29th Jun 2010 07:00
Embargoed for 7.00am on 29 June 2010
TSE GROUP PLC (the 'Company' or 'TSE')
AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2009
The Board of TSE is pleased to announce its audited results for the year ended 31 December 2009. The Report and Accounts are being posted to shareholders today and a copy is available from the Company's website, www.tsegroupplc.com.
Chairman's Statement
Group revenues increased by 43% in the year to £1,577,617 (2008: £1,103,053); in this difficult economic climate your Board considers this a very strong performance. Unfortunately, the margins associated with this revenue stream were not as high as expected and hence a loss before taxation of £165,885 (2008: profit £31,904) was generated. It is worth noting that during 2009 the Group decided to write off almost all of its development and start up costs relating to its international offices; this amounted to £77,000 (2008: nil).
During the year we set up and opened a new wholly owned office in Istanbul in Turkey and further associate offices in Cairo, Warsaw, and Dubai. Also during the year we set up four new business lines; 'Sports Performance', run out of TSE's new office in Colorado Springs, USA; 'Event Appraisal', which is being run out of our TSE Scandinavia office; 'Digital PR and Marketing', a joint venture with Washington DC based Chong + Koster; and 'Environmental Services', a joint venture with Indianapolis-based August Mack.
Revenues within all the international offices have grown during the period, despite the poor global economy, and 2010 has started very positively; importantly, we are also seeing an improvement in the margins associated with these revenues. We have won a number of high profile new clients this year, particularly in the area of Sports Performance and in April we announced that TSE Consulting SA had been appointed by the Russian Olympic Committee to conduct an in-depth internal review of Russia's winter Olympic sports performance. This major contract follows previous assignments from Saudi Arabia, Brazil and Turkey.
Over the past few months we have been approached by a number of sports related companies with a view to acquiring or merging with TSE Consulting SA and it is our opinion that TSE Consulting would benefit substantially by being part of a larger sports focused group. All shareholders will be kept fully informed on developments.
Adam Reynolds
Chairman
Consolidated statement of Comprehensive Income for the year ended 31 December 2009
|
|
Notes |
|
2009 |
|
2008 |
|
||||||
|
|
|
|
£ |
|
£ |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Revenue |
2 |
|
1,577,617 |
|
1,103,053 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Operating costs |
|
|
(1,741,712) |
|
(1,073,650) |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Operating (loss)/profit
|
4 |
|
(164,095) |
|
29,403 |
|
||||||
|
Finance revenue
|
|
|
691 |
|
3,811 |
|
||||||
|
Finance costs |
5 |
|
(2,481) |
|
(1,310) |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(Loss)/ profit before taxation |
|
|
(165,885) |
|
31,904 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Taxation |
6 |
|
45 |
|
(9,242) |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(Loss)/profit for the year |
|
|
(165,840) |
|
22,662 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Other comprehensive (losses)/income |
|
|
|
|
|
|
||||||
|
Exchange differences on translating foreign operations |
|
|
(199,698) |
|
820,355 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Total comprehensive (losses)/income for the year |
|
|
(365,538) |
|
843,017 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(Loss)/earnings per share |
|
|
|
|
|
|
||||||
|
Basic |
13 |
|
(0.002p) |
|
0.004p |
|
||||||
|
Diluted |
13 |
|
(0.002p) |
|
0.003p |
|
||||||
Consolidated Statement of Financial Position as at 31 December 2009
|
|
Notes |
2009 |
|
2008 |
|
Non-current assets |
|
£ |
|
£ |
|
Intangible assets |
7 |
2,312,269 |
|
2,482,721 |
|
Property, plant, and equipment |
8 |
54,925 |
|
38,219 |
|
|
|
2,367,194 |
|
2,520,940 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Trade and other receivables |
9 |
441,534 |
|
552,460 |
|
Cash and cash equivalents |
|
48,997 |
|
155,523 |
|
|
|
490,531 |
|
707,983 |
|
Current liabilities Trade and other payables |
10 |
(371,615) |
|
(394,727) |
|
Net current assets |
|
118,916 |
|
313,256 |
|
Total assets less current liabilities |
|
2,486,110 |
|
2,834,196 |
|
|
|
|
|
|
| Equity |
|
|
|
|
|
Issued share capital |
12 |
1,457,600 |
|
1,457,600 |
|
Shares to be issued reserve |
|
136,000 |
|
136,000 |
|
Share premium account |
|
2,791,920 |
|
2,791,920 |
|
Retained losses |
|
(2,520,067) |
|
(2,371,679) |
|
Translation reserve |
|
620,657 |
|
820,355 |
|
|
|
|
|
|
|
Total Equity |
|
2,486,110 |
|
2,834,196 |
Consolidated Statement of Cash Flows for the year ended 31 December 2009
|
|
|
2009 |
|
2008 |
|
|
|
£ |
|
£ |
|
Cash flow from operating activities |
|
|
|
|
|
Operating (loss)/profit |
|
(164,095) |
|
29,403 |
|
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
|
Depreciation |
|
41,336 |
|
13,012 |
|
Decrease/(increase)in trade and other receivables |
|
110,926 |
|
(97,171) |
|
(Decrease)/increase in trade and other payables |
|
(23,112) |
|
5,213 |
|
Share based payments |
|
17,452 |
|
19,506 |
|
Decrease in provisions |
|
- |
|
(35,114) |
|
Foreign exchange loss |
|
- |
|
7,912 |
|
|
|
|
|
|
|
Tax refunded / (paid) |
|
45 |
|
(50,983) |
|
|
|
|
|
|
|
Net cash generated from/(used in) operating activities |
|
(17,448) |
|
(108,222) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(60,645) |
|
(28,171) |
|
Acquisition of subsidiary, net of cash acquired |
|
- |
|
(17,432) |
|
Interest received |
|
691 |
|
3,811 |
|
Interest paid |
|
(2,481) |
|
(1,310) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(62,435) |
|
(43,102) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from the issue of shares (net of issue costs) |
|
- |
|
341,235 |
|
Repayment of deferred cash consideration relating to the acquisition of Wilton International Consulting Limited |
|
- |
|
(155,000) |
|
|
|
|
|
|
|
Net cash generated from financing activities |
|
- |
|
186,235 |
|
|
|
|
|
|
|
Net (decrease)/increase in cash & cash equivalents |
|
(79,883) |
|
34,911 |
|
|
|
|
|
|
|
Cash & cash equivalents at 1 January 2009 |
|
155,523 |
|
97,945 |
|
Effect of exchange rate changes |
|
(26,643) |
|
22,667 |
|
|
|
|
|
|
|
Cash & cash equivalents at 31 December 2009 |
|
48,997 |
|
155,523 |
|
|
|
|
|
|
Notes to the Financial Statements
Accounting Policies
1. Basis of preparation of the financial statements
Financial information in this final announcement does not comprise statutory accounts for the purpose of section 435 of the Companies Act 2006 and has been extracted from the audited consolidated accounts for the period to 31 December 2009 which were approved by the Board of Directors on 29 June 2010. The statutory accounts of TSE Group Plc for the year to 31 December 2008 have been filed with the Registrar of Companies and those for the year to 31 December 2009 will be filed on or before 30 June 2010. The auditor's report on the 2009 statutory accounts is unqualified.
Whilst the information in this final announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards(IFRS), this statement in itself does not give sufficient information to comply with IFRS.
2. Segmental Reporting
The board considers that the Group has a single business segment which delivers international sports consultancy services. The revenue, expenditure and result reported in the income statement and the assets and liabilities reported in the balance sheet all relate to this single segment. An analysis of turnover by geographical destination is given below.
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Europe (including Cayman Islands and Switzerland) |
690,787 |
|
624,011 |
|
Africa |
265,747 |
|
17,826 |
|
America |
286,001 |
|
209,145 |
|
Asia |
335,082 |
|
252,071 |
|
|
|
|
|
|
|
1,517,617 |
|
1,103,053 |
3. Staff Costs
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Wages and Salaries |
287,942 |
|
191,741 |
|
Directors Remuneration and Fees |
260,058 |
|
231,000 |
|
Social Security costs |
45,799 |
|
39,364 |
|
Share based payment |
17,452 |
|
19,506 |
|
|
|
|
|
|
|
611,251 |
|
481,611 |
|
|
|
|
|
The remuneration of the highest paid Director included above was £119,000 (2008: £96,000).
The average monthly number of employees was as follows:
|
|
2009 No. |
|
2008 No. |
|
|
|
|
|
|
Administration (including Directors) |
10 |
|
12 |
|
|
|
|
|
The directors are considered to be the key management personnel. Directors' remuneration and fees comprises the whole of the compensation for these individuals. The directors hold no share options.
4. Operating (Loss)/Profit
The operating (loss)/profit is stated after charging:
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Depreciation of owned tangible fixed assets |
41,336 |
|
13,012 |
|
Staff costs (See note 3) |
611,251 |
|
481,611 |
|
Foreign currency loss |
22,531 |
|
7,411 |
|
Auditors remuneration |
|
|
|
|
- Audit of the parent company and consolidated financial statements |
16,251 |
|
13,500 |
|
- Audit of subsidiary company financial statements |
10,151 |
|
4,550 |
|
- Tax compliance services |
1,000 |
|
1,000 |
5. Finance Costs
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
|
|
|
|
|
|
2,481 |
|
1,310 |
6. Taxation
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Analysis of charge in the year: |
|
|
|
|
Current tax |
(45) |
|
9,242 |
|
|
|
|
|
The tax assessed for the year differs from the standard rate of corporation tax in the UK at 28%.The differences are explained below:
|
(Loss)/profit before tax |
(165,885) |
|
31,904 |
|
|
|
|
|
|
|
|
|
|
(Loss)/profit before tax multiplied by the standard rate of corporation tax in the UK of 28% |
(46,448) |
|
8,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax losses carried forward and disallowable items |
46,403 |
|
309 |
|
|
|
|
|
|
|
|
|
|
|
(45) |
|
9,242 |
|
|
|
|
|
|
|
||
The total amount of unused tax losses for which no deferred tax asset is recognised in the balance sheet is approximately £500,000 (2008 - £373,000).
7. Intangible Fixed Assets - Group
|
|
|
Goodwill |
||
|
|
£ |
|
||
|
Cost At 1 January 2008 Additions Translation difference |
1,737,158 17,432 728,131 |
|
||
|
At 31 December 2008 |
2,482,721 |
|
||
|
Translation difference |
(170,452) |
|
||
|
At 31 December 2009 |
2,312,269 |
|
||
|
|
|
|
||
Impairment tests of goodwill
No impairment losses in respect of goodwill have been recognised in 2009 or 2008. An annual goodwill impairment review is performed as at 31 December. This review compares the carrying value of goodwill with the present value of future cash flows arising from TSE Consulting SA, the Swiss subsidiary and main operating unit. If the present value is less than the carrying value of the goodwill, an impairment loss is recognised immediately in the income statement.
Key assumptions used in the value in use calculations are as follows:
Cash flow projections are derived from financial plans approved by the Board and cover a twelve month period. They reflect management's expectations of revenue growth, operating cost and margin for TSE Consulting SA based on past experience.
A post-tax discount rate of 10% to 15% has been applied to cash flow projections reflecting management's view that this range of discount rates are suitable for the year.
8. Property, Plant and Equipment - Group
|
|
Office Furniture and machinery |
|
IT Equipment |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
Cost At 1 January 2008 Translation difference Additions |
28,937 11,872 19,471 |
|
11,723 4,809 8,700 |
|
40,660 16,681 28,171 |
|
At 31 December 2008 |
60,280 |
|
25,232 |
|
85,512 |
|
Translation difference Additions |
(4,106) 51,361 |
|
(1,718) 9,284 |
|
(5,824) 60,645 |
|
At 31 December 2009 |
107,535 |
|
32,798 |
|
140,333 |
|
Depreciation At 1 January 2008 Translation difference Charge for the year |
11,428 6,182 5,296 |
|
10,278 6,393 7,716 |
|
21,706 12,575 13,012 |
|
At 31 December 2008 |
22,906 |
|
24,387 |
|
47,293 |
|
Translation difference Charge for the year |
(1,559) 37,453 |
|
(1,662) 3,883 |
|
(3,221) 41,336 |
|
At 31 December 2009 |
58,800 |
|
26,608 |
|
85,408 |
|
|
|
|
|
|
|
|
Net Book Value At 31 December 2008 |
37,374 |
|
845 |
|
38,219 |
|
At 31 December 2009 |
48,735 |
|
6,190 |
|
54,925 |
9. Trade and other Receivables - Group
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Trade debtors: Gross Less: provision for bad debts |
633,613 (199,382) |
|
528,608 (52,879) |
|
|
434,231 |
|
475,729 |
|
Other debtors |
5,661 |
|
53,971 |
|
Prepayments and accrued income |
1,642 |
|
22,760 |
|
|
441,534 |
|
552,460 |
|
|
|
|
|
10. Trade and Other Payables - Group
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Trade creditors Taxes and social security costs Other creditors Accrued expenses |
196,907 1,564 15,004 158,140 |
|
151,267 - 243,460 - |
|
|
371,615 |
|
394,727 |
|
|
|
|
|
|
|
|
|
|
Trade and other creditors principally comprise amounts outstanding for trade purchases and on-going costs. The Directors
11. Provision for Liabilities & Charges - Group & Company
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Provision for claim for breach of contract (see below):
Balance brought forward at 1 January 2009 Legal charges incurred in year Provision released in year
|
- - - |
|
35,114 (12,910) (22,204) |
|
Balance carried forward at 31 December 2009 |
- |
|
- |
In 2007 a provision was made to allow for a potential claim for breach of contract relating to J E Farmer, a former director of the company. In 2008 the provision wasreleased after Mr Farmer withdrew his request for a hearing.
12. Share Capital
|
|
2009 |
|
2008 |
|
|
£ |
|
£ |
|
Authorised: |
|
|
|
|
1,352,000,000 Ordinary shares of 0.1p each |
1,352,000 |
|
1,352,000 |
|
72,000,000 Deferred shares of 0.9p each |
648,000 |
|
648,000 |
|
|
|
|
|
|
|
2,000,000 |
|
2,000,000 |
|
|
|
|
|
|
Allotted, called up & fully paid: |
|
|
|
|
809,600,000 Ordinary shares of 0.1p each |
809,600 |
|
809,600 |
|
72,000,000 Deferred shares of 0.9p each |
648,000 |
|
648,000 |
|
|
|
|
|
|
|
1,457,600 |
|
1,457,600 |
|
|
|
|
|
Deferred Shares
The special rights, privileges, restrictions and limitations attached to the Deferred shares are as follows:
a) A holder of Deferred shares shall have no right to receive notice of or to attend or vote at any General meeting of the company.
b) A holder of Deferred shares shall have no right to receive any dividend or distribution
c) A holder of Deferred shares shall on a return of capital in a liquidation, but not otherwise, be entitled to receive only the amount credited as paid up on each share but only after the holder of each Ordinary share shall have received the amount paid up or credited as paid up on such share, together with a payment of 0.1 pence per share but the holders of Deferred shares shall not be entitled to any further participation in the assets or profits of the Company.
Warrants
Neil McClure, a former Director of the Company, holds 8,800,000 Warrants. Each Warrant entitles Neil McClure to receive, upon exercise of the Warrants, one Ordinary Share at an exercise price of 0.1p per Ordinary Share. These warrants have expired since the year end.
Beaumont Cornish Limited currently holds 7,500,000 Warrants. Each Warrant entitles Beaumont Cornish to receive, upon exercise of the Warrants, one Ordinary Share at an exercise price of 0.85p per Ordinary Share. The Warrants may be exercised at anytime before the expiry of a five year period from the date of grant.
13. (Loss)/Earnings per Share
The basic earnings per share is calculated by dividing the profit for the financial year attributable to shareholders by the weighted average number of shares in issue.
|
|
2009 |
|
2008 |
|
|
Number |
|
Number |
|
Weighted average number of shares (ordinary) |
809,600,000 |
|
645,685,714 |
|
Weighted average number of shares (dilutive) |
809,600,000 |
|
682,985,714 |
|
|
|
|
|
|
|
|
|
|
|
|
£ |
|
£ |
|
(Loss)/profit for the year |
(165,840) |
|
22,662 |
|
Basic (loss)/earnings per share |
(0.002p) |
|
0.004p |
|
Diluted (loss)/earnings per share |
(0.002p) |
|
0.003p |
|
|
|
|
|
In the current year the basic and diluted loss per share is the same, as the exercise of share options and warrants would increase the loss per share and is therefore, anti-dilutive. Details of the options and warrants which are outstanding and potentially dilutive are given in note 19.
14. Share Based Payments
As at 31 December 2009, the following share options and warrants were outstanding over the ordinary shares of the Company.
|
|
Date of grant |
Vesting date |
Expiry date |
Balance at 31 December 2009 Number |
Exercise price Pence |
Fair value of option at grant date Pence |
|
Warrants |
|
|
|
|
|
|
|
2007 Warrants |
28/02/07 |
28/02/07 |
28/02/10 |
8,800,000 |
0.10p |
0.0p |
|
2007 Warrants |
26/07/07 |
26/07/07 |
26/07/12 |
7,500,000 |
0.85p |
0.0p |
|
Total warrants outstanding |
|
16,300,000 |
|
|
||
|
Share option scheme: |
|
|
|
|
||
|
2007 Options |
21/08/07 |
21/08/09 |
21/08/17 |
4,500,000 |
1.00p |
0.325p |
|
2009 Options |
18/02/09 |
18/02/11 |
18/02/14 |
26,000,000 |
0.23p |
0.735p |
|
Total share options outstanding |
|
30,500,000 |
|
|
||
|
Total equity instruments outstanding |
|
46,800,000 |
|
|
||
In February 2009, the Company cancelled the existing options held by certain key employees over 16.5 million shares at an exercise price of 1p per Ordinary Share which had been previously awarded in 2007. At the same time, the Company awarded in aggregate options over 26 million New Ordinary Shares to key employees of its wholly owned subsidiary, TSE Consulting SA, in accordance with the terms of the Company's share option scheme. The options will vest on 18 February 2011 and must be exercised on or before 18 February 2014 at an exercise price of 0.23p per ordinary share.
The exercise price of the warrants is the lowest average closing price for a preceding quarter or the current exercise price, whichever is the lower.
The fair value of share options and warrants at grant date has been determined using the Black-Scholes formula. The assumptions and other inputs used in the models in respect of share options issued during the year were as follows:
|
|
Share option scheme 2007 |
Share option scheme 2009 |
|
Share price on date of grant |
0.395p |
0.20p |
|
Exercise price |
1.00p |
0.23p |
|
Expected volatility |
30% |
30% |
|
Expected dividends |
Nil |
Nil |
|
Option life |
3 years |
5 years |
|
Risk free interest rate |
5.0% |
5.0% |
At the dates of issue of shares under the various share option schemes, there was insufficient historical data to calculate a reliable estimate of expected share volatility in respect of the Company itself and accordingly expected volatility has been based on the average volatility of a range of similar UK listed companies operating in similar markets.
The following tables reconcile the outstanding warrants and share options granted under the employee share option schemes at the beginning and end of the financial year.
|
|
Number 2009 |
Weighted average exercise price 2009 |
Number 2008 |
Weighted average exercise price 2008 |
|
Balance at beginning of the financial year |
37,300,000 |
0.76p |
37,300,000 |
0.76p |
|
Granted during the year |
32,000,000 |
0.23p |
- |
- |
|
Cancelled |
(22,500,000) |
0.79p |
- |
- |
|
Balance at end of the financial year |
46,800,000 |
0.38p |
37,300,000 |
0.76p |
|
Exercisable at end of the financial year |
20,800,000 |
0.56p |
16,300,000 |
0.45p |
No warrants were exercised during the year and 8,800,000 unexercised warrants expired since the year end.
End
Related Shares:
PTCM.L