital radio strategy is
to pursue multiplex operation and to gain licence rollovers for our analogue
stations by securing digital coverage for these services.
We have, however, pulled out of standalone broadcasting of digital services as
this was a drain on the Group's cashflow. Our shareholdings in Switchdigital
London and Scotland continue to make progress and where we have an existing
analogue service we will apply for the multiplex operation, either on our own or
with a partner. We have recently joined with EMAP to apply for regional
multiplexes which will ensure service provision for the multiplex and cover the
costs of operation. Although we believe the time horizon for the switch to
digital transmission is some time away, its uptake will increase and we will be
in a position to exploit this in the future.
Unaudited Consolidated Profit and Loss Account
For the year ended 31 December Notes 2001 2000
£'000 £'000
Turnover
Continuing operations 27,982 26,933
Discontinued operations 3,083 2,472
---------------- ----------------
31,065 29,405
---------------- ----------------
Administration expenses
- goodwill amortisation (17,887) (16,334)
- other administration expenses (41,569) (44,716)
---------------- ----------------
(59,456) (61,050)
---------------- ----------------
Operating loss
Continuing operations (27,677) (30,594)
Discontinued operations (714) (1,051)
---------------- ----------------
(28,391) (31,645)
Income from interests in associated undertakings 110 55
Profit on sale of discontinued operations 1 22,240 -
Interest receivable and similar income 1,029 1,126
Amounts written off investments 2 (849) -
Interest payable and similar charges (4,258) (3,820)
---------------- ----------------
Loss on ordinary activities before taxation (10,119) (34,284)
Tax on loss on ordinary activities - -
---------------- ----------------
Loss on ordinary activities after taxation (10,119) (34,284)
Minority interests - equity interests (21) 105
---------------- ----------------
Loss for the financial year (10,140) (34,179)
Finance cost of non-equity shares - (4,749)
---------------- ----------------
Retained loss for the year (10,140) (38,928)
---------------- ----------------
---------------- ----------------
Basic loss per share:
Loss attributable to each ordinary share (£) (0.10) (0.39)
---------------- ----------------
---------------- ----------------
Loss attributable to each 'B' ordinary share (£) (104.75) (389.33)
---------------- ----------------
---------------- ----------------
Basic loss per share before profit on sale of discontinued operations:
Loss attributable to each ordinary share (£) (0.33) (0.39)
---------------- ----------------
---------------- ----------------
Loss attributable to each 'B' ordinary share (£) (334.48) (389.33)
---------------- ----------------
---------------- ----------------
There were no gains or losses during the year or the prior year other than the
losses reported above, accordingly no separate Statement of Total Recognised
Gains and Losses has been prepared.
The diluted loss per share is the same as the basic loss per share because the
share options are not dilutive as they would have the effect of reducing the
loss per share if exercised.
Unaudited Balance Sheet
At 31 December Notes 2001 2000
£'000 £'000
Fixed assets
Goodwill 3 49,535 88,277
Other intangible assets 3 14,177 15,500
Tangible assets 4 3,080 3,570
Investments 5 3,635 4,350
---------------- ----------------
70,427 111,697
---------------- ----------------
Current assets
Debtors 6 9,038 11,323
Loan notes receivable 7 6,000 -
Short term deposits 8 15,552 15,552
Cash at bank and in hand 121 379
---------------- ----------------
30,711 27,254
---------------- ----------------
Creditors: amounts falling due within one year
Bank and other borrowings 8 (7,239) (32,672)
Loan notes 8 (15,552) (15,552)
Other creditors 8 (13,591) (14,088)
---------------- ----------------
(36,382) (62,312)
---------------- ----------------
Net current liabilities (5,671) (35,058)
---------------- ----------------
Total assets less current liabilities 64,756 76,639
Creditors: amounts falling due after more than one year
Bank and other borrowings 9 (463) (538)
---------------- ----------------
Other creditors 9 (12,523) (14,177)
---------------- ----------------
(12,986) (14,715)
Provisions for liabilities and charges 10 (213) (244)
---------------- ----------------
Net assets 51,557 61,680
---------------- ----------------
---------------- ----------------
Capital and reserves
Called-up share capital 9,681 9,681
Share premium account 35,064 35,064
Merger reserve 81,820 81,820
Profit and loss account (75,003) (64,863)
---------------- ----------------
Shareholders' funds 51,562 61,702
Equity minority interests (5) (22)
---------------- ----------------
Total capital employed 51,557 61,680
------------ ----------------
------------- ---------------
Unaudited Consolidated Cash Flow
For the year ended 31 December Notes 2001 2000
£'000 £'000
Net cash outflow from operating activities 12 (7,464) (20,027)
Return on investments and servicing of finance 13 (3,217) (2,584)
Taxation 13 - (275)
Capital expenditure and financial investment 13 (930) (4,544)
Acquisition 13 - (22,005)
Disposals 11, 13 37,055 -
----------------- ---------------
Cash inflow/(outflow) before management of liquid resources and financing 25,444 (49,435)
Management of liquid resources - 1,343
Financing (23,271) 44,597
----------------- ---------------
Increase/(decrease) in cash in the year 14 2,173 (3,495)
----------------- ---------------
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2001 2000
£'000 £'000
Loss for the financial year (10,140) (34,179)
Finance cost of non-equity shares - (4,749)
Proceeds from issue of new shares - 45,432
Add back finance cost of non-equity shares - 4,749
Cost of employee share scheme - 418
----------------- -----------
Net (reduction)/addition to shareholders' funds (10,140) 11,671
Opening shareholders' funds 61,702 50,031
----------------- -----------
Closing shareholders' funds 51,562 61,702
----------------- -----------
----------------- ------------
Notes
1. Profit on disposal of discontinued operations
2001 2000
£'000 £'000
Profit on sale of SCOT FM Limited (note 11) 22,472 -
Loss on disposal of Wave 105 FM Limited (note 11) (232) -
----------- -------------
22,240 -
----------- -------------
----------- -------------
2. Amounts written off investments
2001 2000
£'000 £'000
Provision to write down fixed asset investments to the lower of cost or market
value.
Investment in own shares (note 5) 458 -
Other investments (note 5) 391 -
----------- -------------
849 -
----------- -------------
----------- -------------
3. Intangible fixed assets
Goodwill Licence
£'000 £'000
Cost
At 1 January 2001 119,890 15,500
Additions 18 -
Disposals (28,873) -
------------- -------------
At 31 December 2001 91,035 15,500
------------- -------------
Amortisation
At 1 January 2001 31,613 -
Charge for the year 17,887 1,323
Disposals (8,000) -
------------- -------------
At 31 December 2001 41,500 1,323
------------- -------------
Net book value
At 31 December 2000 88,277 15,500
--------------- --------------
--------------- --------------
At 31 December 2001 49,535 14,177
--------------- ---------------
--------------- ---------------
4. Tangible fixed assets
Land and Transmitters Studio Fixtures, Motor vehicles Total
buildings equipment fittings and
equipment
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2001 1,609 1,102 3,755 2,580 166 9,212
Additions 373 12 354 385 66 1,190
Disposal of subsidiaries (121) - (720) (299) - (1,140)
Disposals (4) (992) (144) (48) (55) (1,243)
--------------- --------------- --------------- --------------- -------------- --------
At 31 December 2001 1,857 122 3,245 2,618 177 8,019
--------------- --------------- --------------- --------------- -------------- -------
Depreciation
At 1 January 2001 711 791 2,673 1,349 118 5,642
Charge for the year 166 135 465 461 33 1,260
Disposal of subsidiaries (116) - (638) (193) - (947)
Disposals (4) (841) (99) (23) (49) (1,016)
--------------- --------------- --------------- --------------- -------------- --------
At 31 December 2001 757 85 2,401 1,594 102 4,939
--------------- --------------- --------------- --------------- -------------- --------
Net book value
At 31 December 2000 898 311 1,082 1,231 48 3,570
--------------- --------------- --------------- --------------- -------------- --------
At 31 December 2001 1,100 37 844 1,024 75 3,080
--------------- --------------- --------------- --------------- -------------- --------
5. Fixed asset investments
2001 2000
£'000 £'000
Associated undertakings 226 116
Investment in own shares 308 766
---------------- ----------------
3,635 4,350
---------------- ----------------
Associated undertakings
£'000
Carrying amount
At 1 January 2001 116
Share of retained profit for the year 110
-----------------
At 31 December 2001 226
-----------------
-----------------
Investment in own shares
£'000
Carrying amount
At 1 January 2001 766
Provision against carrying value (458)
----------------
At 31 December 2001 308
-----------------
-----------------
The investment in own shares is held through an employee share option trust.
On 15 May 2000, the Company established the Wireless Group Employee Benefits
Trust (the 'Trust'). The trustee of the Trust is an independent trustee
company resident in the Channel Islands. The Trust is used to manage the
funding and delivery of Ordinary Shares under the Share Option Plans. At 31
December 2001 the cost of investment in own shares is represented by 436,289
ordinary shares acquired at an average cost of £1.75 per ordinary share. The
market value of the shares at 31 December 2001 based on the prevailing
market price of 70.5 pence per share was £307,583 (2000: £975,106).
The Group has adopted a policy of carrying investments at the lower of cost
and market value. In accordance with this policy the investment in own
shares has been written down by £458,000 in the year ended 31 December 2001
(2000: Nil).
In the report and accounts for the year ended 31 December 2000 the
investment in own shares was disclosed as a loan in Other debtors and has
been reclassified as a fixed asset investment.
Other investments
£'000
Carrying amount
At 1 January 2001 3,468
Additions 30
Provision against carrying value (391)
Permanent diminution in value (6)
-----------------
At 31 December 2001 3,101
-----------------
-----------------
Other investments include a 16.1% holding in Forever Broadcasting plc: The
market value of the Group interest in Forever Broadcasting plc as at 31
December 2001 was £3,037,905 (2000: £6,944,000). In accordance with the
Group's accounting policy, the investment is carried at the lower of cost
and market value. This has resulted in a write down of £391,000 in the year
ended 31 December 2001 (2000: Nil).
6. Debtors
2001 2000
£'000 £'000
Amounts falling due within one year:
Trade debtors 6,791 8,763
Other debtors 541 420
Prepayments and accrued income 1,706 2,140
----------------- ------------
9,038 11,323
----------------- ------------
7. Loan notes receivable
The £6,000,000 loan notes were issued by Guardian Media Group plc,
guaranteed by the National Westminster Bank plc, as part of the purchase
consideration on the sale of SCOT FM Limited. The loan notes carry an
interest rate of LIBOR less 0.75% and are redeemable by the Company any time
up to 30 June 2005.
8. Creditors: amounts falling due within one year
2001 2000
£'000 £'000
Bank and other borrowings
Bank loans 6,000 29,000
Finance leases 230 232
Bank overdraft 1,009 3,440
---------------- ----------
7,239 32,672
---------------- ----------
---------------- ----------
Loan notes 15,552 15,552
---------------- ----------
---------------- ----------
Other creditors
Trade creditors 2,974 3,178
Amounts owed to associates 233 191
Corporation tax payable 109 109
Other taxation and social security 538 1,191
Accruals and deferred income 7,450 7,924
Licence fees 1,654 1,323
Other creditors 633 172
---------------- -----------
13,591 14,088
---------------- -----------
---------------- -----------
The loan notes were issued as part consideration for the acquisition of The
Radio Partnership Limited in 1999 and are guaranteed by Barclays Bank PLC in
accordance with an agreement dated 23 July 1999, pursuant to which the
Company has agreed to maintain sufficient funds to cover the outstanding
liability from time to time, and has therefore deposited £15,552,000 (2000:
£15,552,000) as guarantee collateral with Barclays Bank PLC to cover the
liability. Repayment of the loan notes is at the option of the holder with a
final maturity date of 2004. Interest is paid at 0.425% above LIBOR with an
annual guarantee fee of 0.575%.
The bank loans and overdrafts comprise:
- An overdraft of £1,009,000 drawn against an overdraft and revolving credit
facility totalling £12.5 million. This borrowing is secured by the assets of
the Group and bears interest at 1.75% above LIBOR.
- A loan of £6,000,000 drawn down against a facility of £6,000,000 secured
against the loan notes issued by Guardian Media Group plc for the
acquisition of SCOT FM Limited. The loan bears interest at 0.5% above LIBOR.
9. Creditors: amounts falling due after more than one year
2001 2000
£'000 £'000
Bank and other borrowings
Finance leases 463 538
---------------- --------------
---------------- --------------
Other creditors
Licence fees 12,523 14,177
---------------- --------------
---------------- --------------
10. Provisions for liabilities and charges
Deferred taxation Property Total
provisions
£'000 £'000 £'000
Group
At 1 January 2001 9 235 244
Utilised during the year - (31) (31)
------------------ ------------------ ------------
At 31 December 2001 9 204 213
------------------ ------------------ ------------
------------------ ------------------ ------------
There was no unprovided deferred taxation.
The property provisions relate to estimated dilapidation costs and committed
rental costs on currently unoccupied properties. The timing of these
liabilities depends on each individual lease and the possibility of leasing
the relevant properties.
No amounts have been discounted.
11. Disposals
a. On 28 June 2001 the Group completed the disposal of its 100% interest in SCOT
FM Limited.
SCOT FM Limited made a loss before taxation of £0.4 million from 1 January
2001 to 28 June 2001, and a loss on ordinary activities before taxation of
£0.9 million for the previous financial year to 31 December 2000.
b. On 29 November 2001 the Group completed the disposal of its 100% interest in
Wave 105 FM Limited.
Wave 105 FM Limited made a loss before taxation of £0.3 million from 1
January 2001 to 29 November 2001, and a loss on ordinary activities before
taxation of £0.3 million for the previous financial year to 31 December
2000.
Net assets disposed of and the related sale proceeds were as follows:
SCOT FM Limited Wave 105 FM Total
Limited
£'000 £'000 £'000
Fixed assets
Tangible assets 123 70 193
Current assets
Debtors 639 345 984
Cash - 2 2
--------------- --------------- ---------------
Total assets 762 417 1,179
Liabilities
Creditors (4,463) (1,096) (5,559)
Overdraft (480) - (480)
--------------- --------------- ---------------
Net liabilities (4,181) (679) (4,860)
Profit on sale 22,472 (232) 22,240
Goodwill written off 2,649 18,224 20,873
--------------- --------------- ---------------
Sale proceeds 20,940 17,313 38,253
--------------- --------------- ---------------
--------------- --------------- ---------------
Satisfied by:
Cash 19,000 18,000 37,000
Loan notes 6,000 - 6,000
--------------- --------------- ---------------
25,000 18,000 43,000
Less costs (136) (287) (423)
Less settlement of intercompany debt (3,924) (400) (4,324)
--------------- --------------- ---------------
20,940 17,313 38,253
--------------- --------------- ---------------
--------------- --------------- ---------------
Net cash inflows in respect of the sale
comprised:
Cash consideration 14,940 17,313 32,253
Settlement of inter company debt 3,924 400 4,324
Bank overdrafts/(cash) disposed 480 (2) 478
--------------- --------------- ---------------
19,344 17,711 37,055
--------------- --------------- ---------------
--------------- --------------- ---------------
12. Reconciliation of operating loss to net cash inflow from operating activities
2001 2000
£'000 £'000
Operating loss (28,391) (31,645)
Depreciation charges 1,260 1,066
Loss/(profit) on disposal of fixed assets 212 (488)
Goodwill amortisation 17,887 16,334
Licence amortisation 1,323 937
Write down in trade investments 6 -
Decrease/(increase) in debtors 1,549 (2,718)
Decrease in creditors (1,310) (3,513)
---------------- -------------
Net cash outflow from operating activities (7,464) (20,027)
---------------- --------------
13. Analysis of cash flows for headings netted in the cash flow statement
2001 2000
£'000 £'000
Returns on investments and servicing of finance
Interest received 816 1,126
Dividends received 98 -
Interest paid (4,131) (3,710)
---------------- ------------
Net cash outflow (3,217) (2,584)
---------------- --------------
---------------- --------------
Taxation
UK corporation tax paid - (275)
---------------- --------------
Net cash outflow - (275)
---------------- --------------
---------------- --------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (893) (1,141)
Disposal of tangible fixed assets 15 640
Purchase of fixed asset investments (30) (3,277)
Purchase of minority interest (22) -
Purchase of own shares by Employee Benefits Trust - (766)
---------------- ---------------
Net cash outflow (930) (4,544)
---------------- ---------------
---------------- ---------------
2001 2000
£'000 £'000
Acquisitions and disposals
Acquisitions
Purchase of subsidiary undertakings - (22,128)
Cash at bank and in hand acquired - 123
----------------- -------------
Net cash outflow - (22,005)
----------------- ---------------
----------------- ---------------
Disposals
Sale of subsidiary undertakings 37,000 -
Settlement of subsidiary overdraft 480 -
Cash disposed of on sale of subsidiary (2) -
Costs of subsidiary sales (423) -
----------------- ------------
Net cash inflow 37,055 -
----------------- --------------
----------------- ---------------
2001 2000
£'000 £'000
Financing and management of liquid resources
Financing
Net additional borrowings (23,000) 1,128
Convertible loan stock - 7,000
Repayment of convertible loan stock - (1,000)
Proceeds from exercise of warrants - 1,875
Proceeds of placing - 40,975
Costs of placing - (3,921)
Redemption of loan notes - (1,343)
Capital element of finance lease rental payments (271) (117)
---------------- ---------------
(23,271) 44,597
---------------- ---------------
Management of liquid resources
Increase in short term deposits - 1,343
---------------- ---------------
Net cash (outflow)/ inflow (23,271) 45,940
---------------- ---------------
---------------- ---------------
Companies disposed of in the year contributed an outflow of £236,000 to the
Group's net operating cash flows; paid £13,000 in respect of net returns on
investment and servicing of finance; paid £nil in respect of taxation; and
utilised £92,000 for capital expenditure.
14. Reconciliation of movement in net debt
2001 2000
£'000 £'000
Increase/(Decrease) in cash in the period 2,173 (3,495)
Cash outflow/(inflow)) from decrease/(increase) in debt and lease financing 23,271 (7,011)
------------------ --------------
Change in net debt resulting from cash flows 25,444 (10,506)
Finance leases (296) (695)
Cash acquired with acquisition - 123
Loans and finance leases disposed/(acquired) with subsidiaries 102 (171)
Loan notes received on disposal of subsidiary 6,000 -
Conversion of loan stock into shares - 6,000
------------------ --------------
Decrease/(increase) in net debt in year 31,250 (5,249)
Net debt at 1 January (32,831) (27,582)
------------------ ---------------
Net debt at 31 December (1,581) (32,831)
------------------ ----------------
------------------ ----------------
15 Analysis of net debt
1 January 2001 Cash flow Acquisitions and Non-cash 31 December
£'000 £'000 disposals* Changes 2001
£'000 £'000 £'000
Bank overdraft (3,440) 2,431 - - (1,009)
Cash at bank and in hand 379 (258) - - 121
----------------- ----------------- ----------------- ---------------- -------------
(3,061) 2,173 - - (888)
Debt due within 1 year (29,000) 23,000 - - (6,000)
Loan notes receivable - - - 6,000 6,000
Loan notes (15,552) - - - (15,552)
Short term deposits 15,552 - - - 15,552
Finance leases (770) 271 102 (296) (693)
----------------- ----------------- ----------------- ---------------- -------------
Net debt (32,831) 25,444 102 5,704 (1,581)
----------------- ----------------- ----------------- ---------------- -------------
----------------- ----------------- ----------------- ---------------- -------------
* Excluding cash & o/d balances
16. Post Balance sheet events
On 31 January 2002 the Group completed the disposal of its interest in
Kingdom FM to Scottish Radio Holdings plc and others for £1.0 million.
On 19 February 2002 the group disposed of its BIG AM radio licence to
Capital Radio for £250,000. 1458 Big AM Limited had accumulated losses for
the year to 31 December 2000 of £422,000.
Preliminary results
These preliminary results do not constitute statutory accounts. The preliminary
results for the year ended 31 December 2001 are extracted from the Group's
accounts for the year, which will be delivered to the Registrar of Companies in
due course. The results for the year ended 31 December 2000 have been extracted
from the accounts for The Wireless Group PLC, which have been delivered to the
Registrar of Companies and which the auditors gave an unqualified report that
did not contain a statement under Section 237 (2) or (3) of the Companies Act
1985.
These preliminary results have been prepared on the basis of the accounting
policies set out in the Company's 2000 statutory accounts, which have been
updated for changes in Financial Reporting Standards and UITF Abstracts coming
into force during the year, the impact of which on the financial information has
not been material.
This information is provided by RNS
The company news service from the London Stock Exchange