RNS Number:7435M
NWD Group PLC
26 June 2003
NWD PRELIMINARY RESULTS AND LATEST DEVELOPMENTS
NWD Group plc ("NWD" or the "Company") today announces its preliminary results
for the year ended 31st December 2002 together with a series of appointments and
other developments. The highlights are as follows:
* New marketing services strategy adopted
* Successful #600,000 fundraising completed in February 2003
* Company in late stage talks with a number of companies
* New board appointed, with Alan Page and David Gray joining from the
marketing services industry and Nigel Gourlay (ex-head of BAT business
development programme) to take over as non-executive Chairman
* Major industry figures join NWD Advisory Committee (the 'Brain')
including Nick Alexander (ex- HMV/Virgin/Sega/Pearson); Andrew Stracey
(founder of direct marketing agency Payne Stracey); Jonathan Cameron (leading
media lawyer); John Hogan (previously president marketing Philip Morris and
currently commercial director Jaguar Formula 1); Duncan Heath (one of UK's
leading players in film/tv talent market and CEO of ICM UK); Nicolas De Santis
(ex-marketing director Opodo and currently CEO of 12 Stars branding agency);
Annette Worsley-Taylor MBE (founder of London Fashion Week); Byron Griffin
(Deloitte & Touche corporate financier)
* Branded Entertainment Group launched as first group start-up in the fast
growing new sector of advertiser funded TV programming. In talks with two
international partners, and in final presentations to first multi-national
client.
* New brokers, nomad and auditors appointed
* Full year operating losses, before amortisation of goodwill, #220,400
(2001: #958,195 loss) on turnover of #13,703 (2001: #838,829)
CHAIRMAN'S STATEMENT
The year to 31st December 2002 has been one of restructuring, reinvention and,
most recently, rebuilding.
The company began the year by restructuring to dramatically reduce its overhead
and conserve cash
This is clearly reflected in the group's financial performance, which shows a
full year operating loss, before amortisation of goodwill, of #220,400 (2001:
#958,195 loss) on turnover down to #13,703 (2001: #838,829).
In July 2002, the Company acquired Pathfinder Ventures Limited, which brought
both cash and the potential for a new strategy for the Company. Following a
thorough review of the business, the board adopted this change of strategy and
is set to become a marketing services group.
Towards the end of the year, the process of rebuilding shareholder value began,
as the group changed name, disposed of or closed down unwanted subsidiaries,
looked at ways to sell the technology and database assets of the old Netwindfall
business, recruited new professional advisers and appointed a powerful committee
of special advisers.
Although the economic and political climate has been generally unkind to the
marketing services industry, the new NWD Group has already begun to demonstrate
the ability to revive its fortunes and recoup value for its original and more
recent investors.
At a time when many internet based businesses simply collapsed, it is no mean
achievement that NWD Group has been re-launched with the prospect of long term
growth for shareholders. It is an outcome largely down to the determination of
Netwindfall's original Chairman, Nigel Turnbull.
Towards the end of the year, Nigel stepped down from the Chairmanship and
following the Company's change of strategy, he felt that his duties were fully
discharged and also stepped down from the board.
I am sure that you would like to join me in thanking Nigel for his untiring
commitment to the company through a difficult time.
During the year other directors of the original business - Andy Booth, Nigel
Weller and Leo Knifton - also resigned from the board.
FUTURE STRATEGY AND POST YEAR-END DEVELOPMENTS
It seems appropriate that this report should also update shareholders on events
post the year-end, since these will have a major impact on the future of the
business.
One of the most significant of these was the successful fundraising, which took
place in February and raised #600,000 before expenses. It was particularly
pleasing to achieve this level of support for the group's strategy of developing
a new business model in the marketing services sector.
This new business model is specifically designed to ADD VALUE to acquisitions
via the committee of advisers known as 'The Brain'. The Company believes that it
is the first marketing services group to adopt and successfully implement such a
process, and has been extremely pleased by the initial reaction to it from both
clients and potential acquisitions. This team of widely experienced executives
from a broad range of backgrounds will give companies within the NWD Group
central access to business development opportunities, senior management
expertise, creative and marketing consultancy.
Including new members announced with this report, the team now consists of:
Toby Constantine (ex-marketing director, News International)
Liam Strong (ex British Airways, Sears, Worldcom. Currently running Teleglobe
on behalf of Cerberus)
John Hogan (ex-president of marketing at Philip Morris, currently Commercial
Director, Jaguar Formula 1)
Nick Alexander (ex HMV, Virgin, Sega, Pearson)
Andrew Stracey (founder Payne Stracey, a top 20 direct marketing agency, now
part of Omnicom)
Jonathan Cameron (leading media lawyer previously a partner at Mishcon de Reya
and Berwin Leighton Paisner)
Nicolas De Santis (ex marketing director Opodo, currently CEO 12 Stars
branding agency)
Duncan Heath (founder and CEO of a leading UK talent agency with clients such
as Catherine Zeta Jones and Anthony Hopkins)
Annette Worsley-Taylor MBE (founder of London Fashion Week)
Byron Griffin (corporate financier, Deloitte & Touche)
Members of the 'Brain' are unsalaried, but will receive success fees should they
introduce new business to the group, and consultancy fees should they be
retained by any group company. In addition, they will each be granted 20,000,000
options to acquire NWD Group ordinary shares.
The group has withdrawn from talks with Hansard Group PLC, but is in advanced
talks with several companies, which may or may not result in offers. These
companies would form the first stage of our development programme.
The Company has identified a number of target areas in which it is looking to
acquire suitable companies. The first stage of the group's development will
cover some or all of the following disciplines - direct marketing, branding,
strategic brand consultancy, below-the-line, CRM and database exploitation,
media strategy, advertising, customer publishing, on-line marketing,
sponsorship, corporate communications and advertiser funded programming.
Most target acquisitions are currently small/medium size private companies, but
the Company is also looking at the AIM and OFEX markets for suitable businesses.
The need to ensure that the first elements of the group fuse together
particularly successfully and provide the potential for fast growth means that
the board is spending considerable time on in-depth due diligence covering both
the financial potential and the business compatibility of the targets. The board
will not make an acquisition unless it satisfies certain criteria, and has
already 'walked- away' from potential deals for this reason.
The company will also consider a start-up operation or joint venture in sectors
where we cannot find suitable acquisition opportunities, such as advertiser
funded programming. The most advanced of these is Branded Entertainment Group,
which is a venture designed to combine ourselves, a major talent agency and an
international TV production and distribution company. The final details of this
business are currently under discussion between the partners, and the first
international contract is under negotiation.
On the corporate front, we have moved to Seymour Pierce as Broker, Smith &
Williamson Corporate Finance as Nominated Advisor and Baker Tilly has been
appointed auditor.
Finally, I am pleased to announce that with effect from 1st July 2003 Nigel
Gourlay has agreed to join the board of NWD Group as non-executive chairman.
Nigel was until 2001 head of BAT's business development unit responsible for its
acquisition programme across the globe. He brings to the group a high level of
financial and commercial expertise, allowing David Gray and myself to
concentrate on developing the business.
I think that in light of the above, we can all look forward to an interesting
year.
Alan Page
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2002
Notes 2002 2001
(restated)
# #
TURNOVER 13,703 838,829
Cost of sales 3,913 (553,387)
GROSS PROFIT 17,616 285,442
Administrative expenses - exceptional 3 (354,964) (3,431,721)
- other (238,016) (1,243,637)
OPERATING LOSS (575,364) (4,389,916)
Interest receivable 2 2,353
Interest payable (2,287) (9,266)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (577,649) (4,396,829)
Tax on loss on ordinary activities - -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (577,649) (4,396,829)
LOSS PER ORDINARY SHARE 4 (0.05p) (0.6p)
Basic
Fully diluted 4 (0.05p) (0.6p)
All of the group's activities were discontinued during the year.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2002
Notes 2002 2001
(restated)
# #
Loss for the financial year (577,649) (4,396,829)
Prior year adjustment 5 (90,000)
Total gains and losses recognised since last (667,649)
annual report
CONSOLIDATED BALANCE SHEET
31 December 2002
Notes 2002 2001
# (restated)
#
FIXED ASSETS
Intangible assets - -
Tangible assets - 20,066
- 20,066
CURRENT ASSETS
Debtors 19,501 56,688
Cash at bank and in hand 6,107 13
25,608 56,701
CREDITORS: Amounts falling due within one (188,991) (143,726)
year
NET CURRENT LIABILITIES (163,383) (87,025)
TOTAL ASSETS LESS CURRENT LIABILITIES (163,383) (66,959)
CREDITORS: Amounts falling due after more - (14,777)
than one year
NET LIABILITIES (163,383) (81,736)
CAPITAL AND RESERVES
Called up share capital 6 6,804,352 6,303,850
Share premium 998,573 1,003,073
Profit and loss account (7,966,308) (7,388,659)
SHAREHOLDERS' FUNDS 7 (163,383) (81,736)
CONSOLIDATED CASHFLOW STATEMENT
for the year ended 31 December 2002
Notes 2002 2001
# #
Net cash outflow from operating activities 8a (71,782) (847,465)
Returns on investments and servicing of finance 8b (2,285) (6,913)
Capital expenditure and financial investment 8b - 91,230
Acquisitions 8b 59,996 -
CASH OUTFLOW BEFORE FINANCING (14,071) (763,148)
Financing 8b 22,843 409,346
INCREASE/(DECREASE) IN CASH IN THE YEAR 8,772 (353,802)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN
NET DEBT
Increase/(decrease) in cash in the period 8,772 (353,802)
Decrease in debt and lease financing 3,657 81,221
Change in net debt resulting from cash flows 12,429 (272,581)
Hire purchase contract terminated in year 22,074 -
MOVEMENT IN NET DEBT IN THE PERIOD 34,503 (272,581)
NET (DEBT)/FUNDS AT 1 JANUARY 2002 (28,396) 244,185
NET FUNDS/(DEBT) AT 31 December 2002 8c 6,107 (28,396)
NOTES TO THE FINANCIAL INFORMATION
for the year ended 31 December 2002
1 The financial information contained in this document does not constitute
statutory accounts within the meaning of section 240 Companies
Act 1985. The figures for the year ended 31 December 2002 have been extracted
from the annual accounts in respect of which the auditors have not yet signed
their audit report. The audited statutory accounts for the year ended 31
December 2002 will be delivered to the Registrar of Companies in due course. The
figures for the year ended 31 December 2001 have been extracted from the audited
statutory accounts for that year which have been filed with the Registrar of
Companies and received an unqualified auditors' report which did not contain a
statement under section 237 (2) or (3) Companies Act 1985.
2 The accounting policies adopted are consistent with those in previous years,
except with regard to deferred taxation. This change in policy to adopt FRS 19
"Deferred taxation" is to comply with accounting best practice. There is no
effect on the current year or prior year figures.
3 EXCEPTIONAL ADMINISTRATIVE EXPENSE
The group performed an impairment review of its goodwill as at 31 December 2002
and as a result #354,964 (2001: #3,431,721) was written off through the profit
and loss account.
4 LOSS PER ORDINARY SHARE
The calculation of loss per ordinary share is based upon the loss after taxation
of #577,649 and on 1,123,094,496 shares, being the weighted number of ordinary
shares in issue during the period (2001: #4,396,829 and 752,486,027 being the
number of ordinary shares).
5 PRIOR YEAR ADJUSTMENT
The financial statements for the year ended 31 December 2001 included a
fundamental accounting error, due to the fact that share capital was understated
by #90,000. The comparative figures in the financial information have been
restated to correct this error.
The effect of this change is to increase the loss for the year ended 31 December
2001 by #90,000 and to increase share capital by the same amount. There is no
effect on net assets as at 31 December 2001 or 31 December 2002 or on the
results for the year ended 31 December 2002.
6 SHARE CAPITAL
2001
2002 (restated)
# #
Authorised
9,578,850,000 ordinary shares of 0.1p each 9,578,850 9,578,850
602,350,000 deferred shares of 0.9p each 5,421,150 5,421,150
15,000,000 15,000,000
Allotted, called up and fully paid:
1,383,201,942 (2001: 882,700,000) ordinary shares of 1,383,202 882,700
0.1p each (equity)
602,350,000 deferred shares of 0.9p each (non 5,421,150 5,421,150
equity)
6,804,352 6,303,850
Shares issued in the year
During April 2002, the company issued 54,500,000 0.1p ordinary shares at par, of
which 28,500,000 were issued to cancel debt. The remainder were issued for cash
consideration of #26,000.
During July 2002, the company issued 446,001,942 0.1p ordinary shares at par, of
which 414,960,582 were issued to acquire Pathfinder Ventures Limited (see note
10) and 26,041,360 were issued to cancel debt. The remainder were issued for
cash consideration of #5,000.
7 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUND
2002 2001
# #
Loss for the financial year (577,649) (4,306,829)
Share issue costs (4,500) (40,133)
New share capital issued 500,502 530,700
Net deficit to shareholders' (81,647) (3,816,262)
funds
Opening shareholders' funds (81,736) 3,734,526
Closing shareholders' funds (163,383) (81,736)
8 CASH FLOWS 2002 2001
# (restated)
#
a. Reconciliation of operating loss to net
cashflow from operating activities
Operating loss (575,364) (4,389,916)
Depreciation 7,264 95,476
Profit on disposal of assets (9,272) (38,513)
Amortisation of goodwill 354,964 3,431,721
Decrease in debtors 37,187 577,133
Increase/(decrease) in creditors 58,897 (523,366)
Shares issued to cancel trade creditors 54,542 -
Net cashflow from operating activities (71,782) (847,465)
b. Analysis of cash flows for headings netted 2002 2001
in the cash flow
# #
Returns on investments and servicing of finance
Interest received 2 2,353
Interest paid (2,287) (9,266)
Net cash flow for returns on investments and servicing of (2,285) (6,913)
finance
Capital expenditure and financial investment
Payments to acquire intangible fixed assets - (14,886)
Payments to acquire tangible fixed assets - (30,510)
Proceeds from sale of tangible fixed assets - 136,626
Net cash inflow for capital expenditure and financial - 91,230
investment
Acquisitions
Acquisition costs (40,004) -
Cash balances acquired with subsidiary 100,000 -
Net cash inflow from acquisitions 59,996 -
Financing
Issue of ordinary share capital (net of costs) 26,500 490,568
Hire purchase capital repaid (3,657) (81,222)
Net cash inflow from financing 22,843 409,346
c. Analysis of net debt At 1 Cash Other At 31 December
January flows changes 2002
2002 # # #
#
Cash at bank and in hand (2,665) 8,772 - 6,107
Finance lease and hire purchase (25,731) 3,657 22,074 -
contracts
Total (28,396) 12,429 22,074 6,107
9 This preliminary announcement was approved by the Board on 24 June 2003.
Copies of the announcement will be available from the Nominated Adviser, Smith &
Williamson Corporate Finance Limited, No 1 Riding House Street, London, W1A 3AS
for one month from the date of this announcement.
For further information please contact:
Adam Reynolds @ Hansard PR: 0207 245 1100
Alan Page: 07778 131051/0207 823 2823
-ends-
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