RNS Number:9994P
CSS Stellar PLC
22 September 2003


For Immediate Release                                  Monday, 22 September 2003



                                CSS Stellar plc

                             ("CSS" or "the Group")



                                Interim Results

                     For the Six Months ended 30 June 2003



CSS Stellar, the global Entertainment and Sports Marketing Group, today
announces its interim results for the six months ended 30 June 2003.



Summary:



*        Gross profit for the period increased to #17.4 million (2002: #15.2
         million).

*        Continued integration of acquisitions, providing the Group with a
         significantly more resilient broad based global business in talent 
         management, marketing and television.

*        Operating profit before goodwill amortisation of #656,000 (2002:
         #1,138,000).

*        Operating loss of #472,000 (2002: profit of #269,000) due to poor
         performance in the Events Division.

*        Bank debt reduced by #1.2 million to #3.4 million during the period and
         net cash inflow from operating activities of #651,000.

*        Significant growth in North America, with turnover of #23.7m (2002:
         #6.3m) and profits of #822,000 (2002: #16,000).

*        Market conditions for the remainder of 2003 unlikely to show much
         improvement, with growth predicted for 2004.



Commenting on the results John Webber, Chairman, stated:



"The first six months of this year saw considerable progress in developing CSS
Stellar into a broad based global entertainment and sports business.  The
difficulties associated with our Events Division, as well as the documented
weakness in corporate marketing, will impact the current financial year.
However, for the first time in its history, the Group is now able to offer
clients a global integrated service encompassing marketing and sponsorship, a
comprehensive talent management offering, and television programming.  Although
2003 will remain difficult, our business is traditionally stronger in the second
half and we are ideally positioned to leverage our leading position in what
promises to be an improved 2004."



For further information please contact:


CSS Stellar                                      Tel: 020 7466 5000 (am)
Sean Kelly, Joint CEO                            Tel: 020 7078 1400 (thereafter)
Kevin Rose, Finance Director

Buchanan Communications                          Tel: 020 7466 5000
Bobby Morse/Catherine Miles



CHAIRMAN'S STATEMENT



We said 2003 would be a year of integration for the Group and one in which we
would focus on the development of our global Entertainment and Sports marketing
business. This we have done. No acquisitions have been made during the period;
North America has been turned around; improvements in profitability of acquired
businesses have been demonstrated across the Group and bank debt has been
significantly reduced.



The results in the first half of 2003 reflect both the positive actions we have
taken to get the right building blocks in place and the continuing challenging
trading conditions in our markets. As we announced in July 2003 the process of
integrating all the businesses into three global divisions Talent Management,
Marketing and Television has begun. These divisions are the foundation for the
Group's future.



In the six months to the end of June 2003, turnover was #34.7 million (2002:
#17.8 million).  Much of this increase is attributable to the inclusion of
Echo's media buying business, acquired in July 2002, which also accounts for a
comparable increase in the cost of sales.  Gross profit for the period was #17.4
million (2002: #15.2 million). Operating profit before goodwill amortisation for
the period was #656,000 (2002: #1,138,000) After accounting for amortisation of
goodwill of #1,128,000 (2002: #869,000), the pre-tax loss was #725,000 (2002:
profit of #143,000).  The basic and fully diluted loss per share was 3.45p over
the period, against earnings of 0.01p in 2002. Adjusted earnings per share,
adding back amortisation costs and exceptional expenses (net of taxation) were
1.22p (undiluted) and 1.11p (fully diluted) against comparatives of 5.50p and
4.62p on a similar basis last year.


The Group's results are satisfactory, other than in the Events Division, whose
underperformance was highlighted in our AGM statement in May. This
underperformance specifically relates to ARB and action is being taken to
address the situation. The performance in North America shows a substantial
turnaround with our Marketing division recording significant progress.  Talent
Management showed steady growth and Television, although only recently expanded,
has already demonstrated an improvement.



LOOKING AHEAD



Signs of an upturn are evident in some areas of our business and the second half
has started satisfactorily. However, although we will benefit from the usual
seasonality in higher second half revenues, we are not assuming any financial
affect from any upturn in the remainder of 2003. We feel more confident about
2004. The recent Entertainment and Media Outlook document from
PriceWaterhouseCoopers endorses our views, expecting the media sector from 2004
onwards to resume growth globally. PwC also showed the Group to be in both the
best practise areas and geographical regions to benefit most from this upturn.



We will continue to focus on the three divisions of Talent Management, Marketing
and Television, all of which will have a global presence.  The Events division
will remain centred in Europe. The restructuring of the Group's senior
management, with the appointment of Sean Kelly as Joint Chief Executive and
Kevin Rose as Group Finance Director, and the formation of the Global Executive
Group, has improved our ability to manage the growth in the business and
activate cross-selling opportunities.



Over the last three years, we have built an entertainment and sports marketing
group, which is now recognised as a market leader, in difficult market
conditions.  Going forward we aim to continue to attract management talent so
that we can continue to improve our client capabilities further differentiating
ourselves from other companies within the industry.





John Webber

Chairman



CHIEF EXECUTIVES' OPERATIONAL AND DIVISIONAL REVIEW



During the period, the Group implemented a number of initiatives to further its
strategy, the total costs of which are expected to be approximately #900,000 for
the full year. These initiatives include:



*          Opening an office in Hong Kong to serve as the regional headquarters
for CSS Stellar Asia, a region we perceive as an essential component in the
global development of the Group, given its growing importance;



*          The expansion of the Group's North American Talent Management motor
sports division, enabling us to build on the NASCAR relationships developed by
our marketing division. NASCAR continues to be a hugely popular family sport
with extensive commercial sponsorship;



*          The expansion of the financial services division in the UK, the
development of which will enable the Group to provide additional services to
individual clients and also develop investment products with the potential to
benefit other Group companies;



*          Continuing to support the UK sponsorship sales area in the Marketing
Division, no longer cushioned by the historic contracted revenues from Formula
One; and



*          Opening PFD's North American Literary division in New York, the
benefits of which will be to broaden the international service offered to
existing clients and to attract North American clients.



In addition to the costs highlighted above, deferred consideration of #2,333,000
in cash was paid to the shareholders of Echo and GEM during the period and
#1,221,000 of bank borrowings were repaid in accordance with the terms of the
loan agreement.  Further loan repayments are anticipated over the rest of the
year and there is no further deferred cash consideration to be accrued at this
time.



DIVISIONAL REVIEW



TALENT MANAGEMENT



Operating profits prior to amortisation of goodwill were #405,000 (2002:
#385,000) on turnover of #5.6 million (2002: #5.6 million), a satisfactory
performance given continuing difficult market conditions.  Our clients have
enjoyed considerable success during the first half of 2003 and there is much to
look forward to in the second half.



In Entertainment, Keira Knightley starred in "Pirates of the Caribbean" and
became the new face of Asprey.  She is currently filming "King Arthur" in
Ireland. Robert Harris has a number one best seller with his new book "Pompeii".
Michael Frayn's latest play "Democracy" is receiving critical acclaim while
Richard Curtis's new film "Love Actually" is opening this autumn and is expected
to attract worldwide audiences.



Sporting highlights include Juan Pablo Montoya, currently challenging to win his
first F1 World Championship and Richard Burns who is leading the 2003 World
Rally Championship and has agreed to return to Subaru next year. In golf, there
were Tour wins for Justin Leonard and Bob Tway. Lorena Ochoa is currently ranked
No.1 rookie in the LPGA and is ranked in the Association's top ten earners. We
have also just signed Oliver Wilson, one of the recent victorious Walker Cup
team.



We have re-structured our financial services offering, Stellar Financial
Partners, during the period, which included the disposal of PFMA in April 2003
and resulted in a loss of #178,000 (2002: #369.000). Now that this
re-structuring is complete, we remain of the belief that there is an opportunity
to provide financial services, founded on servicing a client base of over 1,500
individuals.



MARKETING



Operating profit prior to amortisation of goodwill rose to #716,000 (2002:
#321,000) on turnover of #25.2 million (2002: #7.5 million).



The increase in turnover and profits comes from North America and is partly due
to the first contribution from Echo, acquired in July 2002.  Echo has improved
its year on year trading due to growth in client revenues from Labatt, the
Toronto Stock Exchange and Starbucks.  In addition there was considerably
improved trading at GEM in the USA following management changes. This was due
partly to a lower cost base and to new client wins, including B&Q, Motorock,
Polaris and The Swatch Company and improved cross-selling within the division,
an example being the expansion of our role with a large global bank, now a
worldwide client, having only been involved in Europe previously.



The 2002 interim results for sponsorship sales were still bolstered by the
inclusion of revenues arising from the historic Formula One sponsorship deals,
which ended last year. This area of the business has now been merged into
Marketing to enable better matching of client and opportunity. Early indications
are that the number of initiatives in this area has increased and we are more
hopeful than we have been for a while with this area of our business. Securing
deals continues to be difficult. However we have recently completed a
transaction for our client General Motors with Microsoft to sponsor their IRL
Panther Racing Team.



Although the US economy is beginning to see the start of a revival in
advertising revenues and consumer spending, corporate spending has yet to pick
up on any sustained basis.  We believe the management changes here mean we are
well-placed in the event of any improvement in the second half of the year and
into 2004.



TELEVISION



Operating profit prior to amortisation of goodwill increased to #6,000 (2002:
#55,000 loss) on turnover of #788,000 (2002: #115,000). This is a good
performance in what is always the more difficult half of the year.  Nonetheless,
margin has been hit by the necessary investment in acquisition of content and
employees to grow the division. PFD and Target are now working on a number of
joint initiatives which will become the core creative impetus for the
development of programming within the Group.



Recent successes include "I Am the Answer" which has been commissioned by ITV
for 60 episodes, Kay Mellor's "Between the Sheets" and "Murphy's Law" which was
produced by Tiger Aspect.



Target will also seek to reap benefits from the significantly enhanced rights
portfolios independent production companies are expected to own as a result of
the changes announced in the recent Communications Act.



EVENTS



Turnover declined 32% in the first six months to #3.2 million (2002: #4.7
million), with operating profit prior to amortisation of goodwill reduced still
further, resulting in a loss of #471,000 (2002: #118,000 profit).



Both Icon and ARB failed to meet expectations. However Icon was profitable and
its trading performance improved markedly in May and June.  The outlook for Icon
remains brighter for the second half of the year with the business set to
benefit from its expanded UEFA Champions League contract, with runs through to
2007.



Although ARB had a good June it had a slow start to the year and also relocated
during the period. Trading has been considerably worse here than was envisaged
when budgets were prepared at the start of the year and the Board is currently
undertaking action to resolve the situation before we next report to
shareholders.



ASIA



CSS Stellar Asia began trading from Hong Kong in January 2003, with the aim of
establishing a foothold in the region that will become a major growth area for
our business over the next five years.  The outbreak of SARS led to the
cancellation of many entertainment and sporting events, and will mean a slightly
worse result for 2003 than the forecasted break-even.  The operating loss for
the first half was #35,000, prior to any central overhead allocation.



However we are continuing to develop our presence in the region through a number
of initiatives, including:



*        office opening;



*        acquisition of the goodwill and employees of Sportsunite in Beijing in
         July 2003; and



*        development of significant initiatives that combine all the elements of
         the Group's business, including Talent Management, Marketing and 
         Television divisions, and both the European and North American teams.



SUMMARY



Overall, the business is positioned strongly with a unique offer in terms of
management breadth and expertise.  The equity base has sustained the business
and we are confident in delivering returns with the upside flowing from sector
growth and client gains.



Julian Jakobi

Sean Kelly

Joint Chief Executives



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the period ended 30 June 2003


                                                                   Unaudited     Unaudited       Audited
                                                                    6 months      6 months    year to 31
                                                                  to 30 June    to 30 June      December
                                                        Note            2003          2002          2002
                                                                       #'000         #'000         #'000


Turnover - continuing operations                             2        34,678        17,831        48,457
Cost of sales                                                       (17,262)       (2,660)      (15,069)
Gross profit                                                          17,416        15,171        33,388

Exceptional administrative expenses                          3             -         (485)       (1,547)
Amortisation of goodwill                                             (1,128)         (869)       (1,955)
Other administrative expenses                                       (16,760)      (13,548)      (29,676)
Administrative expenses - total                                     (17,888)      (14,902)      (33,178)

Operating (loss) / profit                                              (472)           269           210

Exceptional item - loss on disposal of subsidiary            3         (178)             -             -
                                                                       (650)           269           210
Interest receivable                                                       77            93           230
Interest payable                                                       (152)         (219)         (434)

(Loss) / profit on ordinary activities before taxation                 (725)           143             6

Tax on (loss) / profit on ordinary activities                          (176)         (141)         (388)

(Loss) / profit on ordinary activities after taxation                  (901)             2         (382)
Equity minority interest                                                  11             -          (56)
                                                                       (890)             2         (438)
Proposed dividend                                                          -             -         (258)

Transferred (from) / to reserves                                       (890)             2         (696)



(Loss)/earnings per ordinary share                           4
Basic                                                                 (3.45)          0.01        (1.84)
Diluted                                                               (3.45)          0.01        (1.84)

Adjusted earnings per ordinary share                         4
Basic                                                                   1.22          5.50         10.93
Diluted                                                                 1.11          4.62         10.15

Statement of total recognised gains and losses                         #'000         #'000         #'000
(Loss) / profit for the financial year                                 (890)             2         (438)
Currency translation differences in foreign currency                      49           (2)          (78)
net investment

Total gains and losses recognised since last annual                    (841)             -         (516)
report



The accompanying accounting policies and notes form an integral part of these
financial statements.



CONSOLIDATED BALANCE SHEET AT 30 JUNE 2003


                                                                   Unaudited     Unaudited    Audited 31
                                                                     30 June       30 June      December
                                                                        2003          2002          2002
                                                                       #'000         #'000         #'000

Fixed assets
Intangible assets                                                     38,502        32,671        39,293
Tangible assets                                                        5,259         4,410         4,990
Investments - other                                                    1,112            66         1,093
                                                                      44,873        37,147        45,376

Current assets
Stocks and work in progress                                              514           353           344
Debtors                                                               15,995        11,132        16,963
Cash at bank and in hand                                               2,559         9,512         5,302
                                                                      19,068        20,997        22,609

Creditors: amounts falling due within one year                      (21,356)      (12,816)      (23,355)

Net current (liabilities) / assets                                   (2,288)         8,181         (746)

Total assets less current liabilities                                 42,585        45,328        44,630

Creditors: amounts falling due after more than one year              (2,330)       (5,495)       (3,523)

Minority interests                                                       180             -           169

                                                                      40,435        39,833        41,276

Capital and reserves
Called up share capital                                               12,880        12,628        12,880
Share premium account                                                 22,976        22,374        22,976
Shares to be issued                                                    4,098         2,735         4,098
Revaluation reserve                                                      171           171           171
Profit and loss account                                                  310         1,925         1,151

Equity shareholders' funds                                            40,435        39,833        41,276



The accompanying accounting policies and notes form an integral part of these
financial statements.



CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2003


                                                                  Unaudited     Unaudited         Audited
                                                                   6 months      6 months         year to
                                                                 to 30 June    to 30 June     31 December
                                                       Note            2003          2002            2002
                                                                      #'000         #'000           #'000

Net cash inflow from operating activities                   1           651         1,724           1,892

Returns on investments and servicing of finance
Interest paid                                                         (152)         (219)           (434)
Interest received                                                        77            93             230
Net cash outflow from returns on investments and                       (75)         (126)           (204)
servicing of finance

Taxation                                                              (525)         (467)         (1,026)

Capital expenditure and financial investment
Purchase of tangible fixed assets                                     (907)         (449)         (1,072)
Purchase of intangible fixed assets                                   (230)             -            (10)
Sale of tangible fixed assets                                           118            42              94
Net cash outflow from capital expenditure and                       (1,019)         (407)           (988)
financial investment

Acquisitions and disposals
Purchase of subsidiaries                                            (2,333)       (1,958)         (5,586)
Sale of subsidiaries                                                  (153)             -               -
Net cash from purchase of subsidiary                                      -             -           2,016
Purchase of investments                                                (19)             -           (894)
Sale of investments                                                       -             -              66

Net cash outflow from acquisitions and disposals                    (2,505)       (1,958)         (4,398)

Equity dividends paid                                                 (258)             -               -

Net cash outflow before financing                                   (3,731)       (1,234)         (4,724)

Financing
New shares issued for cash                                                -         9,937           9,937
Less: associated costs                                                    -         (580)           (580)
Repayment of borrowings                                               (767)       (1,350)          (1973)
Capital element of finance lease rentals                              (454)         (418)           (881)

Net cash (outflow) / inflow from financing                          (1,221)         7,589           6,503

(Decrease) / increase in cash                                       (4,952)         6,355           1,779



The accompanying accounting policies and notes form an integral part of these
financial statements.



NOTES TO THE ACCOUNTS
For the period ended 30 June 2003



1     RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES


                                                                 6 months to   6 months to    Year to 31
                                                                     30 June       30 June      December
                                                                        2003          2002          2002
                                                                       #'000         #'000         #'000

Operating (loss) / profit                                              (472)           269           210
Depreciation charge                                                      696           806         1,508
Amortisation of intangibles - goodwill                                 1,128           869         1,955
Amortisation of intangibles - other                                       45             -           106
Increase in stocks                                                     (170)          (87)          (78)
Decrease in debtors                                                      867           977         1,210
Decrease in creditors                                                (1,443)       (1,110)       (3,019)

Net cash inflow from operating activities                                651         1,724         1,892



2     ANALYSIS OF TRADING BY CLASS OF BUSINESS



Divisions


                                          Turnover                   Profit/(loss) before taxation*
                                6 months    6 months  Year to 31       6 months    6 months  Year to 31
                              to 30 June  to 30 June    December     to 30 June  to 30 June    December
                                    2003        2002        2002           2003        2002        2002
                                   #'000       #'000       #'000          #'000       #'000       #'000

Talent Management                  5,550       5,607       11,499           405         385       1,213
Marketing                         25,169       7,448       26,453           716         321         742
Television                           788         115          696             6        (55)          46
Events                             3,171       4,661        9,809         (471)         118         164
                                  34,678      17,831       48,457           656         769       2,165
Goodwill amortisation                                                   (1,128)       (869)     (1,955)
Operating (loss) / profit**                                               (472)       (100)         210
Net interest                                                               (75)       (126)       (204)
Disposal of PFMA business***                                              (178)         369           -
Group profit before                                                       (725)         143           6
taxation


Geographical analysis

Europe                           10,905       11,579       24,783        (131)          753        1,632
North America                    23,672        6,252       23,674          822           16          533
Rest of the World                   101            -            -         (35)            -            -

                                 34,678       17,831       48,457          656          769        2,165



* Profit/(loss) before taxation

   Profit/(loss) on ordinary activities before interest, taxation, goodwill
amortisation and impairment.



** The operating profit for the 6 months ended 30 June 2002 was #269,000 (see
Note 1) however, for comparison purposes only, the #369,000 profit made by PFMA
(see below) has been disclosed in the divisional analysis note alongside the
exceptional loss on disposal in the current period.



*** PFMA was sold in April 2003. At 30 June 2002 the financial statements
included a profit of #369,000 of which #455,000 was provided for at 31 December
2002.



3                     EXCEPTIONAL ITEMS


                                                                 6 months to   6 months to    Year to 31
                                                                     30 June       30 June      December
                                                                        2003          2002          2002
                                                                       #'000         #'000         #'000
Exceptional items
(Loss) / profit on disposal of PFMA business                           (178)             -             -

Exceptional administrative expenses
Relocation costs of the Group's head office                                -           395           395
Provision for significant bad debts                                        -            90           914
North America's costs of restructuring                                     -             -           238

                                                                           -           485         1,547



4                     EARNINGS PER SHARE


                                                      #'000       Weighted         Basic       Adjusted
                                                               average no.     per share      per share
                                                                 of shares        amount         amount
                                                                                   pence          pence
6 months ended 30 June 2003
Loss                                                  (890)
Adjusted earnings                                       315
Basic earnings per share
(Loss)/earnings attributable to ordinary                        25,761,545        (3.45)           1.22
shareholders
Dilutive effect of securities - options and                      2,722,257
warrants
Diluted (loss)/earnings per share                               28,483,802        (3.45)           1.11

6 months ended 30 June 2002

Earnings                                                  2
Adjusted earnings                                     1,211
Basic earnings per share
Earnings attributable to ordinary                               21,997,860          0.01           5.50
shareholders
Dilutive effect of securities - options and                      4,230,618
warrants
Diluted earnings per share                                      26,228,478          0.01           4.62


Year ended 31 December 2002
Loss                                                  (438)
Adjusted earnings                                     2,600
Basic earnings per share
(Loss)/earnings attributable to ordinary                        23,783,309        (1.84)          10.93
shareholders
Dilutive effect of securities - options and                      1,830,331
warrants
Diluted (loss)/earnings per share                               25,613,640        (1.84)          10.15



The Adjusted earnings per share calculations is based on the retained (losses)/
profits adjusted by the amortisation of goodwill and the exceptional
administrative expenses and exceptional items net of taxation at 30%.



5                     PUBLICATIONS OF NON-STATUTORY ACCOUNTS



The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
figures from the year ended 31 December 2002 have been extracted from the
statutory financial statements which have been filed with the Registrar of
Companies. The auditors' report was unqualified and did not contain a statement
under Section 237(2) of the Companies Act 1985.



6                     BASIS OF PREPARATION



The interim financial statements have been prepared in accordance with
applicable accounting standards under the historical cost convention as modified
by the revaluation of land and buildings.  The principal accounting policies of
the Group have remained unchanged from those set out in the Group's annual
report and financial statements.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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