FOR IMMEDIATE RELEASE: 21 JUNE 2007
XSN PLC
(formerly Sports Network Group PLC)
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
CHAIRMAN'S STATEMENT
These are the final results for Sports Network Group on which I report to you
as chairman. As shareholders are aware, there was overwhelming support at an
Extraordinary General Meeting held on 26 March 2007 for the proposal by your
board to de-merge Sports Network Limited - the main operating subsidiary - from
the Group, thereby creating a cash shell, and to change the company's name to
XSN plc. At the same time, I reported that non-binding heads of agreement had
been reached with a company proposing to reverse into our shell. Further
discussions with that company are continuing.
The last full year of operations serve to confirm the view of the board that a
de-merger was in the best interests of shareholders. Although turnover in 2006
was almost the same as in 2005, higher costs converted last year's profit into
a loss of £670k prior to exceptional legal costs, amortization and taxation.
These are disappointing results, and are further evidence that, in the absence
of significant diversification, the boxing promotions business in its own right
cannot always generate sufficient profit to justify the costs associated with a
public listing. This is because each promotion has to be hand-crafted, with
arena, broadcasting and ticketing arrangements tailored to each date, and with
further uncertainty in relation to boxer availability, propensity to injury,
and willingness to face specific opponents.
Even after a highly successful promotion, such as Joe Calzaghe's brilliant
defence of his world title against the much-vaunted American fighter, Jeff
Lacy, an injury to Joe's hand forced a delay to his next contest, with the
resultant loss of significant broadcast revenues.
Nonetheless, my fellow non-executive directors, Simon Metcalf and Adam Singer -
whom I thank for their efforts on your behalf - join me in wishing our
colleagues, led by Frank Warren, every success in the future. The talents with
which Frank is working - Amir Khan, Calzaghe, Alex Arthur, Enzo Maccarinelli
and their like - are exceptional.
We are conscious that many shareholders will feel disappointed that the value
of the company has declined significantly from its peak, and we have spent much
of the last six months seeking an operating business which was both scaleable
and active in an expanding market, which could restore that lost value.
David Elstein
Non-Executive Chairman
20 June 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
£'000 £'000
Turnover 12,806 12,982
Cost of sales (9,763) (9,010)
Gross profit 3,043 3,972
Amortisation of intangible assets (410) (7,445)
Exceptional legal costs (236) (206)
Other administrative expenses (3,693) (3,229)
Operating loss (1,296) (6,908)
Other interest received and similar 15 19
income
Interest payable and similar charges (35) (34)
Loss on ordinary activities before (1,316) (6,923)
taxation
Taxation 76 159
Retained loss for the financial year (1,240) (6,764)
Loss per share Pence Pence
Basic and diluted loss per ordinary (0.61) (3.3)
share
There are no recognised gains and losses other than those passing through the
profit and loss account.
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006
2006 2005
£'000 £'000
Fixed assets
Intangible asset 4,512 4,922
Tangible assets 311 249
4,823 5,171
Current assets
Debtors 2,083 2,785
Cash at bank and in hand 220 368
2,303 3,153
Creditors: amounts falling due within (2,672) (2,645)
one year
Net current (liabilities)/assets (369) 508
Total assets less current liabilities 4,454 5,679
Creditors: amounts falling due after (185) (170)
more than one year
4,269 5,509
Capital and reserves
Called up share capital 10,109 10,109
Share premium account 2,982 2,982
Profit and loss account (8,822) (7,582)
Shareholders' funds - equity interests 4,269 5,509
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2006 2005 2005
£'000 £'000 £'000 £'000
Net cash (outflow)/inflow from (47) 473
operating activities
Returns on investments and servicing
of finance
Interest received 15 19
Interest paid (35) (34)
Net cash outflow from returns on (20) (15)
investments and servicing of finance
Taxation - -
Capital Expenditure
Payments to acquire tangible assets (51) (70)
Receipts on disposal of tangible 212 30
assets
Net cash inflow/ (outflow) from 161 (40)
capital expenditure
Net cash inflow before management of 94 418
liquid resources and financing
Financing
Hire purchase repayments (239) (16)
Repayment of convertible debt - (750)
Net cash outflow from financing (239) (766)
Decrease in cash in the year (145) (348)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
1. Financial information
The financial information contained in this preliminary announcement does not
constitute the group's statutory accounts for the year ended 31 December 2006
or 2005 but is derived from those accounts. The financial information has been
prepared using consistent financial policies. Statutory accounts for 2005 have
been delivered to the Registrar of Companies and those for 2006 will be
delivered to the Registrar of Companies.
The statutory accounts for the year ended 31 December 2006 and 2005 have been
reported on by the company's auditors; the reports on these accounts were
unqualified and they did not contain a statement under section 237(2) or (3) of
the Companies Act 1985.
2. Basis of preparation
The consolidated profit and loss account and balance sheet include the
financial statements of the Company and its subsidiary undertakings made up to
31 December 2006. The results of subsidiaries sold or acquired are included in
the profit and loss account up to, or from the date control passes. Intra-group
sales and profits are eliminated fully on consolidation.
The consolidated profit and loss account reflects the results of the boxing
promotion and management business which was discontinued as part of the group
after 31 March 2007 and which is therefore not disclosed as a discontinued
business under the provisions of Financial Reporting Standard No.3.
Following the demerger described in Note 3 the assets and liabilities contained
in the consolidated balance sheet which related to the boxing business were
transferred to YellBond Limited and the Company became a cash shell.
3. Post balance sheet events
Pursuant to (i) a scheme of arrangement under section 425 of the Companies Act
1985 dated 2 March 2007 (as amended); (ii) special resolution passed by the
shareholders of the Company at the Company's Extraordinary General Meeting on
26 March 2007; and (iii) pursuant to a court order entered on 9 May 2007, which
became effective on 11 May 2007:
1. 138,546,588 ordinary shares of 5p each held by Frank Warren, his three
children (George Warren, Faye Hannah Warren and Henry Alexander Warren), Edward
Simons, Gavin Simons, Francis Warren, Edward Simons Pensions Scheme and
Alliance Trust Pensions Limited were redesignated as `S' shares of 5p each;
2. the 138,546,588 `S' shares were cancelled and repaid to the relevant holders
by transferring in specie to YellBond Limited the entire issued share capital
of Sports Network Limited and Sports and Leisure Boxing Limited;
3. the authorised share capital of the Company was reduced from £17,000,000
divided into 138,546,588 `S' shares of 5p each and 201,453,412 ordinary shares
of 5p each to £10,072,670.60 divided into 201,453,412 ordinary shares of 5p
each; and
4. the Company's name was changed from Sports Network Group plc to XSN plc.
The above arrangements had the effect of disposing of the boxing business
subsidiaries from the Company to a private company controlled by certain former
directors of the Company, in return for the repayment of inter-company debt of
£1.15m and the cancellation of the shareholding specified above.
4. Loss per share
The calculation of the basic loss per share is based on the loss after tax of £
1,240,000 (2005 - £6,764,000) and on 202,186,201(2005 - 202,186,201) ordinary
shares being the weighted average number of ordinary shares in issue during the
year. There is no dilutive effect of options, warrants and on conversion of the
convertible loan stock.
5. Dividend
The Directors do not recommend the payment of a dividend.
6. Share capital
Following the year end and the redesignation of 138,546,588 ordinary shares of
5p each into `S' shares of 5p each and the subsequent cancellation of the `S'
Shares, the Company's authorised share capital of £17,000,000 divided into
138,546,588 `S' Shares of 5p each and 201,453,412 ordinary shares of 5p each
was reduced to £10,072,670.60 divided into 201,453,412 ordinary shares of 5p
each, of which 63,639,613 such ordinary shares have been issued and are deemed
to be fully paid and the remainder of which are unissued.
The Company had granted warrants over 5,250,000 ordinary shares to former
directors exercisable between 5p and 15p. The former directors have agreed as
part of the scheme of arrangement (Note 3) to give up all the rights to their
warrants.
The Company had also granted options to directors and former directors to
acquire 1,000,000 ordinary shares between 8.5p and 13p per ordinary share,
exercisable any time between the third and tenth anniversary of the date of
grant. All the option holders (with the exception of a former director holding
200,000 options) have agreed as part of the scheme of arrangement to give up
all the rights to their options.
7. Reconciliation of operating loss with net cash (outflow)/inflow from
operating activities
2006 2005
£'000 £'000
Operating loss (1,296) (6,908)
Amortisation of intangible assets 410 7,445
Depreciation of tangible fixed assets 78 79
(Profit)/loss on disposal of tangible assets (56) 13
Increase/(decrease) in debtors 778 (976)
Increase in creditors 39 820
Net cash (outflow)/inflow from operating (47) 473
activities
8. Analysis of changes in cash and cash equivalents during the year
1 Cashflow Non-Cash 31
January changes changes December
2006 2006
£'000 £'000 £'000 £'000
Net cash:
Cash at Bank 368 (148) - 220
Bank overdraft (3) 3 - -
365 (145) - 220
Debt:
Finance lease (221) 239 (245) (227)
(221) 239 (245) (227)
Net funds/(debts) (274) 94 (245) (7)
9. Reconciliation of net cash flow to movement in net fund/(debt)
2006 2005
£'000 £'000
Decrease in cash in the year (145) (348)
Cash outflow from decrease in debt and lease 259 776
financing
Changes in net funds resulting from cash flows 94 418
New finance leases (245) -
Movements in net funds/(debt) in the year (151) 418
Opening net funds/(debt) 144 (274)
Closing net (debt)/funds (7) 144
10. Annual reports and accounts
The annual report will be sent to shareholders in due course. Copies of this
announcement and the full statutory accounts are available, free of charge,
from the offices of the Company's nominated adviser, Blue Oar Securities Plc at
30 Old Broad Street, London EC2N 1HT.
The Company's AGM will take place at the offices of Halliwells LLP, 1
Threadneedle Street, London EC2R 8AW on 16 July 2007 at 10.00 a.m.
Enquiries:
David Elstein
Non Executive Chairman
Tel. 077 3985 3187
Romil Patel
Blue Oar Securities Plc
Tel. 020 7448 4400
END