RNS Number:2009S
Sportsworld Media Group PLC
9 October 2000
SPORTSWORLD MEDIA GROUP PLC
RECORD REVENUE AND PROFIT GROWTH
Preliminary results for the year ended 30 June 2000
Sportsworld Media Group plc, the sports TV production, sponsorship and event
marketing company, announced today its preliminary results for the year ended
30 June 2000.
- Turnover rose to #20.7m (#5.56m*), reflecting strong organic growth and
strategic acquisitions
- Full year pre-tax profits before amortisation of goodwill and including
minority contributions increased to #5.59m (#1.77m*)
- Operating profits before goodwill amortisation and including minority
contributions increased by 323% to #3.98m (#0.94m*)
- Earnings per share, adjusted for goodwill amortisation, of 10.8p (8.9p*)
- Earnings per share, excluding goodwill amortisation and exceptional
profits, of 8.6p (5.2p*)
- Growth in new sports channels, reallocation of global advertising budgets
to sponsorship and consolidation in sports marketing industry provide
opportunities for substantial growth
- AMH, SOMI, TJ Sports, Pro-Active Television and SSM Freesports
acquisitions - all integrating well
- Current year has started strongly, in line with Board expectations
(* Note: the previous accounting period to 30 June 1999 was fourteen months,
of which Sportsworld was only included from 9 December 1998)
Commenting on the results and prospects, Sportsworld's Chief Executive Geoff
Brown said:
"These results were ahead of the Board's previous expectations, which reflects
strong organic growth in all aspects of our business and that acquisitions
have bedded down quickly and effectively. We have benefited from increasing
our portfolio of sports media businesses in an expanding market, which is
experiencing an unprecedented demand for sports programming and a reallocation
of advertising budgets from traditional television advertising to programme
and sports sponsorship.
"The Group is continuing to build an international business focused on sports-
related TV production, marketing and sponsorship, and is confident that it
will continue to benefit from the current strong market environment.
"The current year has started strongly, as the Group establishes itself as a
major international sports media business. Recent customer and market feedback
to the Group indicates a positive environment on all fronts, and the momentum
in the market shows no sign of slowing down."
Enquiries:
Geoff Brown, Chief Executive
Andy Fletcher, Chief Financial Officer
Sportsworld Media Group plc Tel: 020 7831 3113 (09/10/00)
Tel: 020 7240 9626 (thereafter)
Tim Spratt / Tania Wild
Financial Dynamics Tel: 020 7831 3113
GROUP CHIEF EXECUTIVE'S REVIEW
FINANCIAL SUMMARY
Sportsworld Media Group plc announced its results for the year ended 30 June
2000, achieving record revenue and profit growth, reflecting good organic
growth and the Group's ability to successfully and rapidly integrate
acquisitions. The Group's strategic aim of building a global sports-related
marketing, event management and television production and distribution company
through earnings enhancing acquisitions, resulted in substantial growth in
revenues to #20.7m for the year, over the previous fourteen month period
(#5.56m*). Pre-tax profits, before goodwill amortisation and including
minority contributions, also rose to #5.59m (#1.77m*). Operating profits,
excluding goodwill amortisation and including minority contributions,
increased by 323% to #3.98m (#0.94m*). The sale of an interest in Sports
Internet Group plc produced an exceptional gain of #1.1m in addition to this.
Earnings per share before amortisation improved by 21% to 10.8p (8.9p*).
Earnings per share, excluding goodwill and exceptional profits, of 8.6p
(5.2p*). In line with the Group's current development policy there will be no
dividend.
During the year, two substantial fund raisings have occurred in order to
finance the acquisitions of both AMH and SOMI. These were well received and
have allowed the Group to acquire substantial funds for further expansion. New
acquisitions generated #1.54m of operating profit, before goodwill
amortisation.
Operating cash flow is strongly positive, with net cash balances of #19.6m as
at 30 June. It is expected to improve significantly in the next 12 months.
(* Note: the previous accounting period to 30 June 1999 was fourteen months,
of which Sportsworld was only included from 9 December 1998)
MARKET DYNAMICS
The market environment in which the Group operates provides further
opportunities for substantial growth, including:
- the continued and accelerated growth in new sports channels throughout
the world, which is creating unprecedented demand for sports programming;
and
- global advertisers are reallocating substantial budgets from traditional
advertising to sponsorship of sports events and sports programming to suit
the new multi-channel environment; and
- the sports marketing industry is highly fragmented and undergoing
accelerated consolidation to meet the global needs of television networks
and advertisers.
As a result of these market conditions, Sportsworld has greatly increased its
television sales, event management, sponsorship and sports stadia business and
anticipates further strong growth.
GROUP DEVELOPMENT
The sports marketing industry is highly fragmented and undergoing rapid
consolidation to meet the global demands of television networks and the
international advertisers.
Since its listing, the Group has established itself as a preferred acquirer in
this consolidating market, and its management experience, market knowledge and
highly incentivised performance-related remuneration policy has enabled it to
attract world-class talent. The Group has successfully completed and
integrated eight acquisitions and expanded its expertise in television, event
management, sponsorship, sports stadia advertising and new media.
Sportsworld's acquisition criteria are focused on sports-related companies,
with proven management, which consolidate the Group's capabilities and broaden
its geographic coverage. During the current financial year there were five
primary acquisitions. These included:
- AMH
In December 1999, the Group expanded into the Asia Pacific region with the
purchase of Australia Media Holdings (AMH), a media sales representation,
event marketing and sponsorship company. AMH was acquired for #22.4m and has
already exceeded its projected contribution to the Group.
In addition to providing airtime sales representation to television stations
and pay TV networks in Asia Pacific, AMH has been responsible for significant
sponsorships in Australian Rugby and major event staging including a series of
Telstra sponsored post-Olympic celebration parades in all the major Australian
cities.
Through the AMH acquisition the Group has an interest in the global rights to
Popstars, the hit TV series that attracted record audiences on Network Seven
Australia during this year. Popstars is currently being launched in several
additional markets included the USA, UK (through LWT), Canada, Germany and the
Philippines.
- SOMI
In March the Group made its largest acquisition with the purchase of Sports
and Outdoor Media International (SOMI), an AIM listed company. SOMI was
purchased for #54m and is meeting its projections. It will be significantly
earnings enhancing for the current year.
SOMI is the leading rights agent for major stadia in the UK and Australia for
the sale of perimeter advertising space and the stadia's high definition video
screens. These are all high profile stadia including all the ECB Test Cricket
grounds, Sydney Olympic Stadium and the Melbourne Cricket Ground. All are
held under long term contracts.
As the stadia stage more international sporting events with wider television
coverage, the media value of the properties will further increase. There is
also considerable opportunity to significantly expand the number of stadia
under management as a result of the Group's increased global presence.
SOMI also has an excellent sports sponsorship and consultancy business with
close ties to over half the Premier League clubs in the UK and with the
English Cricket Board.
In addition, SOMI has a profitable outdoor advertising business, however, it
does not fit the Group's strategic media portfolio and negotiations are at an
advanced stage to dispose of it.
- TJ Sports
In March the Group acquired a 70% share of TJ Sports, a Los Angeles based
producer and distributor of sports programmes. This acquisition gave the
Group a presence in the large and important US market. TJ Sports' golf
magazine programmes are sold internationally through the Group's sales
division. TJ has also developed a fantasy league television internet model,
which it recently launched for the new NFL season. The Group has opened an
office in New York and is currently reviewing several acquisitions to further
expand its US presence.
- Pro-Active Television
In June, the Group acquired UK based Pro-Active Television, a producer of
extreme sports programmes. Pro-Active owns and produces a number of highly
successful television programmes including Watersports World, Sports
Unlimited, Moto + and Destination Adventure. The company has a 10-year
relationship with BSkyB.
Pro-Active is an excellent fit with SSM Freesports and the combined catalogue
and additional 3,000 hours of library footage that Pro-Active owns has
considerable global potential.
- SSM Freesports
In March, the Group acquired the remaining 49% of SSM Freesports to enable it
to fully capitalise on the rapid growth in popularity of extreme sports for
television networks and advertisers.
Acquisitions will continue to play an important part in Sportsworld's future
and several additional targets have been identified and are being evaluated.
OPERATIONS
1. Television Programming and Distribution
Television sales represent 55% of the Group's revenue on a pro-forma basis.
The Group's television sales strategy has focused on building strong long-term
relationships with leading terrestrial, cable and satellite networks by
providing quality sports programmes; magazine formats and original productions
including the live televising of sports events.
The global television programme sales market is growing strongly, fuelled by
new sports channels in all markets and increased outsourcing by the networks
to independent producers such as Sportsworld.
The Group continues to produce quality, cost effective magazine programmes
which have expanded in numbers following acquisitions made during the year
(Pro-Active and TJ Sports). New contract sales of magazine programmes have
more than doubled, reflecting an increase in the number of new contracts
written and a significant increase in the value of each contract. Not only has
this positively affected the current year, it has also increased the pre-
booked sales value for the year 2001.
Significant new business has been achieved with leading networks in all
regions: Europe, Asia Pacific, Latin America, the USA, the Middle East and
Africa. The Group has greatly expanded its business with UK based networks and
currently sells to Channel 4 (Mountain Bike Britain, and the first ever
terrestrial windsurf show in the UK), BSkyB (Watersports World), ITV (Dream
League) and Rapture (windsurfing, Chilli).
The Group has also recorded significant sales in originally produced
programmes, including the Adidas sponsored series featuring Ian Thorpe and
other international athletes, The Chilli Factor, The Arctic Challenge and the
Trans-Atlantic Windsurf Race.
In May, Sportsworld was appointed by the International Triathlon Union as its
exclusive global media and marketing partner. The Group worked with the ITU to
gain Olympic recognition for the sport, and the recent success of the women's
and men's triathlons at the Sydney Olympic Games has assured significant new
television and sponsorship sales.
The Group has an interest in Five Divas Pty Limited, which owns the global
rights to the Popstars brand and intellectual property. Five Divas Pty Limited
has generated sales from the entertainment programme Popstars. The 13-part
series was the number one rating show in Australia earlier this year. Income
was generated from license fees (Network Seven), record sales and
merchandising. It is expected that Popstars will be launched in the United
States, the UK, Canada and the Philippines and several other countries during
this year.
The Group has recently secured a new entertainment contract with the New York
based Ford Model Agency to produce an eight-part series (similar to Popstars)
for the Ford Supermodel of the Year contest. The show will air in Australia in
October and will feature world famous supermodels, including Jerry Hall and
Naomi Campbell. The concept will be sold to the global television market at
MIP in January as a global property, which can be packaged locally to appeal
to both programme buyers and advertisers. These programmes meet the growing
trend for reality TV shows such as Big Brother and Survivor.
2. Sports Marketing and Sponsorship
Sports marketing and sponsorship represent 15% of the Group's revenue on a
pro-
forma basis.
Sportsworld's event and sponsorship revenue continues to grow strongly. The
Group stages more than 50 events per year and is the leading event manager of
freesports based on its involvement with windsurfing, triathlon, mountain
biking, inline skating, surfing and snowboarding. The rapidly growing
popularity of these sports with television networks and advertisers ensures
that this growth will continue.
The Group is experiencing record growth in sponsorship sales as international
advertisers shift advertising budgets from traditional advertising to sport-
related sponsorships. New sponsorship clients include American Express,
Freeserve, Vodafone, Toyota, Telstra, Adidas, Nike, O'Neill, The North Face
and Yellow Pages.
3. Sports Stadia
Sports stadia represents 20% of the Group's revenue on a pro-forma basis.
A significant new income stream for the Group is the sports stadia business,
acquired with the completion of the purchase of Sports and Outdoor Media
International in March. The Group manages sports stadia advertising under
long-
term contracts for major international stadia, including all of the ECB Test
Cricket grounds, a number of Premier League clubs, Sydney's Olympic Stadium
and the Melbourne Cricket Ground. Currently, the Group manages 43 stadia.
There is significant opportunity to expand this business both geographically
and in the range of services by integrating other parts of the Group's
business. Sportsworld can provide athletes for freesports events and marshal
its group resources to manage the event, produce and distribute the television
programme and arrange sponsorships.
Sportsworld plans to capitalise on its expertise in this category by expanding
the number of stadia it represents and establishing a presence in all major
markets. The Group also expects to generate further income for sports stadia
naming rights and has recently appointed a highly experienced executive with
expertise in this new emerging and substantial category.
4. New media
New media represents 10% of the Group's revenue on a pro-forma basis.
Sportsworld has experienced considerable success in developing its Dream
League television/internet model. As official partner to Euro 2000, the Group
generated income from television sales and merchandising. Following the launch
of a Dream League television programme in the United States for the new NFL
season that will also generate significant income, it is planned to roll out
the Dream League programme to global markets at Sportel in November.
The Group is ideally placed to exploit the worldwide popularity of on-line
gaming. The recent partnership with Coral Eurobet will generate growing income
this year.
MANAGEMENT
The Group's assets are its significant library of television content, its
global brands (Dream League, Chilli, Kids Talk sports, Popstars) and its
intellectual property.
During the year, the Group has assembled a world-class management team to
further exploit these assets. The Global Management Team comprising 10
Executives, chaired by the Chief Strategic Officer, has international
experience in television, brands, intellectual property, media and
sponsorship.
In the past year the Group has integrated all its businesses, including the
acquisitions, into a regional structure, with regional heads in Europe, Asia
Pacific, USA, Canada, the Middle East and Latin America.
Recently, the Group has restructured its Board of Directors, appointing Mr
John Bernbach as Non-Executive Chairman. Mr Bernbach, formally head of DDB
Needham advertising and a founding director of Omnicom, has extensive
international marketing and advertising experience.
CURRENT TRADING & OUTLOOK
The new financial year has started strongly, with trading for the first three
months of this year comfortably in line with the Board's expectations. As the
Group establishes itself as a major international sports media business,
overall customer and market feedback indicates a positive environment on all
fronts, illustrated at MipCom last week, when the Group recorded record sales
for that market. The Group is confident that it will benefit from current
market momentum, which is showing no sign of slowing down, and an environment
in which there are significant opportunities for growth.
In the current year, Sportsworld expects to sign many new programme contracts
in major television markets, increasingly for terrestrial TV. The recently
launched Chilli Television, a new youth and sports-lifestyle production
company, has already attracted 17 hours of programme commission from Channel
4. Also, in the programming division, the Group is developing further brand-
sponsored series, including an Adidas sponsored series focusing on top Olympic
champions Cathy Freeman and Ian Thorpe.
In new media, the Group is working with a leading global telecoms provider to
enhance the content of sports events. Such technology and its applications
will open up new revenue streams, increase loyalty and extend the relationship
between the sports fan and club beyond the physical boundaries of stadia by
creating the concept of a digital stadium, not too dissimilar to digital
television.
Sportsworld Media Group is creating new rules for every market segment in
which it operates. New rules in television production, sponsorship, event
management, sports stadia management and new media, that strengthen its
partnerships with television networks, advertisers, stadia owners and the
sporting bodies that it represents. New rules in its personality and in its
incentivisation policy that it has created to attract world class talent.
Sportsworld Media Group remains committed to become a truly unique global
company in sports marketing.
Preliminary consolidated profit and loss account (Unaudited)
for the year ended 30 June 2000
June 2000 June 1999
Continuing Audited
Continuing Unaudited Operations Acquisitions Total
Operations Acquisitions Total 14 months 14 months 14 months
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 10,517 10,252 20,769 2,739 2,827 5,566
Cost of sales (4,744) (5,111) (9,855) (1,521) (1,077) (2,598)
5,773 5,141 10,914 1,218 1,750 2,968
Amortisation of
Goodwill (2,131) (350) (2,481) (446) - (446)
Net operating
expenses (3,723) (3,604) (7,327) (1,198) (802) (2,000)
- normal (5,854) (3,954) (9,808) (1,644) (802) (2,446)
Operating
profit/(loss) (81) 1,187 1,106 (426) 948 522
Exceptional Items
Profit on sale
of fixed asset investments 1,073 737
2,179 1,259
Interest receivable/
(payable) 534 85
Profit before
taxation 2,713 1,344
Taxation (301) -
Profit after
taxation 2,412 1,344
Minority
Interest 397 (25)
Share of Profit
Retained profit 2,809 1,319
for the period
Earnings per Share
Standard 5.7p 6.6p
Before
amortisation
of Goodwill
and Exceptional Items 8.6p 5.2p
Before
amortisation of Goodwill 10.8p 8.9p
Diluted earnings
per Share
Standard 5.4p 6.2p
Before
amortisation
of Goodwill
and Exceptional Items 8.1p 4.8p
Before
amortisation of Goodwill 10.2p 8.3p
Preliminary consolidated balance sheet (Unaudited)
at 30 June 2000
June 2000 June 1999
#'000 #'000 #'000
Fixed assets
Intangible assets 123,032 19,439
Tangible assets 7,373 2,598
Investments 446 552
130,851 22,589
Current assets
Stocks 285 234
Debtors 25,115 4,244
Cash at bank and in hand 58,253 1,378
83,653 5,856
Creditors: amounts falling due
within
one year
Bank overdraft 1,697 -
Other 56,882 3,359
58,579 3,359
Net current assets 25,074 2,497
Total assets less current 155,925 25,086
liabilities
Creditors: amounts falling due
after more than one year 4,975 69
Provisions for liabilities and 1,392 542
charges
149,558 24,475
Capital and reserves
Called up share capital - equity 679 375
Share Premium 74,962 4,920
Other reserves 70,172 17,180
Special reserves 470 470
Profit and loss account 3,288 1,693
Shareholders' funds 149,571 24,638
Minority Interest (13) (163)
149,558 24,475
Shareholders funds are
attributable to:
Equity shareholders 149,558 24,475
Consolidated cashflow statement (Unaudited)
for the year ended 30 June 2000
Year ended 30 June 14 months to 30 June
2000 1999
#'000 #'000 #'000 #'000
Net cash inflow/(outflow)
from operating activities 1,480 (603)
Returns on investment and
servicing of finance
Interest received 897 72
Interest paid (326) (14)
Finance lease interest paid (37) (5)
Dividend received from other
investments - 32
534 85
Taxation (751) -
Capital expenditure and
financial investment
Purchase of tangible fixed (4,267) (1,101)
assets
Purchase of intangible fixed
assets (845) -
Sale of tangible fixed assets 5 10
(5,107) (1,091)
Acquisitions and disposals
Purchase of subsidiary
undertakings (19,263) (2,074)
Net cash on purchase of
subsidiary undertakings 733 185
Sale of fixed asset 1,438 837
investments
Purchase of fixed asset
investments (259) (413)
(17,351) (1,465)
Cash (outflow)/inflow before
financing (21,195) (3,074)
Management of liquid
resources - term deposits (37,002) -
Financing
Capital element of finance
lease rentals (146) (99)
Issue of shares 95,892 3,824
Bank Loan 300 -
Share issue costs (3,970) (130)
Repayment of Borrowings (15,703) -
Net cash inflow/(outflow)
from financing 76,373 3,595
Increase in cash in the 18,176 521
period
Unaudited statement of total recognised gains and losses
for the year ended 30 June 2000
Year ended 14 months
to
30 June 2000 30 June
1999
#'000 #'000
Profit for the financial period 2,809 1,319
Currency differences on foreign currency (1,214) 145
Total recognised gains and losses
relating to the period 1,595 1,464
Prior year adjustments - 200
Total gains and losses
recognised since the last financial
statements 1,595 1,664
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 period ended 30 June 1999.
Earnings per share
The calculation of the basic earnings per share is based on earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the period.
The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares and on the assumed
conversion of all dilutive options and other dilutive potential ordinary
shares.
Reconciliation of the earnings and weighted average number of shares used in
the calculations are set out below:
2000 1999
Weighted Per Weighted Per
Average Share Average Share
Earnings Number of Amount Earnings Number of Amount
# Shares Pence # Shares Pence
Basic
earnings per
share 2,809,000 49,147,705 5.7 1,319,000 19,904,902 6.6
Dilutive effect
of securities
Options 174,946 17,500
Warrants 2,614,020 1,346,622
Diluted earnings
per share 2,809,000 51,936,671 5.4 1,319,000 21,269,024 6.2
An adjusted earnings per share has also been presented, based on earnings
after the write back of amortisation of goodwill. The Directors consider that
this gives a useful additional indication of underlying performance.
The effect of the adjustment is as follows:
2000 1999
Weighted Per Weighted Per
Average Share Average Share
Earnings Number of Amount Earnings Number of Amount
# Shares Pence # Shares Pence
Basic earnings
per share 2,809,000 49,147,705 5.7 1,319,000 19,904,902 6.6
Adjustment for
amortisation
of goodwill 2,481,000 - - 446,000 - -
Basic EPS
adjusted for
goodwill 5,290,000 49,147,705 10.8 1,765,000 19,904,902 8.9
Revenue recognition
It is the policy of the Group to recognise in the balance sheet the value of
contracts signed with customers for future broadcasts on the date of signing a
contractually binding agreement. The revenue is recognised within the profit
and loss account in accordance with the contract invoicing pattern and when
the licence fee is known, collectability of the full licence fee is reasonably
assured, all contractual terms have been fulfilled and the work is available
for its telecast.
Revenue from the rendering of services is recognised using the percentage of
completion method once the outcome of the services may be estimated reliably.
Turnover is stated exclusive of local sales taxes.
Royalties
Royalties payable are recognised in the profit and loss account on a basis
consistent with the recognition of the related income.
Programme development costs
Direct programme development costs and an appropriate proportion of production
overheads are capitalised as programme costs. Programme costs in respect of
uncompleted work in progress is separately classified as work in progress and
not amortised. Programme costs in respect of completed programmes are
amortised over an appropriate period reflecting the Directors' opinion of the
estimated economic useful life of the programmes, such period not to exceed 20
years.
Music rights and footage library
Costs incurred to acquire rights to include music and footage in programmes
are capitalised as music rights and footage library, within intangible assets.
These costs are amortised on a straight line basis over three years.
Stocks
Stocks are valued at the lower of the cost and net realisable value.
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 Balance Sheet at 30 June 2000 and profit and loss account for the period
then ended 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 period ended 30 June 1999 have been extracted from the
Group's accounts for that period 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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