RNS Number:3585I
Tarsus Group PLC
06 March 2003
Tarsus Group plc
Preliminary results for the year ended 31 December 2002
CHAIRMAN'S & MANAGING DIRECTOR'S STATEMENT
RESULTS
Trading results for Tarsus were mixed for the year ended 31 December 2002.
Robust performances from the Group's core products were offset by weak trading
in France, poor performances from the smaller products in the portfolio (most of
which have been discontinued or sold) and adverse foreign exchange movements.
Our cost reduction programme is substantially complete. The management team is
now focused on growing our core products and launching new exhibitions in these
sectors, where we have market leadership.
Turnover from continuing operations for the year ended 31 December 2002,
including the group's share of joint venture turnover, was #18,844,000 (2001:
#24,415,000) resulting in a profit before tax, exceptional items and goodwill
amortisation from continuing operations of #2,006,000 (2001: #2,729,000).
Adjusted earnings per share were 4.0p (2001: 6.6p). The carrying value of our
goodwill has been written down by #10,566,000 (2001: #16,293,000), primarily
relating to French acquisitions. As a result, the loss on ordinary activities
before tax was #18,929,000 (2001: #19,152,000) after goodwill amortisation and
impairment write-downs of #14,734,000 (2001: #20,526,000), other exceptional
items of #2,943,000 (2001: #1,355,000), operating loss on discontinued
operations of #601,000 (2001: #nil) and profit on sale of discontinued operation
of #5,000 (2001: #nil).
Your Directors propose to pay a final dividend of 2.2p per share. This
dividend, which is unchanged from last year's dividend, is approximately twice
covered by earnings per share from the Group's continuing business. The
dividend is subject to Shareholder approval at the Annual General Meeting to be
held on 25 April 2003. Subject to that approval, it will be paid on 28 April
2003 to Shareholders on the Register of Members of the Company on 14 March 2003.
The Company proposes to continue to give Shareholders the ability to elect to
take this dividend in cash or as a scrip issue in new Ordinary Shares or as a
combination of the two. Your Directors intend, based on the current share
price, to take scrip in respect of 20,283,943 of their Ordinary Shares, in
aggregate, representing approximately 98 per cent of their total Shareholdings
and 54 per cent of the issued Share Capital of the Company.
OPERATING REVIEW
USA
The major contributors in the year were the Off-Price Specialist shows in Las
Vegas in February and August and Labelexpo Americas in Chicago in September.
The Off-Price Specialist shows saw like-for-like volume increases of 9 per cent
and 11 per cent respectively compared with the equivalent events in 2001 - a
record performance for the second year running. Labelexpo Americas saw volumes
contract by 15 per cent owing to the impact of the recession and market
consolidations. In both cases, the exhibitions were well received by our
customers. Contracted sales for the next edition of Labelexpo Americas were
very strong with 92 per cent of 2002 volumes contracted for 2004.
UK
Trading results from this division's small products were disappointing and the
portfolio has been substantially reduced. Labelexpo Europe, the Group's largest
event this year, which takes place in September 2003 in Brussels, has already
contracted 100 per cent of its budgeted volume. The Labels & Labelling
magazine, which supports the Labelexpo brand, produced a solid performance with
revenues up 20 per cent year on year, boosted by improved yields. Exhibition
Bulletin's performance was impacted by difficult trading conditions in its
sector and action has been taken to strengthen the sales and marketing team.
FRANCE
The full effects of the recession were felt in France in the second half of
2002. Strong action was begun early in 2002 in anticipation of these weak
trading conditions. The cost base has now been significantly reduced
notwithstanding the legal difficulties in achieving a rapid reduction in
personnel costs in France.
Resilient performance from our exhibition portfolio, Progiforum (accounting
software), Progilog (logistics software) and Educatec (training) were more than
offset by weak trading performances from our marketing portfolio and our smaller
niche IT products. Rebookings for our exhibitions programme in 2003 are
encouraging.
MANAGEMENT
As part of our strategy to focus on our core products and to bring our cost base
into line with revenues, a number of senior management changes occurred during
the year and shortly after the year end. Bernard Becker replaced Louis
Vaudeville in January 2003 as Director in charge of our French operations.
Bernard Becker was a main Board director of Blenheim Group plc and directeur
general of Groupe Blenheim SA for six years until 1994. He was subsequently
chairman of Reed Elsevier's European exhibition division for five years. Adrian
Broadbent and Nick Helyer resigned as Directors of the Company in April 2002.
DEVELOPMENTS
In September 2002 we purchased the BPC exhibition that services the Bottling,
Packaging and Canning Industries. We have launched this exhibition as a
European event alongside Labelexpo Europe to be held in Brussels in September
2003.
Also in September 2002, we entered into a 50:50 Joint Venture agreement with
Reed Elsevier plc in France to launch a Direct Marketing exhibition to be held
in May 2003. This exhibition will be supported by our two marketing magazines
and electronic newsletters in France and completes our integrated marketing
strategy in this sector.
Following customer demand during Labelexpo Americas in September 2002, we
launched Labelexpo China to take place in December 2003 in Shanghai. To support
our international labelling sector strategy, we launched our market-leading
magazine, Labels & Labelling, online. The total circulation of the magazine has
increased by 31 per cent during the year to 25,108.
Following consultations with the Off-Price industry, we have launched a third
West-Coast Off-Price exhibition in Las Vegas in May 2003.
Initial indications from these four exhibition initiatives are positive and we
anticipate additional exhibition launches in our core markets in 2004.
CURRENT TRADING AND PROSPECTS
The past three years have further demonstrated the resilience of leading brands
in a time of media recession. Tarsus is now clearly focused on its core
products and we have taken strong action to bring our cost base into line with
anticipated revenues. Management is now focused on growing our business
organically. Notwithstanding unpredictable economic and political environments,
we have continued to invest for the future by launching a number of exciting new
products. 2003 has started on a promising note with another record Off-Price
show in February. We now have a solid base from which to grow our business and
your Directors anticipate a satisfactory performance in 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
31 DECEMBER 2002
Note 2002 2002 2002 2001
Before
Exceptional Exceptional
Items Items Total Total
# 000's # 000's # 000's # 000's
Turnover - Group and share of joint ventures
- continuing 2 18,844 - 18,844 22,031
- acquisitions - - - 2,384
- discontinued 933 - 933 -
less: share of turnover of joint venture ( 1,220) - ( 1,220) ( 1,347)
Group turnover 18,557 - 18,557 23,068
Operating costs including intangible amortisation ( 20,567) ( 13,442) ( 34,009) ( 41,703)*
Operating profit / (loss)
Before intangible amortisation and impairment
- continuing 2,541 ( 2,876) ( 335) 1,479
- acquisitions - - - 272
- discontinued ( 601) - ( 601) -
1,940 ( 2,876) ( 936) 1,751
Intangible amortisation and impairment
- continuing ( 3,881) ( 10,226) ( 14,107) ( 18,252)*
- acquisitions - - - ( 2,134)
- discontinued ( 69) ( 340) ( 409) -
3 ( 3,950) ( 10,566) ( 14,516) ( 20,386)
Operating loss
- continuing ( 1,340) ( 13,102) ( 14,442) ( 16,773)*
- acquisitions - - - ( 1,862)
- discontinued ( 670) ( 340) ( 1,010) -
Group operating loss ( 2,010) ( 13,442) ( 15,452) ( 18,635)
Share of operating profit / (loss) in joint venture (after #218,000)
(2001: #140,000) goodwill amortisation) 129 ( 2,729) ( 2,600) 482
Profit on sale of discontinued operation - 5 5 -
Interest receivable and similar income 227 - 227 317
Interest payable and similar charges ( 1,109) - ( 1,109) ( 1,316)
Loss on ordinary activities before taxation ( 2,763) ( 16,166) ( 18,929) ( 19,152)
Taxation 7 ( 578) 668 90 ( 427)*
Loss for the financial year 3 ( 3,341) ( 15,498) ( 18,839) ( 19,579)*
Dividend 8 ( 1,536) - ( 1,536) ( 2)
Retained loss for the financial year ( 4,877) ( 15,498) ( 20,375) ( 19,581)
* The 2001 comparative "Loss for the financial year" includes exceptional items
of #17,451,000, of which impairment of intangible assets was #16,293,000,
restructuring and relocation expenses was #899,000, litigation was #150,000
and events and publishing closures was #306,000 net of the tax credit of
#197,000.
Earnings / (loss) per share (pence) Note 2002 2001
Adjusted 9 4.0 6.6
Basic and diluted ( 52.2) ( 61.1)
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
2002 2001
# 000's # 000's
Loss for the financial year ( 18,839) ( 19,579)
Foreign exchange gains and losses offset in reserves ( 202) ( 129)
Unrealised gain on joint venture formation - 492
Total recognised losses for the year ( 19,041) ( 19,216)
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2002
Note GROUP COMPANY
2002 2001 2002 2001
#000's #000's #000's #000's
FIXED ASSETS
Intangible assets 18,170 33,241 - -
Tangible assets 427 924 5 58
Investments - - 8,764 8,866
Interests in joint venture 6 2,100 4,768 - -
- Share of gross assets 1,736 1,773 - -
- Share of gross liabilities ( 1,047) ( 1,047) - -
- Goodwill arising on acquisition 1,411 4,042 - -
20,697 38,933 8,769 8,924
CURRENT ASSETS
Debtors 7,113 8,501 26,647 23,643
Cash at bank 5,824 6,132 5,397 5,849
12,937 14,633 32,044 29,492
CREDITORS: Amounts falling due within one year ( 20,530) ( 23,143) ( 13,936) ( 10,274)
NET CURRENT (LIABILITIES) / ASSETS ( 7,593) ( 8,510) 18,108 19,218
TOTAL ASSETS LESS CURRENT LIABILITIES 13,104 30,423 26,877 28,142
CREDITORS: Amounts falling due after
more than one year ( 13,799) ( 15,432) ( 124) ( 5,529)
PROVISIONS for liabilities and charges ( 1,390) ( 1,354) ( 78) -
( 2,085) 13,637 26,675 22,613
CAPITAL & RESERVES
Share capital 1,891 1,595 1,891 1,595
Share premium account 23,435 36,876 23,435 36,876
Capital redemption reserve 15 15 15 15
Other reserves ( 443) ( 443) ( 443) ( 443)
Profit & loss account ( 26,983) ( 24,406) 1,777 ( 15,430)
Shareholders' (deficit) / funds ( 2,085) 13,637 26,675 22,613
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
31 DECEMBER 2002
2002 2001
# 000's # 000's # 000's # 000's
Operating activities
Net cash (outflow)/ inflow from operating operations ( 1,134) 3,156
Dividend from joint venture 331 -
Returns on investment and servicing of finance
Interest received on cash deposit 304 276
Interest paid on bank overdraft ( 779) ( 1,398)
Net cash outflow from returns on investment
and servicing of finance ( 475) ( 1,122)
Tax paid - overseas ( 128) ( 401)
Capital expenditure and financial investment
Purchase of tangible fixed assets ( 98) ( 324)
Proceeds on disposal of tangible fixed asset 20 -
Net cash outflow for capital expenditure
and financial investment ( 78) ( 324)
Acquisitions and disposals
Purchase of subsidiary undertaking and joint venture ( 249) ( 3,395)
Overdraft acquired with subsidiaries - ( 46)
Proceeds on disposal of subsidiary - 303
Deferred consideration paid for prior year acquisitions ( 751) ( 1,828)
Consideration adjustment on prior year acquisitions 262 -
Net cash outflow for acquisitions and disposals ( 738) ( 4,966)
Equity dividends paid ( 474) ( 644)
Cash outflow before financing ( 2,696) ( 4,301)
Financing
Issue of ordinary share capital 5,079 5
Costs of share issue ( 452) -
Purchase of own shares - ( 443)
Payment of loan note instalment ( 500) -
Net cash inflow / (outflow) from financing 4,127 ( 438)
Increase / (decrease) in cash in the period 1,431 ( 4,739)
RECONCILIATION OF OPERATING LOSS TO NET CASH (OUTFLOW) / INFLOW FROM OPERATING
ACTIVITIES
2002 2001
# 000's # 000's
Group operating loss ( 15,452) ( 18,635)
Depreciation 402 458
Amortisation of goodwill 3,950 4,093
Impairment of goodwill 10,566 16,293
Loss on disposal of fixed assets 189 11
Decrease in debtors 1,515 3,673
Decrease in creditors < 1year ( 1,784) ( 2,537)
Decrease in creditors > 1year ( 235) ( 3)
Decrease in provisions 36 ( 279)
Minority interest movement - 40
Foreign exchange movements ( 321) 42
Net cash (outflow) / inflow ( 1,134) 3,156
ANALYSIS OF CHANGES IN NET DEBT
At 1 At 31
January Exchange December
2002 Cash flow Movement 2002
# 000's # 000's # 000's # 000's
Cash at bank and in hand including on deposit 6,132 (308) - 5,824
Overdraft ( 3,373) 1,808 - ( 1,565)
2,759 1,500 - 4,259
Debt due within one year ( 5,700) 500 - ( 5,200)
Debt due after one year ( 14,341) - ( 69) ( 14,410)
( 17,282) 2,000 ( 69) ( 15,351)
RECONCILIATION OF NET CASH FLOWS TO MOVEMENTS IN NET DEBT
2002
# 000's
Increase / (decrease) in cash in period 1,431
Repayment of loan note 500
Change in net debt resulting in cash flows 1,931
Net debt at 1 January 2002 ( 17,282)
Net debt at 31 December 2002 ( 15,351)
1. BASIS OF PREPARATION
The preliminary results for the year ended 31 December 2002 have been prepared
in accordance with the accounting policies set out in the financial statements
for the year ended December 2001, except that Financial Reporting Standard 19
has been adopted in the year. There was no material impact on the financial
statements of adopting this standard.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2001 and 2002 but is derived
from those accounts. Statutory accounts for 2001 have been delivered to the
registrar of companies, and those for 2002 will be delivered following the
company's annual general meeting. The previous auditors have reported on the
accounts for the year ended 31 December 2001 and the current auditors have
reported on the accounts for the year ended 31 December 2002; their reports were
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
2. SEGMENTAL ANALYSIS
Group turnover, including share of joint venture turnover, adjusted operating
profit / (loss)(1) and operating profit / (loss) by origin and market segment
are set out below.
2002 2001 2002 2002 2001
Turnover Turnover Adjusted Operating Operating
operating profit / (loss) profit / (loss)
profit / (loss)
(i) Media Segment # 000's # 000's # 000's # 000's # 000's
Traditional Media 18,835 22,705 2,893 1,153 2,927
New Media 942 1,710 (5) (2,364) (3,432)
Total including joint venture 19,777 24,415 2,888 (1,211) (505)
(ii) Geographical Segment
United Kingdom
Exhibitions 221 1,203 (168) (211) (57)
Publishing & Conferences 1,541 1,942 (540) (654) (1,032)
New Media 460 736 12 (2,295) (2,938)
2,222 3,881 (696) (3,160) (4,027)
United States
Exhibitions 6,549 3,109 2,503 2,129 391
Publishing & Conferences 697 383 312 232 (10)
New Media 131 556 195 195 (308)
7,377 4,048 3,010 2,556 73
Continental Europe
Exhibitions 4,718 10,340 1,251 726 3,690
Publishing & Conferences 3,302 4,389 (499) (877) (555)
New Media 268 410 (247) (279) (168)
Joint venture - Exhibitions 808 1,011 262 110 398
Joint venture - Publishing & Conferences 329 328 50 4 102
Joint venture - New Media 83 8 35 15 (18)
9,508 16,486 852 (301) 3,449
Asia
Exhibitions 670 - (278) (303) -
Publishing & Conferences - - - (3) -
670 - (278) (306) -
Total including joint venture 19,777 24,415 2,888 (1,211) (505)
Group 18,557 23,068 2,541 (1,340) (987)
Share of joint venture 1,220 1,347 347 129 482
Total including joint venture 19,777 24,415 2,888 (1,211) (505)
Impairment (10,566) (16,293)
Exceptional items (2,876) (1,355)
Operating loss on discontinued items (670) -
Operating profit on joint venture (129) (482)
Group operating loss (15,452) (18,635)
(1) Operating profit / (loss) before exceptional items and amortisation,
excluding discontinued activities and profit on disposal of discontinued item,
including share of joint venture operating profit.
Inter-segmental turnover and profit is not material. Geographical segmentation
by destination is not materially different from turnover by origin. Turnover and
profit on continuing ordinary activities are wholly derived from the ownership,
organisation and management of exhibitions, conferences and related trade
publications.
The Asia segment consists of a biennial exhibition held in 2002 but not in 2001.
3. EXCEPTIONAL ITEMS
2002 2001
Exceptional costs are set out below: # 000's # 000's
Impairment of intangible assets 10,566 16,293
Pre-acquisition litigation costs 32 150
Postponement / closure of events or publications - 306
Redundancies 1,858 695
Relocations 924 204
Venue litigation 62 -
Profit on sale or closure of discontinued events (5) -
13,437 17,648
Joint venture
Impairment of intangible assets 2,662 -
Restructuring 67 -
2,729 -
Tax credit on exceptional items (668) (197)
15,498 17,451
Impairment of intangible assets
In accordance with Financial Reporting Standard 10 ("FRS 10"), the Group has
recently carried out an impairment review as the investments were made in a
different economic climate to that which prevails today.
In the light of the current economic climate, the Board has concluded that it is
prudent to recognise that goodwill arising on consolidation has been impaired.
The total impairment included within the operating loss is #10,566,000.
The reviews of the French operations have resulted in impairments of goodwill
arising on consolidation of #8,109,000.
The UK operations of Exhibition Bulletin, Employment Week and Organex have been
reviewed resulting in an impairment of goodwill arising on consolidation. This
has been based on the level of the trading activities in 2002 and the proceeds
of the sale of the Organex Show for #135,000 (see note 9). The total impairment
of goodwill arising on consolidation is #2,457,000.
A discount rate of 11.5% has been used.
Exceptional items
Restructuring costs, relating to redundancies and relocations, including the
joint venture, have resulted in exceptional costs of #2,849,000. A further
exceptional charge of #94,000 is for postponed or cancelled events arising from
the Group's acquisitions.
Impairment of Joint Venture
The Group has impaired the goodwill arising on consolidation of the French MM
Star joint venture, by #2,662,000.
4. ACQUISITIONS
On 17 September 2002, Tarsus Exhibitions and Publishing Limited, a wholly owned
subsidiary of Tarsus Group plc, purchased from Binsted Exhibitions the rights to
the assets of the BPC (Bottling, Packaging and Canning) exhibition for the sum
of up to #2,000,000.
The aggregate purchase consideration for the goodwill and intellectual property
rights will be an amount equal to 1.33 times the pre-tax profits of the 2003
edition of the BPC exhibition, plus an amount equal to 0.33 times the pre-tax
profits of the 2005 edition of the event.
5. DISCONTINUED ITEMS
On 30 June 2002 the interest of the Group in Trade Show News Network Inc
("TSNN"), a Group subsidiary, was diluted to 19.8% following the subscription by
three individuals for a total of 401 new shares of capital stock of TSNN.
The Group retains blocking rights in respect of certain key corporate
transactions and a right of first refusal to purchase any shares, which other
shareholders may wish to sell. However, the Group is no longer involved in the
day-to-day management of the business and does not have any directors on the
Board of TSNN.
The results for the year ended 31 December 2002 are disclosed as discontinued on
the face of the profit and loss account.
6. JOINT VENTURE
On 25 September 2002, Tarsus Group plc, through its wholly owned French
subsidiary Groupe MM SA, has signed an agreement with Reed Expositions France
SA, a wholly-owned subsidiary of Reed-Elsevier plc, to establish a new 50:50
joint venture in France to promote and organise a new exhibition for the direct
marketing sector.
The joint venture company, called MD Management sas, has purchased from Delling
Expo sarl the rights and assets of two existing annual exhibitions in the direct
marketing sector, namely SICEP (Salon International du Courrier Electronique et
Postal) and JFMD (Journees Franciliennes du Marketing Direct). The consideration
payable by MD Management sas for the purchase of the two shows is euro533,571,
of which Tarsus is liable for 50%.
This joint venture has been accounted for in accordance with Financial Reporting
Standard 9 ("FRS 9").
7. TAX
2002 2001
# 000's # 000's
Current tax
UK tax on profits for the period - 343
Overseas tax on profits for the period (28) (74)
Overseas tax on joint venture 92 191
Adjustments of UK corporation tax in respect of previous periods 67 -
Current tax charge for the period 131 460
Deferred tax
Movement in the period (221) (33)
Tax (credit) / charge for the year (90) 427
The current tax (credit)/charge for the year is lower than the standard rate
of corporation tax in the UK. The differences are explained below:
2002 2001
# 000's # 000's
Profit / (loss) before taxation per consolidated accounts (18,929) (19,152)
Tax at the standard rate of CT in UK of 30% (5,679) (5,746)
Effects of:
Expenses not deductible for tax purposes 5,642 6,184
Marginal tax on overseas profits (121) 22
Capital allowances for period in excess of depreciation 68 -
Unutilised losses in the year 154 -
Adjustment to tax charge in respect of previous periods 67 -
Current tax charge for the period 131 460
Deferred tax asset of #622,000 has been recognised based on forecasts that
indicate suitable taxable profits will arise.
8. DIVIDENDS
2002 2001
# 000's # 000's
Equity - Ordinary
Interim paid: 2.2p per share 703 2
Final proposed: 2.2p per share 833 -
1,536 2
As disclosed in the Annual Report for 2001 due to the reduction in the share
premium account to create distributable reserves on 6 March 2002, the dividend
relating to the year ended 31 December 2001 was paid as an interim dividend
during 2002.
9. EARNINGS / (LOSS) PER SHARE
The adjusted earnings per share is based on profits after tax from continuing
operations and acquisitions before amortisation of goodwill and exceptional
items of #1,427,851 (2001: #2,105,228 profit) and 36,107,914 (2001: 32,019,145)
ordinary shares, being the weighted average number of shares in the period. This
calculation represents the ongoing operational earnings per share of the Group.
The basic loss per share has been calculated on 36,107,914 ordinary shares
(2001: 32,019,145), being the weighted average number of shares in issue during
the period, and losses attributable to ordinary shareholders for the year of
#18,838,754 (2001: #19,578,774).
Under Financial Reporting Standard 14 ("FRS 14") the share options have no
dilutive effect on the loss per share.
10. POST BALANCE SHEET EVENTS
Disposal of Organex
On 17 January 2003, Tarsus Organex Limited, a wholly owned subsidiary of Tarsus
Group plc, sold its UK Organic food exhibition, Organex, to Diversified Business
Communications Inc. for a consideration of up to #750,000.
Tarsus has received #135,000 and deferred consideration of up to #615,000 based
on revenues generated from Organex exhibitors for the April 2003 and 2004
Natural Products exhibition in to which the Organex exhibition has been merged.
For further information:
Douglas Emslie
Group Managing Director
Tel: 020 8846 2700
This information is provided by RNS
The company news service from the London Stock Exchange
END
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