RNS Number:0407L
Sportsworld Media Group PLC
3 October 2001
3 October 2001
SPORTSWORLD MEDIA GROUP PLC
62% INCREASE IN EPS REFLECTS STRONG ORGANIC GROWTH AND
CHANGING DEMANDS OF ADVERTISERS
Preliminary results for the year ended 30 June 2001
Pre-tax profits, before goodwill amortisation and exceptional items, increase
192% to #12.0m (#4.1m) on revenues up 72% to #35.6m (#20.8m)
Operating profits, excluding goodwill amortisation and exceptional items, jump
to #11.5m from #3.6m
Earnings per share, excluding goodwill amortisation and exceptional profit,
improves 62% to 13.9p (8.6p). Including exceptional profit of #3.6m, EPS rises
77% to 19.1p (10.8p)
Net cash balances of #13m
Results reflect:
strong organic growth from all three Sportsworld divisions;
major new client wins;
successful integration of acquisitions in previous years; and
growing move by marketers away from advertising to content television
programming
Complementary bolt-on acquisitions during the year already well-bedded down
Market dynamics support opportunities for strong further growth. Good future
visibility compared to other advertising dependent media businesses
Board confident of continued progress in current year and beyond
Commenting on the results and future prospects, Sportsworld's Chief Executive
Geoff Brown said:
"This was a strong performance and reflects both strong organic growth and the
move by advertisers away from the traditional 30-second television commercial
to the use of programming content. We are uniquely placed to offer our clients
brand building through television content creation, event management and
sponsorship opportunities.
"Unlike others in the media sector, we are not exposed in the same way to the
decline in advertising spend. Indeed, we are benefiting from the trend by
advertisers to seek new avenues of communication. Future visibility for
Sportsworld is therefore good and we are confident of making good progress
this year and beyond."
Notes to Editors:
Photographs for the media are available at newscast online -
www.newscast.co.uk - Tel: 020 7608 1000.
Enquiries:
Geoff Brown, Chief Executive
Andy Fletcher, Chief Financial Officer
Sportsworld Media Group plc Tel: 020 7240 9626
Tim Spratt / Tania Parsons
Financial Dynamics Tel: 020 7831 3113
GROUP CHIEF EXECUTIVE'S REVIEW
FINANCIAL SUMMARY
Sportsworld Media Group has achieved record results for the year ended 30 June
2001. Significant increases in revenue and profit reflect strong organic
growth in all areas of the Group's business - television, brand and
sponsorship, stadia and athlete representation.
Pre-tax profits, before goodwill amortisation and exceptional items, increased
by 192% to #12.0m (#4.1m) on revenues up 72% to #35.6m (#20.8m). Operating
profits, excluding goodwill amortisation and exceptional items, increased by
219% to #11.5m (#3.6m).
Exceptional profits of #3.6m arose on the sale of the Australian Outdoor
business (#3.4m), and the sale of BSkyB shares (derived from the investment in
Sports Internet), giving total pre-tax profits of #15.6m before goodwill
amortisation.
Earnings per share, excluding goodwill amortisation and exceptional profit,
increased by 62% to 13.9p (8.6p). Earnings per share before goodwill
amortisation increased 77% to 19.1p (10.8p). In line with the Group's current
development policy, there will be no dividend.
The Group had no debt at the year end and net cash balances of #13m. Net cash
from operating activities was #3.5m (#1.8m). A long term bank facility of #30m
has been agreed with National Australia Bank which is available to the Group
as it considers further acquisitions.
During the year, the Group made six further acquisitions and these
acquisitions contributed #0.9m or 8% of total operating profit and 8% of
revenue.
MARKET DYNAMICS
The market environment in which the Group operates is benefiting from major
and irreversible changes in the global television and advertising industries,
including:
The continued growth in new television channels
The worldwide trend of programme outsourcing by all major television networks
to independent producers
The further decline in the effectiveness of 30-second television commercials
in the multi-channel television environment due to audience fragmentation
The acceptance by global broadcasters of advertisers owning the editorial
content of programming
The growing acceptance by media planning and buying groups of content as an
advertising vehicle for many global brands
The consolidation and globalisation of the markets in which the Group operates
including television production, sponsorship, sports marketing, stadia and
athlete representation.
As a result of these market dynamics, the Group has substantially increased
its television, sponsorship, event management and stadia and athlete
representation revenues and profits.
OPERATIONS UPDATE
Television Programming and Distribution
Sales from the division increased by 95% to #16.8m, representing 47% of the
Group's total revenue. The portfolio of the Group's TV programmes has grown
substantially during the past year and now covers sports magazine formats,
action sports and "live" events programmes. In February, the Group became the
exclusive global media and marketing partner for the Association of Surfing
Professionals, owners of the World Surfing Tour. This, along with
Sportsworld's exclusive international relationships with triathlons,
windsurfing and snowboarding properties, makes the Group the leader in
freesports television content and events. These programmes are very
successful in reaching the all important 16-24 year old category, that are
normally difficult to reach on television.
During the year, the Group also secured the overseas rights to the Pepsi Chart
Show. This format has become the cornerstone of Pepsi's global music strategy
and is produced by the Group weekly for 33 international markets.
The Group continued to expand its television programming into youth focussed
entertainment formats. It has a joint venture in Five Divas, which owns the
global rights to the Popstars brand and intellectual property. This highly
successful 13 part series has been launched in 20 countries including the US,
the UK and Canada. In Australia, the second series of Popstars has proved to
be as big a ratings success as the first series. The Group also launched
Supermodels in partnership with the New York based Ford model agency. This
eight part series follows the selection process of Ford's new Supermodel of
the Year and the format has already been sold into more than a dozen markets.
To further capitalise on the opportunities within the programming content
market, the Group launched in August a new independent production company,
Zeal Television. Zeal TV has already secured a worldwide first-look deal with
Chatterbox Partnership - one of the most experienced and recognised format
creation companies in Europe - for the exclusive use and distribution of its
format catalogue. The two companies will create formats for the UK and
international markets and Zeal TV will also sell all Chatterbox formats
outside the UK.
Market dynamics are increasingly changing to Sportsworld's advantage. The
strong demand for programming content is being fuelled in part by new
television channels as countries transform themselves into multi-channel
markets. Additionally, broadcasters are outsourcing more programme commissions
to groups, such as Sportsworld, which produce high rating programmes more cost
effectively and which also deliver advertisers as part of the programme
content. Target audiences continue to fragment in the multi-channel
environment, further enhancing the Group's prospects in specialised television
programming.
Brand and Sponsorship
The Group's sales from brand sponsorship increased 185% to #9.6m. There was
significant new business from global advertisers for the Group's growing
portfolio of sport and entertainment television content. Major new clients
include Pepsi, Mastercard, Sony, Unilever, Colgate Palmolive and L'Oreal. As
television audiences continue to fragment, advertisers are shifting from
traditional 30-second formats into programme content. Aided by media
planners, Sportsworld can quantify significant cost savings for advertisers in
their use of television. In difficult economic times, this is particularly
appealing to advertisers.
Other major sponsorships in non-television included the npower sponsorship of
UK based Test Cricket, the Travelex sponsorship of the Australian Cricket Team
for the recent Ashes series, projects for windsurfing and triathlon events and
the World Surfing Tour. New clients won include Billabong and O'Neill and
further brand and sponsorship work continued with the Scottish Rugby Union.
Stadia and Athlete Representation
The Group's sales in this division, primarily from stadia, increased by 19% to
#7.6m reflecting the relative maturity of the business compared to television
sales and brand sponsorship. Nevertheless, this is a strong and growing part
of Sportsworld's business and has enabled the Group to introduce other parts
of its business to a number of the stadia it represents.
In Australia, the Group has launched Big Screen Productions which is already
providing content to the high definition screens at the Melbourne Cricket
Ground and The Colonial Stadium. Through its acquisition of Elite Sports
Properties, Sportsworld is also providing high profile talent to the Australia
Football League (Australian Rules) for the pre-match and half time
entertainment that is being managed by the Group's event marketing business.
In the UK, the Group has extended its contracts with Headingley, Edgbaston,
Trent Bridge and Old Trafford cricket grounds to 2006 and is currently in
negotiations with both Lords and The Oval for the same extension.
The Group remains committed to increasing the number of stadia under
management, which currently number 45.
Through its acquisition of IMS, HN Sports and Elite Sports Properties, the
Group has a small but growing business in athlete representation. Sportsworld
intends to expand further in this area if other strategic opportunities
present themselves.
GROUP DEVELOPMENT
While the focus of the Group during the year has been on organic growth and
the development of earlier purchases, it has also made further strategic
acquisitions of complementary companies that have intellectual property and
content capable of global exploitation. These included:
Elite Sports Properties
In May, the Group acquired Melbourne-based Elite Sports Properties Limited
("ESP") for an initial cash consideration of approximately AUS$17.5m (#6.1m).
Further deferred consideration may become payable depending upon the net
profits of ESP over the three financial years ending 31 December 2003.
ESP specialises in athlete management, licensed product, live entertainment,
promotions and related intellectual property and as such is highly
complementary to the Group and its activities worldwide and in Australia.
Since its establishment in 1996, ESP has become a significant player in the
sports marketing business in Australia with key operations in:
Athlete Management - managing over 20 current Olympic, World and Commonwealth
champions, including some of Australia's highest profile Olympians such as
Michael Klim and Susie O'Neill, along with Olympic legends such as Mark Spitz
and Shane Gould. The majority of ESP's contracts in this area run for 3-4
years.
Football Management - managing appearances, speaking engagements,
endorsements, licensing and sponsorships for many of the most prestigious
Australian Football League (AFL) players.
Licensing - managing the master license and royalties for AFL, the Sir Donald
Bradman Foundation, ESP Athletes and Sydney Organising Committee of the
Olympic Games (SOCOG) Memorabilia.
Events - managing events including the AFL Grand Final Village and Golf Days.
Direct Sales - sports memorabilia and merchandise development, design and
marketing direct to consumers
IMS
The Group acquired the entire issued share capital of Infinite Management
Solutions Pty Limited ("IMS") for a total initial consideration of AUS$850,000
(#308,000). Further deferred consideration may become payable, depending
upon the net profits of IMS over the five financial years ending 2005.
IMS, based in Melbourne, is one of the world's leading 'action sport'/
freesport athlete representation firms, providing athletes for sponsorship
opportunities and events, and managing their professional development. The
acquisition provides further opportunities to create cross-selling
opportunities for a range of freesports-related products, as well as providing
freesports athletes for the events organised in the Group's managed stadia.
HN Sports & Entertainment Limited
In March, the Group acquired UK based HN Sports and Entertainment Ltd, an
athlete representation company providing a full range of management services
to professional sportsmen, particularly footballers. It also provides
consultancy services to a number of Premier and Football League clubs on a
retainer basis. It will work within the Media and Marketing Division and help
to develop relationships with clubs, athletes and governing bodies.
Uplink
In June the Group acquired the assets of Uplink Sport 2000 Limited and Uplink
Media Limited (together "Uplink") - New Zealand based companies specialising
in the creation and production of sports programs for television. Uplink has
developed a number of exciting sports and general entertainment formats which
will be used throughout the Group's global network.
X-treme
In September, the Group acquired a 51% stake in Europe's leading extreme
sports programme content supplier and video distributor, X-treme Video SAS
("X-treme").
X-treme was founded in 1994 by Franck Bywalski and Valerie Martin, who
identified a demand in the European market for high quality freesports content
for television and video. X-treme has accumulated an impressive archive,
consisting of more than 400 hours of quality programming, making it one of
Europe's leading suppliers of extreme sports content. Currently, X-treme,
based in Biarritz, France, has distributors in 20 major territories, and sells
videos through retailers and direct mail featuring all freesports, including
surfing, snowboarding, motorcross and skateboarding. X-treme also supplies
broadcasters and advertisers with high quality footage and film clips.
The acquisition of X-treme created Europe's largest combined catalogue of free
and extreme sports footage, with over 800 hours of high quality, original
programming.
CURRENT TRADING AND OUTLOOK
Despite the difficult economic conditions, the new financial year has started
strongly and in line with the Board's expectations. In line with previous
years, the current year has begun with 25% of the Group's expected revenues
already booked, reflecting the long-term nature of Sportsworld's contracts. As
a media company providing brand-focussed content to an expanding market,
Sportsworld is well placed to grow and develop its business model. The Group
is uniquely placed to further capitalise on and benefit from the major and
irreversible changes that continue to take place in the television and
advertising industries. Unlike many companies in the media sector heavily
exposed to advertising, Sportsworld's business model provides good forward
visibility and the Board is confident that the Group will continue to make
good progress in the current year and beyond.
Zeal Television has recently secured a number of major contracts and it will
continue selling a strong portfolio of new television programmes to
international broadcasters at the television market, MIPCOM, in October.
Because of the high ratings potential of these programmes, the Group
anticipates securing further new business from a number of major terrestrial
broadcasters that it has not previously sold content to. Zeal TV's success and
recent deals with the National Basketball League of Australia, the World Cup
Skateboarding body and the Seve Ballesteros Trophy will all contribute to the
current year's performance.
Global advertisers are seeking to optimise their marketing budgets. Supported
by their media buyers, many advertisers are utilising programme content
strategies for the marketing of their brands. Since the beginning of this new
financial year, the Group has already won several new traditional advertising
clients - reflecting Sportsworld's established creative capability and ability
to provide major cost efficiencies for a client's content strategy compared to
rate card advertising.
The Group's continued success will also be supported by recent acquisitions
and their rapid integration. Sportsworld's acquisition policy is very
focussed and designed to exploit internationally the intellectual properties
of its purchases. Given the high degree of fragmentation in the creation of
television content, sports marketing and representation markets, further
acquisitions are likely to be made during the current year. However, as in
the past, potential acquisitions will be valued on their potential
contribution to the Group's core competencies of intellectual property,
content creation, brand sponsorship and athlete representation, together with
the quality of their management. The Group remains optimistic that, as a
result of its past financial performances, the value of its business model and
its attractive culture, it remains the preferred acquirer in its rapidly
consolidating industry.
Sportsworld Media Group plc
Unaudited consolidated profit and loss account
for the twelve months ended 30 June 2001
June 2000
Discon-
Continuing Acquisi- tinued Continuing
Operations tions Operations Total Operations Acquisitions Total
year in the year to year year year year
to year to to to to to
30 30 June 30 June 30 30 30 June 30
June 2001 2001 June June 2000 June
2001 2001 2000 2000
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Turnover 30,305 2,892 2,443 35,640 10,517 10,252 20,769
Cost of (5,729) (580) - (6,309) (4,744) (5,111) (9,855)
sales
24,576 2,312 2,443 29,331 5,773 5,141 10,914
Operating
Expenses
Amortisa- (6,736) (148) - (6,884) (2,131) (350) (2,481)
tion of
goodwill
Other (14,977) (1,436) (1,451) (17,864) (3,723) (3,604) (7,327)
operating
expenses
(21,713) (1,584) (1,451) (24,748) (5,854) (3,954) (9,808)
Operating 2,863 728 992 4,583 (81) 1,187 1,106
profit
Exceptional
items
Profit
on sale
of
fixed
asset
investment 3,601 1,073
Profit
on
ordinary
activities
before
interest 8,184 2,179
Net
interest
receivable 571 534
Profit
on
ordinary
activities
before
taxation 8,755 2,713
Taxation (2,197) (301)
Equity
minority
interest (272) 397
Retained
profit
for the
year 6,286 2,809
Earnings
per
share
Standard 9.1 p 5.7p
Before amortisation of 13.9 p 8.6p
goodwill & exceptional
items
Before amortisation of 19.1 p 10.8p
goodwill
Diluted earnings per share
Standard 8.9 p 5.4p
Before amortisation of 13.5 p 8.1p
goodwill & exceptional
items
Before amortisation of 18.6 p 10.2p
goodwill
Sportsworld Media Group plc
Unaudited consolidated balance sheet
at 30 June 2001
June 2001 June 2000
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 146,771 123,032
Tangible assets 15,805 7,373
Investments 957 446
163,533 130,851
Current assets
Stocks 602 285
Debtors 32,531 24,475
Cash at bank and in 48,729 58,478
hand
81,862 83,238
Creditors: amounts
falling
due within one year
Bank overdraft (878) (1,673)
Other (63,270) (57,131)
Net current 17,714 24,434
assets/(liabilities)
Total assets less
current
liabilities 181,247 155,285
Creditors: amounts
falling due
after more than one (25,899) (4,975)
year
Provisions for
liabilities and
charges (1,264) (752)
154,084 149,558
Capital and reserves
Called up share 688 679
capital
Share premium 76,596 74,962
Merger reserve 70,383 70,172
Special reserve 470 470
Profit and loss 5,344 3,288
account
Shareholders funds 153,481 149,571
Minority Interest 603 (13)
Attributable to Equity 154,084 149,558
Shareholders
Sportsworld Media Group plc
Unaudited consolidated cashflow statement
for the year ended 30 June 2001
year ended year ended
30 June 2001 30 June 2000
#'000 #'000 #'000 #'000
Net cash inflow from 3,545 1,845
operating
activities
Returns on
investment and
servicing of finance
Interest received 656 472
Interest paid (135) (326)
Finance lease - (37)
interest paid
Dividend received - -
from other
investments
521 109
Taxation (603) (751)
Capital expenditure
and financial
investment
Purchase of tangible (10,358) (4,207)
fixed assets
Purchase of (3,292) (845)
intangible fixed
assets
Sale of tangible 118 5
fixed assets
(13,532) (5,047)
Acquisitions and
disposals
Sale of businesses 18,365 -
and subsidiary
undertakings
Purchase of (16,873) (19,263)
subsidiary
undertakings
Net cash on purchase 330 736
of subsidiary
undertakings
Sale of fixed asset 441 1,438
investments
Purchase of fixed (938) (262)
asset investments
1,325 (17,351)
Cash (8,744) (21,195)
(outflow)/inflow
before
financing
Management of liquid - (37,002)
resources
- Term deposits
Financing
Capital element of
finance
lease rentals (185) (146)
Issue of shares 75 95,892
Bank loans - 300
Share issue costs - (3,970)
Repayment of (100) (15,703)
borrowings
Net cash (210) 76,373
inflow/(outflow)
from
financing
Increase/(Decrease) (8,954) 18,176
in cash in the
year
Reconciliation of Operating Profit to Net Cash
Inflow from Operations
Operating 4,583 1,106
profit
Add back
non-cash items
Depreciation 2,658 1,536
Amortisation 7,405 2,486
of goodwill
and
other
intangibles
Profit on sale (118) (1)
of fixed
assets
(Increase)/ (66) (50)
decrease in stocks
(Increase)/ (8,691) (5,588)
decrease in
debtors
(Decrease)/ (2,738) 2,146
increase in
creditors
(Decrease)/increase 512 210
in
provisions for
liabilities
(1,038) 739
Net Cash 3,545 1,845
Inflow from
operating
activities
Notes
1. Basis of preparation
The financial information has been prepared in accordance with applicable
Accounting Standards and under the historical cost convention. The accounting
policies applied are consistent with those disclosed in the annual report for
the year ended 30 June 2000.
2. Unaudited statement of total recognised gains and losses
Year ended Year ended
30 June 2001 30 June 2000
#'000 #'000
Profit for the financial period 6,286 2,809
Currency differences on foreign currency (4,230) (1,214)
Total gains and losses recognised since the 2,056 1,595
last financial statements
3. Earnings per share
Earnings per share are calculated on profits of #6,286,000 (June 2000: profits
of #2,809,000) using the weighted average number of ordinary shares in issue
in the period of 68,529,443.
4. Publication of non-statutory Accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The figures for the year ended 30 June 2001 have been extracted from the
Group's financial statements. Those financial statements have not yet been
delivered to the Registrar of Companies, nor have the auditors reported on
them.
The figures for the year ended 30 June 2000 have been extracted from the
Group's accounts for that year which have been filed with the Registrar of
Companies and which contain an unqualified audit report and which do not
contain any statement under section 237(2) or (3) of the Companies Act 1985.
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