RNS No 1243x
SPORTSWORLD MEDIA GROUP PLC
28 September 1999
SPORTSWORLD MEDIA GROUP PLC
PROFIT IMPROVEMENT REFLECTS INCREASE IN TV SPORTS
PROGRAMMING, DISTRIBUTION AND EVENT MARKETING
Preliminary results for the 14 month period ended 30 June 1999
Sportsworld Media Group plc, the sports TV production, sponsorship and event
marketing company, announced today its preliminary results for the 14 month
period ended 30 June 1999.
* Turnover rises to #5.56m (#2.72m), reflecting the reverse takeover of
MediaOne in December 1998
* Full year pre-tax profits before amortisation of goodwill increase to
#1.77m (loss of #761k) confirming contribution of MediaOne business in
second half
* Operating profits from businesses acquired during the period of #948,000
* Basic earnings per share of 6.6p (loss of 12.3p)
* Growth in digital television channels, switch in marketing budgets and
the internet provide further momentum
* SSM Freesports, Netsports and Lone Eagle Entertainment acquisitions - all
made since reverse takeover - integrating well
* Event and sports sponsorship business continues to grow - further
development opportunities anticipated
* Acquisitions continue to be identified
* Current year has started in line with board's expectations
Commenting on the results and future, Sportsworld's Chief Executive Geoff
Brown said:
"Following our reverse takeover in December, our first set of results as a
quoted company have met our initial expectations and reflect the value of our
investment to date. We have benefited from increasing our portfolio of sports
television programming in an expanding market, which has led to broader
distribution and new broadcasting clients.
"The current year has started in line with our expectations and we have a good
base from which to develop. We anticipate showing improved margins as we
integrate recent acquisitions and bring on stream new sports programming.
"Acquisitions continue to be high on our agenda, with a number of potential
targets already identified. The criteria for future acquisitions will continue
to focus on businesses that will strengthen the group's long-term
relationships with major television broadcasters and global advertisers, as
well as being earnings enhancing."
Enquiries:
Geoff Brown, Chief Executive
Andy Fletcher, Chief Financial Officer
Sportsworld Media Group plc Tel: 0207 240 9626
Tim Spratt / Tania Wild
Financial Dynamics Tel: 0207 831 3113
GROUP CHIEF EXECUTIVE'S REVIEW
Results for the 14 month period ended 30 June 1999
FINANCIAL SUMMARY
Sportsworld Media Group plc achieved considerable revenue and profit growth in
1999, following the reverse take-over by Westport Group plc of MediaOne last
December and subsequent name change. The implementation of the group's
development strategy - to build an international television sports programming
and sports marketing company - has produced a strong increase in the group
revenues to #5.56m, a significant rise in profits before tax (excluding
goodwill amortisation) to #1.77m and a sound improvement in operating profits
to over #1m (loss of #800k) before amortisation of goodwill. The sale of an
interest in Sports Internet Group plc reflects the balance between operating
and pre tax profit.
Adjusted earnings per share before amortisation of goodwill were 8.9p. In line
with the group's current policy, and as indicated at the time of the
acquisition of MediaOne, there will be no dividend.
The company has strengthened its position through the period thanks both to
the reverse takeover and satisfactory trading results. The overall net asset
total of #24.3m reflects the acquisitions that have occurred during the
period, characterised principally by the intangible asset of acquired goodwill
(#19.5m).
As at 30 June, Sportsworld had a strong balance sheet with Net Assets of
#24.3m, including positive net cash balances of #1.3m. The period has been one
of investment and expansion, as the group builds both its internal
infrastructure and a wider base from which to grow. Improved resources have
helped working capital management, and the sale of a portion of the investment
in Sports Internet Group plc has supported the group's development. The recent
injection of capital into SSM Freesports and Lone Eagle is expected to pay
rapid dividends by providing these businesses with the necessary resources for
growth.
Lightbox, the original operating business of Westport Group plc, has traded
satisfactorily.
GROUP DEVELOPMENT
Since December 1998, a number of acquisitions have been made, for a total
initial consideration of #2.1m. These include:
* 51% of SSM Freesports, a UK based freesports marketing and management
company focusing on windsurfing, snowboarding and mountain biking;
* 100% of Netsports, a UK based sports internet company; and
* 60% of Lone Eagle Entertainment, a Canadian sports programming producer
and distributor, based in Toronto.
Acquisitions will continue to play an important part in Sportsworld's future
strategy - a key reason for seeking a listing - as the group builds both its
geographic coverage, television content and sports marketing interests.
1. Television Programming and Distribution
Sales of television programmes from the former MediaOne continued to grow,
reflecting several new contract wins, including J Sports, Channel 4 and China
Broadcasting, in key markets such as the United Kingdom, Japan, China, the
Middle East, Canada, Latin America, Spain and Africa. In the US, a
distribution agreement was signed in June with TJ Sports, a Los Angeles based
television producer and distributor, to sell the group's programmes in North
America.
Lone Eagle Entertainment has just completed a new series of Game On, a sports
television game show. This 26 part programme had a highly successful first run
in 1998 and all of the major sponsors including Labatts, AT&T and General
Motors, have renewed their contracts for the new series. The group is
currently reviewing Game On with broadcasters in a number of major markets
including the United States, UK/Europe and major Asian countries, with plans
to introduce the programme to these markets at the Sportel market in Monte
Carlo 27-30 September and MipCom on 4-7 October.
Lone Eagle and TJ Sports also allow Sportsworld to introduce for the first
time a range of golf programmes to broadcasters. These include the Golf
Magazine Show featuring Jack Nicklaus, Golf 2000 including such personalities
as Celine Dion, Samuel Jackson and over 30 other movie and sports stars, and
Get A Grip an instructional programme, already in its second series in Canada.
Sportsworld plans to introduce several new freesports programmes at Sportel
and MipCom including:
* the Trans Atlantic Windsurf Race 2000 to celebrate the discovery of
Brazil. Both the Portuguese and Brazilian tourism authorities are major
sponsors;
* Freesports World, a 26 part weekly series covering fashion, music and
sport directed at the important 16-35 demographic age group;
* Sports Know How, an amusing and informative introduction to a wide range
of sports;
* Global Football, a 30 minute weekly football show.
In addition to introducing these new sports programmes, Sportsworld has signed
major new contracts in India and China for Countdown to Glory, the weekly
sports news programme for the Sydney 2000 Olympics, and has expectations for
further new contracts for its Olympic programming.
The group continues to create and produce its programmes in Australia, and as
such enjoys a high margin base on the lower production cost and the
anticipated license fee that it expects to achieve.
2. Sports Marketing and Sponsorship
Since December, the group has made several key appointments in its sponsorship
division and expects to secure major new sponsorship contracts in conjunction
with the release of the new television programmes in October.
The group's event and sponsorship business continues to grow strongly. In
addition to its existing contracts with the Dubai Rugby Sevens and the ATP
Dubai Tennis Open, and following the acquisition of SSM Freesports, the group
now stages 26 windsurfing events on behalf of the Professional Windsurfing
Association. In other areas of freesports, Sportsworld now has responsibility
for the management, sponsorship and television rights for the annual Arctic
Challenge Snowboarding Event and has recently signed a contract with the
British Cycling Federation, including a six part series which was aired this
month on Channel 4 in the UK.
There is also a strong movement for major advertisers to have their brands
participate and sponsor programming. Recent examples include Toyota's
involvement with mountain bike riding, Silk Cut with windsurfing and Adidas
with Football Feva. It is anticipated that the group will secure business with
several further major advertisers in the near future due to its extensive
library of more than 4000 hours of film and video and 2000 hours of clips
giving it the capability to custom design programmes for major client brands.
3. New Media
The third area of growth for the group lies in the consumer use of the
Internet. As a producer of television programmes, which can be used to promote
internet sites, the e-commerce potential of Sportsworld is considerable.
The group's purchase of Netsports provides it with an exciting opportunity to
explore sports internet opportunities. Netsports owns the Dream League
Football fantasy sport brand and was the exclusive fantasy football partner to
Euro 96 and France 98. It has recently signed an exclusive contract with ISL
on behalf of FIFA to act as the fantasy football partner for Euro 2000. The
contract also awards Netsports with the exclusive on-line gaming rights for
fantasy football for the tournament, which will be held in Benelux in June
2000. Netsports has developed an interactive television programme for Euro
2000 which will be presented to broadcasters at Sportel this week and MipCom
this October.
CURRENT TRADING AND OUTLOOK
Trading in the first two completed months of this year is in line with our
expectations. Sportsworld expects to continue to benefit from:
* the continued growth in the number of television channels;
* an increasing interest in free/extreme sports by television broadcasters;
* low programming production costs; and
* the increase in sponsorship as an alternative to traditional
marketing, especially in the free/extreme sports, which attracts the key
age group of 16-35 year olds.
In the current year, Sportsworld expects to sign many new programme contracts
in major television markets as a result of its very strong new programme
selection. Since all of these programmes have been developed in consultation
with major broadcasters, there is a realistic expectation of favourable sales.
Currently, the Group is actively involved in identifying further acquisitions
in the UK/Europe, the US and Australia and thereby gain even greater access to
these important markets. Such purchases will enable the group to expand its
geographic reach as well as the range of high margin television and sports
marketing areas that it operates in. The key criteria of Sportsworld's
acquisitions are that they should provide and strengthen the Group's
relationships with television broadcasters and global advertisers and that
they are earnings enhancing.
Sportsworld will continue to focus on its core business of television
production and sales and build stronger and wider relationships with
broadcasters to develop its portfolio of TV and freesport interests. The
Company will also capitalise on the strong sponsorship opportunities in
freesports and continue to monitor the potential created by the convergence of
the television and internet industries.
Preliminary consolidated profit and loss account (Unaudited)
for the period ended 30 June 1999
14 months to 30 June 1999 Year to 30 April 1998
Continuing Acquisitions Total Continuing Dis- Total
Operations Operations continued
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 2,739 2,827 5,566 2,634 82 2,716
Cost of
sales (1,521) (1,077) (2,598) (1,395) (36) (1,431)
1,218 1,750 2,968 1,239 46 1,285
Amortis
ation
of
Goodwill (446) - (446)
Net
operating
expenses -
normal (1,198) (802) (2,000) (2,040) (43) (2,083)
(1,644) (802) (2,446) (2,040) (43) (2,083)
Operating
profit/
(loss) (426) 948 522 (801) 3 (798)
Excepti
onal
Items
Profit
on sale
of
fixed
asset
investment 737
Losses on
disposal of
discontinued
operations - (5,916)
Provision made
30 April 1997 - 5,916 -
1,259 (798)
Interest
receivable/
(payable) 85 37
Taxation - -
Minority
Interest (25) -
Share
of
Profit
Retained
profit/
(loss)
of the
period 1,319 (761)
Earnings per
Share
Standard 6.6p (12.3)p
Before
amortisation
of
Goodwill 8.9p (12.3)p
Diluted
Earnings per
Share
Standard 6.5p (12.3)p
Before
amortis
ation
of
Goodwill 8.7p (12.3)p
Preliminary consolidated balance sheet (Unaudited)
at 30 June 1999
30 June 1999 Restated
30 April
1998
#'000 #'000 #'000
Fixed assets
Intangible assets 19,563 -
Tangible assets 2,698 169
Investments 552 155
22,813 324
Current assets
Stocks 237 11
Debtors 4,527 1,033
Cash at bank and in hand 1,331 1,146
6,095 2,190
Creditors:
amounts falling due
within one year
Bank overdraft
Other - 289
4,375 831
Net current
assets/(liabilities) 1,720 1,070
Total assets less current
liabilities 24,533 1,394
Creditors: amounts
falling due after more
than one year 69 80
Provisions for
liabilities and charges 187 550
24,277 764
Capital and reserves
Called up share capital -
equity 375 3,082
Share Premium 4,920
Other reserves 17,180 3
Special reserves 470
Profit and loss account 1,693 (2,321)
Shareholders funds -
equity 24,638 764
Minority Interest 361 -
24,277 764
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.
Earnings per share
The calculation of the basic earnings per share is based on the 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:
Earnings 1999 Per Share Earnings 1998 Per
# Weighted amount # Weighted Share
Average pence Average amount
Number of Number of pence
Shares Shares
Basic Earnings per share
Earnings
attributable
to ordinary
shareholders 1,319,000 19,904,902 6.6 (761,000) 6,163,908 (12.3)
Dilutive effect of securities
Options 0 19,018 0 0
Warrants 0 285,714 0 0
Diluted EPS 1,319,000 20,209,634 6.5 (761,000) 6,163,908 (12.3)
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 effects of the adjustment is as follows:
Earnings 1999 Per Share Earnings 1998 Per
# Weighted amount # Weighted Share
Average pence Average amount
Number of Number of pence
Shares Shares
Basic EPS 1,319,000 19,904,902 6.6 (761,000) 6,163,908 (12.3)
Adjustment
for goodwill 446,000 0
Basic EPS
adjusted for
goodwill 1,765,000 19,904,902 8.9 (761,000) 6,163,908 (12.3)
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 income
statement 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 first 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.
Revenue is stated exclusive of local sales taxes.
Royalties
Royalties payable are recognised in the income statement on a consistent basis
to 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 other non-current
assets. These costs are amortised on a straight line basis over three years.
Inventories
Inventories are valued at the lower of 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 1999 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.
END
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