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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Spg Media | LSE:SPM | London | Ordinary Share | GB0008462714 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 12.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:7574Z SPG Media Group Plc 15 June 2004 SPG MEDIA GROUP PLC ("SPG") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2004 SPG announces its results for the year ended 31st March 2004: * Group turnover of #24.0m (2003: #24.7m) * Adjusted(1) operating profit of #0.07m (2003: loss #0.2m) * Operating loss of #1.4m (2003: #0.9m) after exceptional costs of #1.5m. * Net debt reduced to #0.3m (2003: #1.9m) as a result of positive cash flow. * Fundamental review of operations completed * New management team in place * Removal of duplicate products, costs reduced and trading improving * Strong growth in event and Internet operations. (1) Adjusted operating profit is defined as operating profit before exceptional items (see note 3 to the financial information accompanying this press release.) Steve Nicholson, Executive Chairman, comments: "The last six months have been critical in reshaping the business. The company has been fundamentally restructured, aligned to specific markets and integrated into one trading vehicle, SPG Media. Products have been rationalised and costs reduced with a strategy to reduce our dependence on advertising revenues. We plan to build an international market leading media business skilled and competent at providing customers with solutions and services that deliver tangible and measurable commercial results. I am now confident we have the right strategy, structure and focus to ensure the Group returns to sustained profitability." For further information please contact: Steve Nicholson SPG 020 7915 9637 Barrie Newton Rowan Dartington 0117 933 0011 Lawrence Dore / Ryszard Bublik Mantra PR 020 7907 7800 Chairman's Statement This is my first opportunity to formally communicate with all of our shareholders and to confirm the company made substantial progress in 2003 and that I am now confident we have the right strategy, structure and focus to ensure the group returns to sustained profitability. We undertook a fundamental review of the Group's operations in the third quarter of 2003 concluding that the underlying assets of the business provided significant scope for growth and development, albeit the operational infrastructure required investment to realise this potential. The company has been refocused, aligned to specific markets and integrated into one trading entity, SPG Media. Operating costs have been substantially reduced returning the company to an adjusted operating profit. New management has been recruited to invigorate and drive the development and performance of the core operations. Duplicate products have been removed and investments made to develop brand-based products targeted at specific international audiences. We have rapidly transitioned the ethos of the company from being product to market based with clear signs that the initiatives are well received by our customers. Whilst our ability to impact the 2003/4 results were limited and much has still to be achieved I believe we are laying the foundations for a prosperous and profitable future. Despite challenging market conditions in 2003, I am pleased to report that the Group made an adjusted operating profit before exceptional items of #0.07m (2003: loss #0.22m) on reduced turnover of #24.0m (2003: #24.7m). Restructuring and non-recurring costs of #1.0m have been absorbed into the 2003/4 results together with an impairment charge of #0.5m after a review of the carried value of our intangibles. In print, average revenues per publication were marginally down, though I am pleased to confirm that the Group maintained its page yield premium. Our Internet offer continues to grow with the benefit of higher than anticipated repeat rates from our advertisers. The events business has experienced strong growth, which has been reinforced by a full year contribution following our acquisition of Vision in Business. The board of directors believes it prudent not to propose a dividend for 2003/4 but does intend to return to pay dividends when it is considered appropriate. Operational Review Print: The publishing interests of the Group historically traded under three competing publishing brands, Sterling, Cornhill and Quasar. These operations have been fully integrated into one core print publishing business with the benefit of reduced administration costs, clear market focus and stronger industry relationships. The restructuring of these businesses creates a strong foundation for profitable growth and the development of new revenue streams and channels to market. SPG Media distributed 60 publications (2003:71) to over 650,000 key decision makers worldwide. Business to business advertising remained challenging throughout 2003 with average revenues per publication marginally down on 2002. The Group maintained its page yield premium comparative to the industry average whilst holding its print and distribution costs. Internet: The company undertook a fundamental review of its Internet operations starting the process of redesigning the core functionality, look, feel and service deliverables, all of which will start to benefit the business in 2004/5. The business showed strong underlying growth with our established web sites benefiting from higher than anticipated repeat advertisers. The company has 22 Internet portals aimed primarily at project engineers. The sites provide accurate and relevant information about industry developments, manufacturers and suppliers. We have strengthened the Internet management team appointing the ex R&D director of Alta Vista to drive the development of our technical expertise and levels of service. In addition we opened offices in Hyderabad, India, in September 2003, to build offshore capabilities that reduce operational overheads whilst providing a conduit to servicing local Asian markets. The business is building Internet competencies, is already cash generative and successfully selling Internet based services in Asia. Events: The company successfully expanded its executive management forums from three events in 2002/03 to eight events in 2003/04 contributing #2.1m revenues. The management and operational team was strengthened to facilitate the rapid integration of Vision in Business, a specialist conferencing and events business acquired in March 2003. The combined operations delivered in excess of #4 million revenues in 2003/4 with plans to further extend services across the Group's core markets creating substantial organic growth opportunities in 2004/5 and beyond. Financial Review Accounting Policies The Group accounts include the consolidated results of SPG Media Group plc and its subsidiaries. Accounting policies have been applied consistently, year on year, across all companies in the Group. Profit and Loss Account Group turnover declined 3% year on year with the reduction in print advertising revenues largely offset by increased Internet and event sales. Gross margins for the year were 45.8% (2003: 46.8%) reflecting the changing business mix and investments in product development. We reported an adjusted operating profit before exceptional items of #72,000 against a loss last year of #(221,000). Exceptional items comprised redundancy payments of #667,000 (which included compensation for loss of office to directors of #479,000), an additional provision against non-operational properties of #340,000 and an impairment charge in respect of Debrett's of #500,000. In the prior year exceptional items of #682,000 related solely to a provision against non-operational properties. After exceptional items we reported an operating loss of #1,445,000 (2003: loss of #903,000). Bank interest payable was #44,000 (2003: #89,000) as a result of reduced borrowings. Acquisitions We negotiated an early settlement of the Vision in Business acquisition in December 2003 resulting in a final purchase cost reduced by #525,000 to #557,000. With the constraints of the earn-out removed we were able to integrate the conference and executive management forums activities. Cash Flow and Funding The growth of the events business, which is cash positive, had a beneficial effect on working capital, as debtors were further reduced year on year. The year saw capital expenditure of #0.5m compared to the charge for depreciation of #1.1m. The reduction in debtors was less dramatic than last year and as a result operating cash flow was #2.2m (2003: #3.1m) with net debt at the year-end reduced to #0.3m from #1.9m. Future Developments Market Conditions: Predicting market condition and their outlook is not for the faint hearted, as more informed and distinguished analysts will confirm! USA economic and commercial confidence feeds the world and that confidence seems to be returning. Asia is buoyant, albeit partially eclipsed by the strong growth in India and China. Europe, however, remains challenging with both Germany & France wrestling with domestic issues and the enlarged EU changing the overall economic landscape. The industry has just witnessed one of the most challenging commercial environments of the past twenty years with numerous marketing, media and publishing organisations struggling to survive or ceasing to trade. Business to business marketing expenditure is typically cyclical and reflective of market sentiment and economic confidence, but there are clear signs that commercial confidence is returning with general industry inventories and order books stronger on a comparative year-by-year basis. We do however have a far more discerning marketeer intent on ensuring every marketing dollar delivers a tangible return. Some of the many challenges facing the media industry are to recognise changing market conditions, to understand and embrace customer requirements, build market expertise and industry relationships innovatively responding to customer and market demand. There is a general swing away from above to below the line marketing, which predominantly seeks to communicate with targeted individuals as opposed to broad demographic based audiences. I am delighted to confirm SPG Media is ideally placed to respond quickly and effectively to these changes in market sentiment. Strategy & Developments: The focus and orientation of SPG is structured around building an international market leading media business skilled and competent at providing our customers with solutions and services that deliver tangible and measurable commercial results. This will be achieved through building on our extensive publishing, electronic and Internet communication skills plus professionally exploiting the industry relationships being formed through our conferences and executive management forums. SPG Media is actively investing in building: * Data assets detailing the interests and requirements of the key 500,000 decision makers in our identified markets. * A differentiated and customer centric industry search engine service planned for launch in 2005. * Centres of commercial excellence revered for their customer service, market intelligence and service expertise. * Dedicated lines of business designed to build and leverage established industry relationships. * Internationally located operations dedicated to servicing local geographic communities. Outlook: The company has stabilised margins, building a strong platform to develop a world-class media business over the next 3 to 5 years. The business will capitalise on current opportunities, will strengthen its offer with the launch of new products and be a key participant in industry consolidation. SPG is financially sound and increasingly cash generative due to the growth in our conferences and executive management operations. The investments recently made in restructuring and building competency creates the foundation for strong growth and profitability. The medium term outlook is favourable based on current market conditions, but due to the volatility of the market in recent years the board feels it would be prudent to resist forecasting anticipated performance in the short term. Trading from January through to March 2004 suggests the Group is on track to achieve its financial targets and market conditions continue to look satisfactory. The board is confident that the Group has an exciting future and opportunity for sustained growth. S P Nicholson Executive Chairman 15th June 2004 Consolidated Profit and Loss Account for the year ended 31 March 2004 Notes 2004 2003 #'000 #'000 Turnover 2 23,951 24,709 Cost of sales (12,992) (13,134)* Gross profit 10,959 11,575 Distribution costs (926) (947) Administrative expenses (11,478) (11,531)* Operating profit/(loss) before exceptional items 72 (221) Exceptional items 3 (1,517) (682) Operating loss (1,445) (903) Finance charges - net 4 (37) (263) Loss on ordinary activities before taxation (1,482) (1,166) Tax on loss on ordinary activities 5 - (607) Loss on ordinary activities after taxation for the financial year (1,482) (1,773) Dividends - non-equity 6 - (10) Loss attributable to equity shareholders transferred from reserves (1,482) (1,783) Basic loss per share - net basis 7 (1.76)p (2.16)p Diluted loss per share - net basis 7 (1.76)p (2.16)p Both years' results derive from continuing operations. There are no recognised gains or losses other than those recorded in the profit and loss account. * Certain disclosures have been reclassified to be consistent with the current year treatment - see note 2. Consolidated Balance Sheet as at 31 March 2004 Notes 2004 2003 #'000 #'000 Fixed assets Intangible assets Goodwill 1,684 2,342 Other 3,432 3,932 Tangible assets 3,038 3,553 Investments in own shares 145 86 8,299 9,913 Current assets Stocks and work-in-progress 4,496 4,149 Debtors 5,940 7,002 Cash at bank and in hand 103 255 10,539 11,406 Creditors - amounts falling due within one year (8,611) (9,088) Net current assets 1,928 2,318 Total assets less current liabilities 10,227 12,231 Creditors - amounts falling due after more than one year - (307) Provisions for liabilities and charges (1,179) (1,088) 9,048 10,836 Capital and reserves Called up share capital 4,293 4,223 Shares to be issued - 407 Share premium account 8 7,262 7,231 Capital redemption reserve 8 7,874 7,874 Other reserves 8 733 733 Profit and loss account 8 (11,114) (9,632) Shareholders' funds 9,048 10,836 Consolidated Cash Flow Statement for the year ended 31 March 2004 Notes 2004 2003 #'000 #'000 Net cash inflow from operating activities 9 2,199 3,080 Returns on investments and servicing of finance Interest received 8 17 Interest paid (44) (89) Dividends paid - non-equity - (30) Interest element of finance lease payments (9) (38) Taxation Corporation tax recovered - 336 Capital expenditure and financial investment Payments to acquire tangible fixed assets (549) (1,224) Acquisitions and disposals Payment to acquire subsidiary undertaking (87) (316) Cash acquired with subsidiary undertaking - 65 Equity dividends paid - (83) Cash inflow before financing 1,518 1,718 Financing Capital element of finance lease payments (152) (203) Redemption of preference shares - (717) Decrease in net debt in the year 10 1,366 798 Reconciliation of net cash flow to movement in net debt Decrease in net debt in the year 1,366 798 Cash outflow from lease financing 152 203 Change in net debt resulting from cash flow 1,518 1,001 Opening net debt (1,859) (2,860) Closing net debt 10 (341) (1,859) NOTES: 1. Financial statements This preliminary statement was approved by a duly appointed and authorised committee of the board of directors on 15 June 2004. This statement does not comprise the statutory accounts of the Company. The financial information for the year ended 31 March 2004 has been prepared on the same basis of accounting as for the year ended 31 March 2003. The comparative information for the year ended 31 March 2003 does not constitute the Company's statutory accounts for that year but is derived from those accounts. Certain disclosures have been reclassified to be consistent with the current year treatment. The statutory accounts of the Company for the year ended 31 March 2003 have been delivered to the Registrar of Companies and those for the year ended 31 March 2004 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2. Segmental Information Geographical analysis of turnover by destination: 2004 2003 #'000 #'000 UK 5,329 5,284 USA 5,773 5,766 Europe (other than UK) 10,625 11,795 Other 2,224 1,864 23,951 24,709 The comparative figures have been restated following a review of the classification of the underlying data. The prior year cost of sales has been increased, and the administrative costs deceased, by #719,000 as a result of the reclassification of certain cost headings. There is no impact on the retained loss for the year. 3. Exceptional Items The following exceptional items are included in administrative expenses: 2004 2003 #'000 #'000 Property provision 340 682 Redundancy costs 677 - Impairment of intangible fixed asset 500 - 1,517 682 The property provision represents the additional charge required in respect of non-operational properties held by the Group. Redundancy costs were incurred during the year as part of a restructuring of the management team. The impairment charge is in respect of the carrying value of the Debrett's brand. 4. Finance charges - net 2004 2003 #'000 #'000 Interest on bank loans and overdrafts repayable within five years 44 89 Interest on finance leases 9 38 Unwinding of discount on provisions 51 54 Amounts written off investments in own shares - 99 104 280 Interest receivable and other income 8 17 Credit arising in respect of investments in own shares 59 - 67 17 37 263 5. Tax on Loss on Ordinary Activities 2004 2003 #'000 #'000 United Kingdom corporation tax at 30% (2003: 30%) - - Deferred taxation - 607 - 607 The current year tax can be reconciled to tax at the standard rate of 30% as follows: 2004 2003 #'000 #'000 Loss on ordinary activities before taxation (1,482) (1,166) Corporation tax at 30% (2003: 30%) (445) (350) Effects of: Expenses not deductible for tax purposes 74 12 Depreciation of eligible assets in excess of capital allowances 11 46 Losses carried forward 207 271 Provision against own shares (18) 30 General bad debt provisions (19) (30) Amortisation of goodwill 40 21 Write down of intangible fixed assets 150 - Adjustments to prior years 40 Current tax charge for the year - - 6. Dividends 2004 2003 #'000 #'000 Non-equity 8.25% convertible cumulative redeemable second preference shares 2003 - 10 7. Earnings per Share The loss per share of 1.76p (2003: loss 2.16p) and the diluted loss per share of 1.76p (2003: loss 2.16p) have been calculated based on the attributable loss to shareholders for the financial year of # 1,482,000 (2003: loss # 1,773,000) plus preference dividends of # nil (2003: #10,000). The weighted average number of shares in issue during the year, excluding those held by the SPG Media Group employee benefit trust, were: 2004 2003 '000 '000 Basic 84,096 82,570 Share option adjustment 21 - Shares to be issued - 69 Diluted 84,117 82,639 FRS14 requires the presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. Where a company is reporting a net loss and there are outstanding share options the net loss per share could only be increased by the exercise of out-of-the-money options. Since it is inappropriate to assume that option holders would act irrationally no adjustment has been made to the diluted loss per share for out-of-the-money options. 8. Reserves Capital Share Other Profit and redemption reserve premium reserves loss account #'000 #'000 #'000 #'000 As at 1 April 2003 7,874 7,231 733 (9,632) Recognised loss for the year - - - (1,482) Shares issued - 31 - - As at 31 March 2004 7,874 7,262 733 (11,114) The amount of the profit /(loss) for the financial year dealt with in the accounts of SPG Media Group PLC is #81,000 (2003: loss #(127,000)). 9. Reconciliation of Operating loss to Net Cash Inflow from Operating Activities In the table below positive amounts represent generation of cash and negative amounts cash utilisation. 2004 2003 #'000 #'000 Operating loss (1,445) (903) Amortisation of goodwill 133 69 Impairment of intangible fixed assets 500 - Depreciation of tangible fixed assets 1,064 1,008 Stocks and work-in-progress (347) 752 Debtors 1,062 2,915 Creditors 1,192 (1,049) Provisions for liabilities and charges 40 288 Net cash inflow from operating activities 2,199 3,080 The exceptional items resulted in a net cash outflow of #677,000 (2003: #nil) 10. Analysis of Net Debt 1 April 2003 Cash Flow 31 March 2004 #'000 #'000 #'000 Cash in hand and at bank (255) 152 (103) Overdraft 1,962 (1,518) 444 1,707 (1,366) 341 Finance lease obligations 152 (152) - Net debt 1,859 (1,518) 341 This information is provided by RNS The company news service from the London Stock Exchange END FR QKQKPCBKDFAD
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