RNS Number:7761Q
Shaw (Arthur) & Co PLC
31 January 2002
The issuer advises that the following replaces the Preliminary Results
announcement released today at 07:04 under RNS Number 7685Q.
The previous announcement contained draft text and the full amended text appears
below.
Arthur Shaw & Company PLC
("Arthur Shaw")
Preliminary Results for the year ended 30 September 2001
Highlights
* Turnover for 12 months to 30.9.01 £6.4m (18 months to 30.9.00 £11.4m)
* Loss for the period before exceptional operating items £2.8m (£1.8m)
* Loss per share of 0.81p (0.23p)
* Further Board and senior management appointments
* Refocusing the business to develop the Media Division
* Continuation of acquisition program
Bryan Morrison, Chairman of Arthur Shaw commented,
"The last year has been spent further developing the Media Division and turning
around the Engineering Division. Since the year end the Board has strategically
reviewed the Group and now believes that the two segments of the business may
benefit from individual development. Consequently we have agreed terms for an
option which gives us the right to divest the Engineering Division for nominal
consideration, during the next eight months. With that option in place, we will
be able to concentrate on the potential within the Media Division and to do this
we will be devoting all of our resources to the realisation of that goal.
"The appointments of Richard Halcrow and David Glick and the acquisition of
StreamTeam Limited since the year end demonstrates our drive to turn Arthur
Shaw's Media Division into a broad based media Group in which delivery of
content via the internet is but one element. "
Further Enquiries:
Bryan Morrison
Arthur Shaw
Tel: 020 7706 7304
Jonathon Brill/ Charlotte Lambkin
Bell Pottinger Financial
020 7861 3232
CHAIRMAN'S STATEMENT
Results
The loss before exceptional operating costs and before and after taxation for
the year ended 30 September 2001 was £2.8m (18 months to 30 September 2000:
£1.8m). Turnover in the year was £6.4m (18 months to 30 September 2000 £11.4m).
The Engineering Division contributed £6.2m (18 months ended 30 September 2000:
£11.3m) to turnover and incurred an operating loss, before exceptional operating
costs, of £1.7m (18 months ended 30 September 2000: £1.3m). The increase in the
operating loss reflects the difficult trading conditions in the engineering
sector, although the measures we have taken over the past year have
significantly improved the performance of the Division in the second half year.
The Media Division contributed £0.2m to turnover and incurred an operating loss
before exceptional operating costs of £0.8m. The turnover is revenue earned by
our television production company, Mike Mansfield Television. The operating
losses have principally been incurred due to the costs of producing the Lennox
Lewis and the Foo Fighters webcasts, from which no significant revenue has been
earned.
I refer to developments in the Media Division below and in view of the delays in
the adoption of broadband technology we have undertaken an impairment review on
the goodwill that arose from the acquisition of the companies within the Media
Division and the development costs in respect of the development of the webcast
technology. As a consequence of this review we have provided £4.7m against
goodwill and capitalised development costs, which has been treated as an
exceptional operating cost.
Appointments
We are delighted to announce that Richard Halcrow has agreed to join the Board
as a non-Executive Director with immediate effect. His background as a former
main board director of Morgan Grenfell and his wide City contacts will enable
Richard to make a strong contribution to the Group.
David Glick has also joined the Company as a strategic consultant. David is a
qualified solicitor and has been a partner with Mishcon de Reya since its merger
with Eatons in 2000. He is a specialist in entertainment and media rights and
his practice has a particular emphasis on music, television, film and sport. His
expertise is already proving invaluable as we continue to implement our strategy
of acquisitive growth.
We are also committed to appointing a Chief Executive Officer to co-ordinate and
drive our strategic development plans, whilst ensuring that we derive maximum
benefit for shareholders from the acquisitions we make. I will assume the role
of Executive Chairman once a new CEO is in place.
With these appointments in place, we will continue to focus on the Media
Division, maximising its substantial potential through continued exploitation of
technology, further acquisitions and the expansion of our portfolio of rights.
Media Division
The technically successful transmission of webcast material from Lennox Lewis's
fight in South Africa in April 2001 and the broadcast of the Foo Fighters
concert using interactive broadband technology in the USA have demonstrated the
Group's ability to deliver webcasts internationally.
The current difficulty in this marketplace is the slow adoption of broadband,
especially for home use. This makes pay per view webcasting a commercially
difficult proposition today. However, we still believe in the commerciality of
this medium and will exploit it as broadband connectivity develops. To assist us
in overcoming these short term obstacles we have tailored our webcasts to suit
the current market conditions and these will be sponsored on a free-to-view
basis so that we minimise our financial risk.
Mike Mansfield Television, has recently completed production of a documentary on
Boy George for the BBC and has a number of exciting projects either agreed or in
discussion for the coming months.
This month, in line with our strategy, we have acquired a 50% equity interest in
StreamTeam Limited, a London based video streaming and services company, which
holds the European distributorship for a number of technologies developed by
Vingage Inc, our US technology partners. The consideration for the acquisition
of the initial equity interest in StreamTeam was approximately £100,000 and was
satisfied largely by the issue of our shares to the vendors. We have an option
to acquire the remainder of the issued share capital of StreamTeam after three
years. Deployment of these Vingage technologies in Europe will give StreamTeam
the opportunity to generate significant revenues in the coming year as well as
giving Arthur Shaw considerable in-house technology expertise which it has
previously had to sub-contract.
Engineering Division
We continue to believe that the Engineering Division can, and will, deliver a
positive contribution to the Group. It has to be recognised, however, that it
operates in a difficult sector and that risk has made the desired development of
the media business more onerous. We have agreed terms of an option which gives
us the right to divest the Engineering Division for nominal consideration,
during the next eight months, but with a retained participation in future
profits.
Financing
As a consequence of the delay in revenues generated by the Media Division and
losses in the Engineering Division, the Group is managing its short term cash
requirements through increasing short term borrowings, converting borrowings
into ordinary shares and through deferral of the payment of Executive Directors'
salaries.
We recognise the inherent uncertainties in the likely timing of revenue from the
Media Division, particularly from the exploitation of the compelling content
through webcasts. Therefore, any media productions are now only undertaken if
funded by third parties, with the Group charging a fee and not providing the
cashflow for the project.
We also recognise the risk to the Group of the Engineering Division continuing
to incur losses in the future and have therefore signed Heads of Terms to enter
into a Put Option, under which the Company has the right to divest the companies
within that division for a nominal sum.
We have also agreed further facilities with an existing lender of which a
substantial part will, subject to shareholder approval, be converted into
ordinary shares. The lender has also agreed to grant a further facility
following that conversion.
The cashflow forecasts we have prepared for the period to 31 January 2004 on the
basis of the above assumptions indicate the Group has sufficient working capital
available.
These arrangements will allow us to move forward with our planned strategy of
developing the Media Division.
Outlook
The last two years have been difficult, but we believe that the strengthening of
the management team, a focus on a broader based media business driven by
acquisitions and organic growth together with our option to divest the
engineering businesses, means that we are well positioned to move forward.
We are in preliminary discussions with two companies in the media sector
regarding potential acquisitions and we have a number of further targets under
consideration.
Bryan Morrison
Chairman
31 January 2002
CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2001
Year ended 30.9.01 Year ended 30.9.01 Year 18 months ended
Pre impairment Impairment ended 30.9.00
provision provision 30.9.01 Total
Total
£'000 £'000 £'000 £'000
Turnover 6,415 - 6,415 11,439
Cost of sales (5,561) - (5,561) (9,165)
Gross profit 854 - 854 2,274
Distribution costs (631) - (631) (439)
Administrative expenses (2,725) (4,733) (7,458) (3,317)
Operating loss (2,502) (4,733) (7,235) (1,482)
Net interest payable and
similar charges (341) - (341) (280)
Loss on ordinary activities
before taxation (2,843) (4,733) (7,576) (1,762)
Tax on loss on ordinary - - - -
activities
Loss for the financial period
transferred to reserves (2,843) (4,733) (7,576) (1,762)
Loss per share (0.81p) (0.23p)
There were no recognised gains or losses other than the loss for the financial
period.
CONSOLIDATED SUMMARISED BALANCE SHEET
AT 30 SEPTEMBER 2001
30 September 2001 30 September 2000
£'000 £'000
Fixed Assets
Intangible assets 5,246 9,412
Tangible assets 3,435 3,667
8,681 13,079
Current assets
Stocks 359 919
Debtors 1,626 1,557
Cash at bank and in hand 6 1,856
1,991 4,332
Creditors: amounts falling due within one year (4,581) (5,885)
Net current liabilities (2,590) (1,553)
Total assets less current liabilities 6,091 11,526
Creditors: amounts falling due after more than one
year (3,185) (3,288)
Net assets 2,906 8,238
Capital and reserves
Called up share capital 962 873
Share premium account 4,933 2,778
Other reserves 7,431 7,431
Profit and loss account (10,420) (2,844)
Shareholders' funds 2,906 8,238
CONSOLIDATED SUMMARISED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2001
Year ended 18 months ended
30 September 2001 30 September 2000
£'000 £'000
Net cash outflow from operating activities (1,946) (1,255)
Returns on investments and servicing of finance
Invoice discounting charges (80) (118)
Interest paid (164) (73)
Finance lease interest paid (7) (16)
Other loans (16) (61)
Interest received 29 74
Net cash outflow from returns on investments and
servicing of finance (238) (194)
Taxation 12 66
Capital expenditure and financial investment
Purchase of tangible fixed assets (85) (139)
Sale of tangible fixed assets - 6
Purchase of intangible fixed assets (542) (1,421)
Net cash outflow from capital expenditure and
financial investment (627) (1,554)
Acquisitions
Purchase of subsidiary undertakings - (387)
Net cash outflow from acquisitions - (387)
Financing
Issue of shares 34 692
Invoice discounting (61) 97
Capital element of hire purchase payments (27) (91)
Issue of debentures - 4,000
Loans received 837 475
Expenses paid in connection with share issues - (117)
Net cash inflow from financing 783 5,056
(Decrease)/increase in cash (2,016) 1,732
Notes:
1. Basis of preparation
The financial statements have been prepared under the historical cost
convention, on bases consistent with the previous period and in accordance with
applicable Accounting Standards.
Going concern
As a consequence of the delay in revenues generated by the Media Division and
losses in the Engineering Division, the Group is managing its short term cash
requirements through increasing short term borrowings, converting borrowings
into ordinary shares and through deferral of the payment of Executive Directors'
salaries.
The Directors recognise the inherent uncertainties in the likely timing of
revenue from the Media Division, particularly from the exploitation of the
compelling content through webcasts. Therefore, any media productions are now
only undertaken if funded by third parties, with the Group charging a fee and
not providing the cashflow for the project.
The Directors also recognise the risk to the Group of the Engineering Division
continuing to incur losses and have therefore signed Heads of Terms to enter
into a Put Option under which the Company has the right to divest the companies
within that division for a nominal sum.
The Directors have also agreed further facilities with an existing lender of
which a substantial part will, subject to shareholder approval, be converted
into ordinary shares. The lender has also agreed to grant a further facility
following that conversion.
The Directors have prepared cashflow forecasts for the period to 31 January 2004
which incorporate the assumptions regarding the receipt of revenues from the
Media Division, that the Group has the benefit of the Put Option to dispose of
the Engineering Division and in respect of the additional finance facilities
they have agreed. The cashflow forecasts prepared by the Directors for the
period to 31 January 2004 on the basis of these assumptions indicate the Group
has sufficient working capital available.
On this basis the Directors consider it appropriate to prepare the financial
statements on the going concern basis. The financial statements do not include
any adjustments that would result if the assumptions detailed above are not met.
Such adjustments would be likely to include the write down of the assets of the
Group, including in particular the goodwill and development costs currently
stated at a carrying value of £5,246,000.
The Group auditors have drawn attention to the above disclosures in their audit
report for the year ended 30 September 2001 but their opinion is not qualified
in that respect.
2. Segmental information
Turnover Operating loss pre impairment Net assets/
(liabilities)
Year ended 18 Year 18
30.9.01 months ended ended 30.9.01 months
30.9.00 ended 30.9.00 30.9.01 30.9.00
£'000 £'000 £'000 £'000 £'000 £'000
Engineering and head
office 6,224 11,375 (1,655) (1,280) 928 (253)
Media 191 64 (847) (202) 1,978 8,491
6,415 11,439 (2,502) (1,482) 2,906 8,238
Impairment losses (4,733) -
Operating loss (7,235) (1,482)
All turnover, operating losses and net assets/(liabilities) originate in the
United Kingdom.
3. Tax on loss on ordinary activities
No tax charge arises on the loss for the period.
Unrealised tax losses of approximately £8,600,000 (30 September 2000:
£6,500,000) remain available to offset against future taxable trading profits.
4. Loss per share
The calculation of the basic loss per share is based on the loss for the period
attributable to ordinary shareholders of £7,576,000 (18 months ended 30
September 2000: £1,762,000) divided by the weighted average number of shares in
issue during the period of 933,278,665 (18 months ended 30 September 2000:
754,695,143).
5. Reconciliation of movements in shareholders' funds
Year 18 months ended
ended 30.9.00
30.9.01
£'000 £'000
Loss for financial period (7,576) (1,762)
Issue of shares (including movement on other reserves) 2,244 9,545
Net (decrease)/increase in shareholders' funds (5,332) 7,783
Shareholders' funds at 1 October 2000 8,238 455
Shareholders' funds at 30 September 2001 2,906 8,238
6. Net cash outflow from operating activities
Year
ended 18 months ended
30.9.01 30.9.00
£'000 £'000
Operating loss (7,235) (1,482)
Depreciation and other amounts written off tangible fixed assets 359 426
Loss on sale of tangible fixed assets - 1
Amortisation and other amounts written off intangible assets 4,708 16
Decrease in stocks 560 49
(Increase)/decrease in debtors (81) 425
Decrease in creditors (257) (690)
Net cash outflow from operating activities (1,946) (1,255)
7. Reconciliation of net cash flow to movement in net debt
Year 18 months ended
ended 30.9.00
30.9.01
£'000 £'000
(Decrease)/increase in cash in the period (2,016) 1,732
Cash outflow from finance leases 27 91
Cash inflow from financing (776) (4,572)
Change in net debt resulting from cashflows (2,765) (2,749)
Cash and loans acquired with subsidiaries - (2,090)
Conversion of loans to equity and other non cash items 2,065 795
Movement in net debt in period (700) (4,044)
Net debt at 30 September 2000 (5,010) (966)
Net debt at 30 September 2001 (5,710) (5,010)
8. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The summarised balance sheet at 30 September 2001 and the summarised profit and
loss account, summarised cashflow statement and associated notes for the year
then ended have been extracted from the Group's 2001 statutory financial
statements upon which the auditors opinion is unqualified and does not include
any statement under Section 237 of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
Shaw(A) (LSE:SAW)
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