TIDMWLG

RNS Number : 7252H

Wireless Group PLC

22 August 2016

22 August 2016

Wireless Group plc

("WLG" or "the Company" or "the Group")

Wireless Group plc today announces interim results for the six months ended 30 June 2016.

Financial highlights*

   --      Disposal of TV business to ITV for a purchase price of GBP100m completed in February 2016 
   --      Profit on disposal of GBP79.2m and associated return of capital of GBP55.0m 
   --      Group revenue from continuing operations of GBP38.2m (2015 restated: GBP37.0m) 
   --      Group operating profit of GBP4.7m (2015 restated: GBP6.1m) 
   --      Group operating profit includes GBP1.8m start-up losses for D2 
   --      Pre-tax profits from continuing operations of GBP4.5m (2015 restated: GBP5.0m) 
   --      Reported profit for the period of GBP82.1m (2015 restated: loss of GBP0.5m) 
   --      Diluted adjusted earnings per share of 4.4p (2015 restated: 3.6p) 
   --      Net debt reduced to GBP1.6m (2015: GBP46.9m) 

-- Recommended cash offer of 315p per share from News Corporation ("News Corp"), totalling GBP220m

   --      No interim dividend declared in light of News Corp offer 

* References to operating profit includes income from associates and joint ventures but excludes discontinued operations.

Operational highlights

   --      Strong performance by talkSPORT assisted by the European Football Championships 
   --      Three packages won for Premier League live audio rights for next three seasons 
   --      Advertising slowdown in Q2 in both the UK and Ireland impacted local radio performance 

-- Successful launch of three new digital channels on the D2 multiplex, with strong audiences recorded in first RAJAR results

Richard Huntingford, Chairman, Wireless Group plc, said:

"Wireless Group - and especially talkSPORT - has performed well in the first six months of the year. After a competitive bidding process, we were also delighted to be awarded three packages for Premier League live audio rights which will further underpin the outlook for talkSPORT going forward.

The recent RAJAR and JNLR figures demonstrate the strength of the Group's ongoing brands in its key markets as well as the ability to launch successfully new digital brands that are attractive to listeners which stands the Group in good stead going forward.

In our local stations and in Ireland, advertising trends were softer as we moved towards the referendum in Q2. Whilst it is still unclear what impact the uncertainty created by Brexit might have on advertising revenues in the all-important Q4, including in Ireland, the Group currently anticipates a full year outturn broadly in line with expectations.

In the meantime, good progress is being made in respect of the regulatory clearances required in connection with the News Corp offer."

For further information contact:

 
 Investor Enquiries 
 
 Norman McKeown, Group    +44 (0) 28 9026 
  Finance Director         2204 
 
 Media Enquiries 
 Maitland 
                          +44 (0) 20 7379 
 James Devas               5151 
 

Chairman's Statement

Overview

Following the sale of its television business to ITV, WLG became a focused radio group operating in the UK and Ireland with highly attractive assets including talkSPORT and a growing digital division. It is a profitable business - with a strong balance sheet - that owns and operates valuable brands that attract loyal audiences.

On 30 June 2016, the Group announced a recommended cash offer of 315p per share from News Corp, subject to regulatory clearance. Good progress is being made in respect of the regulatory clearances and as at 17 August 2016, the first closing date of the offer, acceptances totalling 92 per cent. had been received from the Group's shareholders.

Financial results *

Group operating profit from continuing operations was GBP4.7m (2015 restated: GBP6.1m). After net interest costs of GBP0.6m (2015 restated: GBP1.0m) and foreign exchange gains of GBP0.4m (2015 restated: loss of GBP0.1m), Group profit before tax from continuing operations was GBP4.5m (2015 restated: GBP5.0m). Group profit after tax from continuing operations was GBP3.7m (2015 restated: GBP3.6m). Group profit after tax from continuing and discontinued operations was GBP82.1m (2015 restated: loss of GBP0.5m).

Group net debt was substantially lower at GBP1.6m (2015: GBP46.9m) predominantly as a result of the disposal of the TV assets.

* As appropriate, references to operating profit includes income from associates and joint ventures but excludes discontinued operations.

Dividend

Following the offer from News Corp, the Group has agreed not to declare an interim dividend. Wireless shareholders named on the register on 20 May 2016 received on 15 July 2016 the previously announced Special Dividend of 6.15 pence as well as the 2015 Final Dividend of 7.60 pence - 13.75 pence in total.

Operating review

 
                          Revenue            Operating 
                                               profit 
 (GBPm)              2016      2015      2016       2015 
                            (restated)           (restated) 
 Radio GB            27.6      25.8       4.8       5.6 
 Radio Ireland       8.9       8.8        1.2       2.1 
 Digital services    1.7       2.4        0.1       0.1 
                     38.2      37.0       6.1       7.8 
 Central Costs                           (1.6)     (1.9) 
 JV/Associates                            0.2       0.2 
 Total                                    4.7       6.1 
 

talkSPORT is the UK's premier sports radio station and the strength of its offering was again demonstrated in the recent Q2 RAJAR results published on 4 August. The channel's weekly reach increased to 3.3m listeners - the station's second highest ever result - with four of its key weekday shows breaking listener records. talkSPORT's reach and audience demographic both remain attractive propositions for advertisers and while some additional benefit was always expected from the Euro 2016 tournament, talkSPORT nevertheless turned in an exceptionally good first half performance.

talkSPORT was also pleased to be awarded three live UK audio packages for the Premier League for three seasons from 2016/17 to 2018/19 inclusive, meaning it will have more Premier League coverage than ever before and become the only national commercial radio station carrying live Premier League games.

talkSPORT's international broadcasting business, now in its fifth season, continued to achieve double digit sales and profit growth in H1. These rights are in place for three further seasons and there are now partnership agreements in 68 territories.

The Group successfully launched three new national digital radio services in March - Virgin Radio, a music service which brings the iconic Virgin Radio brand back to the UK under a 12 year brand licence agreement with Virgin Group; talkRADIO, a talk-led service focussed on current affairs and entertainment; and talkSPORT 2, a complementary service to talkSPORT covering live action across a broader range of sports.

Early results have been encouraging. Virgin Radio's strong presenter line-up - led by Edith Bowman's breakfast show - saw the station post a weekly reach of 409,000 in Q2. talkSPORT 2 has also proven a popular choice, drawing an initial 285,000 listeners, attracted by a wider range of sporting coverage backed by a range of partnerships with leading sports rights holders. talkRADIO - fronted by a number of strong personalities - has attracted 224,000 weekly listeners with an encouragingly high listening profile of 6.5 hours per week.

Sales in our local radio operations in GB were down on H1 on a like-for-like basis mainly as a result of reduced demand in the lead up to the Brexit referendum. Costs were tightly controlled in this division, largely mitigating the profit decline.

Results for Radio GB overall include start-up losses attributable to the new digital station totalling GBP1.8m in the first six months and planned cost savings of GBP0.5m.

The Irish radio advertising market continues to lag the recovery in the Irish economy, particularly amongst larger advertising agencies, although currency tailwinds mitigated the impact of this on Radio Ireland reported revenue. The key factors affecting this included the continued move towards more measurable digital campaigns, the uncertainty around the Brexit referendum and a slower than expected return to marketing investment from some key market sectors. The recent JNLR audience figures for Q2 have confirmed the market-leading positions that the Group's stations enjoy in key urban areas, which alongside the relaunch of our agency sales operation as Urban Media, with improved digital/social capabilities, provides confidence for the future. Costs increased in part due to currency movements, external television advertising and investment in digital activities.

Profits in the Digital Services division were unchanged but substantial progress was made in the period in improving the future profitability of Simply Zesty.

Outlook

talkSPORT is a highly attractive medium for advertisers seeking male audiences. While a major football tournament typically would drive a 10% increase in sales over the course of a calendar year, talkSPORT is experiencing good underlying sales growth and is increasingly leveraging its brand strength through a growing number of major sponsorships and partnerships.

The launch and establishment of our three recently-launched national radio stations on D2 was a key priority for 2016 and initial results are encouraging. Following the recent RAJAR results, operating losses at the three stations are still anticipated to be broadly in line with forecasts, moving to a small loss in 2017 and growing profitably beyond this. Encouragingly, 70% of our forecast 2016 revenue for the D2 stations has already been achieved.

The recent RAJAR and JNLR figures demonstrate the strength of the Group's ongoing brands in its key markets as well as the ability to launch successfully new digital brands that are attractive to listeners which stands the Group in good stead going forward.

In our local stations and in Ireland, advertising trends were softer as we moved towards the referendum in Q2. Whilst it is still unclear what impact the uncertainty created by Brexit might have on advertising revenues in the all-important Q4, including in Ireland, the Group currently anticipates a full year outturn broadly in line with expectations.

Richard Huntingford

Chairman

22 August 2016

Group Income Statement

for the six months ended 30 June 2016

 
 
 
                                        Results                                      Results 
                                         before                                       before 
                                    Exceptional   Exceptional                    Exceptional     Exceptional 
                                          Items           Items        Total           Items           Items          Total 
                                                                          30                                             30 
                                        30 June         30 June         June         30 June         30 June           June 
                          Notes            2016            2016         2016            2015            2015           2015 
                                                                                  (restated)                     (restated) 
                                         GBP000          GBP000       GBP000          GBP000          GBP000         GBP000 
 
 Continuing operations 
 Revenue                      3          38,187               -       38,187          37,064               -         37,064 
 Operating costs                       (33,705)               -     (33,705)        (31,185)               -       (31,185) 
                                        -------         -------      -------         -------         -------        ------- 
 Operating profit 
  from continuing 
  operations before 
  tax and finance 
  costs                                   4,482               -        4,482           5,879               -          5,879 
 
 Share of results 
  of JVs and associates 
  accounted for using 
  the equity method                         180               -          180             185               -            185 
                                        -------         -------      -------         -------         -------        ------- 
 Profit from continuing 
  operations before 
  tax and finance 
  costs                       3           4,662               -        4,662           6,064               -          6,064 
 
 Finance revenue                             23               -           23              22               -             22 
 Finance costs                            (580)               -        (580)           (994)               -          (994) 
 Foreign exchange 
  gain/(loss)                               361               -          361           (128)               -          (128) 
                                        -------         -------      -------         -------         -------        ------- 
 Profit from continuing 
  operations before 
  tax                         3           4,466               -        4,466           4,964               -          4,964 
 
 Taxation                                 (737)               -        (737)         (1,403)               -        (1,403) 
                                        -------         -------      -------         -------         -------        ------- 
 Profit from continuing 
  operations after 
  tax                                     3,729               -        3,729           3,561               -          3,561 
 
 Discontinued 
 operations 
 (Loss)/profit from 
  discontinued 
  operations                5,6           (802)          79,202       78,400         (4,041)               -        (4,041) 
                                        -------         -------      -------         -------         -------        ------- 
 Profit/(loss) for 
  the period                              2,927          79,202       82,129           (480)               -          (480) 
                                        -------         -------      -------          ------         -------         ------ 
 
   Attributable to: 
 Equity holders of 
  the parent                              2,799          79,202       82,001           (556)               -          (556) 
 Non-controlling 
  interest                                  128               -          128              76               -             76 
                                        -------         -------      -------         -------         -------        ------- 
                                          2,927          79,202       82,129           (480)               -          (480) 
                                        -------         -------      -------          ------         -------         ------ 
 
 Earnings /(Loss) 
  per share                                                                                             2016           2015 
                                                                                                                 (restated) 
 Continuing operations 
 Basic                        8                                                                        4.43p          3.64p 
 Diluted                      8                                                                        4.39p          3.63p 
 Adjusted                     8                                                                        4.43p          3.64p 
 Diluted adjusted             8                                                                        4.40p          3.63p 
 
 Continuing and 
 discontinued 
 operations 
 Basic                        8                                                                      100.82p        (0.58)p 
 Diluted                      8                                                                       99.94p        (0.58)p 
 Adjusted                     8                                                                        3.44p        (0.55)p 
 Diluted adjusted             8                                                                        3.41p        (0.55)p 
 
 

Group Statement of Comprehensive Income

for the six months ended 30 June 2016

 
                                                              30 
                                            30 June         June 
                                               2016         2015 
                                                      (restated) 
                                             GBP000       GBP000 
 
 Profit/(loss) for the period                82,129        (480) 
                                            -------      ------- 
 
 Other comprehensive income /(loss) 
 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Exchange difference on translation 
  of foreign operations                       6,860      (3,316) 
 Income tax relating to items 
  that may be reclassified subsequently          46         (22) 
                                            -------      ------- 
                                              6,906      (3,338) 
                                            -------      ------- 
 Items that will not be reclassified 
  subsequently to profit or loss: 
 Actuarial loss on defined benefit 
  pension schemes                              (16)          (9) 
 Income tax relating to items 
  that will not be reclassified 
  subsequently                                    3            2 
                                            -------      ------- 
                                               (13)          (7) 
                                            -------      ------- 
 
 Other comprehensive profit/(loss) 
  for the period, net of tax                  6,893      (3,345) 
                                            -------      ------- 
 
 Other comprehensive loss for 
  the period from discontinued 
  operations 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Exchange difference on translation 
  of foreign operations                       (293)        (558) 
 Cash flow hedge                                  -          276 
 Income tax relating to items 
  that may be reclassified subsequently          50            - 
                                            -------      ------- 
                                              (243)        (282) 
                                            -------      ------- 
 Items that will not be reclassified 
  subsequently to profit or loss: 
 Actuarial loss on defined benefit 
  pension schemes                             (241)      (1,771) 
                                            -------      ------- 
 
 Other comprehensive (loss) for 
  the period from discontinued 
  operations, net of tax                      (484)      (2,053) 
                                            -------      ------- 
 
                                            -------      ------- 
 Total comprehensive income/(loss) 
  for the period, net of tax                 88,538      (5,878) 
                                            -------      ------- 
 
 
 Attributable to: 
 Equity holders of the parent                88,410      (5,954) 
 Non-controlling interest                       128           76 
                                            -------      ------- 
                                             88,538      (5,878) 
                                            -------      ------- 
 

Group Balance Sheet

for the six months ended 30 June 2016

 
                                               30        30           31 
                                             June      June     December 
                                  Notes      2016      2015         2015 
                                                              (restated) 
                                           GBP000    GBP000       GBP000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment        9     6,109    17,546        5,701 
 Intangible assets                        175,621   166,047      166,696 
 Investments accounted 
  for using the equity 
  method                                    1,023       864        1,053 
 Deferred tax asset                           845     1,691          719 
                                          -------   -------      ------- 
                                          183,598   186,148      174,169 
                                          -------   -------      ------- 
 Current assets 
 Inventories                                  586     1,591        1,584 
 Trade and other receivables               14,639    21,567       16,986 
 Financial assets                    11         -       376            - 
 Cash and short term deposits               3,110    12,832        9,934 
                                          -------   -------      ------- 
                                           18,335    36,366       28,504 
                                          -------   -------      ------- 
 Assets of disposal group                       -         -       23,123 
                                          -------   -------      ------- 
 TOTAL ASSETS                             201,933   222,514      225,796 
                                          -------   -------      ------- 
 
 EQUITY AND LIABILITIES 
 Equity attributable to 
  equity holders of the 
  parent 
 Equity share capital                       4,806    55,557       55,557 
 Capital redemption reserve                    50        50           50 
 Treasury shares                                -     (104)        (104) 
 Foreign currency reserve                   7,556     (303)          989 
 Cash flow hedge reserve                        -       276            - 
 Retained earnings                        124,612    38,038       51,958 
                                          -------   -------      ------- 
                                          137,024    93,514      108,450 
 Non-controlling interest                      96       129          114 
                                          -------   -------      ------- 
 TOTAL EQUITY                             137,120    93,643      108,564 
                                          -------   -------      ------- 
 Non-current liabilities 
 Financial liabilities               11         -    56,437       52,322 
 Pension liability                            284     3,229          512 
 Provisions                                   398       622          381 
 Deferred tax liabilities                  32,754    32,979       30,853 
                                          -------   -------      ------- 
                                           33,436    93,267       84,068 
                                          -------   -------      ------- 
 Current liabilities 
 Trade and other payables                  15,601    24,561       19,446 
 Dividends payable                    7     9,440     5,205            - 
 Financial liabilities               11     4,765     3,335        3,422 
 Tax payable                                  924     1,829        1,397 
 Provisions                                   647       674          665 
                                          -------   -------      ------- 
                                           31,377    35,604       24,930 
                                          -------   -------      ------- 
 Liabilities of disposal 
  group                                         -         -        8,234 
                                          -------   -------      ------- 
 TOTAL LIABILITIES                         64,813   128,871      117,232 
                                          -------   -------      ------- 
 TOTAL EQUITY AND LIABILITIES             201,933   222,514      225,796 
                                          -------   -------      ------- 
 

Group Cash Flow

for the six months ended 30 June 2016

 
                                                                 30 
                                                  30 June      June 
                                                     2016      2015 
                                        Notes      GBP000    GBP000 
 Operating activities 
 Profit before tax (i)                             83,038       980 
 Adjustments to reconcile 
  profit before tax to net 
  cash flows from operating 
  activities 
   Exceptional item - Profit 
    on sale of Television                        (79,046)         - 
   Foreign exchange (gain)/loss                   (1,060)       703 
   Net finance costs                                  548       999 
   Share of post tax profits 
    of associates and joint ventures                (180)     (185) 
   Depreciation of property, 
    plant and equipment                             1,025     1,514 
   Gain on disposal of property, 
    plant and equipment                                 -       (1) 
   Share based payments                               366       171 
   Difference between pension 
    contributions paid and amounts 
    recognised in the income 
    statement                                        (92)   (1,038) 
   Unrealised currency translation 
    losses                                          1,106         - 
 Working capital adjustments: 
   Decrease in inventories                          1,131       799 
   Decrease in trade and other 
    receivables                                     5,269     1,286 
   Decrease in trade and other 
    payables                                      (7,636)   (2,830) 
   Increase/(decrease) in provisions                    -       115 
                                                  -------   ------- 
 Cash generated from operations                     4,469     2,513 
 Income taxes paid                                (1,053)   (1,241) 
                                                  -------   ------- 
 Net cash flow from operating 
  activities                                        3,416     1,272 
                                                  -------   ------- 
 Investing activities 
 Interest received                                     21        24 
 Proceeds on disposal of property, 
  plant and equipment                                   -         1 
 Purchase of property, plant 
  and equipment                                   (1,080)   (2,167) 
 Income received from associates 
  and joint ventures                                  210       221 
 Proceeds from the disposal 
  of discontinued operations                            -       175 
 Net proceeds from the disposal 
  of a group undertaking                           94,945         - 
                                                  -------   ------- 
 Net cash flow from investing 
  activities                                       94,096   (1,746) 
                                                  -------   ------- 
 Financing activities 
 Interest paid                                      (900)   (1,084) 
 Refinancing cost                                   (328)         - 
 Acquisition of treasury shares                      (11)         - 
 Dividends paid to equity 
  shareholders                                      (164)       (4) 
 B Share scheme redemption                 12    (50,762)         - 
 Dividends paid to non-controlling 
  interests                                         (146)         - 
 Repayment of borrowings                   11    (57,195)   (1,939) 
 Proceeds from new borrowings              11       5,000     3,582 
                                                  -------   ------- 
 Net cash flow used in financing 
  activities                                    (104,506)       555 
                                                  -------   ------- 
 Net (decrease)/increase in 
  cash and cash equivalents                       (6,994)        81 
 
 Effect of exchange rates 
  on cash and cash equivalents                        170     (135) 
 Cash and cash equivalents 
  at 1 January                                      9,934    12,886 
                                                  -------   ------- 
 Cash and cash equivalents 
  at 30 June                                        3,110    12,832 
                                                  -------   ------- 
 (i) Includes both continuing 
  and discontinued operations 
 

Group Statement of Changes in Equity

for the six months ended 30 June 2016

 
                                Capital                            Cash              Shareholder 
                    Equity   redemption               Foreign      flow                   equity          Non- 
                     share      reserve   Treasury   currency     hedge   Retained                 controlling 
                   capital                  shares    reserve   reserve   earnings                    interest      Total 
                    GBP000       GBP000     GBP000     GBP000    GBP000     GBP000        GBP000        GBP000     GBP000 
 
 At 1 January 
  2015              55,557           50      (104)      3,571         -     45,428       104,502            53    104,555 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 
 Loss/Profit 
  for the 
  period                 -            -          -          -         -      (556)         (556)            76      (480) 
 Other 
  comprehensive 
  loss in 
  the period             -            -          -    (3,316)         -       (29)       (3,345)             -    (3,345) 
 Other 
  comprehensive 
  (loss)/income 
  in the period 
  from 
  discontinued 
  operations             -            -          -      (558)       276    (1,771)        (2053)             -    (2,053) 
                    ------       ------    -------    -------   -------    -------       -------       -------    ------- 
 Total net 
  comprehensive 
  (loss)/income 
  in the period          -            -          -    (3,874)       276    (2,356)       (5,954)            76    (5,878) 
 
 Share based 
  payment                -            -          -          -         -        171           171             -        171 
 Equity 
  dividends 
  paid and 
  payable                -            -          -          -         -    (5,205)       (5,205)             -    (5,205) 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 At 30 June 
  2015              55,557           50      (104)      (303)       276     38,038        93,514           129     93,643 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 
 Profit for 
  the period             -            -          -          -         -     12,662        12,662           121     12,783 
 Other 
  comprehensive 
  income in 
  the period             -            -          -        737         -         61           798             -        798 
 Other 
  comprehensive 
  income/(loss) 
  in the period 
  from 
  discontinued 
  operations             -            -          -        555     (276)      2,846         3,125             -      3,125 
                    ------       ------    -------    -------   -------    -------       -------       -------    ------- 
 Total net 
  comprehensive 
  income/(loss) 
  in the period          -            -          -      1,292     (276)     15,569        16,585           121     16,706 
 
 Share based 
  payment                -            -          -          -         -         95            95             -         95 
 Equity 
  dividends 
  paid                   -            -          -          -         -    (1,744)       (1,744)         (136)    (1,880) 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 At 31 December 
  2015              55,557           50      (104)        989         -     51,958       108,450           114    108,564 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 
 Profit for 
  the period             -            -          -          -         -     82,001        82,001           128     82,129 
 Other 
  comprehensive 
  income in 
  the period             -            -          -      6,860         -         33          6893             -       6893 
 Other 
  comprehensive 
  (loss) in 
  the period 
  from 
  discontinued 
  operations             -            -          -      (293)         -      (191)         (484)             -      (484) 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 Total net 
  comprehensive 
  income in 
  the period             -            -          -      6,567         -     81,843        88,410           128     88,538 
 
 Issue of 
  new shares            11            -          -          -         -          -            11             -         11 
 Acquisition 
  of treasury 
  shares                 -            -       (11)          -         -          -          (11)             -       (11) 
 Treasury 
  shares issued          -            -        115          -         -      (115)             -             -          - 
 Share based 
  payment                -            -          -          -         -        366           366             -        366 
 B Share 
  Payment         (50,762)            -          -          -         -          -      (50,762)             -   (50,762) 
 Equity 
  dividends 
  paid and 
  payable                -            -          -          -         -    (9,440)       (9,440)         (146)    (9,586) 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 At 30 June 
  2016               4,806           50          -      7,556         -    124,612       137,024            96    137,120 
                    ------      -------    -------    -------   -------    -------       -------       -------    ------- 
 

Notes to the accounts

   1.    Basis of preparation 

The condensed interim financial statements have been prepared in accordance with IAS34 "Interim Financial Reporting" and the Disclosure and Transparency Rules of the Financial Conduct Authority.

In addition, the interim condensed financial statements have been prepared on a basis consistent with the accounting policies set out in the Group's Annual Report and Accounts for the year ended 31 December 2015. A number of New European Union endorsed amendments to existing standards are effective for periods beginning on or after 1 January 2016. However, none of these have a material, if any, impact on the annual or condensed interim financial statements of the Group in 2016.

In October 2015 the Group entered into a conditional agreement to sell its Television business to ITV Broadcasting Limited. The sale of this business was completed on 29 February 2016. Consequently the Group Income Statement reflects the classification of this business as discontinued operations for both 2016 and 2015, with the 30 June 2015 figures having been restated to reflect this.

The Balance Sheet at 31 December 2015 has been restated to reflect the liability, amounting to GBP512,000, in respect of the unfunded pension arrangement that was retained as part of the continuing operations for the Group. In the Report and Accounts for the year ended 31 December 2015, this liability was erroneously netted against the defined benefit pension scheme asset included within the "Assets of disposal group".

These interim statements have been prepared on a going concern basis as the directors, having considered available relevant information, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

The interim results are unaudited but have been formally reviewed by the auditors and their report to the Company is set out at the end of this Interim Report. The information shown for the year ended 31 December 2015 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and has been extracted from the Group's 2015 Annual Report, which has been filed with the Registrar of Companies. The report of the auditors on the accounts contained within the Group's 2015 Annual Report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 regarding inadequate accounting records or a failure to obtain necessary information and explanations.

   2.    Seasonality and cyclicality 

There is no significant seasonality or cyclicality affecting the interim results of the continuing operations.

   3.    Segmental information 

The Group operates in three principal areas of activity - radio in GB, radio in Ireland and digital services. These business segments all form part of the Group's continuing operations and these form the basis on which the Group is managed and reports are provided to the Executive Chairman and the Board.

Following the agreement in 2015 to sell the main Television segment businesses, UTV and UTV Ireland as outlined in note 1, and the classification of these businesses as discontinued operations, Tibus and Simply Zesty which were previously included within the Television segment are now included as a separate segment, renamed Digital Services.

Revenue

Six months ended 30 June 2016

 
                             Radio      Radio     Digital 
                                GB    Ireland    Services     Total 
                            GBP000     GBP000      GBP000    GBP000 
 
 Sales to third parties     27,577      8,877       1,733    38,187 
 Intersegmental sales          374        572         357     1,303 
                           -------    -------     -------   ------- 
                            27,951      9,449       2,090    39,490 
                           -------    -------     -------   ------- 
 

Six months ended 30 June 2015

 
                             Radio      Radio      Digital 
                                GB    Ireland     Services     Total 
                                                (restated) 
                            GBP000     GBP000       GBP000    GBP000 
 
 Sales to third parties     25,839      8,814        2,411    37,064 
 Intersegmental sales          344        678          530     1,552 
                           -------    -------      -------   ------- 
                            26,183      9,492        2,941    38,616 
                           -------    -------      -------   ------- 
 

Results

Six months ended 30 June 2016

 
                           Radio      Radio     Digital 
                              GB    Ireland    Services     Total 
                          GBP000     GBP000      GBP000    GBP000 
 
 Segment operating 
  profit                   4,806      1,186          88     6,080 
                         -------    -------     ------- 
 
 Central costs                                            (1,598) 
 Income from Joint 
  Ventures and 
  Associates                                                  180 
                                                          ------- 
 Profit before 
  exceptional items, 
  tax and finance 
  costs                                                     4,662 
 
 Net finance cost                                           (557) 
 Foreign exchange 
  gain                                                        361 
                                                            ----- 
 Profit before 
  taxation                                                  4,466 
                                                           ------ 
 

Results

Six months ended 30 June 2015

 
                           Radio      Radio      Digital 
                              GB    Ireland     Services     Total 
                          GBP000     GBP000       GBP000    GBP000 
                                              (restated) 
 
 Segment operating 
  profit                   5,573      2,128           87     7,788 
                         -------    -------      ------- 
 
 Central costs                                             (1,909) 
 Income from Joint 
  Ventures and 
  Associates                                                   185 
                                                            ------ 
 Profit before 
  exceptional items, 
  tax and finance 
  costs                                                      6,064 
 
 Net finance cost                                            (972) 
 Foreign exchange 
  loss                                                       (128) 
                                                           ------- 
 Profit before 
  taxation                                                   4,964 
                                                           ------- 
 
   4.    Taxation 

In the budget in March 2016, it was proposed that corporation tax rates in the UK would be reduced to 17% in 2020. As these have not yet been substantively enacted, deferred tax has been calculated at 18% within this Interim Report. If the proposed corporation tax rate changes were to be fully approved, the relevant deferred tax assets and liabilities would be restated accordingly resulting in a net exceptional credit of approximately GBP1,772,000.

   5.    Discontinued operations 

In October 2015 the Group entered into a conditional agreement to sell its Television business to ITV. The sale of this business was completed on 29 February 2016.

The results of the discontinued operations for 2016 and 2015 are presented below. The figures for the six months ended 30 June 2015 have been restated to re-class the results of the Television businesses as discontinued last year.

 
                                         30 June      30 June 
                                            2016         2015 
                                                   (restated) 
                                          GBP000       GBP000 
 
 Revenue                                   7,425       21,198 
 Operating costs                         (8,606)     (24,580) 
                                         -------      ------- 
 Operating loss                          (1,181)      (3,382) 
 
 Interest receivable                           9            - 
 Interest payable                              -         (28) 
 Foreign exchange gain/(loss)                698        (575) 
                                         -------      ------- 
 (Loss) before tax from discontinued 
  operations                               (474)      (3,984) 
 Current tax charge                        (328)         (56) 
                                         -------      ------- 
 (Loss) for the year from 
  discontinued operations                  (802)      (4,041) 
 
 Profit on the sale of discontinued       79,202            - 
  operations (note 6) 
                                         -------      ------- 
 Total profit from discontinued 
  operations                              78,400      (4,041) 
                                         -------      ------- 
 
   6.    Exceptional item 

On 29 February 2016, Wireless Group plc completed the sale of the entire issued share capital of UTV Limited and its wholly owned subsidiary UTV Ireland Limited, to ITV Broadcasting Limited. This resulted in a profit on disposal before tax of GBP79,202,000.

Profit on disposal of subsidiary

 
                                             2016 
                                           GBP000 
 
 Consideration                            138,867 
                                          ------- 
 
 Property, plant and equipment             11,344 
 Deferred tax asset                            66 
 Inventories                                1,834 
 Trade and other receivables               81,008 
 Cash                                       3,449 
 Pension asset                                123 
 Trade and other payables                (40,780) 
 Tax payable                                (647) 
 Deferred tax liability                     (535) 
 
                                          ------- 
 Net assets disposed of                    55,862 
                                          ------- 
 
                                           83,005 
 
 Foreign exchange reserve 
  reclassified on sale                      (774) 
 
 Professional fees                        (2,407) 
 Other disposal costs                       (778) 
                                          ------- 
 Profit from disposal of subsidiary        79,046 
 Taxation                                     156 
                                          ------- 
 Net profit from disposal 
  of subsidiary                            79,202 
                                          ------- 
 

The consideration received on completion of the sale of UTV Television was based on an estimated Balance Sheet at 29 February 2016. In line with the Share Purchase Agreement, an adjustment to the consideration received on Completion would be paid to or received from ITV Broadcasting Limited based on the subsequently agreed Balance Sheet at 29 February 2016. This adjustment was agreed on 9 August 2016 and a refund of GBP930,000 was paid to ITV Broadcasting Limited on 12 August 2016. This adjustment is included within the consideration noted above and included within trade and other payables at 30 June 2016.

   7.    Dividends 
 
                                             30 
                                           June   30 June 
                                           2016      2015 
                                         GBP000    GBP000 
 Equity dividends on ordinary shares 
 Declared at the AGM during the 
  period 
 Final for 2015: 7.60p (2014: 5.43p)      5,218     5,205 
 Special dividend: 6.15p (2015: 
  Nil) (see note 11)                      4,222         - 
                                        -------   ------- 
                                          9,440     5,205 
                                        -------   ------- 
 
 Proposed but not recognised as 
  a liability at 30 June 
 Interim for 2016: Nil (2015: 1.82p)          -     1,744 
                                        -------   ------- 
 

The special dividend in 2016 and final dividend for 2015 were paid on 15 July 2016 (2014: 15 July 2015).

   8.    Earnings per share 

Basic earnings per share are calculated based on the profit for the financial period attributable to equity holders of the parent and on the weighted average number of shares in issue during the period.

Adjusted earnings per share are calculated based on the profit for the financial period attributable to equity holders of the parent adjusted for the exceptional items and the impact of net finance costs under IAS 19 "Employee Benefits (Revised)". This calculation uses the weighted average number of shares in issue during the year.

Diluted earnings per share are calculated based on profit for the financial period attributable to equity holders of the parent. Diluted adjusted earnings per share are calculated based on profit for the financial period attributable to equity holders of the parent before the exceptional items and the impact of net finance costs under IAS 19 "Employee Benefits (Revised)". In each case the weighted average number of shares is adjusted to reflect the dilutive potential of the awards expected to be vested on the Long Term Incentive Schemes.

The following reflects the income and share data used in the basic, adjusted, diluted and diluted adjusted earnings per share calculations:

Net profit attributable to equity holders

 
                                  30 June 2016                            30 June 2015 
                       Continuing   Discontinued               Continuing   Discontinued 
                       Operations     Operations      Total    Operations     Operations     Total 
                                                               (restated)     (restated) 
                           GBP000         GBP000     GBP000        GBP000         GBP000    GBP000 
 
 Net profit/(loss) 
  attributable 
  to equity 
  holders                   3,601         78,400     82,001         3,485        (4,041)     (556) 
 Adjustments 
  to net financing 
  costs                         6            (9)        (3)             -             28        28 
 Exceptional 
  items                         -       (79,202)   (79,202)             -              -         - 
                           ------         ------     ------        ------         ------    ------ 
 Total adjusted 
  and diluted 
  profit/(loss) 
  attributable 
  to equity 
  holders                   3,607          (811)      2,796         3,485        (4,013)     (528) 
                          -------        -------    -------       -------        -------   ------- 
 

Weighted average number of shares

 
                                                 2016        2015 
                                            thousands   thousands 
 Weighted average number of shares 
  for basic and 
  adjusted earnings per share (excluding 
  treasury shares)                             81,335      95,850 
 Effect of dilution of the Long 
  Term Incentive Plan                             717         238 
                                              -------     ------- 
                                               82,052      96,088 
                                              -------     ------- 
 

Earnings per share

 
                                        2016         2015 
                                               (restated) 
 From continuing operations 
 Basic                                 4.43p        3.64p 
                                     -------      ------- 
 Diluted                               4.39p        3.63p 
                                     -------      ------- 
 Adjusted                              4.43p        3.64p 
                                     -------      ------- 
 Diluted adjusted                      4.40p        3.63p 
                                     -------      ------- 
 From continuing and discontinued 
  operations 
 Basic                               100.82p      (0.58)p 
                                     -------      ------- 
 Diluted                              99.94p      (0.58)p 
                                     -------      ------- 
 Adjusted                              3.44p      (0.55)p 
                                     -------      ------- 
 Diluted adjusted                      3.41p      (0.55)p 
                                     -------      ------- 
 From discontinued operations 
 Basic                                96.39p      (4.22)p 
                                     -------      ------- 
 Diluted                              95.55p      (4.21)p 
                                     -------      ------- 
 Adjusted                            (1.00)p      (4.19)p 
                                     -------      ------- 
 Diluted adjusted                    (0.99)p      (4.18)p 
                                     -------      ------- 
 
   9.    Property, plant and equipment 

During the period the Group incurred GBP918,000 (2015: GBP2,020,000) of capital additions.

At 30 June 2016 the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to GBPNil (2015: GBP390,000).

10. Net Debt

 
                                 30 June    30 June   31 December 
                                    2016       2015          2015 
                                  GBP000     GBP000        GBP000 
 
 Cash and short term deposits      3,110     12,832         9,934 
 Interest bearing loans and 
  borrowings                     (4,699)   (59,772)      (55,744) 
                                 -------    -------       ------- 
                                 (1,589)   (46,940)      (45,810) 
                                 -------    -------       ------- 
 

11. Financial instruments

The Group's principal financial instruments comprise bank loans, derivative financial instruments and cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various other financial assets and liabilities, such as trade receivables and trade payables, which arise directly from its operations. Contingent consideration arises in respect of the disposal of businesses.

Set out below is a comparison by category of carrying amounts and fair values of the Group's financial assets and liabilities, excluding cash and cash equivalents, trade receivables and payables, that are carried in the financial statements.

 
                           30 June 2016             30 June 2015          31 December 
                                                                                 2015 
                     Carrying      Fair       Carrying      Fair   Carrying      Fair 
                       amount     value         amount     value     amount     value 
                       GBP000    GBP000         GBP000    GBP000     GBP000    GBP000 
 Financial 
  assets 
 Contingent 
  consideration 
  receivable                -         -            100       100          -         - 
 Derivative 
  financial 
  assets                    -         -            276       276          -         - 
                       ------    ------         ------    ------     ------    ------ 
                            -         -            376       376          -         - 
                      -------   -------        -------   -------    -------   ------- 
 
 Financial 
  liabilities 
 Derivative 
  financial 
  liabilities              66        66              -         -          -         - 
 Interest-bearing 
  loans and 
  borrowings            4,699     4,699         59,772    59,772     55,744    55,744 
                       ------    ------         ------    ------     ------    ------ 
                        4,765     4,765         59,772    59,772     55,744    55,744 
                      -------   -------        -------   -------    -------   ------- 
 
 

The Group uses the following hierarchy as set out in IFRS 7 "Financial Instruments: Disclosures" for determining and disclosing the fair value of financial instruments by valuation technique:

-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

-- Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and,

-- Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The Group's financial assets and liabilities are considered as falling within level 2 of this hierarchy, with the exception of the contingent consideration which existed at 30 June 2015 which was considered as falling within level 3. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period. There have been no transfers between level 1, 2 or 3 during the current period or in the previous years.

Management have assessed that the fair value of cash and cash equivalents, trade and other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of interest bearing loans and borrowings are also a close approximation to their carrying value given that they bear interest at floating rates based on Libor/Euribor.

The Group's banking facilities were refinanced on 29 February 2016. From the net cash proceeds of the sale of UTV Television the Group's existing bank facilities of GBP57,195,000 at 29 February 2016 were repaid in full. New bank facilities were put in place with effect from Completion and comprise a GBP30m dual-currency Revolving Credit Facility (RCF), and an GBP8m overdraft Facility.

The bank loans at 30 June 2016 are stated net of deferred financing costs amounting to GBP301,000

(30 June 2015: GBP397,000; 31 December 2015: GBP345,000).

The fair value of derivative financial assets and liabilities relating to foreign exchange forward contracts is determined by calculating the present value of future cash flows, estimated using forward rates from third party market price quotations.

The Company has entered in to a commitment to sell EUR750,000 on 20 September 2016 and EUR800,000 on 20 January 2017 and buy sterling at agreed foreign exchange rates. A net financial liability has been recognised in respect of this commitment calculated as the difference between the commitment translated at the agreed exchange rates and at the exchange rate at 30 June 2016. The range of possible outcomes in respect of these arrangements is considered by the Directors to not be materially different from their fair values at 30 June 2016.

The contingent consideration receivable at 30 June 2015 related to amounts due in respect of the disposal of certain of the Group's New Media businesses in 2014.

12. Equity share capital

Following completion of the sale of UTV Television, Wireless Group plc issued a new class of redeemable preference, B Shares. Shareholders received one B Share for each corresponding existing Ordinary Share held. Each B Share was then redeemed by the Company for 52.81 pence on 23 March 2016 and cancelled on redemption.

In conjunction with the B Share Scheme, a Share Capital Consolidation was also undertaken whereby shareholders received 5 New Ordinary Shares for every 7 Existing Ordinary Shares held. As a consequence, from 24 March 2016, the issued share capital of the Company comprised 68,657,787 ordinary shares of 7 pence each.

13. Related party transactions

The nature of related parties disclosed in the consolidated financial statements for the Group as at and for the year ended 31 December 2015 has not changed. There have been no significant related party transactions in the six month period ended 30 June 2016.

Risks and uncertainties

The 2015 Annual Report sets out the most significant risk factors relating to Wireless Group plc's continuing operations in the Company's judgement at the time of that report. The Company does not consider that these principal risks and uncertainties have changed. However additional risks and uncertainties not currently known to the Company or that the Company does not currently deem material may also have an adverse effect on its business.

With respect to the risks and uncertainties identified within the Annual Report, the Chairman's statement highlights those risks and uncertainties that will have significant impact throughout 2016.

Statement of directors' responsibilities

The interim report is the responsibility of, and has been approved by, the directors of Wireless Group plc. Accordingly, the directors confirm that to the best of their knowledge:

-- the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

-- the interim report includes a fair review of the information required by the Disclosure and Transparency Rules:

- DTR 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

- DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board:

Richard Huntingford

Chairman

22 August 2016

Independent review report to Wireless Group plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 6 months ended 30 June 2016 which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Group Statement of Changes in Equity, Group Cash Flow Statement and the related notes 1 to 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 6 months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

Belfast

22 August 2016

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR PLMFTMBJBBFF

(END) Dow Jones Newswires

August 22, 2016 02:00 ET (06:00 GMT)

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