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Parallel Media Group - Final Results
RNS Number : 8882X Parallel Media Group PLC 30 June 2008 Parallel Media Group plc Final Results - Year Ended 31 December 2007 30th June 2007 Results Summary * Turnover #5.2m (2006: #4.6m) * Pre tax loss of #2.1m (2006: profit #0.36m) * Diluted loss per share 0.58p (2006: earnings per share of 0.30p) Operating Highlights * Investment in Ballantine's Championship, successfully staged in March 2008 in Korea and viewed worldwide. * Exclusive agreement signed with GCap Media Plc for the London 2012 Olympics. * Successful staging of UBS Hong Kong Open in 2007. * Planning for the 50 year celebration of the UBS Hong Kong Open in 2008. * UBS renewal of title sponsorship of the Hong Kong Open event for 2009. * PMG announces a New Ladies European Tour sanctioned golf event in Korea. * New sales and consulting contract agreed for Ladies European Tour sanctioned golf event in Shanghai. Activities during 2008 and outlook Commenting today David Ciclitira, Chairman, said: '2007 was a year of investment in the development of new golf event rights in key Asian markets. These long term assets should grow and enhance PMG's revenues and profit contribution for years ahead. The business climate in Asia is very strong especially in the executive sports sector, which appears recession proof, and from this platform we have the momentum to continue building and developing our asset portfolio in the region. In the UK, PMG have entered into an exclusive agreement with GCap Media plc (owners of Capital Radio and Classic FM) to develop multi media sponsorship, event and consulting opportunities in the four year period leading up to London 2012 Olympic Games' www.parallelmediagroup.com For more information please contact Martin Doherty Parallel Media Group +44 20 7225 2000 [email protected] Nominated Adviser: Tony Rawlinson / Antony Legge Dowgate Capital Advisers Limited +44 (0)20 7492 4768 CHAIRMAN'S STATEMENT Parallel Media Group plc ('PMG' or the 'Company'), has made significant investments in 2007 developing long term revenue generating business assets. The costs of creating and developing these assets have all been borne this year. These assets form the foundations on which PMG intends to grow its international sports business over the forthcoming years, guaranteeing revenues ranging over three to twelve years. Summary of Financial Results Turnover increased 14% to #5.2 million from #4.6 million in 2006 with PMG staging two events in 2007 compared to just one in 2006. Administrative expenses were #3.2 million (2006: #1.3 million) reflecting the expensed investment referred to above and additional staff and offices in Hong Kong which were acquired in September 2006. With the costs of investment expensed during the year, the Company produced a loss before interest of #1.8 million (2006: Profit before interest of #0.1 million). Earning per share are 0.58 pence loss per share (2006: 0.43 pence profit per share). No dividend is being recommended. In Asia The restructuring of the Company's Asian operations in 2006 has enabled the Company to operate freely within the region. The UBS Hong Kong Open was again successfully staged in November 2007 and PMG also managed the TCL Classic for the first time. In 2008, the UBS Hong Kong Open will be celebrating its 50th anniversary and in April PMG renewed UBS as title sponsor for this event through to 2009 with an option to extend for a further two years. New business opportunities in Asia remain extremely strong, with sports sponsorship in the region expected to grow by 20% per annum. PMG has made new senior appointments in its Hong Kong office to capitalise on the opportunities presented in the region. In January 2007, PMG concluded the contract for Omega to become Title Sponsor of the Mission Hills World Cup until 2018. This saw the return of PMG to the World Cup of Golf with its appointment by Mission Hills Golf Club as its commercial representative for the World Cup of Golf for a 12 year period. Outside Asia PMG has continued to operate its existing contracts as exclusive commercial representative to the Ladies European Tour and is a promoter of the Kazakhstan Open. In 2007, PMG acted as advisor to Omega in golf, and was recently reappointed to continue in this role in 2008. London 2012 In July 2007, PMG signed an agreement with GCap Media Plc (owners of commercial radio stations throughout the UK) and is investing to develop sports sponsorship, events and consultancy opportunities aimed at the London 2012 Olympics and beyond. The Olympics is expected to result in a c 40% increase in Media and sponsorship spend in the capital city in the period leading up to 2012. Media sponsorship activity in 2009 onwards is expected to increase as London becomes the focus for the Olympics, post Beijing. Valuation of Events These comprise the major asset of the company. It is important that a meaningful picture is communicated on the state of these assets, which constitute the platform for the company's future profitability. The company has made material progress in the acquisition of new events during the year, as well as since the year end. We now have a meaningful portfolio of events under long term contract with significant capacity for revenue and profit generation. Your directors have applied themselves to what constitutes fair valuations for these events. Three primary methodologies exist, namely:- * The cost of either acquisition or development of events. * Discounting the future cash flows of an event over the duration of the contract. * Utilising a profit multiple to value these events based on similar transactions of which the directors are aware. Your directors consider that these events have an earnings based valuation which could be as high as #15m which is materially in excess of the nominal cost reflected in the annual financial statements. Balance Sheet and Cash flow The net liability position of the Group is #2.6m compared to #1.6m in 2006. At the year end, the company had received #0.9m of income against future sales which is included as deferred income (in Trade and other payables) at 31st December 2007. Convertible loans outstanding at 31st December 2007 are #2.8m; conversion of these loans would return the company to a net asset position. During the year the Company raised a total of #2.1 million of new finance; #0.9 million was raised through the issue of new ordinary shares, a further #0.4 million was raised through the issue of convertible loan notes and medium term financing of #0.8 million was drawn down. The overall result was a net cash increase for the year of #0.5 million and at the end of the year the Company had net debt of #3.1 million (2006: #3.1 million). The financial structure of the business is being reviewed by the board and the management team. During the first six months of 2008, convertible loans totalling #0.5m were repaid following the drawdown of #448,000 of medium term lending. A further #0.2m of convertible loans were cancelled. The remaining #2.2m nominal of convertible loan are due for redemption between September and December 2008. Loan note holders holding #2.1 million of these convertible loan notes have committed to extend the period of the loan notes beyond December 2008 subject to the approval of the Company's shareholders. The Company will write to shareholders in due course with the detailed proposal. The directors have consequently prepared the financial statements on a going-concern basis. Capital Restructure PMG will seek to consolidate the current shareholder structure in 2008. A consolidation is being proposed at the forthcoming EGM which will reduce the number of shareholders to less than 1,000. Board Appointments We have decided to strengthen our board and will be announcing new appointments at the forthcoming AGM Future Prospects The investments made in 2007 are beginning to bear fruit with PMG successfully entering the Korea Sports Promotion and Sponsorship market with the holding of the first European Tour sanctioned golf event in Korea in March 2008, sponsored by Pernod Ricard (The Ballantine's Championship). PMG aims to build on opportunities in the Korean market and has announced a new Ladies European Tour sanctioned event for November 2008. A pipeline of opportunities to promote and sell sponsorship for additional events is being developed, with a contract signed in May 2008 to promote a Korean Ladies Professional Golf Association sanctioned event in Shanghai. I expect the business will return to profit in 2008 and beyond and I would like to thank my fellow directors, management and staff for their contribution and continued support. David Ciclitira Chairman 30th June 2008 Consolidated income statement for the year ended 31 December 2007 Year ended Year ended 31 31 December December 2007 2007 #'000 #'000 Note Continuing Operations Revenue 5.195 4,561 Cost of Sales (3,744) (2,738) Gross Profit 1,451 1,823 Administrative expenses (3,205) (1,302) Loss on disposal of investments (112) - Profit on disposal of investments 32 - Restructuring costs - (399) Operating (loss)/profit (1,834) 122 Finance costs (286) (204) Investment income 14 - Share of operating loss in associates - (329) Profit on sale of associated undertakings - 770 (Loss)/Profit on ordinary activities before tax (2,106) 359 Taxation - - (Loss)/Profit for the year (2,106) 359 Attributable to: Minority interests (1) (1) Equity holders of the parent (2,105) 360 (Loss)/profit for the financial year (2,106) 359 (Loss)/earnings per share -basic 2 (0.58)p 0.43p -diluted 2 (0.58)p 0.30p All amounts relate to continuing operations. Balance sheet as at 31 December 2007 GROUP COMPANY Note Year ended Year ended Year ended Year ended 31 31 31 31 December December December December 2007 2006 2007 2006 #'000 #'000 #'000 #'000 Non - current assets Property, plant & equipment 24 23 24 21 Intangible assets 2,545 2,681 2,545 2,681 Investments 180 243 1,230 1,225 Total non-current assets 2,749 2,947 3,799 3,927 Current assets Trade receivables 655 406 714 514 Cash 837 305 835 305 Total current assets 1,492 711 1,549 819 Current liabilities Financial liabilities - 716 778 716 778 borrowings Financial liabilities - 2,868 - 2,868 - convertible loans Trade & other payables 2,796 1,644 2,735 1,524 Total current liabilities 6,380 2,422 6,319 2,302 Net current liabilities (4,888) (1,711) (4,770) (1,483) Non - current liabilities - (422) (2,808) (422) (2,808) financial borrowings Net liabilities (2,561) (1,572) (1,393) (364) Equity Share Capital 3 3,064 2,481 3.064 2,481 Share premium 2,077 1,560 2,077 1,560 Equity element of convertible 92 88 92 88 loans Other reserves 557 557 557 557 Capital redemption reserve 5,034 5,034 5,034 5,034 Foreign translation reserve 177 244 - - Retained earnings (13,453) (11,427) (12,217) (10,084) Total equity (2,452) (1,463) (1,393) 364) Minority Interests (109) (109) - - Equity attributable to equity (2,561) 1,572) (1,393) (364) holders of the parent Consolidated cash flow statement for the year ended 31 December 2007 GROUP COMPANY Note Year ended Year ended Year ended Year ended 31 31 31 31 December December December December 2007 2006 2007 2006 #'000 #'000 #'000 #'000 Cash flows from operating activity Operating (loss)/profit (1,834) 121 (1,862) (43) Depreciation 7 4 5 4 Amortisation of intangibles 136 32 136 32 Profit on disposal of (32) - - - investments Charge for fair value of - 33 - 33 options over vesting period (Increase)/decrease in debtors (233) 1,364 (199) 1,384 Increase in creditors 925 (508) 984 (763) Foreign exchange 36 (101) 36 298 Cash (used in)/generated from (995) 945 (899) 946 operations Interest paid (80) (62) (79) (61) Net cash (used in)/generated (1,075) 883 (978) 885 from operations Cash flow from investing activities Purchase of property, plant & (8) (11) (8) (11) equipment Sale of Associated companies - 1,605 - 1,606 Costs incurred on sale of - (252) - (252) associated companies Sale of other investments 100 15 - 15 Investments (5) - (5) - Interest received 14 - 14 - Purchase of golf events - (2,065) - (2,065) Net cash generated from (used 101 (708) 1 (708) in) investing activities Cash flow from financing activities Bank facility repaid - (1,058) - (1,058) Cash received from bank loan - 300 - 300 Cash received from convertible 350 1,276 350 1,276 loans Convertible loans repaid (76) (2,186) (76) (2,186) Issue of shares 862 1,235 862 1,235 Loan received 751 100 751 100 Loans repaid (381) - (381) - Loan received from director - 356 - 356 Net cash generated from/(used 1,506 23 1,506 23 in) financing activities Net increase/(decrease) in 532 198 529 200 cash and cash equivalents Cash and cash equivalents at 305 107 305 105 beginning of the year Cash and cash equivalents at 837 305 834 305 end of year NOTES 1. Accounting policies Basis of preparation The Group's financial statements were prepared in accordance with UK GAAP until 31 December 2006. From 1st January 2007 the group and company has prepared financial statements for the first time in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The group incurred a loss after tax of #2.1m during the year ended 31 December 2007, and at that date the group had net liabilities of #2.6m and net current liabilities of #4.9m. The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2009. These forecasts included the assumption that a substantial proportion of the convertible loans totalling #2.9m at the Balance Sheet Date would be extended. In the period from 1 January to 26 June 2008, convertible loans totalling #0.7m were cancelled or repaid. In June 2008, PMG agreed the extension of #2.05m of the outstanding #2.2m of convertible loan to extend their conversion or repayment date beyond 31 December 2009. In the opinion of the directors, this has substantially improved the group's short term financial position. The forecasts also incorporate trading assumptions, including increased sponsorship from existing tournaments, and agreement for the group to stage an additional tournament in 2009. Based on the above, the directors believe these forecasts to be realistic, and consequently have prepared the financial statements on the going concern basis, which assumes that the group will continue in operational existence for the foreseeable future. IFRS transition The Group's results for the year ended 31 December 2007 are the first results to be reported under IFRS. The Groups date of transition to IFRS is 1 January 2006 and the adoption date is 1 January 2007. In the year ended 2006, the company accounted for share-based payments and Financial Instruments disclosure and presentation, as required by International Accounting Standard (IAS) 32 and IFRS 2. A review of the financial statements was conducted and the impact of the transition from UK GAAP to IFRS was assessed. No additional changes to the 2006 results were required as a result of the impact of moving to IFRS and no further reconciliation is therefore required or provided. Significant Judgements and Estimates The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements. The area involving a high degree of judgement or complexity is the valuation of intangible assets with a carrying value of #2.5m. The intangible assets represent rights to operate golf events on dates in the European Tour Calendar and are included in the financial statements at cost of acquisition less amortisation. Management are required to assess potential impairment and confirm the appropriateness of the useful life and amortisation period which may materially impact results for the year. Basis of consolidation The consolidated financial statements incorporate the results of the Company and all of its subsidiary undertakings as at 31 December 2007 using the acquisition method of accounting. Under the acquisition method the results of subsidiary undertakings are included from the date of acquisition. On disposal, the results are included up to the date of disposal. The financial statements are prepared in accordance with International Financial Reporting Standards and Interpretations in force at the reporting date. The company has not adopted any standards or interpretations in advance of required implementation dates. It is not expected that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but not adopted, will have a material impact on the financial statements. Intangible Assets The rights to promote European Tour golf events were acquired in September 2006 and included in the Balance Sheet as intangible assets in the audited financial statements for the year ended 31 December 2006. These assets are amortised over their expected life of 20 years. Intangible Assets are held at cost less amortisation. Impairment The carrying amounts of the Group's assets, other than inventories and deferred tax assets, are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. The recoverable amount of assets is the greater of their net selling price and value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised. Property, Plant & Equipment Depreciation is provided on office equipment, fixtures & fittings so as to write them off over their anticipated useful lives. Office equipment, fixtures & fittings are depreciated at 20% on a straight line basis The carrying amounts of property, plant and equipment are reviewed for amendments to the residual value, this is performed annually or sooner, if there is an indication that they may be impaired. Trade receivables Trade receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are stated at their nominal value. Segmental reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group's primary reporting format is geographic segments. Turnover and revenue recognition Turnover includes sponsorship, management fees, consulting fees, and income from sales of broadcasting rights. Revenue is recognised when the Group has earned the right to receive consideration for its performance, measured on the following basis: (i) Management fees and other fees earned - on rendering of services to third parties. (ii) Income from sales of sponsorship and commercial rights - on a straight line basis in accordance with the terms of the agreement. (iii) Income from sale of broadcasting rights - on delivery of the programmes to broadcasters in accordance with the terms of the agreement. Barter transactions When services are rendered in exchange for dissimilar goods or services, the revenue generated for the services rendered is measured at the fair value of the goods or services received, adjusted for the amount of any cash or cash equivalents transferred. Foreign currencies Assets and liabilities expressed in foreign currencies are translated at the rates of exchange ruling at the Balance Sheet date. Transactions in foreign currencies are translated at the rate ruling at the date of the transaction. Differences on exchange arising on translation of subsidiaries are charged directly to equity. All other exchange differences have been charged to the Income Statement. Deferred taxation Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date except that the recognition of deferred tax assets is limited to the extent that the Group anticipates making sufficient taxable profits in the future to absorb the reversal of underlying timing differences. Deferred tax balances are not discounted. Leases Rentals under operating leases are charged to the Income Statement as incurred. Available for sale financial assets Available for sale financial assets comprise equity investments (and exclude investment in subsidiaries). Subsequent to initial recognition, available for sale financial assets are stated at fair value. Movements in fair values are taken directly to equity, with the exception of impairment losses which are recognised in the Income Statement. Fair values are based on prices quoted in an active market, if such a market is available. If an active market is not available, the group establishes the fair value of financial instruments by using a valuation technique, usually discounted cashflow analysis. When an investment is disposed, and cumulative gains and losses previously recognised in equity are included in the Income Statement. Dividends are recognised in the Income Statement when the right to receive payments is established. Compound financial instruments Compound financial instruments comprise both liability and equity components. At issue date, the fair value of the liability component is estimated by discounting its future cash flows at an interest rate that would have been payable on a similar debt instrument without any equity conversion option. The liability component is accounted for as a financial liability. The difference between the net issue proceeds and the liability component, at the time of issue, is the residual or equity component, which is accounted for as an equity instrument. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components of the instrument in proportion to the allocation of the proceeds. The interest expense on the liability component is calculated by applying the effective interest rate for the liability component of the instrument. Share based payments The group has applied the exemption available under IFRS 1 and elects to apply IFRS 2 only to awards of equity instruments made after 7 November 2002 that had not vested by 1 January 2006. Options are measured at fair value at grant date using Black-Scholes model. The fair value is expensed on a straight line basis over the vesting period, based on an estimate of the number of options that will eventually vest. Cash settled share based payment transactions results in the recognition of a liability at its current fair value. 2. (Loss) / Earnings per share The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue during the year. In calculating the diluted earnings per share, outstanding share options, warrants and convertible loans are taken into account where the impact of these is dilutive. Year ended Year ended 31 December 31 December 2007 2006 (i) Basic (Loss)/ Profit for the (2,106) 360 financial year (#'000) Weighted average number of 364,205,784 82,769,941 shares in issue (Loss) / Earnings per share (0.58p) 0.43p (ii) Diluted (Loss)/Profit for the (2,106) 360 financial year (#'000) Add back interest charged on convertible loans where the 138 60 impact of these loans is dilutive (#'000) Revised (loss) /profit (#'000) (1,968) 420 Weighted average number of 364,205,784 82,769,941 shares in issue Weighted average of potential dilutive effect of ordinary shares issuable under: - Convertible loan agreements 212,744,775 57,623,270 - Employee share schemes 18,803,958 - - Warrants 20,578,805 - 616,333,332 140,393,211 (Loss)/Earnings per share (0.58p)* 0.30p * For the year ended 31 December 2007 the diluted loss and earnings per share is calculated on the same basis as basic loss and earnings per share because the effect of the potential ordinary shares reduces the net loss per share and is therefore anti-dilutive. 3. Called up share capital 31 December 31 December 2007 2006 #'000 #'000 Authorised 1,799,533,475 ordinary shares of 0.5p each 8,998 8,998 199,831,545 deferred shares of 0.5p each 999 999 9,997 9,997 Issued and fully paid 413,037,700 ordinary shares of 0.5p each (31 December 2006: 296,429,269 ordinary 2,065 1,482 shares of 0.5p each) 199,831,545 deferred shares of 0.5p each 999 999 3,064 2,481 Reconciliation of the number of shares outstanding is: 31 December 31 December 2007 2006 (number) (number) Issued and fully paid Ordinary shares of 0.5p each in issue at start of 296,429,269 22,203,555 year Ordinary shares issued during the year 116,608,430 274,225,714 Ordinary shares of 0.5p each in issue at end of 413,037,699 296,429,269 year Deferred shares of 0.5p each in issue 199,831,545 199,831,545 During the year the following share issues were made: Date Shares Cash Raised / Description Issued Creditor (No.) Settled (#) 29th January 2007 25,641,025 250,000 Cash Raised 22nd March 2007 46,666,666 525,000 Cash Raised 22nd March 2007 333,333 5,000 Convertible loan note settled 22nd March 2007 3,000,000 45,000 Creditor Settled 13th November 2007 10,000,000 100,000 Cash Raised 13th November 2007 20,967,406 245,712 Creditor Settled 29th November 2007 10,000,000 100,000 Cash Raised 116,608,430 # 1,270,712 4. Post Balance Sheet Events The financial structure of the business is being reviewed by the board and the management team. During the first six months of 2008, convertible loans totalling #0.5m were repaid following the drawdown of #448,000 of medium term lending. A further #0.2m of convertible loans were cancelled. The remaining #2.2m nominal of convertible loan are due for redemption between September and December 2008. Loan note holders holding #2.1 million of these convertible loan notes have committed to extend the period of the loan notes beyond December 2008 subject to the approval of the Company's shareholders. The Company will write to shareholders in due course with the detailed proposal. The directors have consequently prepared the financial statements on a going-concern basis. Further to an agreement between RAM Media Ltd in Administration (RAM) and PMG dated 22nd May 2006 relating to the Fifpro World XI Player Awards, RAM Investment Group PLC (RIG) undertook to guarantee to PMG the performance by RAM of its obligations. In February 2008, PMG agreed to release RIG from the guarantee in exchange for the cancellation of the convertible loan of #125,000 (together with accrued interest). In February 2008, PMG agreed to draw down a further EUR290,000 of medium term lending (as part of a facility announced in November 2007). In April 2008, PMG agreed to consolidate and extend it's medium term debt. Individual loans at the Balance Sheet date totalling #651,000 and repayable between 12 and 18 months, were consolidated and extended for repayment over a 30 month period. In June 2008, PMG agreed to draw down a further #448,000 of medium term lending which has been applied to reducing the convertible loan notes. In the period to June 2008, amounts totalling #518,000 were repaid to convertible loan note holders. In June 2008, loan note holders holding #2.1 million of convertible loan notes have committed to extend the period of the loan notes beyond December 2008 subject to the approval of the Company's shareholders. The Company will write to shareholders in due course with the detailed proposal. The directors have consequently prepared the financial statements on a going-concern basis. 5. Statutory Accounts The financial information set out above does not constitute the Company's statutory accounts for the year to 31 December 2007 but is derived from those accounts. 6. Report and Accounts Copies of the Report and Accounts for the period ended 31 December 2007 will be posted to shareholders on 30th June 2008. Further copies will be available from the Company's registered office, which is 3-12 Harbour Yard, Chelsea Harbour, London SW10 0XD and on the Company's web site www.parallelmediagroup.com. This information is provided by RNS The company news service from the London Stock Exchange END FR SDDFDSSASEDM
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