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HAWKWING PLC — Earnings Release 2012
Apr 22, 2013
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Earnings Release
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RNS Number : 8465C
TLA Worldwide PLC
22 April 2013
TLA Worldwide ("TLA", "Group" or "the Company")
Preliminary Results for the year ended 31 December 2012
TLA Worldwide (AIM: TLA), the sports marketing and athlete management business, is pleased to announce its preliminary results for the period ended 31 December 2012.
FINANCIAL HIGHLIGHTS
· Adjusted EBITDA1 up 7.5% to $6.6 million at a 43% margin (2011: unaudited pro forma EBITDA2: $6.1 million).
· Revenue of $15.1 million, up 9% on unaudited pro forma of $ 13.8 million in 2011.
· Adjusted basic earnings per share3 of 4.19 cents (2011: 0.02 cents).
· Cash balance at 31 December 2012 up 32% to $4.1 million, giving net debt of $3.9 million.
· Successful agreement of new long term debt facility and revolver.
· Maiden dividend of 0.6 pence per share, reflecting Board's confidence in the performance of the business.
· Contracted revenue approximately $40 million, up 33% (2011: $30 million).
· Statutory operating profit of $1.2 million.
OPERATIONAL HIGHLIGHTS
· 57 Major League Baseball clients as at start of the 2013 season, a 67% increase on the previous season.
· 21 clients in total selected as Major League All-Stars.
· Negotiated over $210 million of guaranteed contracts for our baseball clients in the 2012 off-season (2011: $100 million).
· 52 net new client wins, taking total number of clients to 380; new client wins growth of 147% on 2011.
· Opening of a new office in Venezuela to drive growth in Latin America.
· Successful acquisition of baseball representation firm, Peter E Greenberg & Associates, establishing TLA as the leading agency in the representation of Latin American Major League Baseball players.
· Enhanced and expanded sales functions and capabilities within the TLA group.
· The hiring of an MLB executive to the newly created position of Senior Vice President of Business Development including events.
· 42 Top-10 finishes by TLA Clients on PGA TOUR and four players in the Fed Ex Cup.
· Excellent showing by TLA's coaching business at 2012 NCAA Year-end Men's Basketball Tournament.
· Negotiated high profile deals for TLA clients with premier brands such as Pepsi, Red Bull, Subway, Tyco and Ticketmaster.
· TLA nominated as Best in Talent Representation and Management at the prestigious 2013 Sports Business Awards.
CURRENT TRADING AND OUTLOOK
· Approximately 70% of 2013 consensus forecast revenues already contracted.
· Approximately 32% of the Group's contracted revenue relates to 2013.
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any other acquisition related charges, share based payments charges and exceptional items. A further description is provided in the Finance Review
2 Unaudited pro forma financial information for the year ended 31 December 2011 is based on unaudited management accounts of both Legacy and Agency for the period from 1 January 2011 to 7 December 2011, aggregated with the trading results of the Group for the period from 8 December 2011 to 31 December 2011. The aggregated financial information is then adjusted for member earnings, certain exceptional costs and an estimate of central costs as further described in the Business Review.
3 Adjusted profit per share is defined as adjusted profit for the period divided by the weighted average number of ordinary shares in issue during the period. Adjusted profit for the period is defined as profit for the period 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 and exceptional items. A further description is provided in note 2 to the accounts.
Bart Campbell, Chairman, commented:
"This year has seen us deliver a strong set of results and we have performed in line with expectations, proving the business model to investors. We remain focused on developing the business, expanding our client base and improving the value of the Group's offering. The economic and growth trends are favourable for the sports marketing industry, specifically in baseball and the USA generally. We remain confident about TLA's long-term growth."
Contacts:
| TLA Worldwide Mike Principe, Chief Executive |
Tel: 001 212 645 2141 |
| Pelham Bell Pottinger Dan de Belder/Anna Gamble |
Tel: 020 7861 3232 |
| Numis Securities Nick Westlake / Lorna Tilbian / Chris Wilkinson |
Tel: 020 7260 1000 |
About TLA Worldwide
TLA Worldwide plc (TLA:LN) and its subsidiaries, The Legacy Agency, Inc and TLA (NY) Inc. are a leading athlete representation and sports marketing business with a full service offering to their clients in baseball, broadcasting, coaching, endorsement and golf talent, as well as corporate consulting. The Group's success and growth potential is founded on three key pillars: the competency of the underlying businesses, their complementary practices and the strength and experience of the management team. TLA has an exceptional roster of clients including baseball All-Stars C.C. Sabathia, Carl Crawford, Adam Dunn, Jose Reyes, Ricky Romero, Johan Santana, Rickie Weeks and Vernon Wells, broadcasters Troy Aikman, Dan Hicks, Darryl Johnston, Chris Myers and Mitch Williams, college coaches Mick Cronin, Randy Edsall, Mark Fox and Mark Gottfried, PGA Tour professionals, Jim Furyk, Matt Every, Robert Garrigus, John Huh, Spencer Levin, Jeff Overton, John Senden and Kyle Reifers, and talent marketing clients such as Reggie Bush, Colt McCoy, Ndamukong Suh and Ryan Tannehill. Headquartered in New York, TLA operates out of offices in New York, Newport Beach, Houston, San Francisco, Charleston, SC, Maracay, Venezuela and London. For more information, visit www.tlaww-plc.com.
CHAIRMAN'S STATEMENT
I am pleased to report that the first full financial year of operations for TLA Worldwide plc ("TLA" or "the Group") has been a successful one. Following TLA's listing on the Alternative Investment Market (AIM) on 8 December 2011, TLA has fully integrated its portfolio companies under one unified brand, and completed a bolt-on acquisition of Peter E. Greenberg & Associates ("PEG") to further extend our reach into Major League Baseball ("MLB") by targeting the high growth region of Latin America. We also realigned and enhanced the Group's sales functions. As a result, TLA is now a market leader in the representation of professional baseball players. TLA has also expanded its sports marketing offering. It is particularly strong in talent marketing, with special competencies in the representation of broadcasters, coaches and professional golfers. The short listing of TLA as Best in Talent Representation and Management at the prestigious 2013 Sports Business Awards is a testimony to the hard work of our people and the growing reputation of the Group.
Review of Results
For the year ended 31 December 2012, the Group reported:
· revenues of $15.1 million;
· operating profit of $1.2 million;
· adjusted EBITDA1 of $6.6 million;
· contracted revenues for future periods, now stand at some $40 million;
· cash at the end of the period was $4.1 million; and
· the payment of our maiden dividend of 0.6 pence per share, reflecting the confidence of the board in the cash generation of the Group.
Review of Operations
The operational integration of TLA following our acquisition of PEG is complete with PEG repositioning itself within the TLA brand. We currently have over 50 full time personnel and 9 locations worldwide (London, New York City, Newport Beach, San Francisco, Houston, Charleston SC, Phoenix, Miami and Maracay in Venezuela). There have been 52 net new client wins in 2012 demonstrating the benefits of the combined Group and reflecting the efforts of our team.
In January 2013, we renegotiated and expanded our banking facility to include a revolving facility to fund any future acquisitions and for general corporate purposes. We also appointed Numis Securities Limited as nominated adviser and broker to TLA as we strive to move the business forward.
Board Changes
In June 2012, Andy Pearson was appointed as a non-executive director to the Board. Andy brings substantial experience to the Group. As a senior partner at KPMG for 16 years he formed and led KPMG's Transaction Services business in the Midlands between 1999 and 2005 and led work on over 100 M&A or financing transactions.
Additionally, effective 29 November 2012, Gareth Jones, TLA's Group Financial Controller was promoted to Chief Financial Officer and has joined the Group's Board. Gareth joined TLA having previously advised the Group on its flotation. Previously, Gareth spent four years within the Audit and Assurance practice of Ernst & Young where he worked on companies varying in size from start-ups to FTSE 100 clients. He holds a CA qualification and is a member of the Institute of Chartered Accountants of Scotland.
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. A further description is provided in the Finance Review.
Outlook
The start of 2013 has been positive and is in line with the Board's expectations for the year. The cash position continues to be strong with cash on balance sheet of $1.2 million as at 31 March 2013, after the payment of $2.2 million in earn-outs and 70% of our forecast 2013 revenue is currently contracted.
From an industry perspective, the strong underlying fundamentals of MLB were further confirmed through the recent doubling of its national media rights values to $1.55 billion per annum from 2014 to 2021. Additionally, the global sports marketing industry is trending positively following the highly successful London 2012 Summer Olympics. Growth in sports marketing and sponsorship in the US continues to be robust and TLA is well placed to capture this market upswing.
This year has seen us deliver a strong set of results and we have performed in line with expectations, proving the business model to investors. We remain focused on developing the business, expanding our client base and improving the value of the Group's offering. The economic and growth trends are favourable for the sports marketing industry, specifically in baseball and the USA generally. We remain confident about TLA's long-term growth.
Bart Campbell
Chairman
22 April 2013
CHIEF EXECUTIVE'S REVIEW
TRADING
The Group has continued to deliver strong sales and profit growth. In our first full year results we generated $15.1 million of revenue and growth of 9% on a pro-forma basis (2011 pro-forma $13.8 million; for the 23 day period after our admission to AIM revenues were $171,000). Our adjusted EBITDA was $6.6 million (2011: pro-forma of $6.1 million). The reported operating profit for the year was $1.2m (2011: a loss of $0.7m for the 23 day period) after amortisation charges of $4.4 million (2011: $0.3 million).
Adjusted EBITDA1 margin for the group was 43% (2011 unaudited pro-forma2: 44%).
Adjusted diluted EPS was 4.2 cents (2011 unaudited pro-forma: 0.02 cents). Statutory EPS for the year was a loss of 1.4 cents per share (2011: 2.7 cent loss per share).
BUSINESS REVIEW
The group has progressed successfully over the last 12 months and now operates under one brand across its operations. We also enhanced our sales team to capitalise on the potential within our baseball business and the increased awareness of the TLA organisation.
The baseball division was active during 2012, highlighted by four TLA clients selected as MLB All-Stars in 2012, meaning that TLA now has 21 current and past All-Starson our roster. In the MLB Amateur Draft, TLA advised 18 MLB draft picks, an increase of 20% on 2011. 18 of TLA's clients were called up to the MLB compared to four in 2011. With the acquisition of PEG, TLA expanded into Latin America and is now a market leader in that sector. TLA is off to a strong start in 2013 with nearly 60 clients on MLB 40 man rosters, compared to 33 commencing the 2012 season. TLA recently completed a productive off-season, negotiating over $210m of contracts for its clients, compared to slightly over $100m in the prior off-season.
The sports marketing division has performed well. We have invested in its sales resources which slightly reduced margins in the short term. Golf had a solid year with 42 top 10 PGA TOUR finishes and three new PGA TOUR clients, including 2012 Rookie of the Year, John Huh and 2010 USA Ryder Cup team member, Jeff Overton signing with TLA for their exclusive representation. Talent marketing continued to perform well in commercially promoting its clients, negotiating deals with high profile brands as Pepsi, Red Bull and TicketMaster, as well as its exclusive marketing representation of top 10 draft pick in the National Football League, Ryan Tannehill. Coaching continued its upward trend by selectively expanding its client base, highlighted by its representation of eight of the 64 teams in the 2012 NCAA basketball championship tournament. Broadcasting added over 10 new clients to its roster meaning TLA now has clients commentating across the media spectrum for networks such as ESPN, the MLB, NFL and NHL Networks, CBS, NBC, Fox and Turner.
ACQUISITION
Part of our strategy is to acquire companies that fit into and further enhance our business and strategy. It was for this reason that we acquired PEG in November 2012. The acquisition moves us into a leading position in the Latin American baseball player market as well as enhancing our position as a leading baseball management business in the USA. Latin America is a key area for baseball representation with 23.5% of MLB players originating from Latin America. PEG's key markets of the Dominican Republic and Venezuela produce 10.2% and 7.3% of all MLB players respectively.
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. A further description is provided in the Business Review.
2 Unaudited pro forma financial information for the year ended 31 December 2011 is based on unaudited management accounts of both Legacy and Agency for the period 1 January 2011 and 7 December 2011, aggregated with trading results of the Group for the period 8 December 2011 to 31 December 2011. The aggregated financial information is then adjusted for members earnings, certain exceptional costs and an estimate of central costs as further described in the business review.
The integration of PEG into the TLA baseball business is progressing well, with the re-brand complete. The additional reach, combined with industry recognised agents will only continue to enhance the TLA brand. During 2013 we intend to consolidate all of our New York operations into one office which will complete our integration.
EQUITY AND DEBT FINANCING
As part of the acquisition of PEG we raised additional equity. It was pleasing not only to have the support of our existing investors but to see new institutions supporting TLA. In January 2013 we renegotiated our banking facilities which are in place now until January 2018. This enabled us to reduce the interest paid margin by 1% and increase our overall facilities to $15 million. The increase in the facilities is by way of a $7 million revolver, which is in addition to our current $8 million term loan facility. The revolver is available for the future requirements of the group, including acquisitions.
OUR MARKETS
The baseball market continues to go from strength to strength. The estimated MLB revenues for the 2012 season is expected to be $7.5 billion (2011: $7.2 billion). That revenue figure is underpinned by the rapidly growing local broadcast rights market and league attendance. MLB's 2012 gate increased to nearly 75 million, marking a return to pre-Recession levels. The two percent year-on-year increase, is the fifth highest in its history and the largest since 2008. These positive factors, combined with the new TV rights deal of $1.55 billion per annum from the 2014 season, give MLB a sound footing.
The overall US sports market is worth some $48 billion per annum. The key segments of sponsorship and media rights are respectively worth over $9 billion and $12 billion per annum. These segments are forecast to grow faster that the overall US sports market at 6.3% and 7.8% per annum against growth of 4.7%1 for the total market. Drilling down further into the sports marketing landscape, PGA TOUR revenues rose in 2012 to record high $1.11 billion, highlighted by a nine year television deal which commenced in 2011 and averages $800 million per annum. These markets are key drivers for the growth of TLA's business as they underpin the spend by MLB baseball teams as well as increasing our ability to secure sponsorship opportunities for our clients.
PEOPLE
One of the strengths of our business is the quality of our people. As well as the Board appointments of Andy Pearson and Gareth Jones, we have also made a number of key hires, including the fulfilment of the newly created position of Senior VP, Business Development. On a personal note, I would like to thank all of the TLA team for their enthusiasm, energy and support over the last year.
OUTLOOK
As set out in the Chairman's statement, the Group will continue to build upon its progress in 2012 by developing organically by expanding the current service offering and geographic presence, as well as seeking to make strategic acquisitions if and when the right opportunity presents itself.
TLA intends to become the pre-eminent, fully integrated representation and marketing services agency with on-field focus on professional baseball. As a combined group, TLA offers industry-leading capabilities in baseball, broadcasting, coaching, golf and talent management. TLA today offers a stronger platform to recruit new clients and identify new opportunities across the portfolio.
2013 has started as expected and the Group is performing is in line with the Board's expectations.
Michael Principe
Group Chief Executive
22 April 2013
____________
1 All data sourced from PWC “ Outlook for global sports market ” report published in December 2011
Finance REVIEW
This review covers the 12 month trading period from 1 January 2012 to 31 December 2012. For this period the Group reported a statutory loss before tax of $79,000. The performance at the operating level, before interest, tax, depreciation, amortisation and exceptional charges showed an Adjusted EBITDA1 of $6.6 million.
HEADLINE RESULTS
| 2012 | 2011 Unaudited proforma2 |
% | |
| $000 | $000 | Change | |
| Revenue | 15,082 | 13,793 | 9.3% |
| Adjusted EBITDA1 | 6,566 | 6,108 | 6.0% |
| Operating profit before tax | 1,204 | N/A | - |
| Adjusted EBITDA margin3 | 43.5% | 44.3% | 0.8% |
| Adjusted Earnings Per Share (cents)4 | 4.19 | 0.02 | Greater than 100% |
· Cash balances as at 31 December 2012 of $4.1 million (2011: $3.1 million) and net debt of $3.9 million (2011: $6.9m).
· $15 million facility agreed with SunTrust in January 2013 for five years including a $7m revolver to assist with our on-going corporate development.
REPORTED RESULTS
On a statutory basis the operating profit was $1.2 million (2011: loss of $3.1 million) and the loss before tax was $79,000 (2011: loss $3.2 million).
| Year ended 31 December 2012 |
23 day period to 31 December 2011 |
|
| $000 | $000 | |
| Revenue | 15,082 | 175 |
| Operating profit /(loss) from operations | 1,204 | (3,102) |
| Statutory loss before tax | (79) | (3,221) |
| Statutory loss Per Share (cents) | (1.19) | (2.72) |
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the acquisition and integration of new businesses and associated equity fundraising, There have been no share based payment charges in the period although the Directors believe that such items may arise in the future.
2 Unaudited pro forma financial information for the year ended 31 December 2011 is based on unaudited management accounts of both Legacy and Agency for the period from 1 January 2011 to 7 December 2011, aggregated with the trading results of the Group for the period from 8 December 2011 to 31 December 2011. The aggregated financial information is then adjusted for member earnings, certain exceptional costs and an estimate of central costs as further described in the Business Review.
3 Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue
4 Adjusted profit per share is defined as adjusted profit for the period divided by the weighted average number of ordinary shares in issue during the period. Adjusted profit for the period is defined as loss for the period 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 and exceptional items. A further description is provided in note 2 to the accounts.
TLA segments its operations into baseball representation and sports marketing as follows:
Year ended 31 December 2012
| Baseball Representation $000 |
Sports Marketing $000 |
Unallocated $000 |
Total $000 |
|
| Revenues | 10,065 | 5,017 | - | 15,082 |
| Cost of sales | (355) | (230) | - | (585) |
| Gross profit | 9,710 | 4,787 | - | 14,497 |
| Operating expenses excluding depreciation, amortisation and exceptional items | (4,246) | (2,262) | (1,423) | (7,931) |
| Adjusted EBITDA1 | 5,464 | 2,525 | (1,423) | 6,566 |
| Amortisation of intangibles arising on acquisition | (3,081) | (1,323) | - | (4,404) |
| Depreciation | (5) | (1) | (2) | (8) |
| Exceptional and acquisition related costs (See note 4) | - | - | (950) | (950) |
| Operating profit/(loss) | 2,378 | 1,201 | (2,375) | 1,204 |
| Finance costs | (1,283) | |||
| Loss before tax | (79) | |||
| Tax | (1,117) | |||
| Loss for the period | (1,196) | |||
HEADLINE DIVISIONAL PERFORMANCE
Baseball Representation
| 2012 | 2011 proforma2 | % | |
| $000 | $000 | Change | |
| Revenue | 10,065 | 8,785 | 15% |
| Adjusted EBITDA1 | 5,464 | 4,697 | 16% |
| Adjusted EBITDA Margin3 | 54.6% | 53.5% | |
| Operating profit | 2,378 | N/A |
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the IPO, associated equity fundraising, and acquisitions made in the period. There have been no share based payment charges in the period although the Directors believe that such items may arise in the future
2 Unaudited pro forma financial information for the year ended 31 December 2011 is based on unaudited management accounts of both Legacy and Agency for the period from 1 January 2011 to 7 December 2011, aggregated with the trading results of the Group for the period from 8 December 2011 to 31 December 2011. The aggregated financial information is then adjusted for member earnings, certain exceptional costs and an estimate of central costs as further described in the Business Review.
3 Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue
Trading for the 12 month period ended 31 December 2012 saw $10.1 million of revenue, an Adjusted EBITDA of $5.5 million and a statutory operating profit of $2.4 million after accounting for the amortisation of acquired intangibles. The 60 day performance of PEG is included in the above results.
Sports Marketing
| 2012 | 2011 proforma1 | % | |
| $000 | $000 | Change | |
| Revenues | 5,017 | 5,008 | - |
| Adjusted EBITDA2 | 2,521 | 2,711 | (7)% |
| Adjusted EBITDA Margin3 | 50.3% | 54.1% | |
| Operating profit | 1,145 |
Trading for the 12 month period ended 31 December 2012 showed revenue of $5.0 million, adjusted EBITDA of $2.5 million and operating profit of $1.1 million. The reduction in EBITDA reflects investment in additional people to build its future sales capacity.
CORPORATE ACTIVITY
On 11 November 2012 TLA acquired PEG for an initial consideration of $4.46m, split $3.1m in cash and $1.3m in shares. There are five contingent earn-out payments of up to $7.1m, subject to certain EBIT targets. TLA has the option to pay 30% of any earn-out in shares.
PEG is a Latin America focused baseball representation business. This enhances TLA's Latin America operation moving it to a market leader in the representations of Latin American baseball players. For the 60 days that PEG was part of TLA it made an operating loss of $0.5 million.
CASH FLOW AND BANKING ARRANGEMENTS
Cash generated from operating activities for the year ended 31 December 2012 was $2.1million (23 day period ended 31 December 2011: $0.3million). Cash as at 31 December 2012 was $4.1 million (2011: $3.1 million) and net debt was $3.9 million (2011: $6.9m).
A new $15 million banking facility has been arranged since the year end with SunTrust Bank for a term of 5 years to January 2018. We have reduced the interest margin by 1%, the full benefit of which will not be seen until our hedge against future interest rate increases unwinds. The facility is comprised of a term loan of $8.0 million, which was fully drawn down as of 31 March 2013, and a $7.0 million revolver which was unused as of 31 March 2013.
Cash earn-outs payments due in 2013 total $3.84 million. These were paid in March and April 2013.
____________
1 Unaudited pro forma financial information for the year ended 31 December 2011 is based on unaudited management accounts of both Legacy and Agency for the period from 1 January 2011 to 7 December 2011, aggregated with the trading results of the Group for the period from 8 December 2011 to 31 December 2011. The aggregated financial information is then adjusted for member earnings, certain exceptional costs and an estimate of central costs as further described in the Business Review.
2 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the acquisition and integration of new businesses, associated equity fundraising, There have been no share based payment charges in the period although the Directors believe that such items may arise in the future.
3 Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue
TAXATION
The effective tax rate for 2012 was 30.6%, which is expected to remain at a similar rate in 2013.
DIVIDENDS
The board proposes a final dividend of 0.6 pence per share (2011: nil) payable on 12 July 2013 to shareholders on the register at 31 May2013. The ex-dividend date is 29 May2013.
Key Performance Indicators ("KPI's")
The Group manages its operational performance using a number of KPIs. The most important of these are:
| KPI | Year ended 31 December 2012 | Period ended 31 December 2011 |
| Adjusted EBITDA1 | $6.6 million | $6.1 million * |
| Adjust EBITDA Margin2 | 43.5% | 44.3% |
| Loss before tax | $79,000 | $3.2 million |
| Contracted revenue (approximately) | $40 million | $30 million |
| Number of net new client wins | 52 | 21 |
| Debtor collection days | 56 days | 58 days |
*unaudited pro-forma for 2011
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the acquisition and integration of new businesses, associated equity fundraising, There have been no share based payment charges in the period although the Directors believe that such items may arise in the future
2 Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue
TLA Worldwide plc
Group Income Statement
For the year ended 31 December 2012
| Note | Year ended 31 December 2012 $000 |
23 Day period to 31 December 2011 $000 |
|
| Revenue | 1 | 15,082 | 175 |
| Cost of sales | (585) | (4) | |
| Gross profit | 14,497 | 171 | |
| Administrative expenses | (13,293) | (3,273) | |
| Operating profit/(loss) from operations | 1,204 | (3,102) | |
| Operating profit/( loss) before exceptional costs | 2,154 | (808) | |
| Exceptional Items | 3 | (950) | (2,294) |
| Operating profit/ (loss) from operations | 1,204 | (3,102) | |
| Finance costs | (1,283) | (119) | |
| Loss before taxation | (79) | (3,221) | |
| Taxation | 4 | (1,117) | 537 |
| Loss for the period from continuing operations attributable to the equity holders in the company | (1,196) | (2,684) | |
| Loss per share from continuing operations: | ||
| Basic (cents) | (1.19) | (2.72) |
| Diluted (cents) 2 | (1.19) | (2.72) |
TLA Worldwide plc
Group Statement of Comprehensive Income
For the year ended 31 December 2012
| 31 December 2012 $000 |
23 day period to 31 December 2011 $000 |
||
| Loss after taxation | (1,196) | (2,684) | |
| Exchange differences on translation of overseas operations | (88) | 174 | |
| Loss for the period attributable to the equity holders in the company | (1,284) | (2,510) | |
TLA Worldwide plc
Group Balance Sheet
31 December 2012
| Restated* | |||||||||
| 31 December 2012 $000 |
31 December 2011 $000 |
||||||||
| Non-current assets | |||||||||
| Intangible assets - goodwill | 29,022 | 24,229 | |||||||
| Other intangible assets | 22,407 | 22,661 | |||||||
| Property, plant and equipment | 37 | 4 | |||||||
| Deferred tax asset | 1,055 | 973 | |||||||
| 52,521 | 47,867 | ||||||||
| Current assets | |||||||||
| Trade and other receivables | 3,698 | 3,781 | |||||||
| Cash and cash equivalents | 4,124 | 3,115 | |||||||
| 7,822 | 6,896 | ||||||||
| Total assets | 60,343 | 54,763 | |||||||
| Current liabilities | |||||||||
| Trade and other payables | (1,870) | (3,447) | |||||||
| Borrowings | (1,907) | (1,907) | |||||||
| Deferred consideration | (4,005) | (303) | |||||||
| (7,782) | (5,657) | ||||||||
| Net current assets | 40 | 1,239 | |||||||
| Non-current liabilities | |||||||||
| Borrowings | (5,799) | (7,626) | |||||||
| Deferred consideration | (12,103) | (14,791) | |||||||
| Derivative financial instruments | (129) | (78) | |||||||
| Other payables | (10) | (8) | |||||||
| (18,041) | (22,503) | ||||||||
| Total liabilities | (25,823) | (28,160) | |||||||
| Net assets | 34,520 | 26,603 | |||||||
| Equity | |||||||||
| Share capital | 2,741 | 1,985 | |||||||
| Share premium | 23,396 | 16,262 | |||||||
| Shares to be issued | 12,177 | 10,866 | |||||||
| Foreign currency reserve | 86 | 174 | |||||||
| Retained loss | (3,880) | (2,684) | |||||||
| Total equity | 34,520 | 26,603 | |||||||
* The restatement of goodwill relates to the reassessment of fair value of assets and consideration payable on a prior year acquisition.
TLA Worldwide plc
Group Statement of Cash Flows
For the year ended 31 December 2012
| Note | Year ended 31 December 2012 $000 |
23 day period ended 31 December 2011 $000 |
|
| Net cash from operating activities | 8 | 2,421 | 315 |
| Investing activities | |||
| Purchases of property, plant and equipment | (41) | (4) | |
| Deferred consideration paid | (303) | - | |
| Acquisition of subsidiary undertakings | (2,410) | (24,522) | |
| Net cash used in investing activities | (2,754) | (24,526) | |
| Financing activities | |||
| Interest paid | (492) | (32) | |
| (Repayment of bank loans)/new bank loans raised | (2,000) | 10,000 | |
| Fees paid on issue of new bank loans | - | (476) | |
| Issue of shares for cash consideration (net of issue costs) | 3,835 | 17,834 | |
| Net cash from financing activities | 1,342 | 27,326 | |
| Net increase in cash and cash equivalents | 1,009 | 3,115 | |
| Cash and cash equivalents at beginning of period | 3,115 | - | |
| Cash and cash equivalents at end of period | 4,124 | 3,115 | |
TLA Worldwide plc
Group Statement of Changes in Equity
| Share Capital | Share Premium | Shares to be issued | Foreign Currency Reserve | Retained Earnings | Total | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
| Balance at 16 August 2011 | - | - | - | - | - | - |
| Total comprehensive income for period | - | - | - | 174 | (2,684) | (2,510) |
| Equity issued during the period | 1,985 | 17,095 | - | - | - | 19,080 |
| Equity costs charged during the period | - | (833) | - | - | - | (833) |
| Deferred consideration to be settled in equity | - | - | 10,866 | - | - | 10,966 |
| Balance at 31 December 2011 | 1,985 | 16,262 | 10,866 | 174 | (2,684) | 26,603 |
| Total comprehensive income for period | - | - | - | (88) | (1,196) | (1,284) |
| Equity issued during the period | 756 | 7,332 | - | - | - | 8,088 |
| Equity costs charged during the period | - | (198) | - | - | - | (198) |
| Deferred consideration to be settled in equity | - | - | 1,311 | - | - | 1,311 |
| Balance at 31 December 2012 | 2,741 | 23,396 | 12,177 | 86 | (4,060) | 34,520 |
Notes to the preliminary announcement of results
Principal accounting polices
While the financial information included in this preliminary 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 Company expects to publish full financial statements that comply with IFRSs in May 2013.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2012, or period ended 31 December 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's annual general meeting. The auditors have 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 the forecasts for the year ending 31 December 2013 and 31 December 2014. The Directors consider the forecasts to be prudent and have assessed the impact on the Group's cash flow, facilities and headroom within its banking covenants. Further, the Directors have assessed the future funding requirements of the Group and compared the level of borrowing facilities. Based on this work, the Directors are satisfied that Group has adequate resources to continue in operational existence for the foreseeable future despite the current economic uncertainty. For this reason they continue to adopt the going concern basis 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, along with intragroup transactions, and exceptional items (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 the off-field actives of athletes; in addition it represents broadcasters and coaches in respect of their contract negotiations.
All of the Group's revenue arises through the rendering of services.
IFRS 8 paragraph 34 requires disclosure of revenues by customer for each customer that generates in excess of 10 per cent of the Group's total revenues in a period. In the year ended 31 December 2012, there were no clients who generated in excess of 10 percent of total revenue (23 day period ended 31 December 2011: one).
1. Segmental Analysis (Continued)
Year ended 31 December 2012
| Baseball Representation $000 |
Sports Marketing $000 |
Unallocated $000 |
Total $000 |
|
| Revenues | 10,065 | 5,017 | - | 15,082 |
| Cost of sales | (355) | (230) | - | (585) |
| Gross profit | 9,710 | 4,787 | - | 14,497 |
| Operating expenses excluding depreciation, amortisation and exceptional items | (4,246) | (2,262) | (1,423) | (7,931) |
| Adjusted EBITDA1 | 5,464 | 2,521 | (1,423) | 6,566 |
| Amortisation of intangibles arising on acquisition | (3,081) | (1,323) | - | (4,404) |
| Depreciation | (5) | (1) | (2) | (8) |
| Exceptional items (See note 3) | - | - | (950) | (950) |
| Operating profit/(loss) | 2,378 | 1,197 | (2,531) | 1,204 |
| Finance costs | (1,283) | |||
| Loss before tax | (79) | |||
| Tax | (1,117) | |||
| Loss for the period | (1,196) | |||
| Assets | 44,373 | 14,463 | 1,507 | 60,343 |
| Liabilities | (564) | (1,157) | (24,102) | (25,823) |
| Capital Employed | 43,809 | 13,306 | (22,595) | 34,520 |
The accounting policies of the reportable segments are the same as the Group's accounting policies described the principal accounting policies. Segment profit represents the profit earned by each segment without allocation of the share of profits of associates, central administration costs including directors' salaries, investment revenue 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.
____________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the IPO, associated equity fundraising, and acquisitions made in the period. There have been no share based payment charges in the period although the Directors believe that such items may arise in the future.
1. Segmental Analysis (Continued)
23 day period to 31 December 2011
| Baseball Representation $000 |
Sports Marketing $000 |
Unallocated $000 |
Total $000 |
|
| Revenues | 19 | 156 | - | 175 |
| Cost of sales | - | (4) | - | (4) |
| Gross profit | 19 | 152 | - | 171 |
| Operating expenses excluding depreciation, amortization and exceptional items | (289) | (155) | (242) | (686) |
| Adjusted EBITDA2 | (270) | (3) | (242) | (515) |
| Amortisation of intangibles arising on acquisition | (192) | (101) | - | (293) |
| Exceptional items (See note 3) | - | - | (2,294) | (2,294) |
| Operating loss | (462) | (104) | (2,536) | (3,102) |
| Finance costs | (119) | |||
| Loss before tax | (3,221) | |||
| Tax | 537 | |||
| Loss for the period | (2,684) | |||
| Assets* | 37,640 | 13,926 | 3,197 | 54,763 |
| Liabilities | (1,257) | (228) | (26,675) | (28,160) |
| Capital Employed | 36,383 | 13,698 | (23,478) | 26,603 |
* Restated to reflect change in fair value of assets acquired.
____________
2 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the IPO, associated equity fundraising, and acquisitions made in the period. There have been no share based payment charges in the period although the Directors believe that such items may arise in the future.
2. Earnings per share
| Year ended 31 December 2012 cents per share |
23 day period to 31 December 2011 cents per share |
|
| Basic and diluted loss per share | (1.19) | (2.72) |
The calculation of loss per share per share is based on the following data:
| Loss | 2012 $000 |
23 day period to 31 December 2011 $000 |
| Loss for the purposes of basic earnings per share being net loss attributable to owners of the company | (1,196) | (2,684) |
| Number of Shares | ||
| Weighted Average number of shares in issue: | 65,469,620 | 63,860,990 |
| Weighted Average number of deferred consideration shares to be issued | 34,905,521 | 34,802,015 |
| Weighted average number of shares for the purposes of basic loss per share | 100,375,141 | 98,663,005 |
Adjusted earnings per share (see below)
| Year ended 31 December 2012 cents per share |
23 day period to 31 December 2011 cents per share |
|
| Basic adjusted earnings per share | 4.19 | 0.03 |
| Diluted adjusted earnings per share | 4.19 | 0.03 |
Adjustment to the earnings is defined as profit or loss for the period 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 and exceptional items.
The adjusted profit attributable to owners of the company used in calculating the basic and diluted adjusted earnings per share is reconciled below:
| Year ended 31 December 2012 $000 |
23 day period to 31 December 2011 $000 |
|
| Loss attributable to shareholders | (1,196) | (2,644) |
| Adjusted for | ||
| Exceptional costs (see note 4) | 950 | 2,294 |
| Amortisation of acquired intangible assets | 4,404 | 293 |
| Fair value loss on interest rate swap | 51 | 78 |
| Adjusted profit attributable to owners of the company | 4,209 | 21 |
3. Exceptional Items
The exceptional costs relate to:
| Year ended 31 December 2012 $000 |
23 day period to 31 December 2011 $000 |
|
| Acquisition related costs | 614 | 1,031 |
| Integration costs | 406 | 1,263 |
| Loyalty bonus arising on acquisition | 250 | - |
| Fair value movement on valuation of deferred consideration | (320) | - |
| Total exceptional and acquisition related costs | 950 | 2,294 |
4. Taxation
| Year ended 31 December 2012 $000 |
23 day period to 31 December 2011 $000 |
|
| UK Taxes | ||
| Current year | - | - |
| US Taxes | ||
| Current year | (1,420) | (65) |
| Adjustments in respect of prior year | 221 | - |
| (1,199) | - | |
| Deferred tax (note 9) | 82 | 602 |
| Total Tax | (1,117) | 537 |
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The charge for the year can be reconciled to the profit per the income statement as follows:
| Year ended 31 December 2012 $000 |
23 day period to 31 December 2011 $000 |
|||
| Profit/(loss) before tax on continuing operations | (79) | (3,221) | ||
| Tax credit at the US corporation tax rate of 40% (23 day period ended 31 December 2011: 40%) | 32 | 1,289 | ||
| Effects of: | ||||
| Tax losses utilised in the year | 497 | - | ||
| Expenses not deductible for tax purposes | (1,358) | - | ||
| Other timing differences | (477) | - | ||
| Adjustments to tax charge for prior period | 221 | - | ||
| Unrecognised deferred tax asset | - | (687) | ||
| Effect of different tax rates of entities operating in other jurisdictions | (32) | (65) | ||
| Tax (charge)/credit for the year | (1,117) | 537 | ||
5. Acquisitions
Peter E Greenberg & Associates ("PEG")
On 11 November 2012, through its wholly owned subsidiary TLA Acquisitions Limited, the Group acquired the trade and certain assets of PEG. The company focuses on Baseball representation and has 13 Major League Baseball, including 5 All-star, players as clients. The consideration for PEG was made up as follows:
· initial cash consideration of $3.1 million, reduced by a working capital adjustment of $0.7 million, payable on completion;
· a further payment in cash of $0.2 million on 31 July 2013;
· $1.3m satisfied by the issue of the TLA (NY) Inc. Consideration shares upon completion of the Acquisition which can, in accordance with the terms of the exchange Agreement, be exchanged for 3,326,029 Ordinary Shares in the capital of TLA Worldwide plc at any time at the option of the vendors; and
· up to $7.1million, payable in five earn-out payments. These earn-out payments can be earned if either the individual annual EBIT targets or the cumulative five year EBIT target are met or exceeded. The Company has the option to pay 30% of each earn-out in shares instead of cash. Management have assigned a fair value of $4.9m to these payments.
| Book value at acquisition $000s |
Revaluations $000s |
Provisional Fair value $000s |
|
| Intangible assets | - | 4,150 | 4,150 |
| Tangible assets | 6 | (6) | - |
| Trade and other receivables | 46 | - | 46 |
| Trade and other payables | (247) | - | (247) |
| Total | (195) | 4,144 | 3,949 |
| Goodwill | 4,793 | ||
| Purchase Consideration | 8,742 | ||
| Less deferred payable in cash discounted to present value | (5,021) | ||
| Less TLA (NY) Inc. shares on acquisition | (1,311) | ||
| Cash outflow on acquisition | 2,410 |
The goodwill of $4.8 million arising from the acquisition consists of synergies arising from the acquisition, the acquiree's assembled workforce and anticipated future profits arising from access to new markets. $4.8m of the goodwill is expected to be deductible for income tax purposes.
The fair value of the 3,326,029 ordinary shares issued as part of the consideration paid for PEG ($1.3 million) was determined at a value of 24.5 pence per share, being the average price at which the Group's ordinary shares were traded on AIM during the period of seven (7) days ending at the close of trading on 16 October 2012). This valuation has been used as TLA (NY) Inc. shares are convertible at any time at the vendor's option into TLA Worldwide plc shares. The conversion of these shares is not contingent on any future events.
The contingent consideration arrangement requires the PEG business to achieve set earnings targets over a five year period. The potential undiscounted amount of all future payments that TLA Worldwide plc could be required to make under the contingent consideration arrangement is between $nil and $7.1million.
The fair value of the contingent consideration arrangement of $4.9 million (discounted to present value) was estimated based on the anticipated earnings of PEG.
Acquisition-related costs (included in exceptional items) amount to $0.6 million. PEG contributed $0.3 million revenue and a loss of $0.5 million to the Group's loss for the period between the date of acquisition and the balance sheet date. It is not deemed practical to disclose revenue or profit if the acquisition occurred on 1 January 2012 as PEG historically produced financial statements on a cash basis.
6. Borrowings
| 2012 $000 |
2011 $000 |
|
| Secured borrowing at amortised cost | ||
| Bank loans | 8,000 | 10,000 |
| Debt costs amortised over the life of the facility | (294) | (467) |
| 7,706 | 9,533 | |
| Total borrowings | ||
| Amount due for settlement within 12 months | 1,907 | 1,907 |
| Amount due for settlement after 12 months | 5,799 | 7,626 |
| 7,706 | 9,533 | |
All borrowings are denominated in US dollars. The other principal features of the Company's borrowings are as follows:
· interest is charged at 4% above US LIBOR;
· The loan is secured against trade receivables and contracted revenue;
· repayments are made quarterly evenly over the life of the loan; and
· the loan is for 5 years and expires on 22 January 2018.
7. Deferred Consideration
Under the terms of the acquisition agreements in relation to Agency, Legacy, and PEG the Group has obligations to the vendors of those businesses as set out below:
| 2012 $000's |
As restated* 2011 $000's |
|
| Payable in less than one year | ||
| - Settled by way of cash consideration | 4,005 | 303 |
| Payable in one to two years | ||
| - Settled by way of cash consideration or equity | - | 4,271 |
| - Settled by way of cash consideration | 7,617 | - |
| Payable in two to five years | ||
| - Settled by way of cash consideration | 6,695 | 10,660 |
| Payable in more than five years | ||
| - Settled by way of cash consideration | - | 1,600 |
| Impact of discounting on provisions payable in cash | (2,209) | (1,740) |
| Total deferred consideration payable | 16,108 | 15,094 |
In addition to the liabilities detailed above an additional $12,177,000 (2011: $10,866,000) consideration payable in one to two years is to be settled by way of the issue of shares. This issue is not contingent on any future event and is therefore considered an equity item (see note 7).
7. Deferred Consideration (continued)
The cash deferred consideration requires the conversion into cash of the EBIT underlying the earn-out payment prior to its payment date. To the extent this this has not achieved the earn-out is reduced by the cash shortfall.
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 to present value using the Group's borrowing rate of 5.22%.
The Group has the option to settle 30% of the $5,021,000 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. These payments are made annually for the next five years.
| Deferred consideration $000 |
|
| At January 2012 as previously stated | 15,144 |
| Restatement | (50) |
| At January 2012 as restated | 15,094 |
| Additional deferred consideration in the year | 5,021 |
| Settlement of deferred consideration | (4,303) |
| Adjustments in fair value | (270) |
| Unwinding of discount | 566 |
| At December 2012 | 16,108 |
8. Notes of cash flow statement
| 2012 $000 |
2011 $000 |
||
| Operating loss for the period | 1,204 | (3,102) | |
| Adjustments for: | |||
| Amortisation of intangible assets | 4,404 | 293 | |
| Exceptional costs paid in shares | - | 1,246 | |
| Amortisation of tangible assets | 8 | - | |
| Operating cash flows before movements in working capital | 5,616 | (1,563) | |
| Increase/(decrease) in receivables | 268 | (496) | |
| (Decrease)/increase in payables | (2,177) | 2,203 | |
| Cash generated by operations | 3,707 | 144 | |
| Income taxes paid | (1,197) | (3) | |
| Foreign exchange (losses)/gains | (89) | 174 | |
| Net cash from operating activities | 2,421 | 315 | |
| Cash and cash equivalents | |||
| Cash and bank balances | 4,124 | 3,115 |
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.
9. Annual report and accounts
Copies of the annual report and accounts for the period ending 31 December 2012 together with the notice of Annual General Meeting will be issued shortly and will be available to view and download from the Company's website: www.tlaww-plc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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