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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tla Worldwide Plc | LSE:TLA | London | Ordinary Share | GB00B68HD384 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.70 | 1.60 | 1.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTLA
RNS Number : 6407P
TLA Worldwide PLC
30 May 2018
30 May 2018
TLA Worldwide plc
("TLA" or "the Group")
2017 Full Year Results
TLA Worldwide plc (AIM: TLA), a leading athlete representation and sports marketing business, is pleased to announce its final results for the year ended 31 December 2017.
Hot Features
Premium
HEADLINE RESULTS Year ended Year ended
31 December 31 December %
2017 2016
$000 $000 Change
Revenue 51,100 43,425 17.7
Gross profit 34,800 32,778 6.2
Headline EBITDA (before
provisions and FX) 6,240 5,978 4.4
Headline EBITDA(1) 4,673 (398) 1,274
Headline profit/(loss)
before tax(3) 2,999 (1,876) 259.9
Sports Marketing Headline
EBITDA 5,862 3,395 72.7
Baseball Headline EBITDA 3,351 470 613.0
--------------------------- ------------- ------------- -------
Headline EBITDA margin(2) 13.4% -1.2% 14.6pp
Headline diluted earnings
per share (cents)(4) 1.03 1.00 3.0
--------------------------- ------------- ------------- -------
STATUTORY RESULTS Year ended Year ended
31 December 31 December %
2017 2016
$000 $000 Change
Operating loss(5) (6,150) (6,978) 11.9
Loss before tax(5) (8,457) (9,259) 8.7
Loss per share (cents) (5.43) (4.32) (25.7)
Net debt at 31 December (16,495) (22,059) 25.2
Operational Highlights
Sports Marketing
-- Sports Marketing revenue grew 17.4% to $35.6 million (2016: $30.3 million)
-- Delivered 8 events in 2017, more than any previous year, including Brazil vs. Argentina at the Melbourne Cricket Ground ("MCG") and New Zealand All Blacks ("All Blacks") vs. the Barbarians at Twickenham
-- Awarded Sports Marketing Agency of the Year 2017 in Australia (Mumbrella Awards) -- Almost 300,000 spectators attended TLA events in 2017, a record number for the Group -- Talent Marketing group expanded to include the representation of tennis players -- Golf continues its trend of recruiting the best young golfers in the US
-- US Sports Marketing restructuring completed creating a solid foundation to return this business to growth
Baseball Representation
-- Baseball Representation revenue grew 18.3% to $15.5 million (2016: $13.1 million)
-- Offseason contracts negotiated by the division worth up to $186 million (2016 offseason: $274 million)
-- 15 arbitration clients (2016: 20) and 6 MLB free agents (2016: 17) agreed new contracts in the off season
-- 73 MLB clients on MLB teams 40-man roster (2016: 89)(6) , of which 30 are fee paying (2016: 35)
-- Contract extensions for key management teams of TLA Baseball's North American and Latin American businesses, contracted out to 2021/22
-- Nine clients in the MLB All Star game - a TLA record (2016: four) -- TLA had eight players playing in the MLB World Series
Client achievements
The Group has commercial relationships with 844 clients (2016: 884). A selection of achievements from TLA's clients include:
-- Adam Peaty retained his titles for 50m and 100m at the World Aquatics Championships -- Sloane Stephens won her first major in the women's tennis singles at the 2017 US Open
-- Sam Burns awarded NCAA Division I Jack Nicklaus National Player of the Year Award, before turning professional in 2017
-- George Springer voted World Series MVP in 2017 -- Jim Furyk appointed captain of the US Ryder Cup team
Key appointments
-- Richard Shamsi was appointed Group CFO in December 2017 and started his role on 2 January 2018
-- Appointed Matthew Craig as North American CFO in October 2017
1 Headline EBITDA is defined as statutory operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any acquisition related charges, share-based payment charges and exceptional items.
2 Headline EBITDA over gross profit
3 Headline EBITDA after bank interest and depreciation.
4 Headline earnings per share is defined as headline profit for the year divided by the weighted average number of ordinary shares in issue during the year. Headline profit for the year is defined as profit for the year adjusted to add back amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges, fair value movement on financial derivatives, unwinding of discount on contingent consideration and exceptional items.
5 After $10.8 million of charges relating to exceptional costs ($2.7 million), amortisation and depreciation ($3.8 million), additional fair value movements on contingent consideration ($0.8 million), and revised baseball earnouts and other acquisition related costs ($2.4 million); and after a charge in respect of share based payments ($1.1 million).
6 As at the start of the 2017 or 2016 Baseball season.
Mike Principe, Group CEO of TLA, commented:
"It is pleasing to report double-digit revenue growth and 6% growth in gross profit in 2017, which reflects the strong performance across our Sports Marketing and Baseball Representation divisions. In Sports Marketing we delivered our highest number of events in one year, with events in the US, UK and Australia. The Brazil vs. Argentina football game at the MCG and the All Blacks vs. the Barbarians at Twickenham saw near capacity audiences watch enthralling games. Baseball Representation continues to develop as our young roster matures into a greater number of fee paying clients.
"The historic accounting issues faced by the Group were rectified in 2017 and resulted in TLA introducing a stronger financial function at the Group level as well as in the US subsidiary. As a result the business was stabilised in 2017 with extended banking facilities and net debt reducing significantly compared to the prior year. We believe the actions we have taken have established a solid base from which to grow from and move forward positively.
"In 2018, the fundamentals of the business remain sound and trading has started well in both Baseball Representation and Sports Marketing. In Baseball, TLA has a high-quality and maturing roster of clients. Our Sports Marketing division organised its highest number of events in 2017 and the Group expects to continue to organise popular flagship live events in Soccer, Rugby and other sports played in front of large audiences. The Board looks forward to the future with confidence."
Enquiries:
TLA Worldwide plc
-----------------------------------------------
Bart Campbell, Executive +44 20 7618 9100
Chairman On the day
---------------------------- -----------------
Michael Principe, Chief +44 20 7618 9100
Executive Officer On the day
+1 212 645 2141
Thereafter
---------------------------- -----------------
Numis Securities
-----------------------------------------------
Nick Westlake and Oliver
Hardy (Nomad) +44 20 7260 1000
---------------------------- -----------------
Christopher Wilkinson
---------------------------- -----------------
Luther Pendragon
-----------------------------------------------
Harry Chathli, Alexis Gore +44 20 7618 9100
---------------------------- -----------------
About TLA
TLA is a leading athlete representation, sports marketing and event management group quoted on London's AIM market. The Group derives revenues from long term agency relationships with many prominent US and international sports stars, broadcasters and media personalities associated with major sports including the MLB, NFL, NBA, PGA TOUR, AFL, Olympians and cricketers. In addition, it also provides a range of services in respect of media consultancy, sports sponsorship and event creation and ownership. With over 170 full-time personnel, TLA serves its clients from 10 locations worldwide including its offices in London, UK; New York, Newport Beach, Houston, Charleston, San Francisco, USA; Melbourne, Perth, Adelaide and Sydney, Australia. For more information, please visit www.tlaworldwide.com.
Overview
The Group's principal activity is that of a leading, fully integrated talent representation and sports marketing business.
Despite the challenges, 2017 was a year of operational progress delivering encouraging results with double-digit revenue growth for the Group, reflecting positive performances in both Sports Marketing and Baseball Representation.
The Group has expanded into representing tennis players such as Sloane Stephens who won the US Open. The Group organised and delivered more sporting events than ever before notably bringing the All Blacks to Twickenham and American College Football and Argentina vs Brazil soccer to Australia. Almost 300,000 spectators attended live TLA events in 2017, a record number for the Group.
The Group's banking agreement was revised in May 2018 where the repayment schedule together with covenants were revised to provide further funding flexibility. The debt rescheduling moved $2.6 million of repayments previously due before March 2019 to later in 2019.
The full year results reflect the work that the Group has put in during the past year, not only to resolve the historic accounting issues, but to put into place the resources and framework to strengthen the finance and reporting functions in its US business. The restructuring of the US finance team has been completed. In addition, TLA strengthened its management team with the appointment of Richard Shamsi as Group CFO. The Headline EBITDA, prior to provisions and FX, of $6.2 million (2016: $6.0 million) is a reflection of the hard work and effort of everyone in the Group.
Operating Overview
Sports Marketing
The Sports Marketing division assists with the on-field and off-field activities of athletes and represents broadcasters and coaches in respect of their contract negotiations. The division also manages and delivers events, primarily in sports, along with the sale of merchandise and represents brands who invest in sport, by helping to bring this investment to life.
The division performed well in 2017 as revenue increased 17.4% to $35.6 million (2016: $30.3 million) due to the success of its portfolio of popular sporting events and the strong performance of TLA's Australian sports marketing business.
Our events division organised and delivered several large events, including Brazil vs. Argentina at the MCG in front of 96,000 people in June 2017 and the All Blacks against the Barbarians at Twickenham, in November 2017, in front of a crowd of over 62,500.
Other events TLA organised included: USA against the Irish national rugby team at Red Bull Stadium in June; the 2017 American College Football season opener in Sydney in August, with Stanford University playing Rice University; the Australian national rugby union team against the Barbarians, in October; the Pasifika Challenge featuring the All Blacks against Samoa and Wales vs. Tonga in a doubleheader at Eden Park, New Zealand in Auckland in June; and TLA's Ice Hockey Classic touring Australia in June. TLA has now built a suite of successful recurring events, providing greater revenue visibility for the Group. Recurring events include:
-- Four years of rugby in the US;
-- Three years of top club and international football matches in Australia;
-- Three years of matches with the New Zealand All Blacks;
-- Three years of TLA's Ice Hockey Classic in Australia;
-- Two years of bringing NCAA College Football to Australia; and
-- Two years of international rugby for the Irish Rugby Football Union ("IRFU")
TLA is in discussions with all the above rights holders for longer term arrangements based off an established track record of delivery and has extended in 2018 its work with New Zealand Rugby ("NZR"), the IRFU and the Ice Hockey Classic for a further year.
TLA Australia continues to go from strength to strength, exceeding the Board's expectations. During the year, it performed work for clients such as Emirates at the Australian Open and, with the US sports marketing team, the US Tennis Open, Cricket Australia for the Ashes Series and Big Bash League, the Australian Football League ("AFL") and the National Australia Bank during the year.
The US Sports Marketing group completed its restructuring in 2017 with the recruitment of new personnel bringing TLA new services and client opportunities. With a solid foundation in place, management has been encouraged by progress and is focused on a return to growth in the US business.
Baseball Representation
The Baseball Representation division advises the on-field activities of baseball players, including all aspects of players' contract negotiations throughout their careers.
The Group holds one of the largest rosters of baseball clients in the US and is well positioned to benefit from a high quality and maturing roster. TLA had several MLB free agent clients in the current off-season and a number of clients eligible for arbitration and market-related salaries, thereby enabling the Group to negotiate these contracts and secure the accompanying agency fees. In the 2017-2018 off-season, the division negotiated contracts worth up to $186 million (2016-2017 offseason: $274 million). The current off-season contracts year on year fall in value reflects the balance of TLA's roster with its younger players maturing through arbitration and towards free agency, when larger contracts are earned, while certain older players on the roster have approached the point in their career where their earning potential is lower. It also reflects a trend of clubs, investing in younger players instead of older ones, which going forwards bodes well for TLA given its younger player base.
Nine of TLA's clients were selected for the 2017 Major League Baseball All Star game held in July 2017, the highest number of All Star selections in TLA's history, and an increase over the four clients selected for last year's game.
As announced in March 2017, the Group extended its employment and earn-out agreements with key personnel in its Baseball North America and Baseball Latin American businesses, incentivising them to remain at TLA for at least another four years.
Revenue in Baseball Representation increased 18.3% to $15.5 million and Headline EBITDA increased by $2.9 million to $3.4 million (2016: $0.5 million).
Corporate Developments
Key appointments
TLA has divided the roles of US CFO and Group CFO and recruited a new Group CFO, Richard Shamsi, who started with TLA on 2 January 2018.
Richard has held senior finance roles for more than 15 years and has considerable experience in both the media and agency spaces, particularly working for UK based companies with extensive US operations. Most recently, he served as Chief Financial Officer of AKQA, a wholly-owned operating company of WPP PLC and a leading full service digital agency where he was heavily involved in improving the operating and financial performance of the business. Prior to this, he was the CFO of Weve Limited, a market-leading mobile media, data analytics, consultancy and technology solutions business, which was established as a joint venture between O2, Vodafone and EE. He was instrumental in improving the financial controls and monitoring processes for Weve and overseeing O2's buyout from the joint venture in 2015.
TLA also appointed Matthew Craig as North American CFO on the 31 October 2017. Prior to joining TLA, Matthew worked for two years as the Director of Accounting and Analysis at Disney Theatrical Group, the live events division of Disney which includes theme parks, Broadway productions and cruise ships. Previously he was Director of Finance for ten years at the leading sports and entertainment agency, WME, (formerly International Management Group ("IMG")). In his role at IMG Matthew supervised the reporting of all North American Media properties including entertainment, archive, digital, licensing, consulting, international distribution, post production facilities and various acquisitions.
Outlook
In 2018 the fundamentals of the business remain sound and trading has started well, particularly in Sports Marketing Australia. In Baseball, TLA has a high-quality and maturing roster of clients. TLA's Sports Marketing division organised the Group's highest number of events in 2017 and TLA expects to continue to organise popular flagship events in American Football, Soccer, Rugby and other sports played in front of large audiences. As a result, the Board looks forward to the future with confidence.
FINANCE REVIEW
Review of the Group's financial performance for the year ended 31 December 2017.
Summary of RESULTS
Year ended
31 December
2016
Total
2016
Year ended 31 December 2017 $000
-------------
Total
Sports
Baseball Marketing Central 2017
$000 $000 $000 $000
---------- ------------ -------- -------- -------------
Headline EBITDA
prior to provisions
and foreign exchange 4,259 6,521 (4,540) 6,240 5,978
Provision adjustments
(1) (908) (659) - (1,567) (5,923)
One-off forex
charge (2) - - - - (453)
Headline EBITDA 3,351 5,862 (4,540) 4,673 (398)
Amortisation of
intangibles (2,431) (1,165) - (3,596) (4,863)
Depreciation - (81) (167) (248) (179)
Exceptional and
acquisition related
(costs)/income (2,503) (433) (2,977) (5,913) 1,597
Share based payments - - (1,066) (1,066) (3,135)
---------- ------------ -------- -------- -------------
Statutory operating
profit/(loss) (1,583) 4,183 (8,750) (6,150) (6,978)
---------- ------------ -------- -------- -------------
2017 AND 2016 Headline ebitda
Year ended Year ended %
31 December 31 December
2017 2016
Baseball (3) 4,259 3,940 8.1
Sports Marketing (3) 6,521 5,848 11.5
Central (4,540) (3,810) (19.2)
Headline EBITDA pre-provisions
and one-off forex charge 6,240 5,978 4.4
Provisions (1,567) (5,923) 73.5
One-off forex charge - (453) -
Headline EBITDA 4,673 (398) 1,274
The increase in central costs primarily relate to the finance team and the aligning of the central cost base.
1 Provisions relate to irrecoverable trade and other receivables in the US business.
2 The one-off foreign exchange charge in 2016 related predominately to a loss on a forward currency contract relating to the International Champions Cup ("ICC") which had to be settled before the ICC proceeds were received.
3 Prior to provisions for irrecoverable trade and other receivables in the US business.
STATUTORY LOSS BEFORE TAX
For the period ended 31 December 2017, the Group reported a statutory loss before tax of $8.5 million (2016: loss of $9.3 million). This loss includes the impact of:
-- $2.1 million exceptional costs relating to the adjustment for an amended, integrated earn out for the Baseball businesses;
-- $1.4 million relating to additional external resources to support the detailed review into the misappropriation of funds by the former CFO Donald Malter; including the costs of forensic accountants, the interim CFO and legal counsel. As set out in prior announcements the Group continues to pursue historic misapproiated funds under its insurance policy; -- charges for amortisation and impairment totalling $3.6 million (2016: $4.9 million);
-- non-cash costs for share-based payment charges of $1.1 million (2016: $3.1 million), the long-term incentive plan which this charge relates to lapsed in September 2017;
-- provisions for irrecoverable trade and other receivables in the US business (both Baseball and Sports Marketing) of $1.6 million (2016: $5.9 million); and
-- impairment $0.8 million of loans to other ventures.
Performance at the operating level, before interest, tax, depreciation, amortisation and exceptional charges showed a Group Headline EBITDA of $4.7 million (2016: loss of $0.4 million). Group Headline EBITDA margin of 13.4%. (2016: -1.2%). 2017 and 2016 was materially impacted by provisions (that relate to a final cleaning up of historical issues relating to irrecoverable trade debtors and other receivables within the US business), and Group Headline EBITDA, prior to these charges, was $6.2 million (2016: $6.0 million).
The improvement in Headline EBITDA reflects:
-- Baseball Representation's continued profitability; -- The beginning of the turnaround in the US sports marketing business; -- The continued excellent performance of the Australian sports marketing business; -- The increased profitability of events; and -- Higher central costs both in the US and the UK; - In the US this related to increasing the US finance function; and - In the UK the investment into a Global Head of Events to drive new events for the Group.
Headline diluted earnings per share using Headline profit attributable to owners of the company was 1.03 cents (2016: earnings 1.00 cents).
Statutory diluted loss per share attributable to owners of the company was 5.43 cents (2016: loss 4.32 cents).
STATUTORY RESULTS Year ended Year ended %
31 December 2017 31 December 2016
$000 $000 Change
Revenue 51,100 43,425 17.7
Operating loss (6,150) (6,978) 11.9
Statutory loss before tax (8,457) (9,259) 8.7
Statutory diluted loss per share (cents) (5.43) (4.32) (25.7)
HEADLINE RESULTS %
Year Year ended
ended 31 December
31 December 2016
2017
$000 $000 Change
Revenue 51,100 43,425 17.7
Gross profit 34,800 32,778 6.2
Headline EBITDA 4,673 (398) 1,274
Headline EBITDA margin
(1) 13.4% -1.2% 14.6pp
Headline profit/(loss)
before tax (2) 2,999 (1,876) 259.9
Headline diluted earnings
per share (cents) 1.03 1.00 3.0
(1) Headline EBITDA over gross profit
(2) Headline EBITDA after bank interest and depreciation
TLA segments its operations into Sports Marketing and Baseball Representation as follows:
Year ended 31 December 2017
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 15,476 35,624 - 51,100
Cost of sales (499) (15,801) - (16,300)
---------------- ----------- -------- ---------
Gross profit 14,977 19,823 - 34,800
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (11,626) (13,961) (4,540) (30,127)
Headline EBITDA 3,351 5,862 (4,540) 4,673
Amortisation of
intangibles (2,431) (1,165) - (3,596)
Depreciation - (81) (167) (248)
Exceptional items
and acquisition
related costs (2,503) (433) (2,977) (5,913)
Share based payments - - (1,066) (1,066)
Operating (loss)/profit (1,583) 4,183 (8,750) (6,150)
Finance income and
costs (2,307)
Loss before tax (8,457)
Tax 671
Loss for the year (7,786)
Year ended 31 December 2016
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 13,078 30,347 - 43,425
Cost of sales (57) (10,590) - (10,647)
---------------- -----------
Gross profit 13,021 19,757 - 32,778
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (12,551) (16,362) (4,263) (33,176)
Headline EBITDA 470 3,395 (4,263) (398)
Amortisation and
impairment of intangibles (3,127) (1,736) - (4,863)
Depreciation - (78) (101) (179)
Exceptional items
and acquisition
related costs 4,795 (1,439) (1,759) 1,597
Share based payment - - (3,135) (3,135)
Operating profit/
(loss) 2,138 142 (9,258) (6,978)
Finance costs (2,281)
Loss before tax (9,259)
Tax 3,101
Loss for the year (6,158)
DIVISIONAL PERFORMANCE
Sports Marketing
2017 2016 %
$000 $000 Change
------- ------- -------
Revenues 35,624 30,347 17.4
Gross profit 19,823 19,757 0.5
Headline EBITDA 5,862 3,395 72.7
Headline EBITDA Margin 29.5% 17.2% 12.3pp
Operating profit 4,183 142 2,845
Sports Marketing for the year ending 31 December 2017 delivered revenue of $35.6 million, Headline EBITDA of $5.9 million and operating profit of $4.2 million. The division's reported revenues grew by 17.4%. This growth was partly due to increases in revenues from events, where TLA acted as principal, and revenue increases in the merchandise business within TLA Australia.
Due to the high cost of sales in delivering events or merchandise within TLA Australia, a more effective measure of performance is gross profit which increased by 0.5% to $19.9 million. This reflects the strong performance of the Australian sports marketing and TLA's events businesses, off-set by lower gross profit in the Group's US Sports Marketing business.
Headline EBITDA margin increased from 17.2% to 29.5% during the year; driven by profit increases in Events and the Australia Sports Marketing business.
Baseball Representation
2017 2016 %
$000 $000 Change
-------- ------- --------
Revenue 15,476 13,078 18.3
Gross profit 14,977 13,021 15.0
Headline EBITDA 3,351 470 613.0
Headline EBITDA Margin 22.4% 3.6% 18.8pp
Operating (loss)/profit (1,583) 2,138 (174.0)
Performance for the year ended 31 December 2017 saw revenue increase to $15.5 million, Headline EBITDA of $3.4 million and gross profit of $15.0 million. The Headline EBITDA reflects a more normal level of provisioning. Gross profit increased by 15% and the statutory operating loss was $1.6 million. The statutory operating profit is higher than the Headline EBITDA in 2016 because of an exceptional credit relating to the adjustment to expected contingent consideration payable in the future. The statutory operating loss in 2017 is stated after amortisation ($2.4 million); fair value adjustments to contingent consideration ($0.4 million); and accounting of performance related contingent consideration extensions ($2.1 million).
CASH FLOW AND BANKING ARRANGEMENTS
Cash balances as at 31 December 2017 were $11.6 million (31 December 2016: $8.6 million), with net debt of $16.5 million (31 December 2016: $22.1 million).
The Group's banking facilities were renewed on 3 November 2017 with Sun Trust Bank, its existing bankers. The facilities comprise an amortising term loan of $23.75 million and a revolving facility of $5 million. The facilities mature in March 2020. The interest margin varies between 3% and 5.5% over US LIBOR, depending on the Group's leverage ratio and it is secured against the assets of the Group. The term loan has quarterly repayments over the life of the loan together with a final bullet repayment. In May 2018 the repayment schedule together with covenants were revised to provide further funding flexibility. The debt rescheduling moved $2.6 million of repayments previously due before March 2019 to later in 2019.
Changes in the US tax rate announced in the year incentivised a number of clients to prepay their commissions earlier than they might otherwise have done, which improved cash inflows and contributed to the reduction in net debt.
$5.4 million of cash earn-out is payable for 2017 and prior year performance which were due to be paid in 2018 and which have been rescheduled under pre-existing subordination agreements. The timing of these earnout payments will be governed by when the Board believes it has sufficient cash headroom to make such payments; current expectation is late 2019. These relate to the vendors of ESP (TLA's Australian sports marketing business) and the vendors of PEG (part of TLA's Baseball business). In addition, the vendors of ESP will be issued $1.2 million of TLA shares to settle the share portion of their earn-out payment. The Group has the option to also pay $0.6 million of the cash earn-out in shares of the Company to the vendors of PEG, which it intends to exercise.
BALANCE SHEET POSITION
The Group has Net Assets at the end of December 2017 of $18.6 million (31 December 2016: $24.7 million). Furthermore, Current Assets at 31 December 2017 of $24.8 million (31 December 2016: $25.1million), with total liabilities (current and on-current) of $58.0 million (31 December 2016: $52.9 million) however the Directors' forecasts and sensitivity analysis indicate that the Group is expected to have adequate financial resources to meet its liabilities as they fall due for the foreseeable future.
FUTURE DEVELOPMENTS
The Group intends to continue its strategy of organic growth. This strategy is focused on geographic expansion, whereby TLA offers its current services in new geographies; hires senior fee earners; or expands into complementary services that TLA provides to its clients.
DIVIDS
The board does not propose a final dividend for the year and will review the dividend policy at the half year 2018 (2017: nil).
Key Performance Indicators ("KPI's")
The Group manages its operational performance using a number of KPIs. Performance against these KPIs was as follows:
KPI Year ended Year ended
31 December 31 December
2017 2016
Headline EBITDA $4.7 million $(0.4) million
Headline EBITDA Margin 13.4% (1.2)%
Loss before tax $(8.5) million $(9.3) million
Off-season contracts negotiated $186 million $274 million
Debtor collection days 70 days 83 days
TLA Worldwide plc
Group Income Statement
For the year ended 31 December 2017
Year ended Year ended
31 December 2017 31 December 2016
Note $000 $000
Revenue 1 51,100 43,425
Cost of sales (16,300) (10,647)
Gross profit 34,800 32,778
Administrative
expenses (40,950) (39,756)
Operating loss (6,150) (6,978)
Headline EBITDA 4,673 (398)
Amortisation and
impairment of
intangibles (3,596) (4,863)
Depreciation (248) (179)
Exceptional and
acquisition related
(costs)/income 3 (5,913) 1,597
Share based payments (1,066) (3,135)
Operating loss (6,150) (6,978)
Net Finance costs 4 (2,307) (2,281)
Loss before taxation (8,457) (9,259)
Taxation 5 671 3,101
(7,786) (6,158)
Loss for the year
Loss for the period from continuing
operations attributable to:
Owners of the company (7,786) (6,189)
Non-controlling
interest - 31
_______________ _______________
(7,786) (6,158)
Loss (pe per share from continuing
operations:
Basic (cents) 2 (5.43) (4.32)
Diluted (cents) 2 (5.43) (4.32)
TLA Worldwide plc
Group Statement of Comprehensive Income
For the year ended 31 December 2017
Year ended Year ended
31 December 2017 31 December 2016
$000 $000
Loss for the year (7,786) (6,158)
Exchange differences on translation of overseas operations 624 (5,085)
Total comprehensive expense (7,162) (11,243)
Total comprehensive expense attributable to:
Owners of the company (7,162) (11,274)
Non-controlling interests - 31
____________________ _______________
(7,162) (11,243)
TLA Worldwide plc
Group Balance Sheet
31 December 2017
31 December 2017 31 December 2016
Note $000 $000
Non-current assets
Goodwill 6 43,259 42,156
Intangible assets 1,106 4,581
Property, plant and equipment 544 480
Deferred tax asset 6,875 5,324
Derivative financial instruments 15 -
51,799 52,541
Current assets
Trade and other receivables 13,199 16,491
Cash and cash equivalents 11,630 8,566
24,829 25,057
Total assets 76,628 77,598
Current liabilities
Trade and other payables (19,693) (15,612)
Borrowings 7 (6,250) (30,625)
Contingent consideration 8 (6,552) -
(32,495) (46,237)
Net current liabilities (7,666) (21,180)
Non-current liabilities
Borrowings 7 (21,875) -
Contingent consideration 8 (3,671) (6,602)
Derivative financial instruments - (76)
(25,546) (6,678)
Total liabilities (58,041) (52,915)
Net assets 18,587 24,683
Equity
Share capital 4,473 4,473
Share premium 46,079 46,079
Merger reserve 309 309
Foreign currency reserve (6,263) (6,887)
Share based payments reserves - 3,859
Employee share reserve - (9,633)
Retained loss (26,011) (13,517)
Total equity attributable to owners of the Company 18,587 24,683
TLA Worldwide plc
Group Statement of Cash Flows
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Note $000 $000
Net cash from operating activities 9 7,583 1,897
Investing activities
Purchases of property, plant and equipment (297) (389)
Contingent consideration paid 8 (750) (1,600)
Purchase of other intangible assets (42) (21)
Net cash used in investing activities (1,089) (2,010)
Financing activities
Interest paid 4 (1,426) (1,299)
Repayment of borrowings (2,500) (2,500)
Increase in borrowings - 10,071
Dividend paid - (2,375)
Acquisition of non-controlling interest - (1,143)
Net cash from financing activities (3,926) 2,754
Net increase in cash and cash equivalents 2,568 2,641
Cash and cash equivalents at beginning of the year 8,566 6,312
Foreign currency translation effect 496 (387)
Cash and cash equivalents at end of the year 11,630 8,566
TLA Worldwide plc
Group Statement of Changes in Equity
For the year ended 31 December 2017 and 2016
Share Share Merger Foreign Non-controlling Share Employee Retained Total
Capital Premium Reserve Currency interest based share Loss
Reserve payment reserve
reserves
----------------- -------- -------- -------- --------- ---------------- --------- --------- --------- ---------
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1
January
2016 4,461 46,079 - (1,802) 134 724 (9,633) (4,068) 35,895
Total
comprehensive
income for the
year - - - (5,085) 31 - - (6,189) (11,243)
Dividend - - - - - - - (1,949) (1,949)
Equity issued
during
the year 12 - 309 - - - - - 321
Credit to equity
for
share based
payments - - - - - 3,135 - - 3,135
Acquisition of
non-controlling
interest - - - - (165) - - (1,311) (1,476)
Balance at 1
January
2017 4,473 46,079 309 (6,887) - 3,859 (9,633) (13,517) 24,683
Total
comprehensive
income for the
year - - - 624 - - - (7,786) (7,162)
Credit to equity
for
share based
payments - - - - - 1,066 - - 1,066
Share options
expired - - - - - (4,925) - 4,925 -
Transfer to
retained
earnings - - - - - - 9,633 (9,633) -
Balance at 31
December
2017 4,473 46,079 309 (6,263) - - - (26,011) 18,587
Notes to the announcement of final results
Principal accounting polices
While the financial information included in this final results announcement has been prepared in accordance with the recognized and measurement criteria of International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRSs.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2017, or year ended 31 December 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's annual general meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.
Going concern
The Directors have reviewed forecasts for the years ending 31 December 2018 and 31 December 2019 and these forecasts covered both a base case and also consideration of reasonable downside scenarios. The forecasts show that in the base case and reasonable downside scenarios, there are adequate facilities available to meet liabilities, and also satisfy financial covenants requirements.
Key factors taken into account in assessing going concern include:
-- The revised banking facilities agreed in May 2018 which reflect deferral of $2.6 million of repayments to the second half of 2019 and revised covenant levels; together with deferral of earn-outs of $4.8 million under the subordination agreements as the Group had insufficient resources to meet them. These payments are deferred until late 2019, to outside of the going concern assessment period, although they remain a liability of the Group to be paid in the future when the Group has adequate financial resources to make those payments;
-- Recognition of circumstances in the US business in 2016 and 2017, and revenue assumptions made around US performance in Baseball and Sports Marketing;
-- Events revenue is contingent on success of events, which inherently carry risk and therefore the Group has had mixed past success, and this is therefore reflected in downside scenario;
-- Certain cost saving initiatives have been commenced in the US and factored into forecasts and need to be achieved, and therefore the risk of non-ahievement is reflected in downside scenerio; and
-- The forecasts assume no further acquisitions and no further material investments.
Considering the above, at the time of approving the financial statements, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future although on a downside scenario basis has little headroom on either a cash or covenant basis. The Group's revised banking facilities, as outlined in note 7, are no longer disclosed as repayable within 12 months, as was required in the 31 December 2016 Group balance sheet, and the revised repayment terms and loan covenants are such that the Directors do not anticipate any future loan covenant issues arising in the forecast period. The Board therefore continues to adopt the going concern basis of accounting in preparing the financial statements.
1. Segmental Analysis
The Group reports its business activities in two areas: Baseball Representation and Sports Marketing. Unallocated represents the Group's costs as a public company, certain exceptional items and acquisition related costs (see note 3). The Group derives its revenues in the United States of America.
Baseball Representation - primarily assists the on-field activities of baseball players, including all aspects of a player's contract negotiation.
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
All of the Group's revenue arises through the rendering of services. In the year ended 31 December 2017, there were no clients who generated in excess of 5 percent of total revenue (31 December 2016: nil).
Year ended 31 December 2017
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 15,476 35,624 - 51,100
Cost of sales (499) (15,801) - (16,300)
Gross profit 14,977 19,823 - 34,800
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (11,626) (13,961) (4,540) (30,127)
Headline EBITDA 3,351 5,862 (4,540) 4,673
Amortisation and
impairment of intangibles (2,431) (1,165) - (3,596)
Depreciation - (81) (167) (248)
Exceptional items
and acquisition
related costs (2,503) (433) (2,977) (5,913)
Share based payments - - (1,066) (1,066)
Operating profit/
(loss) (1,583) 4,183 (8,750) (6,150)
Finance income and
costs (2,307)
Loss before tax (8,457)
Tax 671
Loss for the year (7,786)
Assets 30,535 38,663 7,430 76,628
Liabilities (9,897) (18,878) (29,266) (58,041)
Capital employed 20,638 19,785 (21,836) 18,587
1. Segmental Analysis (Continued)
Year ended 31 December 2016
Baseball Sports Central Total
Representation Marketing
$000 $000 $000 $000
---------------- ----------- -------- ---------
Revenue 13,078 30,347 - 43,425
Cost of sales (57) (10,590) - (10,647)
Gross profit 13,021 19,757 - 32,778
Operating expenses
excluding depreciation,
amortisation, share
based payments,
acquisition related
costs and exceptional
items (12,551) (16,362) (4,263) (33,176)
Headline EBITDA 470 3,395 (4,263) (398)
Amortisation of
intangibles (3,127) (1,736) - (4,863)
Depreciation - (78) (101) (179)
Exceptional items
and acquisition
related costs 4,795 (1,439) (1,759) 1,597
Share based payments - - (3,135) (3,135)
Operating profit/
(loss) 2,138 142 (9,258) (6,978)
Finance costs (2,281)
Loss before tax (9,259)
Tax 3,101
Loss for the year (6,158)
Assets 39,215 32,290 6,093 77,598
Liabilities (2,086) (5,987) (44,842) (52,915)
Capital Employed 37,129 26,303 (38,749) 24,683
The accounting policies of the reportable segments are the same as the Group's accounting policies described in the principal accounting policies. Segment profit represents the profit earned by each segment, central administration costs including Directors' salaries, exceptional, acquisition and finance costs, and income tax expense. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.
2. Loss per share
Year ended Year ended
31 December 31 December
2017 2016
cents per cents per
share share
Basic loss per share (5.43) (4.32)
Diluted loss per share (5.43) (4.32)
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for calculating diluted earnings per ordinary share are identical to those used for basic loss per ordinary share. At 31 December 2017 all share options had expired. In 2016 the exercise of share options that were out of the money would have had the effect of reducing the loss per ordinary share and were therefore not dilutive under the terms of the IAS 33.
The calculation of loss per share is based on the following data:
2017 2016
$000 $000
Loss for the purposes of
basic earnings per share
being net loss attributable
to owners of the Company (7,786) (6,189)
Number of Shares
Weighted average number of
shares in issue: 143,427,199 143,193,261
There were no shares with a dilutive, or potentially dilutive, impact (2016: nil).
Headline earnings per share (see below)
Year ended Year ended
31 December 31 December
2017 2016
cents per cents per
share share
Basic headline earnings per
share 1.03 1.00
Diluted headline earnings
per share 1.03 1.00
Headline earnings is defined as profit or loss for the year adjusted to add back amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges, fair value movement on financial derivatives, unwinding of discount on contingent consideration and exceptional items.
The Headline profit attributable to owners of the Company used in calculating the basic and diluted adjusted earnings per share is reconciled below:
Year ended Year ended
31 December 31 December
2016
2017 $000
$000
Loss attributable to shareholders (7,786) (6,189)
Adjusted for
Exceptional and acquisition
related costs/(income) (see
note 3) 5,913 (1,597)
Share based payments 1,066 3,135
Amortisation and impairment
of intangible assets 3,596 4,863
Fair value (profit)/loss
on interest rate swap (91) 62
Amortisation of discount
on deferred consideration 972 617
Tax effect of adjusting items (2,196) 543
Headline profit attributable
to owners of the Company 1,474 1,434
3. Exceptional and acquisition related costs
The exceptional and acquisition related costs/ (gains) relate to:
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Exceptional items:
Impairment of loans to TLA rights
business * - 1,230
Legal and professional costs
** 1,422 286
Loan refinancing costs 496 -
Impairment of loans in other
ventures *** 803 -
2,721 1,516
Acquisition related costs/(gains):
Costs related to potential acquisition 121 -
Integration costs relating to
ESP acquisition - 252
Costs relating to offer by potential
investors 135 1,473
Revised earn out agreement costs
(note 8) 2,088 -
Loyalty bonus arising on acquisition - 250
Fair value movement on valuation
of contingent consideration
(note 8) 848 (5,088)
3,192 (3,113)
Total exceptional and acquisition
related costs / (gains) 5,913 (1,597)
* The Loan impairment relates to the rights business in which the Group invested to establish "TLA sales". The loan was written off when the business was closed in December 2016.
** Legal and professional costs incurred as a consequence of the misappropriation of funds and accounting issues, including the costs of forensic accountants, the interim CFO and legal counsel (note 10).
*** The impairment of loans in other ventures relates to working capital provided to a start-up business.
4. Net Finance Costs
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Interest on bank overdrafts and other loans (1,426) (1,299)
Fair value loss on interest rate swaps - (62)
Amortisation of borrowing costs over the term of the loan - (303)
Amortisation of discount on contingent consideration (972) (617)
Total finance costs (2,398) (2,281)
Fair value gain on interest rate swaps 91 -
Total finance income 91 -
Net Finance Cost (2,307) (2,281)
5. Taxation
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
UK Taxes
Current year (373) (286)
Adjustments in respect
of prior year 36 (47)
US Taxes
Current year (115) 3,122
Adjustments in respect
of prior year 153 (89)
Australian Taxes
Current year (618) (461)
Adjustments in respect
of prior year - (12)
Total current tax (917) 2,227
Deferred tax - current
year 3,081 (66)
Deferred tax - adjustments
in respect of prior year (1,493) 940
1,588 874
Total tax credit 671 3,101
Taxation is calculated at the rates prevailing in the respective jurisdiction.
6. Goodwill
Cost and net book value $000 At 1 January 2016 and 2017 42,156 Exchange differences 1,103 At 31 December 2017 43,259
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:
2017 2016
$000 $000
Baseball representation 22,902 22,902
Sports Marketing USA 6,120 6,120
Sports Marketing Australia 14,237 13,134
Total TLA Worldwide 43,259 42,156
7. Borrowings
2017 2016
$000 $000
Secured borrowing at amortised
cost
Bank loans 23,125 15,625
Revolving credit facilities 5,000 15,000
28,125 30,625
Total borrowings
Amount due for settlement within
1 year 6,250 30,625
Amount due for settlement between
1 - 5 years 21,875 -
28,125 30,625
All borrowings are denominated in US dollars. The other principal features of the Company's borrowings as at 31 December 2017 are as follows:
-- the interest margin varies between 3% and 5.5% over US LIBOR, depending on the Group's leverage ratio;
-- fees of between 1.0% to 2.0% are payable on any payments made over and above the quarterly agreed repayment schedule;
-- the facilities are secured against trade receivables and contracted revenue;
-- covenants are in place encompassing an agreed fixed charge ratio and EBITDA being equal to or greater than 80%-85% of quarterly budget;
-- the loan repayments are made quarterly over the life of the loan plus a final bullet repayment; and
-- the facilities are renewable in 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 vendors of those businesses as set out below:
2017 2016
$000 $000
Payable in less than one year 6,552 -
Payable in one to two years 1,651 5,774
Payable in two to five years 900 1,821
Payable in more than 5 years 1,820 -
Impact of discounting on provisions
payable in cash (700) (993)
Total contingent consideration
payable 10,223 6,602
In March 2017, the Group extended its employment and earn-out agreements with key personnel in its Baseball North America and Baseball Latin American businesses incentivising them to remain at TLA for at least another four years.
There are subordination agreements in place that govern when the contingent consideration become payable. The timing of these earnout payments will be determined when the Board believes it has sufficient cash headroom to make such payments and those payments are in accordance with any banking covenants. Based on current financial projections and after assessing the sensitivities within those projections, the current expectation is these cash earnouts will not be paid until late 2019.
The Group has estimated the fair value of this liability based on the anticipated future EBIT of each underlying business. This value has then been discounted back using 10.69% in the case of ESPM and 4.76% in the case of Legacy and PEG.
The cash contingent consideration requires the achievement of certain EBIT targets over the period of each agreement.
In addition, the achieved EBIT must be converted into cash. To the extent that the conversion of EBIT to cash has not been achieved for each year, the Legacy and PEG earn-outs are reduced by a proportion of the cash shortfall in that year.
The Group has the option to settle 30% of an estimated amount up to $1,600,000 payable to PEG in shares in TLA (NY) Inc. In accordance with the terms of the exchange Agreement, these shares can be exchanged for Ordinary Shares in the capital of TLA Worldwide plc at any time at the option of the vendors.
9. Notes to the Statement of Cash Flow
Year ended Year ended
31 December 31 December
2017 2016
$000 $000
Operating loss for the year (6,150) (6,978)
Adjustments for:
Amortisation and impairment
of intangible assets 3,596 4,863
Depreciation of tangible assets 248 179
Loss on disposal of property,
plant and equipment - 110
Share based payment charges 1,066 3,135
Fair value movement on valuation
of contingent consideration 848 (5,088)
Additional contingent consideration 2,088 -
Provision for irrecoverable
receivables 1,567 5,923
Operating cash flows before
movements in working capital 3,263 2,144
Decrease in inventory - 117
Decrease/(Increase) in receivables 1,214 (1,145)
Increase in payables 2,134 1,341 Cash generated by operations 6,611 2,457 Income taxes received / (paid) 972 (969) Other non-cash movements (foreign exchange) - 409 Net cash from operating activities 7,583 1,897 Cash and cash equivalents Cash and bank balances 11,630 8,566
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.
10. Related parties
Brian Peters is deemed to be a related party as a beneficiary of the agreement relating to the acquisition of LS Legacy Sports LLC. During 2017 Brian Peters received a payment of $375,000 against his earn out extension and this has been offset against that future liability (see note 8). As at 31 December 2017 he owed $375,000 (2016: $nil) to the Company.
Greg Genske is deemed to be a related party as a director and beneficiary of the agreement relating to the acquisition of LS Legacy Sports LLC. During 2017 Greg Genske received a payment of $375,000 against his earn out extension and this has been offset against that future liability (see note 8). Also during 2017, Greg Genske received an advance of $55,639 which was repaid in January 2018. As at 31 December 2017 he owed $430,639 to the Company (2016: $163,756).
Donald Malter is deemed to be a related party as a director of the Company during the year. As at 31 December 2017 Bungalow Entertainment LLC, a company in which Donald Malter is the sole shareholder, owed the company $355,000 (2016: $355,000). In addition, Donald Malter owed the company $333,737 (2016: $333,737). These items have arisen as a result of funds misappropriated from the Group and an insurance claim has been submitted in respect of recovering the funds owed by Donald Malter, but which has not been recognised in these financial statements.
During the year the group repurchased shares in the subsidiary undertaking, TLA Acquisitions Limited, from the International Sports Pty Ltd, a company controlled by Bart Campbell, Michael Principe and Dwight Mighty, as legally required under the Group's LTIP scheme which expired on 30 September 2017, for consideration of $78,777, $78,777 and $39,389 respectively for a total of 14,597,821 LTIP shares.
11. Annual report and accounts
The Company will shortly be publishing its annual report and accounts including a notice of AGM. These will be made available on the Company's investor relations website at www.tlaworldwide.com. The AGM is to be held at the offices of DAC Beachcroft, at 100 Fetter Lane, EC4A 1BN at 11 am on 25 June 2018.
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
FR LIFFEETIIVIT
(END) Dow Jones Newswires
May 30, 2018 02:01 ET (06:01 GMT)
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