RNS Number:2157R
Proactive Sports Group PLC
23 October 2003
23 OCTOBER 2003
PROACTIVE SPORTS GROUP PLC
Preliminary Results Statement for the year ended 31 August 2003
Proactive Sports Group PLC ("Proactive" or the "Group"), a leading sports
representation and management agency, is pleased to announce its preliminary
results for the year ended 31 August 2003.
HIGHLIGHTS
Financial
* Turnover of #10.1 million (2002: #8.1 million), an increase of 24.7 per cent.
* Operating profit before goodwill amortisation and impairment of #1.4 million (2002: #2.65 million)#.
* Net cash inflow from operating activities of #1.1 million.
* Year end cash position of #2.7 million (2002: #3.5 million).
* Committed future gross profits of #2.9 million (2002: #3.9 million).
* Underlying IIMR earnings per share of 0.99p (2002: 1.80p). Basic loss per share 12.25p
(2002: earnings per share 0.58p) impacted by goodwill impairment.
* Maiden dividend of 0.065p per share.
Operational
* Continuing strong performance by Sports Marketing Division. Turnover up by 153%.
* In spite of difficult market conditions the Representation Division continues to be very profitable.
* Establishment of new Wealth Management Division by the acquisition of Kingsbridge Asset Management,
thereby creating new revenue stream.
* Formation of new Legal Services joint venture.
* Implementation of holistic sports management business in line with the Board's vision.
# Goodwill amortisation of #1.3 million (2002: #1.3 million) and impairment of
#12.4 million (2002: Nil).
John Lawrence, Chairman of Proactive, commented:
"Our strategy of creating a holistic sports management business is a sound one
and is clearly endorsed by these results. We are confident that the recent
steps we have taken towards achieving this aim will prove beneficial, both to
our clients and to our shareholders."
Enquiries:
Proactive Sports Group PLC Tel: 01625 536411
Neil Rodford, Chief Executive
Mark Page, Finance Director
ICIS Limited Tel: 020 7628 1114
Tom Moriarty
Caroline Evans Jones
Chairman's Statement
Introduction
During the year, the Group has continued its development in challenging
conditions for the sports industry as a whole and the football sector in
particular. The Group has remained focused on delivering the strategy which it
outlined at the time of its flotation in 2001. While its core skills and
strengths have traditionally been the provision of a range of services to
customers in the football sector, the Group has steadily been positioning itself
to service a broader market. This market comprises professional athletes,
together with corporate organisations and their associated brands who wish to be
associated with sport. The implementation of our strategy of providing an
all-encompassing holistic service and product range servicing the needs of these
customers is well underway.
During the year ended 31 August 2003, the Group had two clearly defined
divisions operating under the Proactive umbrella, being the Representation
Division and the Sports Marketing & Events Division. Subsequent to the year
end, a Wealth Management Division and a Legal Division have been created through
the acquisition of Kingsbridge Asset Management and the joint venture with
Couchman Harrington Associates. Our aim continues to be to develop a business
with a variety of complementary income streams which serve two sets of
homogenous customers: professional sports athletes and Brands whose commercial
advancement requires them to be professionally represented in the sporting
arena. We continue to believe this strategy presents long-term growth
opportunities for the Group.
The Sports Marketing & Events Division has had an outstanding year. This has
enabled the Group to offset some of the lost revenue which resulted from the
downturn in trading in the Representation Division. This sector has been under
pressure during the year mainly due to the re-organisation and contract renewal
programme of broadcasting rights for the elite football leagues in Europe.
However, the Directors believe the outlook appears more optimistic, with the key
area of television underpinning our long-term confidence. The anticipated
increase in pay TV subscribers throughout mainland Europe, in the coming three
years alone, means that football content will continue to be a 'must-have' item
for the mainstream broadcasters. This subscriber growth can only be of benefit
to the Group's long term ability to grow. Contrary to some forecasts, the
recently awarded rights to broadcast the English Premiership were similar in
value to the previous contract. However, the deliberations by the European
Union currently obscures the near term outlook regarding the UK domestic TV
rights for next season and onwards.
We remain committed to being a public company. We believe in the long-term
opportunities to implement our growth strategy that our listing provides. We are
also delighted to announce our first dividend payment as a sign of our
confidence in the future development of the Group.
Results
The financial year ended 31 August 2003 is the Group's second full year of
trading as a listed company and, as such, makes year on year comparisons
simpler. Turnover for the year was #10.1 million (2002: #8.1 million) and
operating profit before goodwill amortisation and impairment was #1.4 million
(2002: #2.65 million). The goodwill impairment of #12.4 million relates to the
goodwill write down on the Representation Division as announced on 27 June 2003.
Profit before taxation, goodwill amortisation, impairment and exceptional
items was #1.5 million (2002: #2.7 million).
The basic loss per share for the year was 12.25p because of a one-off impairment
charge of #12.4 million (2002: earnings per share of 0.58p), and the IIMR
headline earnings per share was 0.99p (2002: 1.80p).
The Sports Marketing Division's turnover was #5.6 million (2002: #2.2 million),
an increase of 153 per cent. This now includes the Events Division. The
operating profit generated by the division before central overheads, goodwill
amortisation and impairment increased by 198 per cent. to #1.5 million (2002:
#0.5 million). The increase is the result of a combination of organic growth
and the contribution of Fox Advertising, which was acquired in September 2002.
The Representation Division traded profitably despite the uncertainties within
the football sector and decline in the number and value of transfers completed
during the year ended 31 August 2003. This was mainly due to the quality of our
client base. Turnover for the division was #4.5 million (2002: #5.9 million) and
operating profit before central overheads, goodwill amortisation and impairment
was #1.4 million (2002: #3.9 million). The players we represent continue to
value the breadth and depth of support which we provide. We are therefore
confident that in time we will once again be able to show growth in this
division, whilst recognising that it will take some time to achieve the level of
contribution generated in 2002.
The Group has committed future gross profit of #2.9 million (2002: #3.9 million)
of which #2.1 million will be recognised in this current financial year ending
on the 31 August 2004. #0.8 million (2002: #1.0 million) relates to future
financial years.
Cash Flow
At 31 August 2003, the Group had cash reserves of #2.7 million (2002: #3.5
million). During the year the Group spent #1.0 million on acquisitions and paid
#0.8 million in interest, taxation and capital expenditure. There has been a
#1.1 million increase in our cash reserves due to trading. We recently secured
an ongoing working capital facility of #1.0 million. The underlying strongly
cash generative nature of our business means we have never incurred any
borrowings. However, we believe the increased size and scope of our business
now makes it prudent to have such a facility in place, if required.
Dividend
The Board is pleased to propose the Group's first dividend payment of 0.065p
pence per share. Subject to shareholder approval at the forthcoming Annual
General Meeting of the Company, the dividend will be paid to shareholders on 14
January 2004 to shareholders on the register at the close of business on 31
October 2003.
Representation
Proactive currently represents 278 players, of these 131 players have
represented their countries at international level. The Group completed 88
(2002: 117) transfers or contract renewals in the year.
The Group's focus remains on attracting and retaining leading talent, which has
been the strategy of the Group since conception. The Group has 14 licensed
agents operating from ten offices in eight countries. In the face of changing
circumstances, we made a number of operational decisions to refocus this
division. We closed the Greek and Nottingham offices, transferring the clients
and assets of these locations to their respective regional headquarters, and
also disposed of the Dutch operation via a management buyout in August for a
deemed consideration of #0.2m. This created a one off exceptional loss of #0.2m.
This reorganisation was undertaken following a review of the Representation
Division's global operations. We remain committed to a global presence in the
key football territories and will continue to expand the reach of the division
as and when opportunities arise which we believe are of value. Particular focus
will be placed on Northern Europe working from our hub Copenhagen office with
emphasis being placed on Germany.
Much has been written and documented on the role of agents and their involvement
in the game. Proactive is committed to providing a service to our clients, which
we believe is unrivalled throughout Europe. We continue to seek opportunities
to play an active role in shaping the rules and regulations as governed by FIFA
and the relevant domestic associations. Proactive supports the need for FIFA to
continually review and adapt the regulations in line with market changes.
Sports Marketing & Events
The Division has had an outstanding year of trading, exceeding management's
expectations. This has been achieved through organic growth of the original
division based out of Manchester and also the success of the Fox Advertising
acquisition made at the commencement of this financial year based out of Durham.
The Division continues to offer a range of services to corporate clients ranging
from rights acquisition to exploitation of properties which they may have
already contracted, along with our inventory of perimeter advertising sites in a
variety of sporting venues, although mainly concentrated on football arenas. We
have created a niche position in the sporting arena and continue to add value to
our customers by delivering properties, including players' image rights, at a
realistic market price, and ensuring that the properties meet their needs and
wants.
Our original Sports Marketing division has added a number of high calibre
clients in this trading period, and continued to retain and underpin our long
term client relationships with brands such as Nike, EA Sports and adidas, with
whom we have consistently worked for a number of years. These are household
names who have specific needs in the sporting sector which we continue to meet.
Our outdoor media business Fox Advertising continues to manage the inventory
requirements of a number of blue chip brands. These companies have long term
arrangements with Fox Advertising and continue to see this form of advertising
as an important part of their communication mix.
Turnover for the Division was #5.6 million, with operating profit prior to
central overheads, goodwill amortisation and impairment of #1.5 million. The
division currently employs 18 people based out of three offices within the UK.
The growth for this year has exceeded our expectations and our objective for
2004 is to maintain this position and ensure that this growth is underpinned by
a quality service.
In the medium term we continue to seek opportunities to expand this division via
increasing market share as well as exploring new territories internationally via
our network of offices.
Post Balance Sheet Events - Acquisitions / Launches
As announced on 13 October 2003, Proactive has created a new Wealth Management
Division through the acquisition of Kingsbridge Asset Management. Kingsbridge
Asset Management provides financial services and advice to a client base which
includes professional football players, managers and coaching staff from the 92
professional football clubs. It currently advises over 600 UK based
footballers, managers and coaching staff. In addition to its football clients,
the company also advises clients from other sports such as Rugby, Cricket, Golf
and Racing.
The initial consideration was satisfied by #1.1 million payable in cash and by
the issue of 15,851,667 new ordinary shares at a price of six pence per share,
which was satisfied on completion of the acquisition. A further #0.4 million
will become payable in cash on 1 September 2004. Additional consideration of up
to a maximum of #3.0 million will become payable in cash to the Vendors
depending on the trading performance of Kingsbridge Asset Management in the
period to 31 August 2006.
Proactive has also launched a Joint Venture with Couchman Harrington Associates
to form an in-house legal division. Couchman Harrington Associates has a wealth
of experience throughout Europe working in the sporting arena. Although this
operation is not expected to be revenue generating in the short-term, it enables
the Group to offer another complementary service to all its clients in-house.
The launch of a Wealth Management Division and the Legal Services Division is an
important strategic development for the Group and confirms Proactive's
commitment to delivering a holistic sports management business on a global
basis. Furthermore, by enlarging the Group's operations it will inevitably
reduce the dependence on any one division or revenue stream whilst providing its
clients with a comprehensive range of representation, management and advisory
services.
Board Changes and Management
Since the year-end, we have made a number of planned Board Changes as we
continue to evolve the Group to meet the future market needs of the company. I
have taken the role of Non Executive Chairman on a permanent basis. This follows
a temporary period after the departure of our previous Chairman, Charles Green
in February of 2003. I am also pleased to welcome Alec Craig to the Board as a
Non Executive Director. Alec is currently the senior partner in Halliwell Landau
legal practice based out of Manchester.
I would like to take this opportunity to thank Paul Stretford, who recently
relinquished his role of Chief Executive in order to concentrate on the sales
development of the Group. Paul has been instrumental in the development of the
Group, prior to and after its flotation in 2001. He will continue to remain a
key member of the Board, using his experience gained since founding the company
in 1987. Neil Rodford has assumed the position of Chief Executive. Neil has been
with the Company for nearly three years and has been responsible for developing
and implementing Proactive's overall growth strategy. Furthermore, I am
delighted to welcome David McKee to the Board. David will be responsible for
the Wealth Management Division, following the acquisition of Kingsbridge Asset
Management.
Employees
It has been a difficult year for all our employees and in particular all those
working in the Representation Division, so I would like to thank the directors
and all staff for their continued hard work.
The Group currently employs 77 people throughout the world. The year on year
comparison in our head count is actually down from 79 to 77, even after
including the employees from the newly acquired Wealth Management Division.
We are pleased to have created from the commencement of this financial year a
profit share scheme. This is open to all employees following an initial
qualifying period and is based on Group as against divisional targets. I believe
that it is one of the best ways to drive integration and to ensure that all
employees have the Group's common goals as their focus.
We are increasingly able to attract the highest calibre of talent as and when
positions arise. Proactive's reputation continues to grow and our track record
is there for all to see. I believe we have some of the most exciting talents
within our sector who will continue to shape and drive the industry as they grow
and prosper.
The largest investment in our business is people and I will continue to ensure
that our benefits and salary packages are in line with market conditions as we
aim to attract the very best people at every possible opportunity.
Outlook
The outlook for the Group remains positive despite some of the factors affecting
the sector. However, we have established ourselves and have now created four
distinct revenue streams in Representation, Sports Marketing, Wealth Management
and Legal Services. This will, I believe, not only insulate us against the
various peaks and troughs that our sector naturally encounters, but will also
provide an entry point to other sectors of the sporting arena as and when we
deem appropriate.
Our cost base is under control and our income streams are becoming less volatile
as we change the mix of the business. We continue to review the very challenging
Representation Division as the new transfer window system and its implications
on the market unfold. Representation will remain profitable in the coming twelve
months, and we will continue to innovate our service offer in order to retain
and attract the very best talent as we move forward. Sports Marketing & Events
and our newly acquired Wealth Management Division both represent growth
opportunities in the short to medium term as we expand our service proposition
and penetrate new territories. There is also no doubt that market conditions will
continue to deliver opportunities for us to expand, which we will consider on
their individual merits.
I see 2004 as a year of integration of our various businesses whilst continuing
to increase our market share in our separate operating divisions. I expect
limited growth in our financial performance and remain extremely confident about
our long term prospects.
John Lawrence
Chairman
23 October 2003
CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR YEAR ENDED 31 AUGUST 2003
Before Before
goodwill, Goodwill, goodwill, Goodwill,
goodwill goodwill goodwill goodwill
impairment impairment impairment impairment
and and and and
exceptional exceptional 2003 exceptional exceptional 2002
Notes items items Total items items Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover
Continuing 5,629 - 5,629 6,448 - 6,448
operations
Acquisitions 3,736 - 3,736 - - -
Discontinued 700 700 1,622 - 1,622
operations
__________ __________ __________ __________ __________ __________
1 10,065 - 10,065 8,070 - 8,070
Cost of (3,493) - (3,493) (1,790) - (1,790)
sales
__________ __________ __________ __________ __________ __________
Gross profit 6,572 - 6,572 6,280 - 6,280
Other (5,011) - (5,011) (3,505) - (3,505)
administrative
expenses
Amortisation - (1,261) (1,261) - (1,276) (1,276)
of goodwill
Impairment of - (12,409) (12,409) - - -
goodwill
Depreciation (154) - (154) (125) - (125)
and other
amortisation
__________ __________ __________ __________ __________ __________
Administrative (5,165) (13,670) (18,835) (3,630) (1,276) (4,906)
expenses
__________ __________ __________ __________ __________ __________
Operating
(loss)/
profit
Continuing 754 (13,670) (12,916) 1,962 (1,276) 686
operations
Acquisitions 739 - 739 - - -
Discontinued (86) - (86) 688 - 688
operations
__________ __________ __________ __________ __________ __________
Operating 1,407 (13,670) (12,263) 2,650 (1,276) 1,374
(loss)/
profit __________ __________ __________ __________
Loss on (182) -
disposal of
discontinued
operations
__________ __________
(Loss)/profit
on ordinary
activities
before
interest (12,445) 1,374
Finance income 54 41
(net)
__________ __________
(Loss)/profit (12,391) 1,415
on ordinary
activities
before
taxation
Tax on (loss)/ (384) (802)
profit on
ordinary
activities
__________ __________
(Loss)/profit (12,775) 613
on ordinary
activities
after
taxation
Proposed (64) -
dividend
__________ __________
(Loss)/profit (12,839) 613
for the
financial
year
__________ __________
(Loss)/
earnings per
share
Basic 2 (12.25p) 0.58p
Diluted 2 (12.25p) 0.58p
IIMR 2 0.99p 1.80p
headline
__________ __________
STATEMENT OF RECOGNISED GAINS AND LOSSES
FOR YEAR ENDED 31 AUGUST 2003
2003 2002
#'000 #'000
(Loss)/profit for the financial year (12,839) 613
Deemed consideration received on disposal of (234) -
discontinued operations
Profit on foreign currency translation 60 3
___________ ___________
Total recognised gains and losses relating to the (13,013) 616
year
___________ ___________
CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2003
Notes 2003 2002
#'000 #'000
Fixed assets
Trademarks and other rights 49 7
Goodwill 11,628 23,471
__________ __________
Intangible assets 11,677 23,478
Tangible assets 542 589
__________ __________
12,219 24,067
__________ __________
Current assets
Debtors 4,597 3,586
Cash at bank and in hand 2,730 3,481
__________ __________
7,327 7,067
Creditors: Amounts falling due within one year (5,768) (4,288)
__________ __________
Net current assets 1,559 2,779
__________ __________
Total assets less current liabilities 13,778 26,846
Creditors: Amounts falling due after more than (1,168) (930)
one year
Provisions for liabilities and charges (1) -
__________ __________
Net assets 1 12,609 25,916
__________ __________
Capital and reserves
Called-up share capital 983 1,044
Shares to be issued 26 297
Share premium account - 9,529
Capital redemption reserve 61 -
Special reserve 6,558 -
Merger reserve 2,896 13,868
Profit and loss account 2,085 1,178
__________ __________
Equity shareholders' funds 12,609 25,916
__________ __________
CONSOLIDATED CASHFLOW STATEMENT
FOR YEAR ENDED 31 AUGUST 2003
Notes 2003 2002
#'000 #'000
Net cash inflow from operating activities 3 1,100 2,580
Returns on investments and servicing of (24) 75
finance
Taxation (704) (394)
Capital expenditure and financial investment (89) 6,965
Acquisitions and disposals (1,011) (337)
__________ __________
Cash (outflow)/inflow before management of
liquid resources and financing
(728) 8,889
Management of liquid resources (373) (90)
Financing (23) (7,399)
__________ __________
(Decrease)/increase in cash in the year (1,124) 1,400
__________ __________
(Decrease)/increase in cash in the year (1,124) 1,400
Cash outflow from decrease in lease financing - 6
Cash outflow from increase in liquid resources 373 90
__________ __________
Change in net (debt)/funds resulting from cash flows (751) 1,496
Repayment of loan notes - 7,300
__________ __________
Movement in net (debt)/funds in year (751) 8,796
Net funds/(debt) at 1 September 2002 3,481 (5,315)
__________ __________
Net funds at 31 August 2003 2,730 3,481
__________ __________
NOTES TO FINANCIAL STATEMENTS
1. Segment information
Classes of business: Representation Sports Marketing Group
and Events
2003 2003 2003
#'000 #'000 #'000
Turnover 4,509 5,556 10,065
__________ __________ __________
Segment profit 1,359 1,482 2,841
__________ __________
Common costs (1,434)
__________
Operating profit before goodwill 1,407
amortisation and impairment*
__________
Segment net assets 11,043 1,985 13,028
__________ __________
Unallocated net liabilities (419)
__________
Net assets 12,609
__________
Representation Sports Marketing Group
and Events
2002 2002 2002
#'000 #'000 #'000
Turnover 5,876 2,194 8,070
__________ __________ __________
Segment profit 3,851 498 4,349
__________ __________
Common costs (1,699)
__________
Operating profit before goodwill 2,650
amortisation and impairment*
__________
Segment net assets/(liabilities) 25,653 (419) 25,234
__________ __________
Unallocated net assets 682
__________
Net assets 25,916
__________
* The goodwill amortisation charge of #1,261k (2002 - #1,276k) relates to the
Representation Division #1,155k (2002 - #1,276k) and the Sports Marketing and
Events Division #106k (2002 - #nil). The goodwill impairment charge of #12.4m
(2002 - #nil) relates to the Representation Division.
2. (Loss)/earnings per share
The calculations of (loss)/earnings per share are based on the following
(losses)/profits and numbers of shares:
2003 2002
#'000 #'000
(Loss)/profit for the financial year (12,775) 613
Adjustment for goodwill amortisation 1,261 1,276
Adjustment for goodwill impairment 12,409 -
Loss on disposal of discontinued operations (net of 142 -
tax effect)
_________ _________
Profit for the financial year - IIMR earnings 1,037 1,889
_________ _________
2003 2002
No. of No. of
shares shares
'000 '000
Weighted average number of shares:
For basic and IIMR earnings per share 104,279 104,926
Diluted earnings per share 105,014 104,926
_________ _________
(Loss)/earnings per share is calculated by dividing the (loss)/profit for the
financial year by the weighted average number of shares in issue during the
year. FRS 14 requires presentation of diluted EPS when a company could be called
upon to issue shares that would decrease net profit or increase net loss per
share. For a loss making company with outstanding shares to be issued, net loss
per share would decrease by the shares being issued. This is inappropriate and
therefore no adjustment is made to diluted EPS for shares to be issued. An
additional measure of earnings per share has been recommended by the Institute
of Investment Management and Research ("IIMR") which requires the adjustment of
earnings to eliminate certain items adjusted for any tax effect.
Any difference between the weighted average number of shares and diluted number
of shares is due to the potential dilutive effect of the shares to be issued.
The Directors consider that headline IIMR earnings per share gives a better
understanding of the Group's earnings.
3. Reconciliation of operating (loss)/profit to operating cash flows
2003 2002
#'000 #'000
Operating (loss)/profit (12,263) 1,374
Depreciation and amortisation charges 1,415 1,401
Impairment of goodwill 12,409 -
(Profit)/loss on sale of tangible fixed assets (4) 8
Increase in debtors (689) (637)
Increase in creditors 165 431
Other 67 3
__________ __________
Net cash inflow from operating activities 1,100 2,580
__________ __________
4. The comparative figures are for the financial year ended 31 August
2002. The comparative figures are an abridged version of the Group's full
accounts and, together with other financial information contained in these
results, do not constitute statutory accounts of the Group within the meaning of
section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 August 2002 have been filed with the
Registrar of Companies for England and Wales and have been reported on by the
Group's auditors. The report of the auditors was not qualified and did not
contain a statement under section 237 of the Companies Act 1985.
The results for the year ended 31 August 2003 are extracts from the 2003 Group
accounts which, if adopted by members in General Meeting on 12 December 2003
will be filed with the Registrar of Companies. The report of the auditors was
not qualified and did not contain a statement under section 237 of the Companies
Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANEAAFLDFFE