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Hawkwing PLC Interim Results

26/09/2019 11:00am

UK Regulatory (RNS & others)


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Hawkwing PLC

26 September 2019

26 September 2019

Hawkwing plc

("Hawkwing", the "Company" or the "Group")

Unaudited interim results for the six months ended 30 June 2019

Hawkwing plc (AIM: HNG), formerly TLA Worldwide Plc, announces its interim results for the six months ended 30 June 2019.

Financial Highlights

Headline figures

   --    Revenue decline of 55.2% to $10.6 million (H1 2018: $23.6 million) 
   --    Operating income(1) of $6.0 million (H1 2018: $15.2 million) 

-- Headline EBITDA(2) of $0.03 million (H1 2018: $(1.2) million)

-- Headline Loss Before Tax(3) of $0.2 million (H1 2018: $2.3 million)

-- Headline Diluted Loss Per Share(4) of 0.23 cents (H1 2018: 1.52 cents)

-- Sports Marketing Headline EBITDA of $0.5 million (H1 2018: $1.0 million)

-- Cash balances of $2.3 million (H1 2018: $4.5 million)

-- Pro forma net assets following post period end disposal of the business GBP514,000

Statutory figures

   --     Operating loss from continuing operations of $0.7 million (H1 2018 loss: $2.8 million) 
   --     Loss before tax of $0.7 million (H1 2018 loss: $2.8 million) 
   --     Loss per share from continuing operations of $0.52 cents (H1 2018 loss: $1.98 cents) 
   --     Earnings per share from discontinued operations of $0.07 cents (H1 2018 loss: $0.40 cents) 
   --     Net debt as at 30 June 2019 was $20.2 million (H1 2018: $21.2 million) 

Post Period

Hawkwing sold its Australian business on 5 September to QMS Sport Holding Limited, a subsidiary of QMS Media Limited, which is quoted on the ASX.

Keith Sadler, Interim Non-Executive Chairman, commented: "In the first half of the year, our focus was on progressing the disposal of the Australian business and we are pleased to have completed the disposal in September 2019. Following completion of the sale, we changed our name to Hawkwing plc and became an AIM Rule 15 Cash Shell.

"The Group's strategy is to pursue an acquisition and we intend to identify a business with the prospects of being profitable and cash generative. We have started the process of identifying such a business and look forward to updating the market as appropriate. On behalf of the board, I would like to thank all our shareholders for their continued support."

1 Operating income is equal to gross profit in the segmental analysis income statement.

2 Headline EBITDA is defined as statutory operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any acquisition related charges, and exceptional items.

3 Headline EBITDA after bank interest and depreciation.

4 Headline earnings per share is defined as headline profit for the period divided by the weighted average number of ordinary shares in issue during the period.

Enquiries:

 
 Hawkwing plc 
 Keith Sadler Interim Non-Executive 
  Chairman                                  +44 20 7618 9100 
                                           ----------------- 
 
 Beaumont Cornish 
 Roland Cornish and James Biddle (Nomad)    +44 20 7628 3396 
                                           ----------------- 
 Christopher Wilkinson 
                                           ----------------- 
 
 Luther Pendragon 
 Harry Chathli, Alexis Gore                 +44 20 7618 9100 
                                           ----------------- 
 

About Hawkwing plc

Hawkwing is an AIM Rule 15 Cash Shell. It intends to pursue a reverse takeover transaction, subject to shareholder approval, with the aim of delivering shareholder value. The board intends to seek a business with the prospects of being profitable and cash generative. For more information, please visit www.hawkwing.co

Overview

The performance for the six months ended 30 June 2019 represents the Group's Australian business and some residual income from the events activities. The latter was formally closed down in November 2018 and the former was put up for sale in December when the Group announced the sale of its US business, which was concluded on 28 December 2018.

Post the period end, on 5 September 2019 the Australian business was sold to QMS Sport Holdings Limited, a subsidiary of QMS Media Limited, which is quoted on the ASX. This disposal was required under the forbearance agreed with the Group's bank. With this disposal, the Group's debts were repaid, and any outstanding balance forgiven by the Group's bank. This leaves Hawkwing without any bank debt and minimal creditors. As set out in the recent circular, the proforma balance sheet (in GBP, which is the currency of Hawkwing) after the sale of Australia is as follows:

 
                                      As at 30    Proceeds   Proforma 
                                     June 2019    from the 
                                                  Proposed 
                                                      Sale 
                                   -----------  ----------  --------- 
                                      GBP000's    GBP000's   GBP000's 
 
 Current assets 
 Trade and other receivables                72           -         72 
 Cash and cash equivalents                 105         511        616 
                                   -----------  ----------  --------- 
 
   Total assets                            177         511        688 
 
 Current liabilities 
 Trade and other payables                  174           -        174 
 
   Total current liabilities               174           -        174 
 
 
   Net assets                                3         511        514 
                                   ===========  ==========  ========= 
 
 
   Equity 
 Share capital                           2,869           -      2,869 
 Share premium                          29,899           -     29,899 
 Retained loss                        (32,765)         511   (32,254) 
                                   -----------  ----------  --------- 
 
   Equity attributable to owners 
   of the company                            3         511        514 
                                   ===========  ==========  ========= 
 

Following completion of the disposal, the Company is now an AIM Rule 15 cash shell. As such, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules on or before the date falling six months from completion or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least GBP6 million) failing which, its ordinary shares would then be suspended from trading on AIM pursuant to Rule 40 of the AIM Rules. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified. The board has begun the process of seeking suitable acquisitions and will update the market as necessary. During this period the board will seek to conserve cash resources.

The performance of the Group has been split into continuing (Hawkwing) and discontinued (the Australian and Events businesses) performance.

Group Headline results

 
 For the six-month             Continuing   Discontinued       2019      2018 
  period to 30 June            operations     operations                            Change 
                                                             $000's    $000's 
---------------------------  ------------  -------------  ---------  --------  ----------- 
 
 Revenue                                -         10,573     10,573    23,598        55.2% 
 
 Operating income                       -          6,073      6,073    15,206      (60.1)% 
 
 Headline EBITDA                    (524)            527          3   (1,203)       100.2% 
 
 Headline EBITDA margin(1)              -           8.7%      0.05%    (7.9)%       7.95pp 
 Headline (loss)/profit 
  before tax(2)                     (524)            304      (220)   (2,258)      (90.3)% 
 Headline loss per 
  share (cents)                                              (0.23)    (1.52)   1.29 cents 
 
 Group statutory results 
 For the six-month                                             2019      2018 
  period to 30 June                                                                 Change 
                                                             $000's    $000's 
 
 Revenue - discontinued                                      10,573    23,598        55.2% 
 Operating loss - 
  continuing                                                  (749)   (2,760)        72.9% 
 Loss before tax - 
  continuing                                                  (749)   (2,760)        72.9% 
 Profit from discontinued 
  operations                                                    100       577      (82.7)% 
 Loss after tax                                               (649)   (2,259)        71.3% 
 Loss per share (cents) 
  - continuing                                               (0.52)    (1.98)   1.46 cents 
 Loss per share (cents)                                                             (0.33) 
  - discontinued                                               0.07      0.40        cents 
 

1 Headline EBITDA divided by operating income

2 Headline EBITDA after bank interest and depreciation

Group operating income decreased by 60.1% to $6.0 million (H1 2018: $15.2 million).

The statutory operating loss is after charges relating to amortisation of intangibles of $0.1 million (2018: $0.4 million).

Sports Marketing

 
 For the six-month period to      2019     2018         % 
  30 June 
                                  $000     $000    Change 
                               -------  -------  -------- 
 Revenue                        10,573   17,051   (38.0)% 
 Operating income                6,037    9,202   (34.4)% 
 Headline EBITDA                   527      964   (45.3)% 
 Headline EBITDA Margin           8.7%    10.5%    (1.8)% 
 Operating profit                  178      727   (75.5)% 
 

The fall in revenue, operating income and EBITDA reflects the sale of the Group's US businesses on 28 December 2018 and no events, as the business was closed in November 2018.

Baseball Representation

 
 For the six-month period to 30    2019    2018        % 
  June 
                                   $000    $000   Change 
                                  -----  ------  ------- 
 Revenue                              -   6,547      - % 
 Operating income                     -   6,004      - % 
 Headline EBITDA                      -      13      - % 
 Headline EBITDA margin               -    0.2%     - pp 
 Operating profit                     -     723      - % 
 

Baseball was sold on 28 December 2018

Cash flow and net debt

The Group cash balances as at 30 June were $2.3 million (H1 2018: $4.5 million).

The Group's net debt was $20.2 million as at 30 June 2019 (H1 2018: $21.2 million). The Group expects net debt for the 2019 full year to be in the range of $25 million - $28 million.

Following the sale of the Australian business on 5 September 2019, the Group's debt has been repaid and forgiven by its bank and the Group is debt free.

Dividend

The Directors are precluded from declaring an interim dividend for the six months ended 30 June 2019. The Directors will continue to review the Group's dividend policy.

Current trading and outlook

Hawkwing is now an AIM cash shell and the board, as stated previously, is seeking potential businesses that could be reversed into the Company. The board intend to identify a business with the prospects of being profitable and cash generative. The process of identifying such a business has started and the board look forward to updating the market as appropriate.

Condensed Consolidated Income statement (unaudited)

For the six month period to 30 June 2019

 
                                                      6 month   6 month period 
                                                    period to       to 30 June 
                                                      30 June             2018 
                                                         2019 
                                                       $000's           $000's 
 Continuing operations 
 Administrative expenses                                (749)          (2,760) 
 Operating loss                                         (749)          (2,760) 
 
 Headline EBITDA (continuing and discontinued 
  operations)                                               3          (1,203) 
 
 Amortisation of intangibles                            (126)            (356) 
 Depreciation                                           (223)            (141) 
 Exceptional and acquisition related costs 
  (continuing) 3                                        (225)            (864) 
 Exceptional and acquisition related income 
  (discontinued) 3                                          -              817 
 Less: operating profit from discontinued 
  operations                                            (178)          (1,013) 
 
 Operating loss from continuing operations              (749)          (2,760) 
 
 
 Loss before taxation                                   (749)          (2,760) 
 Taxation 4                                                 -             (76) 
                                                  -----------  --------------- 
 Loss after taxation from continuing operations         (749)          (2,836) 
 Profit after taxation from discontinued 
  operations                                              100              577 
 
 Loss after taxation for the period                     (649)          (2,259) 
 
 
 
 

Loss for the year is entirely attributable to the owners of the parent company.

 
 (pe Loss per share from continuing operations attributable 
  to the owners of the parent company: 
 Basic (cents)                                                  2   (0.52)   (1.98) 
 Diluted (cents)                                                2   (0.52)   (1.98) 
 
 
 
 
 (pe Loss per share from discontinued operations attributable 
  to the owners of the parent company: 
 Basic (cents)                                                    2   0.07   0.40 
 Diluted (cents)                                                  2   0.07   0.40 
 
 
 
 
 (pe Loss per share from total operations attributable to 
  the owners of the parent company: 
 Basic (cents)                                                2   (0.45)   (1.58) 
 Diluted (cents)                                              2   (0.45)   (1.58) 
 
 
 

Condensed Consolidated Comprehensive Income (unaudited)

For the six-month period to 30 June 2019

 
 
                                                      6 month period to 30 June 2019    6 month period to 30 June 2018 
 
                                                                              $000's                            $000's 
 
Loss for the period                                                            (649)                           (2,259) 
 
Exchange differences on translation of overseas 
 operations                                                                     (87)                             (454) 
 
  Total comprehensive expense                                                  (736)                           (2,713) 
 
 
Continuing operations                                                          (926)                           (3,285) 
Discontinued operations                                                          190                               572 
 
Total comprehensive expense                                                    (736)                           (2,713) 
 
 

Total comprehensive expense for the period is entirely attributable to the owners of the parent company.

Condensed Consolidated Group Balance Sheet (unaudited)

 
 
                                                                            Note   30 June 2019   30 June 2018 
                                                                                         $000's         $000's 
                                                                                      Unaudited      Unaudited 
Non-current assets 
  Goodwill                                                                                    -         42,526 
Intangible assets                                                                             -            782 
Property, plant and equipment                                                                 -            427 
Deferred tax asset                                                                            -          7,808 
Derivative financial instruments                                                              -             65 
 
                                                                                              -         51,608 
 
Current assets 
Inventories                                                                                   -          1,013 
Trade and other receivables                                                               1,200         12,656 
Cash and cash equivalents                                                                   135          4,471 
 
                                                                                          1,335         18,140 
Assets of disposal group classified as held for sale                         6           25,879              - 
 
Total current assets                                                                     27,214         18,140 
 
Total assets                                                                             27,214         69,748 
 
 
Current liabilities 
Trade and other payables                                                                  (248)       (19,122) 
Borrowings                                                                   7         (22,465)        (4,168) 
Contingent consideration                                                     8                -        (7,877) 
 
                                                                                       (22,713)       (31,167) 
 
  Liabilities directly associated with assets classified as held for sale    9         (16,276)              - 
 
Net current liabilities                                                                (11,775)       (13,027) 
 
 
Non-current liabilities 
Borrowings                                                                   7                -       (21,457) 
  Contingent consideration                                                   8                -        (1,250) 
 
                                                                                              -       (22,707) 
 
Total liabilities                                                                      (38,989)       (53,874) 
 
 
Net (liabilities)/assets                                                               (11,775)         15,874 
 
 
Equity 
Share capital                                                                             4,473          4,473 
Share premium                                                                            46,079         46,079 
Merger reserve                                                                              309            309 
Foreign currency reserve                                                                (7,734)        (6,717) 
Retained loss                                                                          (54,902)       (28,270) 
 
Equity attributable to owners of the company                                           (11,775)         15,874 
 
 
 

Condensed Statement of Cash Flows (unaudited)

For the six-month period to 30 June 2019

 
 
                                                      6 month period to 30 June 2019    6 month period to 30 June 2018 
 
                                              Note                            $000's                            $000's 
                                                                           Unaudited                         Unaudited 
 
Net cash outflow from operating activities     10                              (536)                           (3,579) 
 
 
Investing activities 
 
Purchases of property, plant and equipment                                      (55)                              (24) 
 
Net cash used in investing activities                                           (55)                              (24) 
 
Financing activities 
 
           Interest paid                                                        (61)                             (914) 
Repayment of borrowings                                                            -                           (2,500) 
Lease repayments                                                               (107)                                 - 
 
Net cash outflow from financing activities                                     (168)                           (3,414) 
 
Net decrease in cash and cash equivalents                                      (759)                           (7,017) 
 
Cash and cash equivalents at beginning of 
 period                                                                        3,035                            11,630 
 
Foreign currency translation effect                                             (18)                             (142) 
 
 
Cash and cash equivalents at end of period                                     2,258                             4,471 
 
Cash and cash equivalents comprise: 
Continuing operations                                                            135                                53 
Disposal group classified as held for sale                                     2,123                             4,418 
 
Total cash and cash equivalents                                                2,258                             4,471 
 
 

Condensed Consolidated Statement of Changes in Equity (unaudited)

For the six-month period to 30 June 2019

 
                           Share      Share     Merger     Foreign    Retained       Total 
                         Capital    Premium    reserve    Currency        Loss 
                                                           Reserve 
                           $000s     $000's     $000's       $000s       $000s       $000s 
---------------------  ---------  ---------  ---------  ----------  ----------  ---------- 
 
 Balance as at 1 
  January 2018             4,473     46,079        309     (6,263)    (26,011)      18,587 
 Total comprehensive 
  income for period            -          -          -       (454)     (2,259)     (2,713) 
 Balance as at 30 
  June 2018                4,473     46,079        309     (6,717)    (28,270)      15,874 
                       =========  =========  =========  ==========  ==========  ========== 
 
 Balance as at 1 
  January 2019             4,473     46,079        309     (7,647)    (54,253)    (11,039) 
 Total comprehensive 
  income for period            -          -          -        (87)       (649)       (736) 
 Balance as at 30 
  June 2019                4,473     46,079        309     (7,734)    (54,902)    (11,775) 
                       =========  =========  =========  ==========  ==========  ========== 
 
 

Notes to the Interim Report

General information

Hawkwing plc (the "Company") is incorporated and domiciled in the United Kingdom. The Company is listed on the AIM market of the London Stock Exchange. The registered address is 25 Walbrook, London EC4N 8AF.

Basis of preparation

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements. While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

The reporting currency of the Group is US$, unless stated otherwise.

Going concern

The Group's results for 2019 and the net liabilities position at 30 June 2019 reflect the issues the Group has faced during the period and, following a strategic review of the business in September 2018, the US businesses were sold on 28 December 2018 and the decision has been made to also sell the Group's Australian business. The Group has now sold the Australian business to QMS Sport, the proceeds from which have facilitated settlement of the Group's bank borrowings. Following the sale and settlement of the borrowings the Company has become an AIM Cash Shell under AIM Rule 15. The board intends to seek a business that can be reversed into the Company. The Company has 12 months from the date of the sale of the Australian business to complete a reverse takeover, during which period the board intends to keep costs to a minimum in order to preserve cash. If it is not possible to complete a reverse takeover or should funds not be available to sustain the company during the foreseeable future, the going concern position of the Company would be at risk.

As a result of the sale of the Australian business the Board continues to adopt the going concern basis of accounting in preparing the financial statements.

Discontinued Operations

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Group Income Statement.

In accordance with 'IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations' comparative figures for the prior period have been restated in the Group Income Statement so that the discontinued operations disclosures relate to all operations that have been discontinued at 30 June 2019.

Application of new and amended standards

In the current period, the following standards and interpretations have been adopted which were effective for periods commencing on or after 1 January 2019:

IFRS 16 Leases

IFRIC 23 Uncertainty over Income Tax Treatments

Annual Improvements to IFRS Standards 2015-2017 Cycle

Amendments to IFRS 9: Prepayment Features with Negative Compensation

Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures

Amendments to IAS 19: Plan Amendment, Curtailment or Settlement

Except for the implementation of IFRS 16, the adoption of these standards has not had any impact on the financial statements.

Initial application of IFRS 16 'Leases' (IFRS 16) - effective 1 January 2019

On 1 January 2019, the group adopted IFRS 16 'Leases' (IFRS 16) for the first time. IFRS 16 replaces IAS 17 'Leases'. The main change on application of IFRS 16 is the accounting for 'operating leases' where rentals payable (as adjusted for lease incentives) were previously expensed under IAS 17 on a straight-line basis over the lease term.

Under IFRS 16 a right-of-use asset and a lease liability are recognised for all leases except 'low-value' and 'short' term leases where lease payments are recognised on a straight-line basis over the lease term.

At 1 January 2019 a right-of-use asset and corresponding lease liability of $1,680,219 has been recognised. The net impact on the income statement of additional depreciation and interest expense for the period ended 30 June 2019 in excess of the rental expense is $41,026.

The group has applied the modified retrospective approach on adoption of IFRS 16. There was no impact on opening reserves at 1 January 2019. The comparative figures are as previously reported under IAS 17. The group has used the following practical expedients in IFRS 16.

-- For all contracts that existed prior to 1 January 2019, the group has not applied IFRS 16 to reassess whether each contract is, or contains, a lease.

-- Single discount rates have been applied to portfolios of buildings, vessels and vehicles leases with similar characteristics.

-- The right-of-use assets have not been assessed for impairment at 1 January 2019 but have been reduced by the amount of any onerous lease provisions at that date.

   --      Initial direct costs have been excluded from the measurement of the right-of-use assets. 

-- Hindsight has been applied in determining the lease term for contracts that contain lease extension or termination options.

1. Segmental Analysis

The segmental analysis provided below presents full details of the Baseball Representation and Sports Marketing business segments activity which are classified as discontinued operations in the Group Income Statement. Consequently, the gross profit, operating loss and finance income/costs disclosed below do not directly correspond to the Group Income Statement.

Prior to the events giving rise to classification of the Group's principal activities as discontinued operations, the Group reported its business activities in two areas: Baseball Representation and Sports Marketing. Central costs represent the Group's costs as a public company, along with certain exceptional items and acquisition related costs.

In 2019 the Central costs represent the entirety of the Group's continuing operations. Central costs in the 2018 segmental analysis do not reflect the 2017 continuing operations as Central costs also included certain exceptional and other items of expenditure subsequently classified as discontinued in that period.

Sports Marketing - primarily assists with the on-field and off-field activities of athletes; it represents broadcasters and coaches in respect of their contract negotiations; manages, produces events, primarily in sports, PR and activation, media consultancy and the selling of merchandise, primarily in sport.

Baseball Representation - primarily assisted the on-field activities of baseball players, including all aspects of a player's contract negotiation.

In the six-month period ended 30 June 2019, no client generated in excess of 10 percent of total revenue.

 
 Six months to 30 June 2019                     Discontinued    Continuing 
                                                  operations    operations       Total 
 
                                            Sports Marketing       Central 
                                                      $000's        $000's      $000's 
 Revenue - discontinued                               10,573             -      10,573 
 Cost of sales - discontinued                        (4,536)             -     (4,536) 
 Gross profit - discontinued                           6,037             -       6,037 
 Operating expenses excl. depreciation, 
  amortisation, acquisition 
  related costs and exceptional 
  items                                              (5,510)         (524)     (6,034) 
 Headline EBITDA                                         527         (524)           3 
 Depreciation                                          (223)             -       (223) 
 Amortisation of intangibles                           (126)             -       (126) 
 Exceptional and acquisition 
  related costs                                            -         (225)       (225) 
 Operating profit/(loss)                                 178         (749)       (571) 
 Finance costs                                          (61)             -        (61) 
 Profit/(loss) before tax                                117         (749)       (632) 
 Taxation                                               (17)             -        (17) 
 Profit/(loss) for the period                            100         (749)       (649) 
 Assets                                               25,879         1,335      27,214 
 Liabilities                                        (16,276)      (22,713)    (38,989) 
                                          ------------------  ------------  ---------- 
 Capital employed                                      9,603      (21,378)    (11,775) 
                                          ------------------  ------------  ---------- 
 

1. Segmental Analysis (continued)

The following segmental disclosures for 30 June 2018 are stated prior to any adjustment for operations subsequently discontinued:

 
 Six months to 30 June           Baseball Player       Sports    Central      Total 
  2018                            Representation    Marketing 
                                          $000's       $000's     $000's     $000's 
 Revenue                                   6,547       17,051          -     23,598 
 Cost of sales                             (543)      (7,849)          -    (8,392) 
 Gross profit                              6,004        9,202          -     15,206 
 Operating expenses excl. 
  depreciation, amortisation, 
  acquisition related 
  costs and exceptional 
  items                                  (5,991)      (8,238)    (2,180)   (16,409) 
 Headline EBITDA                              13          964    (2,180)    (1,203) 
 Depreciation                                  -         (57)       (84)      (141) 
 Amortisation of intangibles               (176)        (180)          -      (356) 
 Exceptional and acquisition 
  related costs                              886            -      (933)       (47) 
 Operating profit/(loss)                     723          727    (3,197)    (1,747) 
 Finance costs                                                              (1,008) 
 Loss before tax                                                            (2,755) 
 Taxation                                                                       496 
 Loss for the period                                                        (2,259) 
 
 Assets                                   27,444       35,047      7,257       69,748 
 Liabilities                             (5,663)     (13,292)   (34,919)     (53,874) 
                                ----------------  -----------  ---------  ----------- 
 Capital employed                         21,781       21,755   (27,662)       15,874 
                                ----------------  -----------  ---------  ----------- 
 
 

2. Loss per share

Basic and diluted loss per share: attributable to ordinary shareholders:

 
 
                          6 month period    6 month period 
                              to 30 June        to 30 June 
                                    2019              2018 
                               cents per         cents per 
                                   share             share 
 
Continuing operations             (0.52)            (1.98) 
 
Discontinued operations             0.07              0.40 
 
Total operations                  (0.45)            (1.58) 
 
 

The calculation of loss per share per share is based on the following data:

 
                                                             6 month period  6 month period 
                                                                                 to 30 June 
                                                                                       2018 
                                                                 to 30 June          $000's 
                                                                       2019 
                                                                     $000's 
 
 
           Loss from continuing operations for the 
            purposes of basic earnings per share being 
            net loss attributable to owners of the Company 
 
            Profit from discontinued operations for                   (749)             (2,836) 
            the purposes of basic earnings per share 
            being net loss attributable to owners of 
            the Company                                                 100                 577 
 
                                                                  Number of           Number of 
                                                                     Shares              Shares 
Weighted average number of shares in issue:                     143,427,199         143,427,199 
 
 

3. Exceptional and acquisition related costs

Exceptional items comprise:

 
                                                  6 month period  6 month period 
                                                                      to 30 June 
                                                                            2018 
                                                      to 30 June          $000's 
                                                            2019 
                                                          $000's 
Continuing operations 
Loan refinancing costs                                         -             346 
Impairment of loans in other ventures                          -             414 
Costs relating to offers by potential investors              225             104 
                                                             225             864 
Discontinued operations 
Loan refinancing costs                                         -              49 
Other                                                          -              20 
Fair value movement of contingent consideration 
 (note 8)                                                      -           (886) 
                                                               -           (817) 
 
Total exceptional and acquisition related 
 costs                                                       225              47 
 
 

4. Taxation Expenses

 
                                                  6 month period  6 month period 
                                                                      to 30 June 
                                                                            2018 
                                                      to 30 June          $000's 
                                                            2019 
                                                          $000's 
 
UK Taxes 
  Current tax                                                  -              17 
           USA Taxes 
  Current tax                                                  -              51 
  Adjustments in respect of prior periods                      -             170 
  Deferred tax                                                 -           (793) 
           Australian Taxes 
  Current tax                                              (218)             190 
  Deferred tax                                               201           (131) 
 
 
Total tax credit                                            (17)           (496) 
 
           Total tax credit is attributable to: 
           Loss from continuing operations                     -              76 
            Profit from discontinued operations             (17)           (572) 
 
 

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

5. Discontinued operations

The profit after taxation from discontinued operations is comprised as follows:

 
                                                     6 month period  6 month period 
                                                                         to 30 June 
                                                                               2018 
                                                         to 30 June          $000's 
                                                               2019 
                                                             $000's 
 
 
           Australian subsidiaries and TLA-ESP 
            Limited                                               2             176 
           TLA Acquisitions Limited                              98           (316) 
           US subsidiaries                                        -             717 
 
           Profit after taxation from discontinued 
            operations                                          100             577 
 

Australian subsidiaries and TLA-ESP Limited

On 12 December 2018 the consolidated entity announced the decision to sell the Australian subsidiaries TLA Merchandise Pty Ltd, The Legacy Agency Australia Pty Ltd and also the UK subsidiary TLA Worldwide (Aust) Pty Ltd and TLA-ESP Limited. The Australian sports marketing and event management business and the UK talent representation and marketing business was sold on 5 September 2019.

The profit after taxation from these discontinued operations included within the consolidated income statement is shown below.

 
                                                     6 month period  6 month period 
                                                                         to 30 June 
                                                                               2018 
                                                         to 30 June          $000's 
                                                               2019 
                                                             $000's 
 
 
           Revenue                                           10,573          10,750 
           Expenses                                        (10,554)        (10,551) 
           Profit before tax                                     19             199 
           Taxation                                            (17)            (23) 
           Profit after taxation from discontinued 
            operations                                            2             176 
 

5. Discontinued operations (continued)

TLA Acquisitions Limited

The trade of the UK subsidiary TLA Acquisitions Limited ceased in 2018. The profit/(loss) after taxation from discontinued operations included within the consolidated income statement is shown below.

 
                                                            6 month period  6 month period 
                                                                                to 30 June 
                                                                                      2018 
                                                                to 30 June          $000's 
                                                                      2019 
                                                                    $000's 
 
 
           Revenue                                                       -              13 
           Expenses                                                     98           (403) 
           Profit/(loss) before tax                                     98           (390) 
           Taxation                                                      -              74 
           Profit/(loss) after taxation from discontinued 
            operations                                                  98           (316) 
 

US subsidiaries

On 28 December 2018 the Group sold the US subsidiaries The Legacy Agency (NY) Inc., TLA Americas Inc. and The Legacy Agency Inc.

The loss after taxation from discontinued operations included within the consolidated income statement is shown below.

 
                                                     6 month period  6 month period 
                                                                         to 30 June 
                                                                               2018 
                                                         to 30 June          $000's 
                                                               2019 
                                                             $000's 
 
 
           Revenue                                                -          12,835 
           Expenses                                               -        (12,639) 
           Profit before tax                                      -             196 
           Taxation                                               -             521 
           Profit after taxation from discontinued 
            operations                                            -             717 
 

Cash flow information

The net increase in cash and cash equivalents from discontinued operations in the 6 month period to 30 June 2019 was $75,000 (6 months to 30 June 2018: $7,143,000 cash decrease).

Sale of the Australian business

Following the sale of the Australian business the arrangements agreed with the Group's lender to settle the borrowings leave the Group with sufficient financial resources to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.

The Directors therefore have a reasonable expectation that the Company and the Group will continue in operational existence for the foreseeable future. As a result, and as set on in the Principal Accounting Policies, the Board continues to adopt the going concern basis of accounting.

   6.    Assets of disposal group classified as held for sale 
 
                                                 As at 30    As at 30 
                                                June 2019   June 2018 
                                                   $000's      $000's 
Goodwill                                           12,796           - 
Investment                                             31           - 
Intangible assets                                     272           - 
Property, plant and equipment - owned assets          177           - 
Property, plant and equipment - right of 
 use assets                                         1,532           - 
Deferred tax asset                                    391           - 
Cash and cash equivalents                           2,123           - 
Inventory                                           1,402           - 
Trade receivables                                   6,350           - 
Other receivables                                     271           - 
Prepayments                                           534           - 
                                                   25,879           - 
 

The assets identified above represent the assets of TLA Merchandise Pty Ltd, TLA Worldwide (Aust) Pty Ltd and TLA-ESP Limited, subsidiaries of the Group which was sold on 5 September 2019. Refer to note 5 for further information.

7. Borrowings

 
                                            As at 30 June  As at 30 June 
                                                     2019           2018 
                                                   $000's         $000's 
Secured borrowing 
Bank loans                                         22,465         25,625 
 
Total borrowings 
Amount due for settlement within 12 
 months                                            22,465          4,168 
Amount due for settlement after 12 months               -         21,457 
 
                                                   22,465         25,625 
 
 

All borrowings are denominated in US dollars. The facilities hold security against trade receivables and contracted revenue.

The banking facilities were being operated under a Forbearance Agreement in place with Group's bank at 30 June 2019. Under this agreement no interest was accruing on the bank borrowings. The Forbearance Agreement required the proceeds from the disposal of the Australian businesses to be ringfenced to repay the debt, with any shortfall being written off by the bank. The Group's bank debt was settled on 5 September 2019 on the sale of the Australia business.

Prior to the arrangement of the Forbearance Agreement, and at 30 June 2018, the terms of the bank loan were of an interest margin which varied between 3.0% and 5.5 over US LIBOR, depending on the Group's leverage ratio; fees of between 1.0% to 2.0% payable on any payments made over and above the quarterly agreed repayment schedule; covenants encompassing an agreed fixed charge ratio and EBITDA being equal to or greater than 80%-85% of quarterly budget; quarterly loan repayments over the life of the loan plus a final bullet repayment; and a facility renewable date of March 2020.

8. Contingent Consideration

Under the terms of the acquisition agreements in relation to Legacy, PEG and ESP (including ESPM) the Group has obligations to the lenders of the businesses as set out below:

 
                                                      As at 30       As at 30 
                                                     June 2019      June 2018 
                                                        $000's         $000's 
 
 Payable in less than one year                           4,735          7,877 
 Payable in one to two years                                 -            711 
 Payable in two to five years                                -            150 
 Payable in more than five years                             -            761 
                                                 -------------   ------------ 
                                                         4,735          9,499 
 
  Impact of discounting on provisions payable 
   in cash                                                   -          (372) 
  Classified as held for sale                          (4,735)              - 
 
  Total contingent consideration payable                     -          9,127 
 
 

The employment and earn-out agreements with key personnel in the Group's Baseball North America and Baseball Latin American businesses (Legacy and PEG) were disposed upon sale of the US businesses on 28 December 2019. The remaining contingent consideration balance relates to the Australian business (ESPM) and has been transferred to liabilities held for sale at 30 June 2019 and was disposed of on the sale of the Australian business on 5 September 2019.

There are subordination agreements in place that govern when the contingent consideration become payable. The cash contingent consideration requires the achievement of certain EBIT targets over the period of each agreement and, in addition, the achieved EBIT must be converted into cash.

The Group estimates the fair value of the contingent consideration liability at 30 June 2019 based on the anticipated future EBIT of each underlying business.

9. Liabilities directly associated with assets classified as held for sale

 
                                       As at 30    As at 30 
                                      June 2019   June 2018 
                                         $000's      $000's 
Trade payables                            2,032           - 
Accruals and other amounts payable        7,260           - 
Deferred income                             573           - 
Current taxes payable                       103           - 
Contingent consideration                  4,735           - 
Lease liabilities                         1,573           - 
                                         16,276           - 
 

The liabilities identified above represent the liabilities of TLA Merchandise Pty Ltd, TLA Worldwide (Aust) Pty Ltd and TLA-ESP Limited, subsidiaries of the Group which were sold on 5 September 2019. Refer to note 5 for further information.

10. Notes to the Statement of Cash Flow

 
                                                    6 month period     6 month 
                                                                     period to 
                                                                       30 June 
                                                                          2018 
                                                        to 30 June      $000's 
                                                              2019 
                                                            $000's 
 
Operating loss for the period from continuing 
 operations                                                  (749)     (2,760) 
Operating profit for the period from discontinued 
 operations                                                    178       1,013 
 
Adjustments for: 
Amortisation and impairment of intangible 
 assets                                                        126         356 
           Depreciation of tangible assets                     223         141 
Fair value movement on contingent consideration                  -       (886) 
 
Operating cash flows before movements in 
 working capital                                             (222)     (2,136) 
 
Decrease/(increase) in trade other receivables               1,949         543 
(Increase) in inventory                                      (173)     (1,013) 
(Decrease) in trade other payables                         (1,850)       (490) 
 
Cash used in operations                                      (296)     (3,096) 
 
Income taxes paid                                            (240)       (518) 
Other non-cash movements                                         -          35 
 
Net cash outflow from operating activities                   (536)     (3,579) 
 
Cash and cash equivalents 
Continuing operations                                          135          53 
Disposal group classified as held for sale                   2,123       4,418 
Total cash and cash equivalents                              2,258       4,471 
 

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets is approximately equal to their fair value.

The Group's net debt has moved as follows during the period:

 
                             1 January    Cash flow     Non-cash     30 June 
                                  2019                 Movements        2019 
                                  $000         $000         $000        $000 
                           -----------  -----------  -----------  ---------- 
 
  Cash and bank balances         3,035        (759)         (18)       2,258 
 
  Borrowings                  (22,465)            -            -    (22,465) 
 
  Net debt                    (19,430)        (759)         (18)    (20,207) 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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