30th Jan 2006 07:00
First Artist Corporation plcUnder embargo to 0700hrs Monday 30th January 2006 First Artist Corporation plc Preliminary Results for the year ended 31 October 2005 First Artist Corporation plc (AIM:FAN), the acquisitive sports andentertainment group , today announces its preliminary results for the yearended 31st October 2005.KEY POINTS * Turnover up 47% to ‚£5,861,000 * Operating profit (before exceptional administrative expenses and goodwill impairment) up ‚£1,018,000 to ‚£1,054,000 * Retained profit up ‚£836,000 to ‚£510,000 * EPS before taxation, amortisation of goodwill and exceptional costs up 0.95p to 1.25p * Consolidated net assets up more than threefold to ‚£3,306,000 * Successful completion of 3 acquisitions and subsequent integration, which have strengthened the representation division and extended the range of services that we offer into new business areas: Team Sports Management Limited - Player representation businessABG Financial Management Limited - Independent FSA registered wealth managementbusinessThe Finishing Touch (corporate events) Limited - Corporate Events andConference ManagementJarvis Astaire, non-executive Chairman of First Artist Corporation plc,commented:"The past 12 months have seen us reap the benefits of a successfulrepositioning of the Group to function as a truly integrated service for allaspects of sports and celebrity representation and event management¢â‚¬¦. Ourbroad-based business, organised across four divisions, gives us a strongposition for growth through international expansion, and the cross referral ofincome and new business opportunities."For further information please contact:First Artist Corporation PLC 020 8900 1818Jon Smith, Chief ExecutiveRichard Hughes, Finance DirectorShore Capital 020 7408 4090Alex Borrelligth media relationsToby Hall/Jade Mamarbachi Tel: + 44 (0) 20 7153 8039/8035CHAIRMAN'S STATEMENTIt gives me great pleasure to introduce our results and operating review for2005, a year which has had a transforming effect on First Artist Corporation'sbusiness. The past 12 months have seen us reap the benefits of a successfulrepositioning of the Group to function as a truly integrated service for allaspects of sports and celebrity representation and event management. Thefigures for all four of our divisions reflect the mutual benefits that they aregaining from this strategy.I wish to thank my predecessor as chairman, Tim Chadwick, whom I look forwardto working with in his new capacity as Vice-Chairman, for his excellent work onthe ABG Financial Management Limited ("ABGFM") and The Finishing Touch Limitedacquisitions.Both these acquisitions, together with the similarly acquired Team SportsManagement have now been successfully integrated into the Group and, with theirhighly respected management teams continuing on board, are already deliveringsignificant revenue.Broader income: fuller serviceOur broad-based business, organised across four divisions, gives us a strongposition for growth through international expansion, and the cross referral ofincome and new business opportunities. Whilst building on the reputation thatFirst Artist Management enjoys as one of the world's leading footballmanagement groups, we have successfully reduced the dependence of the Group onthis one sport by two-thirds whilst broadening both our income base and therange of services that we offer to clients.There are considerable opportunities for cross referral of business andsubstantial new business opportunities within our new structure. The wealthmanagement division created through the ABGFM acquisition allows us to formdeeper and more valuable relationships with the players and media figuresserved through First Artist Management and First Artist Entertainment; theevent management business of Finishing Touch gives us exposure to Public Sectorcontracts and the opportunity to leverage our position as a FIFA and UEFAlicensee, as well as a further outlet for our growing roster of entertainmentclients.Corporate governanceWe believe in good corporate governance, and a clear division of roles andresponsibilities on the Group Board. Due to the Group now having twoNon-Executive directors, our finance director, Richard Hughes, is now free tostep down from our committees. Tim Chadwick will continue as Non-ExecutiveVice-Chairman of the First Artist Corporation, focusing on relations with thefinancial and investor community.Our responsibilities as a businessIntegrity and credibility are vital commodities in our business. We prideourselves on the transparency of our relationships with players, clubs andmedia personalities, and First Artist Management has been a prime mover in thecreation of the Football Agents Federation, which establishes guidelines forthe conduct of agents. We make efforts in this area because of our commitmentto sport.In summary, I recommend our results to you as evidence that our year ofsignificant change and growth has created a company with a broader income base,strongly positioned for expansion, and with a uniquely integrated, excitingoffer in the marketplace. We expect all four divisions to continue theirsuccess in 2006, whilst we look to expand our successful model to new marketsoverseas.I would like to thank all those involved in the restructuring of this group andthank the Board for its commitment in turning around a group in what remains adifficult environment.Jarvis AstaireChairman27 January 2006CHIEF EXECUTIVE'S STATEMENTIn the last year we have completed the reshaping of First Artist Corporation'sbusiness following the turmoil created by the 2002 collapses of ITV Digital inthe UK and Bertelsmann in Europe, coupled with the EU reforms of the footballplayer contracts and the advent of `trading windows'. At that time our businesswas almost entirely focused on football player representation, and this left usexposed to the disappearance of vast amounts of television money from the game.We resisted the temptation to take the company back into private ownershipbecause we felt a strong moral obligation to our shareholders. We also firmlybelieved in and started to implement a strategy for leveraging our globalreputation in football to create a broader personality, event and wealthmanagement company with powerful synergies and a stable income base.Fast-forward to year-end 2005 and the value of this strategy has been clearlydemonstrated. Our acquisition programme has diluted our dependency on footballby approximately two thirds and created a profitable, omni-functional plc witha strong basis for growth. Our four divisions complement one another perfectly:the financial management business is a second heartbeat to our businesses ofsports and entertainment representation, allowing us to offer valuable newservices to our clients; event management provides a second income line withgood synergies to our traditional business and exciting opportunities whichwill benefit from our previous experience as one of the UK's leading eventpromoters during the nineties.Each division benefits from a strong management team, with the founders of ourwealth management business, ABG Financial Management, and our event managementbusiness, The Finishing Touch, remaining in full-time management roles. Thesuccess of this integration shows in our results across the Group, and I wouldlike to thank all employees for the tremendously positive way in which theyhave dealt with the changes of the last few years.2005 performance and outlookOur traditional business of player representation has enjoyed its mostsuccessful year for several years, with First Artist Management almost treblingits operating profit to ‚£1.26 million although the market continues to bedifficult and unpredictable. The successful integration of Team SportsManagement has added stability to our London operation and increased ouralready wealthy bank of contacts and experience through the involvement of MelStein, whose contribution has proven invaluable. Our Italian playerrepresentation business, PromoSport has reaped the benefits of its own recentrestructuring and our developing affiliations in Germany and Spain are furtherincreasing our operational reach in Europe.First Artist Entertainment has developed from a standing start to a six-figurebusiness in two years of strong organic growth and I must pay credit toCorrinne Goodall who heads this division. It has built on the increasingoverlap between sports, celebrity and light entertainment to develop a clientroster including Andy Gray, Martin Tyler, Dennis Taylor and Suzanne Shaw. Thesuccessful development by Matthew Fisher of the speaker agency within thisdivision has provided further opportunities for our growing portfolio oftalent, which complements well with The Finishing Touch.ABG Financial Management has delivered an operating profit of ‚£214,000 sinceits acquisition by the Group, demonstrating the vitality of the business whilstbroadening the services available to clients of First Artist Management andFirst Artist Entertainment. The changes to pension legislation that will beintroduced on 6 April 2006, `A Day', have boosted the value of high-qualityinvestment advice and should continue to add to the appeal of the wealthmanagement service going forward. There is also strong potential for expansionalongside First Artist Management and PromoSport in Europe, where the financialadvice industry is less developed and UK-based investments are highly valued.The Finishing Touch demonstrated the potential of event management with a ‚£76,000 profit since its acquisition by the Group. Increased margins overChristmas demonstrated rising demand following several years of cutbacks inevents budgets. Long-term contracts with Accenture and the public sector'seducation training programme have provided a stable income stream for thebusiness, and there are opportunities to gain further Public Sector business in2006.Ongoing strategyOur Group continues to be second half focussed although the recent acquisitionswill reduce this emphasis. Our acquisition programme will advance over the next12 months as we continue to secure opportunities in all four of our strategicsectors, where we can introduce genuinely complementary skills to our existingportfolio, further broaden the business base of the group and reduce historicalvolatility.Further developing our entertainment capability is a particular priority. Thisis an area that offers significant crossover to our player management business,as the organic growth of First Artist Entertainment over the last two yearsshows. This is a business we should be in and know well, with both Phil Smithand myself having successful roots in this industry sector. It will definitelybe targeted in the ongoing acquisition programme. The integration of ABGFinancial Management, with its extensive list of music, media and entertainmentclients, should greatly accelerate the development process.Genuine integration has been the secret of our success in 2005 and it willcontinue to underpin our business going forward. Moving The Finishing Touch toFirst Artist's freehold Wembley offices in early 2006 will give us theopportunity to exploit the synergies between events and our entertainmentrepresentation business, as well as the potential for leveraging our status asa FIFA and UEFA licensee, and the matches and tours that this allows us toorganise. The Group's close proximity to Wembley Stadium we believe will alsoopen opportunities for development in the coming years. It is also worth notingthe substantial capital appreciation of our freehold property as its neighbournears completion.I am equally delighted to welcome our new Non-Executive Chairman, JarvisAstaire, who has extensive experience and stature within the industry and withwhom I have previously worked closely, having successfully staged NFL, NHL andNBA UK events in the 1980s and 90s. I am just as delighted that hispredecessor, Tim Chadwick, will be continuing his excellent work with thefinancial and investor community as Non-Executive Vice-Chairman.Global expansionJarvis' arrival signals a new phase in the development of First ArtistCorporation, as we look to export our successful, full-service model to newmarkets. Our key challenge going forward is to maintain our pivotal position inthe global football market and to manage the issues that will face thatindustry in the next few years. Jarvis will help us to develop our profile on aglobal basis, as we aim to replicate our successes in the UK, Europe, US andMiddle East. Our increasing global profile will also increase our potential tooffer representation in other sports.Finally, I would like to extend my personal thanks to my fellow Board membersfor their determination shown in turning First Artist into a vibrant andexciting sports and entertainment group. To Phil Smith and Vincenzo Morabitofor producing remarkable figures in a difficult market - "probably the bestAgents in the World" and to our finance director, Richard Hughes, whose skillin the acquisition market, coupled with his strong financial management hasbeen so vital in the turnaround of the Group.Jon SmithChief Executive Officer27 January 2005CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 OCTOBER 2005 Continuing Acquisitions Discontinued Total Year Year ended Operations Operations ended 31 31 Year ended Year ended October Year ended 31 October October 31 October 2005 2004 31 October 2005 2005 ‚£000 ‚£000 2005 ‚£000 ‚£000 ‚£000 TURNOVER 4,385 1,449 27 5,861 3,975 Cost of sales (602) (723) - (1,325) (1,143) GROSS PROFIT 3,783 726 27 4,536 2,832 Administrative (3,007) (436) (39) (3,482) (2,796)expenses Profit/(loss) before 776 290 (12) 1,054 36 exceptional administrative expenses Exceptional (22) - (139) (161) (391)administrative expenses OPERATING PROFIT/ 754 290 (151) 893 (355)(LOSS) before goodwill amortisation Administrative (43) - - (43) (92)expenses - goodwill impairment and amortisation TOTAL OPERATING PROFIT 711 290 (151) 850 (447)/(LOSS) Investment income 11 8 Interest payable (52) (54) PROFIT/(LOSS) ON 809 (493)ORDINARY ACTIVITIES BEFORE TAXATION Taxation (299) 167 PROFIT/(LOSS) ON 510 (326)ORDINARY ACTIVITIES AFTER TAXATION Dividends - - RETAINED PROFIT/(LOSS) 510 (326)FOR THE YEAR EARNINGS/(LOSS) PER 0.89 (0.63)SHARE pence pence Basic earnings/(loss) per share Fully diluted earnings 0.88 (0.62)/(loss) per share pence pence Basic earnings/(loss) 1.25 0.30 per share before goodwill amortisation pence pence and exceptional costs Fully diluted earnings 1.23 0.30 /(loss) per share before goodwill pence pence amortisation and exceptional costs CONSOLIDATED BALANCE SHEETAS AT 31 OCTOBER 2005 2005 2004 ‚£000 ‚£000 FIXED ASSETS Intangible assets 5,295 - Tangible assets 719 755 6,014 755 CURRENT ASSETS Debtors 4,746 2,243 Cash at bank and in hand 1,527 310 6,273 2,553 CREDITORS: Amounts falling due within one year (6,173) (2,133) NET CURRENT ASSETS 100 420 TOTAL ASSETS LESS CURRENT LIABILITIES 6,114 1,175 CREDITORS: Amounts falling due after more than (2,808) (98)one year NET ASSETS 3,306 1,077 CAPITAL AND RESERVES Called up share capital 224 120 Capital redemption Reserve 15 15 Share premium account 7,888 6,217 Profit and loss account (4,821) (5,275) EQUITY SHAREHOLDERS' FUNDS 3,306 1,077 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 OCTOBER 2005 Year ended Year ended 31 October 31 October 2004 2005 ‚£000 ‚£000 Cash (outflow) / inflow from operating (12) 313activities Returns on investments and servicing of finance (35) (46) Taxation (4) 87 Capital expenditure and financial investment (3) 22 Acquisitions and disposals (2,083) (92) CASH (OUTFLOW)/INFLOW BEFORE FINANCING (2,137) 284 Financing 3,095 7 INCREASE IN CASH IN THE PERIOD 958 291 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Year ended Year ended 31 October 31 October 2004 2005 ‚£000 ‚£000 Increase in cash in the period 958 291 Cash from increase in debt financing (1,412) (7) New finance leases - (32) Deferred consideration on acquisition of (2,666) - subsidiaries (3,120) 252 NET DEBT AT 1 NOVEMBER 2004 (151) (403) NET DEBT AT 31 OCTOBER 2005 (3,271) (151) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 31 OCTOBER 2005 Year ended Year ended 31 October 31 October 2004 2005 ‚£000 ‚£000 Profit/(loss) for the financial period 510 (326) Currency translation differences on net (56) (73) foreign currency investments Total recognised gains and losses relating to 454 (399)the period NOTES1. BASIS OF ACCOUNTINGThe financial information contained in this report does not constitutestatutory accounts within the meaning of Section 240 of the Companies act 1985.The financial information contained in this report has been extracted from theaudited accounts of the Company for the year to 31st October 2005 for which theauditors have given an unqualified report.2. TAXATION 2005 2004 ‚£000 ‚£000 Current tax: UK corporation tax charge/(credit) on 106 -profits/(losses) of the period Foreign taxes 118 (91) Adjustments in respect of previous periods - (56) Current tax (credit)/charge for the period 224 (147) Deferred taxation: Origination and reversal of timing 75 (20)differences Tax charge/(credit) on profit on ordinary 299 (167)activities 3. EARNINGS PER SHAREThe calculation of earnings per share are based on the following profits andnumber of shares: Basic and Basic and Diluted Diluted 2005 2004 ‚£000 ‚£000 Profit/(loss) on ordinary activities 510 (326) after taxation Before goodwill amortisation and exceptional costs: Profit/(loss) on ordinary activities 510 (326) after taxation Amortisation and impairment of goodwill 43 92 Exceptional administrative expenses 161 391 714 157 2005 2004 No of Shares No of Shares For basic earnings per share 57,034,181 51,784,044 Exercise of share options 1,005,773 112,883 For diluted earnings per share 58,039,954 51,896,927 4. RESERVES AND RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Share Capital Share Profit and Total capital redemption premium loss account shareholders' Reserve ‚£000 ‚£000 ‚£000 Funds ‚£000 ‚£000 GROUP 1 November 2004 120 15 6,217 (5,275) 1,077 Retained profit for the - - - 510 510 financial period Shares issued to acquire 6 - 129 - 135 subsidiary undertakings Shares issued 98 - 1,903 - 2,001 Issue costs - - (361) - (361) Exchange adjustments - - - (56) (56) 31 October 2005 224 15 7,888 (4,821) 3,306 Share Capital Share Profit and Total capital redemption premium loss account shareholders' Reserve ‚£000 ‚£000 ‚£000 Funds ‚£000 ‚£000 COMPANY 1 November 2004 120 15 6,217 (5,149) 1,203 Retained profit/(loss) for - - - (283) (283)the financial period Shares issued to acquire 6 - 129 - 135 subsidiary undertakings Shares issued 98 - 1,903 - 2,001 Issue costs - - (361) - (361) 31 October 2005 224 15 7,888 (5,432) 2,695 5. CASH FLOWS 2005 2004 ‚£000 ‚£000 Reconciliation of operating profit to net cash (outflow) / inflow from operating activities Operating profit 850 (447) Depreciation 65 67 Amortisation of goodwill 43 92 Profit/(loss) on disposals of fixed assets 5 (1) (Increase)/decrease in debtors (1,608) 1,208 Increase/(decrease) in creditors 689 (533) Exchange differences (56) (73) Net cash (outflow) / inflow from operating (12) 313 activities 6. ANNUAL REPORTCopies of the Annual Report and Financial Statements will be circulated toShareholders shortly and may be obtained after the posting date from theCompany Secretary, First Artist Corporation plc, First Artist House, 87 WembleyHill Road, Middlesex, HA9 8BU, or from the Companies Websitewww.firstartist.comENDFIRST ARTIST CORPORATION PLCRelated Shares:
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