RNS Number:3992M
Sterling Publishing Group PLC
16 June 2003
FOR IMMEDIATE RELEASE 17 JUNE 2003
STERLING PUBLISHING GROUP PLC ("STERLING")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2003
Sterling Publishing Group PLC announces its results for the year ended 31 March
2003:
* Group turnover for the full year #24.7m (2002: #32.9m)
o Print media #18.2m (2002: #28.2m)
o Internet #4.8m (2002: # 4.1m)
o Forums #1.0m (2002: #nil)
o Other #0.7m (2002: #0.6m)
* Operating loss #(0.9)m ( 2002: profit # 0.6m)
* Net debt of #1.9m down from #2.9m last year
* Ongoing overhead reduction
Christopher Haines, Chairman of Sterling Publishing Group PLC, said:
"This has been a difficult trading year for Sterling Publishing Group as the
severe downturn in the market for advertising has continued to affect
performance, particularly in our core print media operations.
I believe the Group has responded well to mitigate the effect of this downturn,
which has affected world markets and North America in particular. This has been
achieved by further reducing the cost base in response to market conditions and,
importantly, these actions have been undertaken without impairing the Group's
ability to take advantage of any future improvement in trading conditions.
We have also concentrated upon the diversification of the Group so as to reduce
the reliance on print media. Our web publishing division has grown in a
difficult market and our new event management division, which organises industry
specific forums, has made excellent progress. The Group is now considerably
better balanced, with our non-print media interests accounting for 26% of total
turnover, up from 9% in 2000. We intend to continue this process of developing
new business areas to ensure that the company can more robustly withstand any
future economic downturn.
Our cash flow was positive with net debt reducing by #1.0m in the course of the
year.
Overall, we remain extremely cautious about future prospects until there is
clearer evidence of a sustained recovery in world markets. We are however
confident that having taken the appropriate steps to reduce costs and with a
broader portfolio of product offerings we are ready to take advantage of any
future economic upturn."
For further information, please contact:
Sterling Publishing Group PLC
Simone Kesseler, Chief Executive 0207 915 9660
Derek Watson, Finance Director 0207 915 9600
Rowan Dartington
Barrie Newton 01179 330010
Hogarth Partnership Limited
Chris Matthews 0207 357 9477
EXTRACTS FROM CHAIRMAN'S STATEMENT AND CHIEF EXECUTIVE'S REVIEW FOR THE YEAR
ENDED 31 MARCH 2003
Chairman's Statement
Results
Looking back over the year we have seen our revenue from advertising in print
media decline by 35% from #28.2m in 2002 to #18.2m in 2003 during one of the
most difficult periods for business to business advertising that I can remember.
I believe the Group has responded well to mitigate the effect of this downturn,
which has affected world markets and North America in particular. This has been
achieved by further reducing the cost base in response to market conditions and,
importantly, these actions have been undertaken without impairing the Group's
ability to take advantage of any future improvement in trading conditions.
We have been able to increase revenues in the web division by 15% from #4.1m to
#4.8m and launch our Forums business which contributed #1.0m in its first year
of operation. Analysis & Networking Limited, a specialist conference company,
was acquired on 13 March 2003 and did not therefore make any significant impact
on this year's results.
Despite the sharp fall in revenue we kept costs under control and as a result
are reporting an operating loss for the year as a whole of #(0.9)m, which is
lower than earlier market expectations and which includes a profit of #0.4m for
the second half.
Our cash flow was positive with net debt reducing by #1.0m in the course of the
year.
Dividends
In the light of the full year results your board is not proposing a final
dividend.
Business developments and outlook
Overall, we remain extremely cautious about future prospects until there is
clearer evidence of a sustained recovery in world markets. We are however
confident that having taken the appropriate steps to reduce costs and with a
broader portfolio of product offerings we are ready to take advantage of any
future economic upturn.
CJM Haines, Chairman
17 June 2003
Chief Executive's Review
The challenges we faced last year in business to business media continued into
2003. Ongoing economic difficulties and low business confidence in our main
geographical markets and across most sectors, brought a further significant
downturn in our print media advertising sales volumes, and a slower rate of
growth in internet advertising revenues than in the previous year. Despite the
difficult trading environment, we successfully launched our Forums business,
which accounted for #1m of our Group turnover, and which we believe will be an
exciting new revenue stream for the future. We also cemented our presence in
the events and information business with the acquisition, at the very end of the
financial year, of conference company Analysis and Networking Limited. As we
move forward, our strategy remains firm: to utilise our core strengths in the
tracking of international markets and our unique telephone-based sales
capabilities across an increasing range of media formats. In this way we intend
to improve our risk profile as well as our yields and our margins.
We continued to address our cost base throughout this year. The year ended 31
March 2003 shows a reduction in our non-sales staff costs of almost #1m, and the
cost of our operational properties fell by over #500,000 from the prior year. We
ended the year with a non-sales staff head count of 161(2002: 173) including a
staff of 17 whom we acquired with Analysis and Networking Limited.
Our operating efficiencies and customer communications should improve further in
the year to come as a result of the installation of a newly developed Group-wide
computer system, which went into our operations at the end of March 2003. We
are now beginning to enjoy the capabilities and full advantages of this new
system.
Print Media
Our print media businesses Sterling Publications, Cornhill Publications and
Quasar International Communications responded to very tough conditions by
reducing the number of issues published to 71 in the year in order to maintain
their yield per issue published at #252,000 (2002: #261,000). The page yield
achieved also held up despite obvious discounting pressure. Sales staff numbers
were reduced by 24% to 190 staff. This was a natural consequence of the
reduction in the number of publications and volumes in order to protect our
yield per man, and to defend our margins. This led to some offset from the
impact of the increased element of fixed costs in the cost of sales mix due to
the changes we made to sales staff remuneration structures last year. This
investment in the sales force coupled with our rigorous recruitment and
selection processes have partially paid off this year as our staff churn rate
has slowed and the average yield of a new recruit has improved by 49% in their
first 12 weeks of employment with us. However, this has not been sufficient to
mitigate the total damage to our gross profit margin which has reduced by 1.7%
to 52.5% in print media. Markets remain difficult however it is important that
we maintain our remuneration package and selection processes in order to ensure
that we are equipped to capitalise on any upturn that may come this year.
Internet
Whilst the cost of sales has increased in print media, continued growth and
management of the yield per man during the year has resulted in a decrease in
cost of sales and a gross margin improvement in Net Resources International ("
NRI"), our internet operation, to 44.9% (2002: 43.2%). Turnover also increased
over last year by 14.8% to #4.75m. The number of sites we operated at the end of
the year was 22, (2002: 26 sites). The mix included two new launches in the
year: a specialist site for sports venue construction and management and one on
road traffic management. Six sites were suspended during the year of which two
(Hotel-technology.com and Semiconductor-technology.com) have been relaunched in
the first quarter of the current year.
Our plans for our internet division include launches of at least four new sites
in the year ahead, and further development of the recruitment advertising
potential of our sites. We are also examining the advantages of establishing
additional NRI sales offices both in the UK and overseas where significantly
lower costs offer obvious advantages. Naturally we shall strive to improve our
service to clients and site users by optimising the content of NRI websites and
consequently we fully expect to achieve growth across all of our sites during
the coming year.
Forums
Forums are three or four day events, usually held at resort locations. Within
the Forum framework senior buyers and expert suppliers working within a specific
industry are brought together for planned private meetings. The Forum also
provides networking opportunities for all attendees together with informative
seminars.
At the end of last year we had only just announced our plans for our first
forum, the European Digital Infrastructure Technology Forum or EDIT2002 as it
became known. I am pleased to inform you that EDIT2002 was a resounding success
resulting in tangible business results for many of the participants. Industry
support from both buy side and sell side in this sector continues and the second
EDIT (EDIT 2003) will take place this October. EDIT was one of three founding
forum events to take place in the year. An equally successful event for the
European Banking sector and one for the European Railway industry took place in
March 2003. These events will be repeated in the coming year. In addition to
nine brand new Forums making a total of 12 events planned to take place before
the end of March 2004. Our experience in a wide range of sectors in which we
operate in our established print and internet divisions, including our knowledge
of both buyers and sellers gives us a natural advantage when launching new
events. Forums will represent a larger share of Group revenue in the years to
come.
Conferencing and business information
In March 2003 we completed the acquisition of a conference company specialising
predominantly in the pharmaceuticals industry with a strong reputation for
delivering high quality business information products, both on a paying delegate
basis and a free to attend model. Analysis and Networking Limited produces its
conferences under the Vision in Business brand. Despite the difficulties faced
by the conference sector, particularly around the Iraq war, early signs are that
this will be a valuable addition to our group. Conferences are traditionally
sold by direct marketing; a skill which we hope will be transferable to our
other Group companies over time, including Winthrop publications, where
subscription marketing activities and information rich products have much in
common with the services of Vision in Business. Winthrop will increase its
marketing activities this year to stimulate new subscribers in addition to
building its renewal rates. At least one new product will also be introduced in
the year ahead.
Debrett's
2003 saw a small profit from the reference book publishing side of Debrett's as
well as the successful continuation of the Royal Collection, a bi-annual
consumer series for high net worth individuals following the highly successful
Debrett's Golden Jubilee Collection.
During the year the editorial policies for inclusion in Debrett's People of
Today were reviewed and refined, to limit those who are invited to become a
Debrett's name to those people of true influence and achievement , and in
preparation for the launch of the Debrett's Society of Members later this year
for which entry in People of Today is a prerequisite. The Debrett's Society will
provide a range of services and benefits to its members and will create many
publishing and brand development opportunities in future years.
Current Trading
There has been no sign of a recovery in our print media advertising in the first
calendar quarter or the second calendar quarter post Iraq. We will continue to
manage our cost base in print media accordingly. Sales in NRI have slowed in
the second quarter, but we are confident that this is directly related to sales
staff numbers which will begin to increase at the end of the academic year when
our recruitment activity increases among the graduate population. Much of our
growth in NRI for the current year is scheduled for the second half.
Sales of delegate places to supplier companies for our upcoming Forums are going
to plan. Only one (The Leading European Architects Forum) of the 12 events
scheduled will take place in the first half year and sales to date suggest that
this should be a first class Forum. Our task in the year will be to manage
rapid expansion of our events division, whilst also producing the kind of
quality which comes from attention to detail. With this in mind we will look to
add an experienced and client facing operations director to our very able team
in the near future.
Other key performance indicators show a reduction in our cancellation rate
compared with previous years, an increase in pro-forma payments in both the
print and web divisions, and a healthy debt collection rate, all of which
suggest that the financial standing of our client base has improved compared
with the turbulent times of a year ago and that our rigorous compliance and
client vetting policies have paid off. We wait fully prepared for stronger signs
of a return to business confidence, particularly in the USA - one of our key
markets and from which Europe and the rest of the world traditionally take their
lead.
Finally, a thank you to staff, which is often read as a gratuitous comment at
the end of the year, every year. A Herculean effort has been made by many of
our talented people over the last two years. Few expected such a protracted
adverse climate as has impacted upon our Group businesses since 2000. The
commitment and skill of our people over this time has enabled us to react
swiftly to changing circumstances, in the face of a smaller workforce and with
no apparent respite. My thanks and congratulations with regard to the
achievements of our staff this year have never been more heartfelt.
Simone Kesseler
Group Chief Executive
17 June 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
Turnover 2 24,709 32,910
Cost of sales (12,415) (15,566)
Gross profit 12,294 17,344
Distribution costs (947) (1,373)
Administrative expenses (12,250) (15,411)
Operating (loss)/profit before exceptional items (221) 1,789
Exceptional items:
Property provision 3 (682) (529)
Write down of intangible fixed asset - (700)
Operating (loss)/profit (903) 560
Interest receivable and similar income 17 32
Interest payable and similar charges (280) (986)
Loss on ordinary activities before taxation (1,166) (394)
Tax on loss on ordinary activities 4 (607) (152)
Loss on ordinary activities after taxation for the financial year (1,773) (546)
Dividends - non-equity 5 (10) (59)
Loss attributable to equity shareholders (1,783) (605)
Dividends - equity 5 - (166)
Loss for the financial year transferred from reserves (1,783) (771)
Basic loss per share - net basis 6 (2.16)p (0.73)p
Diluted loss per share - net basis 6 (2.16)p (0.73)p
Both years' results derive from continuing operations.
Consolidated statement of recognised gains and losses
There are no recognised gains and losses other than those recorded in the profit
and loss account.
CONSOLIDATED BALANCE SHEET
Notes As at 31 As at 31 March
March 2003 2002
#'000 #'000
Fixed assets
Intangible assets 6,274 5,057
Tangible assets 3,553 3,291
Investments in own shares 86 185
9,913 8,533
Current assets
Stocks and work-in-progress 4,149 4,901
Debtors 7,002 10,612
Cash at bank and in hand 255 136
11,406 15,649
Creditors - amounts falling due within one year (9,088) (10,407)
Net current assets 2,318 5,242
Total assets less current liabilities 12,231 13,775
Creditors - amounts falling due after more than one year (307) (152)
Provisions for liabilities and charges (1,088) (746)
10,836 12,877
Capital and reserves
Called up share capital 4,223 4,904
Shares to be issued 7 407 -
Share premium account 7 7,231 7,215
Capital redemption reserve 7 7,874 7,157
Other reserves 7 733 733
Profit and loss account 7 (9,632) (7,132)
Shareholders' funds 10,836 12,877
Comprising:
Equity interests 10,836 12,160
Non-equity interests - 717
10,836 12,877
CONSOLIDATED CASH FLOW STATEMENT
Notes Year ended 31 Year ended 31
March 2003 March 2002
#'000 #'000
Net cash inflow from operating activities 8 3,080 3,210
Returns on investments and servicing of finance
Interest received 17 32
Interest paid (89) (102)
Dividends paid - non-equity (30) (59)
Interest element of finance lease payments (38) (80)
Taxation
Corporation tax recovered/(paid) 336 (1,573)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,224) (1,350)
Acquisitions and disposals
Payment to acquire subsidiary undertaking (316) -
Cash acquired with subsidiary undertaking 65 -
Equity dividends paid (83) (659)
Cash inflow/(outflow) before management of liquid resources and 1,718 (581)
financing
Management of liquid resources
Decrease in monies held in escrow - 755
Net cash inflow before financing 1,718 174
Financing
Capital element of finance lease payments (203) (98)
Redemption of preference shares (717) -
Issue of ordinary shares - 29
Decrease in net debt in the year 798 105
Reconciliation of net cash flow to movement in net debt
Decrease in net debt in the year 798 105
Cash outflow from lease financing 203 98
Change in net debt resulting from cash flow 1,001 203
Opening net debt (2,860) (3,063)
Closing net debt 9 (1,859) (2,860)
NOTES:
1. Financial statements
This preliminary statement was approved by a duly appointed and authorised
committee of the board of directors on 17 June 2003. This statement does not
comprise the statutory accounts of the Company.
The financial information for the year ended 31 March 2003 has been prepared on
the same basis of accounting as for the year ended 31 March 2002. The
comparative information for the year ended 31 March 2002 does not constitute the
Company's statutory accounts for that year but is derived from those accounts.
The statutory accounts of the Company for the year ended 31 March 2002 have been
delivered to the Registrar of Companies and those for the year ended 31 March
2003 will be delivered following the Company's annual general meeting. The
auditors have reported on those accounts; their reports were unqualified and did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Segmental reporting analysis
All of the turnover and operating profit is derived from international
business-to-business communication and originates in the UK.
The geographical analysis of turnover by destination is as
follows:
2003 2002
#'000 #'000
United Kingdom 9,925 8,641
United States 4,503 7,973
Europe (other than UK) 8,844 13,717
Other 1,437 2,579
24,709 32,910
3. Exceptional items
Certain leasehold properties that are not required for current operations are
subject to leases under which the rent payable is in excess of current market
rates. Provision of #682,000 has been made for the net present value of future
residual lease commitments taking into account expected future lettings.
4. Tax charge
2003 2002
#'000 #'000
United Kingdom corporation tax at 30% (2002: 30%) - 458
Deferred taxation 607 (259)
Prior year credit - (47)
607 152
5. Dividends
2003 2002
#'000 #'000
8.25 per cent. convertible cumulative redeemable preference shares 2002 10 59
Ordinary 5p shares nil (2002 - 0.10p) per share paid - 83
Ordinary 5p shares nil (2002 - 0.10p) per share proposed - 83
10 225
6. Loss per share
The loss per share of (2.16)p (2002: (0.73)p) and the diluted loss per share of
(2.16)p (2002: (0.73)p) have been calculated based on the loss for the
financial year of #(1,773,000) (2002: #(546,000)) less preference dividends of
#10,000 (2002: #59,000).
The weighted average number of shares in issue during the year (excluding those
held by the Sterling Publishing Group employee benefit trust) were:
2003 2002
'000 '000
Basic 82,570 82,482
Shares to be issued 69 -
Diluted 82,639 82,482
FRS 14 requires the presentation of diluted earnings per share when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share. Where a company is reporting a net loss and there are
outstanding share options the net loss per share could only be increased by the
exercise of out-of-the-money options. Since it is inappropriate to assume that
option holders would act irrationally no adjustment has been made to the diluted
loss per share for out-of-the-money options.
7. Reserves
The movement on reserves for the year was as follows:
Share Capital Other Profit and Total
premium redemption reserves Loss
reserve account
#'000 #'000 #'000 #'000 #'000
As at 31 March 2002 7,215 7,157 733 (7,132) 7,973
Recognised loss for the year - - - (1,773) (1,773)
Shares issued 16 - - - 16
Dividends (10) (10)
Redemption of preference shares - 717 - (717) -
As at 31March 2003 7,231 7,874 733 (9,632) 6,206
8. Reconciliation of operating (loss)/profit to net cash inflow
from operating activities
In the table below positive amounts represent generation of cash and negative
amounts cash utilisation.
2003 2002
#'000 #'000
Operating (loss)/profit (903) 560
Amortisation of goodwill 69 66
Write down of intangible fixed assets - 700
Depreciation of tangible fixed assets 1,008 806
Loss on disposal of tangible fixed - 29
assets
Stocks and work-in-progress 752 1,399
Debtors 2,915 2,647
Creditors (1,049) (3,493)
Provisions for liabilities and charges 288 496
Net cash inflow from operating 3,080 3,210
activities
9. Analysis of net debt
31 March 31 March
2003 2002
#'000 #'000
Cash in hand and at bank (255) (136)
Overdraft 1,962 2,641
Finance lease obligations 152 355
Net debt 1,859 2,860
This information is provided by RNS
The company news service from the London Stock Exchange
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