Preliminary announcement of results for the 17 months ended 31 December 2009

 
TIDMSPMG 
 
26 April  2010 
 
                             SPORT MEDIA GROUP PLC 
 
                   ("Sport Media", "SPMG", "or "the Company") 
 
  Preliminary announcement of results for the 17 months ended 31 December 2009 
 
The  Board of  Sport Media  Group plc  (AIM: SPMG.L), the integrated multi-media 
group  that publishes the Sunday and Daily Sport newspapers and provides digital 
content  for internet and mobile  channels,  today announces preliminary results 
for the 17 months to 31 December 2009 
 
Financial highlights: 
 
  * Group generated revenue of  GBP30.9m (12 months to 31 July 2008:  GBP29.4m) 
  * Loss before tax after exceptional items of  GBP29.2m (12 months to 31 July 
    2008: loss  GBP18.2m). 
  * Underlying loss before tax (excluding non-recurring items, share option 
    cost, bad debts, amortisation and impairment) was  GBP0.4m (12 months to 31 
    July 2008: profit  GBP6.4m). 
  * The 5 month period to December 2009 showed a much improved performance at 
    the underlying profit level, producing an EBITDA of  GBP551k. 
  * No final dividend. 
 
 
Chairman's Statement 
 
The period under review covers the 17 month period between 1 August 2008 and 31 
December  2009. It was  a dramatic  period for  Sport Media Group ("Group"), and 
also  encompasses much of the recent crisis  period for the British economy. The 
Group  has had a turbulent experience, but has survived and is now profitable on 
a  monthly basis  at the  operating profit  level. There  is still a significant 
level  of debt within the Group and debt-servicing  costs are a major cost but I 
am  delighted  to  report  that  our  debt  holders  have agreed to extend their 
facilities  until 31 March 2013, which provides  an important cornerstone to the 
ongoing  development of the business. We have cut our expenses significantly and 
continue  to seek efficiencies in the Group, and we are working hard to increase 
revenues, which is the key to our future success. We have a stable platform from 
which  to build a strong  position in our market  place and are optimistic that, 
through supportive debt holders, dedicated staff and interested shareholders, we 
can look forward to a positive future. 
 
In  the  extended  reporting  period  to  31 December  2009, the Group generated 
revenue  of  GBP30.9m  (12 months  to 31 July  2008:  GBP29.4m) and  a loss before tax 
after exceptional items of  GBP29.2m (12 months to 31 July 2008: loss  GBP18.2m).  The 
underlying  loss before tax  (excluding non-recurring items,  share option cost, 
bad  debts, amortisation and impairment) was   GBP0.4m (12 months to 31 July 2008: 
profit   GBP6.4m).  The  5 month  period  to  December  2009 showed a rather better 
performance at the underlying profit level, producing an EBITDA of  GBP551k. 
 
Total  net debt at the  period end stood at   GBP11.9m (31 July 2008:  GBP10.4m). Debt 
provided  by The Royal Bank of Scotland plc ("RBS") comprised a revolving credit 
facility  of   GBP3.9m,  a  loan  of   GBP2.5m  (further details below) and an invoice 
discounting facility standing at  GBP1.3m at the period end together with a further 
 GBP0.1m  of net borrowings. This totalled   GBP7.8m. Gold Group International ("GGI") 
and  Roldvale Limited, a company controlled by David Sullivan, provided loans of 
 GBP1.6m  during the period  to provide critical  finance to the  Group, and we are 
grateful to them for their support. Without this finance it is unlikely that the 
Group would have been able to continue to trade. 
 
Deferred  consideration with regard  to the acquisition  of Sport Newspapers, at 
the date of acquisition and in favour of GGI, amounted to  GBP5.0m.  GBP2.5m is by way 
of  an outstanding liability to  GGI, which together with  the  GBP1.6m owed to GGI 
and Roldvale Limited and the  GBP7.8m owed to RBS accounts for the Group's net debt 
position  of  GBP11.9m. The  remaining  GBP2.5m of  deferred consideration was settled 
via the term loan from RBS for the same value. For the Group to secure this loan 
GGI  was required to  maintain a charge  of deposit for  the same value and this 
will  remain in  place for  the duration  of the  term loan. The Group is paying 
interest  to RBS for  the loan of   GBP2.5m and interest  to GGI for  the charge of 
deposit it is maintaining. 
 
The  Group has two main operating divisions,  Print and Digital; Print being the 
larger  and incorporating Sport  Newspapers Limited, publisher  of the Daily and 
Sunday  Sport newspapers. Print revenues,  including advertising, for the period 
were   GBP25.5m (12  months to  31 July 2008:  GBP20.1m)  and generated  an underlying 
operating profit of  GBP0.3m (12 months to 31 July 2008:  GBP2.4m). 
 
In  August 2008, at  the beginning  of the  reporting period,  we were achieving 
circulation  figures of an  average of 79,500 per  day for the Daily, 51,000 for 
the  Saturday and 77,500 for the Sunday.  In  the period January to Easter 2010 
circulation  has averaged around  73,700 for the Daily,  49,000 for the Saturday 
and  66,400 for the  Sunday. It  has been  widely reported  that this has been a 
torrid time for most national newspapers, with falls in circulation and falls in 
advertising  revenues. Our advertising revenues have been arguably less impacted 
than most newspapers, as we have little advertising targeted at the residential, 
automotive  or  employment  markets.  Nonetheless,  advertising  revenues in the 
period  January  to  Easter  2010 are  approximately  14% lower than in the same 
period  in  2009.  Our  production  costs  have  been  reduced  and the paper is 
produced  by  far  fewer  staff.   This  business  is now stable and profitable. 
However,  with unemployment likely to rise further, and few signs of recovery in 
the  sectors that employ our readers,  the outlook remains difficult. We believe 
that  our  newspaper  product  is  much  improved,  with more news items, better 
quality  pictures and that it represents good value to our readers. However, the 
price  war between  the larger  "red-tops" remains  a constraint  on our revenue 
opportunities.  We  will  continue  to  seek  efficiencies, as well as selective 
marketing opportunities to increase circulation. 
 
The  other division of the Group, the  Digital Division, should help us increase 
circulation,  as their expertise  in the digital  space, including mobile phones 
and  the internet, can be  used to alert potential  readers to news items and to 
develop web products that can be monetised to increase revenues. We are the only 
National  newspaper in the UK to make revenues by giving away DVDs in our Sunday 
newspaper,  thanks to  our "lock  'n' pay"  technology, and we are experimenting 
with developing this technology in new ways. Equally, the logic of combining the 
Digital  Division with the newspaper that  it uses to generate customers remains 
persuasive.  However, for the period under review, this business suffered a very 
significant fall in revenues.  Revenues in the entire adult industry have fallen 
dramatically  in the last two  years, as a consequence  of "free" adult internet 
content  supported  by  advertising.  Our  digital  division,  which markets its 
products  across various platforms, including  mobile and internet, and delivers 
products  sold over the internet by traditional post, lost customers and margin, 
as  well as some key support contracts as the market declined. In the period the 
Digital Division achieved revenues of  GBP5.4m (12 months to 31 July 2008:  GBP9.3m). 
This division employs 19 people, but costs have been reduced and the division is 
seeking  further  efficiencies.  It  has  also  been developing new products and 
initiatives.  In particular the  formation of Telecom2,  a tier-2 level telecoms 
business,  which now provides routing, aggregation and internet hosting services 
to  the rest of  the Group, as  well as developing  a customer base  of its own, 
further enhances the Group's ability to leverage content. 
 
The  Group is not in a position to resume paying dividends as yet, and we expect 
to  use our net  cash flow to  reduce debt as  we believe that  will deliver the 
greatest benefit to our shareholders. 
 
The  new financial year has carried on  much as we finished 2009, albeit the bad 
winter  weather impacted both newspaper distribution  and readers working in the 
building  sector.  However,  we  are  optimistic  that we can trade the business 
profitably  and progressively reduce  our debt to  deliver enhanced value to our 
shareholders. We will continue to explore all opportunities to achieve this. 
 
 
Chief Executive's Statement 
 
The results are presented for the 17 month period to 31 December 2009. In August 
2009, Telecom2 was formed following the acquisition of assets from a business in 
liquidation and results for the subsequent five months of trading are included. 
 
 
Trading 
In the 17 months ended 31 December 2009 Group revenues were  GBP30.9m (12 months to 
31 July 2008:  GBP29.4m). 
 
The  Group recorded a loss before tax for the period of  GBP29.2m (12 months to 31 
July   2008: loss    GBP18.2m).  The  underlying  loss  for  the  period  excluding 
non-recurring  items, share option  cost, amortisation and  impairment was  GBP0.4m 
(12 months to 31 July 2008: profit  GBP6.4m). 
 
Total  net debt at the  period end stood at   GBP11.9m (31 July 2008:  GBP10.4m). Debt 
provided  by The Royal Bank of Scotland plc ("RBS") comprised a revolving credit 
facility  of   GBP3.9m,  a  loan  of   GBP2.5m  (further details below) and an invoice 
discounting facility standing at  GBP1.3m at the period end together with a further 
 GBP0.1m  of net borrowings. This totalled   GBP7.8m. Gold Group International ("GGI") 
and  Roldvale Limited, a company controlled by David Sullivan, provided loans of 
 GBP1.6m  during  the  period  to  provide  critical finance to the Group. Deferred 
consideration with regard to the acquisition of Sport Newspapers, at the date of 
acquisition  and in  favour of  GGI, amounted  to  GBP5.0m.   GBP2.5m is  by way of an 
outstanding  liability to  GGI which  together with  the  GBP1.6m  owed to  GGI and 
Roldvale  Limited and the   GBP7.8m owed to  RBS accounts for  the Group's net debt 
position  of  GBP11.9m. The  remaining  GBP2.5m of  deferred consideration was settled 
via the term loan from RBS for the same value. For the Group to secure this loan 
GGI  was required to  maintain a charge  of deposit for  the same value and this 
will  remain in  place for  the duration  of the  term loan. The Group is paying 
interest  to RBS for  the loan of   GBP2.5m and interest  to GGI for  the charge of 
deposit it is maintaining. 
 
Interest  charges remain a significant burden  on the business and opportunities 
to  improve the position through profitable  trading and debt repayment remain a 
priority  for  the  directors.  Interest  charges  in the period were  GBP1.4m, (12 
months to 31 July 2008:  GBP0.3m). 
 
Working capital 
Cash  generated from operations during the period was  GBP1.3m with a further  GBP1.5m 
inflow  from net  financing activities.  The Group  ended the  year with  a cash 
position of  GBP0.3m. 
 
Balance sheet 
The  carrying  value  of  the  Group's  goodwill  and  intangible  assets relate 
predominantly  to the  balances arising  on the  acquisition of Sport Newspapers 
Limited  and Flip Media and encompass:  newspaper mastheads, publishing rights & 
imprints,  trade  marks  &  names,  and  customer relationships & contracts. The 
principal  assets  of  Flip  Media  were  disposed  of  during  the  period  and 
consequently  the carrying values  of goodwill and  intangible assets were fully 
impaired with a charge of  GBP1m in the period. The directors assessed the carrying 
values  of goodwill  and intangible  assets of  Sport Newspaper  Limited through 
value  in use calculations as detailed in note 16. This assessment resulted in a 
full  impairment of goodwill from its carrying value of  GBP18.0m and an impairment 
charge  of  GBP0.5m against intangible  assets. Amortisation and impairment charges 
for the period amounted to  GBP23.8m. 
As  a consequence of the impairment charges  the Group has a negative net assets 
balance of  GBP0.2m. 
As detailed in the Chairman's Statement, RBS, GGI and Roldvale Limited agreed to 
extend  the  terms  of  their  existing  facilities  until 31 March 2013. At 31 
December  2009 these facilities were all reported as current liabilities as they 
were  due for repayment in November 2010. The extract of the balance sheet below 
shows  the  reported  position  and  a  pro forma  presentation for the movement 
between  current and  non-current liabilities  had the  agreed extension been in 
place  at  31 December  2009 which  has  the  effect  of  reducing  net  current 
liabilities from  GBP12.4m to  GBP2.5m. 
 
 
Extract from the Consolidated Balance Sheet as at 31 December 2009 
 
                                Pro forma     Actual 
 
                                     2009       2009 
 
                                     GBP'000       GBP'000 
 
 
 
 Current assets                     3,709      3,709 
 
 
 
 Total assets                      19,767     19,767 
 
 
 
 Current liabilities 
 
 Trade and other payables           4,190      4,190 
 
 Short term borrowings              2,045     11,957 
 
 Current tax liabilities 
 
 
 
                                    6,235     16,147 
 
 
 
 Net current liabilities          (2,526)   (12,438) 
 
 
 
 Non-current liabilities 
 
 Long term borrowings               9,912          - 
 
 Deferred tax liabilities           3,835      3,835 
 
 
 
                                   13,747      3,835 
 
 
 
 Total liabilities                 19,982     19,982 
 
 
 
 Net liabilities                    (215)      (215) 
 
 
 
 
Business review 
2008/09 has  seen  a  significant  transformation  of  Sport  Media Group, as it 
tackled  falling revenues across all divisions,  question marks over its banking 
facilities  and  a  comprehensive  restructuring  of  facilities and operations, 
against the backdrop of a depressed economic climate. 
It  has been a  period of consolidation  within the business,  with the priority 
being to minimise management distractions wherever possible to allow operational 
focus on the core publishing and digital businesses. 
 
The  restructuring that took  place to secure  the renewal of banking facilities 
for   the   Group  in  April  2009 again  saw  comprehensive  cost  savings  and 
efficiencies achieved, albeit with significant exceptional costs incurred. 
 
Print Division 
At  the start of  the period, the  Print Division consisted  of Sport Newspapers 
Limited, publisher of the Daily and Sunday Sport, Moresport Limited publisher of 
magazine  titles and Flip Media Limited,  publisher of Front magazine (which was 
acquired in June 2008). 
As  a result of the operational restructuring,  the assets of Flip Media Limited 
were  disposed of in July 2009, to allow  management to focus on the operational 
changes required at the core newspaper business. 
 
The  newspaper suffered significant falls in both sales and advertising revenues 
in  November  2008, which  worsened  over  the  Christmas  2008 period,  and its 
loss-making  position  resulted  in  the  Group  breaching  one  of  its banking 
covenants in January 2009. 
 
During  Q1 2009, the  business undertook  a complete  operational review and was 
able  to present  and deliver  the strategic  and tactical  changes necessary to 
return it to profitability by July 2009. This involved the provision of loans to 
the  company of  GBP1.6m from  Roldvale Limited and GGI  in return for the issue of 
9.68m options  over ordinary shares at 3.5p per  share to David Sullivan and the 
appointment of David Sullivan as Honorary Publisher of the Group. 
 
Headcount 
The  annual  headcount  cost  removed  from  the  business  as  a  result of the 
restructuring  amounted to  GBP614k  per annum, and  these efficiencies were gained 
across the whole business. 
At  period  end  the  Group  had  97 staff  in employment, from a high of 138 in 
October 2008 (31 July 2008: 118). 
 
Editorial 
Monthly content costs now average  GBP130k, a reduction of 35% on pre-restructuring 
levels,  and average monthly casual staffing  costs are now immaterial, compared 
to c.  GBP11k in 2009. 
Whilst  circulation peaked  in August  2009 the averages  achieved in January to 
Easter  2010 of 73,700 for the Daily, 49,000 for the Saturday and 66,400 for the 
Sunday are in line with budget. 
 
We  are currently assessing the establishment  of dedicated studio facilities to 
further  reduce content costs in this area. More importantly, this will allow us 
to  significantly increase the  volume of wholly  owned content within the Group 
and  take greater advantage  of opportunities for  new revenue streams driven by 
this content across all platforms. 
 
Supply chain 
Despite  lower overall sales  volumes the number  of retailers selling the paper 
remains  at c. 40,000 per day. Following the  business failure of Dawson News in 
August  2009 the wholesale market is now serviced by Smiths News and Menzies and 
is more streamlined as a consequence. The Dawson News administration has exposed 
the  business to  GBP200k of bad debt and  whilst this has been fully provided for, 
it remains unclear whether there will be a return of funds against this from the 
administrator. 
 
Cost  savings within  the distribution  side of  the business have been achieved 
through  improved distribution  contracts and  renegotiated retail and wholesale 
terms. 
As  a result  of the  current sales  levels, waste  levels are currently at 52% 
(Daily), 58% (Saturday) and 55% (Sunday), and are in line with our budget. 
 
Advertising 
Advertising  revenues for  the period  were  GBP10.7m  (12 months to 31 July 2008: 
 GBP9.1m) and currently remain stable and in line with budget. 
 
Online 
We  now provide  a full  subscription-based electronic  version of the newspaper 
online,  and although  revenues are  small in  this area  they are  growing, and 
providing  us with  useful data  to tailor  the future  development of  both our 
online and printed offerings. 
The  introduction of  our own  studio facilities  will significantly improve the 
opportunity  to provide exclusive video and  still content online, to complement 
the printed products. 
 
Digital Division 
The  Digital Division's  revenues are  derived primarily  from the sale of adult 
content  over a  number of  different platforms.   However the rapid increase in 
usage  of  the  adult  'tube'  internet  sites,  offering  free  content  in  an 
advertising  funded  environment,  along  with  lower  average  newspaper  sales 
volumes, has had an adverse impact on revenues across this division. 
 
A  reflection of the  changing environment, Locked  DVD revenues overtook mobile 
content  revenues for the first time in October 2009, and, although the DVDs are 
profitable, they provide a smaller margin revenue stream than mobile content. 
 
The  changes to the  content stream being  put into place  in the Print Division 
will  feed an improved supply of wholly-owned content to the Digital Division to 
help reinvigorate the mobile side of the business. 
 
In reaction to this changing landscape, the Group formed a new company, Telecom2 
out of the liquidation of an unconnected communications company, which has given 
the  Group a carrier-level (tier 2 grade) telecoms provider and internet service 
provider (ISP) for a small capital outlay. 
 
Telecom2  was formed in August 2009, and  provides call termination, routing and 
billing  facilities to the  Group and third  party customers (previously, all of 
the  Group's telecoms termination  and aggregation had  to be done through third 
parties).   Its  services  include  voice  over  internet  protocol  (VoIP)  and 
switchboard   services,   discount  national  and  international  call  routing, 
non-geographical  (0844), follow-me (070) and other  number services, as well as 
ISP-grade  hosting. Telecom2 employs two people and is an extremely low overhead 
business. 
 
Utilising the services of Telecom2 across the Group has generated advantages and 
these  will continue to be sought as the business develops. A new billing engine 
has  now been rolled  out, a key  milestone in allowing  Telecom2 to compete for 
business in this market. 
 
In  its first five months, Telecom2  contributed  GBP340k to revenues and recovered 
its setup costs. 
 
Cost  control  remains  a  priority  across  the  Digital  Division, and savings 
achieved in January 2010 of c.  GBP20k per month are helping to ensure this side of 
the  business remains profitable  and cash generative.  The Digital Division now 
employs a total of 19 staff across its four companies (2008: 22). 
 
Board changes 
Following  the restructuring activity in  the early part of  the period, and the 
improvements  in  reporting  and  structure  instigated by the current Chairman, 
David  Bailey  announced  his  intentions  to  step  down  to make way for a new 
Chairman to build on the solid foundation created and drive the Group forward. 
 
As  previously announced,  Martin Robinson  joined the  Board in January 2010 as 
non-executive  Deputy Chairman,  the intention  being for  Martin to take up the 
Chairmanship  following  the  Group's  next  annual  general meeting. David will 
continue  as a non-executive director  and I'd like to  take this opportunity on 
behalf  of the board  to thank David  for his efforts  and I look forward to his 
ongoing contribution to the business. 
 
At the same time, Rob Johnson, Managing Director of the Group's Digital Division 
was appointed to the board as an Executive Director. 
 
Andrew  Fletcher,  CFO,  left  the  business  in  July 2009, and Neil Robertson, 
finance  director of  Sport Newspapers  Limited, was  appointed to  the Board as 
Group Finance Director in October 2009. 
 
I  now believe both the board and the business are well placed to take advantage 
of the opportunities available to us in the coming year. 
 
During  what has been a challenging period  I would like to take the opportunity 
to thank our staff for their ongoing commitment and effort. 
 
Outlook 
Securing  a consistent, high quality stream of low-cost content for the business 
is  now a priority, as  a means to leverage  our various technology platforms in 
the  most advantageous  way. The  development of  a studio  to deliver a content 
archive  as  a  core  asset  of  the  business  opens up a wealth of new revenue 
possibilities:  from merchandising to syndication, web streaming to high quality 
video.  It also paves  the way for  the development of  in-house girl management 
facilities  to help us find, promote and  more importantly monetise the stars of 
the  future.  Whilst  the  outlook  for  advertising  revenues, circulations and 
consumers'  response to services remains poor,  access to exclusive content that 
allows  us to innovate quickly and  efficiently on current and future technology 
platforms will help to secure our future in an uncertain climate. 
 
 
Sport Media Group plc 
 
Consolidated Income Statement - Period ended 31 December 2009 
 
 
                                                              17 month 
                                                          period ended   Year to 
                                                           31 December   31 July 
                                                                  2009      2008 
 
 
                                                                  GBP'000      GBP'000 
 
 
 
Revenue                                                         30,937    29,394 
 
Cost of sales                                                 (25,627)  (16,095) 
 
                                                              ________  ________ 
 
 
 
Gross profit                                                     5,310    13,299 
 
Administrative costs                                           (5,750)   (6,865) 
 
                                                              ________  ________ 
 
Underlying operating (loss)/profit*                              (440)     6,434 
 
 
 
Depreciation                                                     (208)     (225) 
 
Finance income                                                      38       103 
 
Finance costs                                                  (1,638)     (309) 
 
                                                              ________  ________ 
 
Underlying (loss)/profit before tax**                          (2,248)     6,003 
 
 
 
Share based payment charges                                    (1,613)   (1,026) 
 
Reorganisation and re-launch charges                                 -   (1,489) 
 
Negative goodwill on acquisitions                                    -       279 
 
Amortisation of intangibles                                    (2,000)   (1,316) 
 
Impairment of goodwill and other intangibles                  (21,827)  (20,676) 
 
Non-recurring operating expenses                               (1,476)         - 
 
                                                              ________  ________ 
 
Loss before tax                                               (29,164)  (18,225) 
 
 
 
Taxation credit                                                  2,508       191 
 
                                                              ________  ________ 
 
Loss for the period from continuing operations                (26,656) 
                                                                        (18,034) 
 
 
 
Profit/(loss) attributable to minority interests                    13      (65) 
 
                                                                ______    ______ 
 
Loss for the period attributable to equity holders of 
the parent 
                                                              (26,643)  (18,099) 
 
                                                                ______    ______ 
 
Earnings per share: 
 
 
 
Basic loss per share                                          (27.38)p  (19.87)p 
 
                                                                ______    ______ 
 
Adjusted (loss)/earnings per share                             (2.29)p     5.72p 
 
                                                                          ______ 
 
Diluted loss per share                                        (27.38)p  (19.87)p 
 
                                                                ______    ______ 
 
 
*   Operating   (loss)/profit   before  non-recurring  items,  amortisation  and 
impairment of intangibles, share based payment charges, interest and taxation 
** (Loss)/Profit before tax and non-recurring items, amortisation and impairment 
of intangibles and share based payment charges 
 
 
Consolidated Statement of Changes in Equity - Period ended 31 December 2009 
 
 
                      Share Share premium         Other      Retained      Total 
                    capital       account       reserves     earnings     equity 
 
                       GBP'000          GBP'000           GBP'000         GBP'000       GBP'000 
 
 
 
Balance at 31                                        100        3,401      4,784 
July 2007                96         1,187 
 
 
 
 
 
Loss for the                                           -     (18,099)   (18,099) 
year                      -             - 
 
Share-based                                            -        1,026      1,026 
payments                  -             - 
 
 
 
Total                                                  -     (17,073)   (17,073) 
recognised 
income and 
expense                   -             - 
 
 
 
Dividends                 -             -              -      (3,480)    (3,480) 
 
Issue of share                                         -            -     43,700 
capital                 146        43,554 
 
Cost of shares                                         -            -    (3,204) 
issued                    -       (3,204) 
 
 
 
Balance at 31                                        100     (17,152)     24,727 
July 2008               242        41,537 
 
 
 
 
 
Net loss for                                           -     (26,643)   (26,643) 
the period                -             - 
 
Share-based                                            -        1,613      1,613 
payments                  -             - 
 
 
 
Total 
recognised 
income and 
expense                                                      (25,030)   (25,030) 
 
 
 
Issue of share                          -              -            -          5 
capital                   5 
 
 
 
Balance at 31                                        100     (42,182)      (298) 
December 2009           247        41,537 
 
                    =======    ==========    ===========    =========   ======== 
 
 
There are no items of recognised income and expense other than the loss for the 
period. 
 
 
Consolidated Balance Sheet - as at 31 December 2009 
 
                                                2009       2008 
                                                GBP'000       GBP'000 
 
 Non-current assets 
 
 Property, plant and equipment                   163        286 
 
 Indefinite lived assets                      10,517     11,452 
 
 Customer relationships and contracts          1,774      3,102 
 
 Goodwill                                        200     18,194 
 
 Other intangible assets                       1,617      3,390 
 
 Investments                                       -          3 
 
 Deferred tax asset                            1,787        430 
 
 
 
                                              16,058     36,857 
 
 
 
 Current assets 
 
 Inventories                                      89        102 
 
 Trade and other receivables                   3,352      6,812 
 
 Cash and cash equivalents                       268        534 
 
 
 
                                               3,709      7,448 
 
 
 
 Total assets                                 19,767     44,305 
 
 
 
 Current liabilities 
 
 Trade and other payables                      4,190      4,066 
 
 Short term borrowings                        11,957     10,430 
 
 Current tax liabilities                           -          - 
 
 
 
                                              16,147     14,496 
 
 
 
 Net current liabilities                    (12,438)    (7,048) 
 
 
 
 Non-current liabilities 
 
 Deferred tax liabilities                      3,835      4,986 
 
 
 
                                               3,835      4,986 
 
 
 
 Total liabilities                            19,982     19,482 
 
 
 
 Net (liabilities)/assets                      (215)     24,823 
 
 
 
 Equity 
 
 Share capital                                   247        242 
 
 Share premium account                        41,537     41,537 
 
 Other reserves                                  100        100 
 
 Share option reserve                          2,707      1,094 
 
 Retained earnings                          (44,889)   (18,246) 
 
 
 
 Equity shareholders' (deficit)/funds          (298)     24,727 
 
 
 
 Minority interests                               83         96 
 
 
 
 Total equity                                  (215)     24,823 
 
 
 
The  financial statements were approved by the board of directors and authorised 
for issue on 23 April 2010. 
 
 
Consolidated Cash Flow Statement - Period ended 31 December 2009 
 
                                                   17 month period ended Year to 
                                                             31 December 31 July 
                                                                    2009    2008 
 
 
 
                                                                    GBP'000    GBP'000 
 
Cash flows from operating activities 
 
 
Underlying operating (loss)/profit                                 (440)   6,434 
 
Adjustments for: 
 
Decrease in trade and other receivables                            3,094   2,484 
 
Decrease/(increase) in inventories                                    13    (62) 
 
Increase/(decrease) in trade & other payables                        123 (1,806) 
 
Profit on disposal of investment                                       -   (106) 
 
 
 
Cash generated from operations before 
non-recurring costs                                                2,790   6,944 
 
Reorganisation and re-launch costs                                     - (1,489) 
 
Non-recurring items                                              (1,476)       - 
 
 
 
Cash generated from operations                                     1,314   5,455 
 
 
 
 
 
Interest received                                                     38     103 
 
Interest paid                                                    (1,373)   (309) 
 
Other finance charges                                              (265)       - 
 
Income taxes received/(paid)                                         372 (1,015) 
 
 
 
Net cash generated from operating activities                          86   4,234 
 
 
 
Cash flows from investing activities 
Acquisitions of subsidiaries net of cash acquired               - (47,256) 
 
Purchase of property, plant and equipment                   (106)     (83) 
 
Proceeds from disposal of property, plant and equipment        17        - 
 
Purchase of intangible assets                             (1,797)  (2,063) 
 
Capitalised development expenditure                             -  (1,304) 
 
Sale/(purchase) of trade investment                             -      356 
 
 
 
Net cash used in investing activities                     (1,886) (50,350) 
 
 
 
Cash flows from financing activities 
Cash proceeds from issue of share capital                       5         41,100 
 
Share issue costs  settled in cash                              -          (604) 
 
Proceeds from new borrowings                                1,959          8,500 
 
Repayment of borrowings                                     (430)          (570) 
 
Payment of equity dividends                                     -        (3,480) 
 
 
 
Net cash from  financing activities                         1,534         44,946 
 
 
 
Net decrease in cash and cash equivalents                   (266)        (1,170) 
 
Cash and cash equivalents at beginning of period              534          1,704 
 
 
 
Cash and cash equivalents at end of period                    268            534 
 
                                                   ============== ============== 
 
 
 
 
 
For further information, please contact: 
 
Sport Media Group plc 
David Bailey, Chairman 
Andrew Fickling, Chief Executive Officer 
Neil Robertson, Group Finance Director 
Tel: + 44 (0) 7836 258 558 
Tel: + 44 (0) 161 236 4466 
www.sportmediagroup.co.uk <http://www.sportmediagroup.co.uk/> 
 
Daniel Stewart & Company plc 
Simon Leathers/Oliver Rigby 
Tel: + 44 (0) 20 7776 6550 
www.danielstewart.co.uk <http://www.danielstewart.co.uk/> 
 
Notes to Editor: 
On the 5th September 2007 Interactive World Plc acquired the entire issued share 
capital  of Sport Newspapers Limited by way  of a reverse takeover. At this time 
the  name of the Company  was changed to Sport  Media Group Plc and the enlarged 
issued share capital was admitted to trading on AIM. 
 
The  Group  has  grown  to  become  a  recognised UK branded  tabloid newspaper, 
publishing  various titles including the Daily Sport and Sunday Sport. The Sport 
titles  are  sold  to  approximately  39,000 retail  outlets  around the UK by a 
network of wholesalers, both commercial and independent. 
 
The  Group's other activities include the sales of digital media content through 
mobile telephones and via the internet. 
 
 
 
[HUG#1407898]