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Parallel Media Group PLC - Final Results
31 March 2009 Parallel Media Group plc ('PMG' or the 'Company') Final Results for the year ended 31 December 2008 Highlights * PMG successfully staged three events (UBS Hong Kong Open, Ballantine's Championship and Ladies Korean Masters). * Turnover increased 83% to #9.5 million from #5.2 million in 2007. * The Group generated a profit before interest of #222,000 (2007: Loss before interest of #1.8 million). * Loss per share is 0.06 pence (2007: 0.58 pence loss per share). * Capital restructuring completed in October 2008. Contact Details For more information please contact: Martin Doherty +44 (0) 20 7225 2000 Finance Director, Parallel Media Group Plc Tony Rawlinson / Antony Legge +44 (0) 20 7492 4777 Dowgate Capital Advisers Limited www.parallelmediagroup.com The Annual Report and Financial Statements will be sent to all shareholders today. Further copies will be available to the public from the company's registered office and also at the company's website www.parallelmediagroup.com. CHAIRMAN'S STATEMENT AND EXTRACTS FROM THE DRIECTORS' REPORT Parallel Media Group plc ('PMG' or the 'Group') has continued to invest during 2008 in the development of long term revenue generating sports assets. These assets form the foundations on which PMG intends to grow its future business by providing guaranteed revenues out to 2018. SUMMARY OF FINANCIAL RESULTS Turnover increased 83% to #9.5 million from #5.2 million in 2007 with PMG staging three events in 2008 compared to two in 2007 whilst at the same time increasing other revenue streams in sponsorship sales and consulting. Gross margin fell slightly reflecting a change in the mix of revenues and the lower margin generated on the two inaugural events. The margins on these events are expected to increase as the events mature and more secondary sponsors are secured. Operating expenses for the period were marginally down on 2007 (after adjusting for the one-off recognition in 2007 of #1.13 million of costs) reflecting the Company's tight control of costs. The Group generated a profit before interest of #222,000 (2007: Loss before interest of #1.8 million). Loss per share is 0.06 pence (2007: 0.58 pence loss per share). During the year the Group raised a total of #1 million (#0.2 million was raised through the issue of convertible loan notes and medium term financing of #0.8 million was drawn down). The Group repaid loans totalling #1.2 million and a further loan of #0.1 million was cancelled by mutual agreement on withdrawal from an investment. The overall result was a net cash decrease for the year of #0.1 million. At the end of the year the Group had net debt of #3.2 million (2007: #3.1 million). IN ASIA In March 2008 PMG successfully staged the inaugural Ballantine's Championship in Korea. This event, co-sanctioned by the PGA European Tour, Asian Tour and the KPGA, is now the largest golf tournament in Korea. In November 2008 PMG staged the 50th edition of the UBS Hong Kong Open, co-sanctioned by the PGA European Tour, the Asian Tour and the Hong Kong Golf Association. Revenues for the UBS Hong Kong Open increased in 2008, with PMG securing a number of new secondary sponsors, including BMW, Emirates, Rolex, Hugo Boss, UPS, ECCO, Titleist, PCCW, J W Marriott, Ballantine's, Fuji Film, Grosse Golf, Heineken, Samsung, Tibet Water and Jebsen Wine. November also saw PMG staging the inaugural Ladies Korean Masters co-sanctioned by the Ladies European Tour and the KLPGA and sponsored by the Saint Four Golf Club; as well as the second edition of the Omega Mission Hills World Cup of Golf for which PMG receives commission for the length of the contract (2007 - 2018) for the introduction of Omega as Title Sponsor. UBS has reconfirmed its commitment for the Hong Kong Open 2009 event which now has a confirmed date before the inaugural Dubai World Championship, the richest tournament in golf. However, UBS will not be exercising its option to extend title sponsorship beyond this year. Discussions are now underway with several potential replacement title sponsors to complement the growing list of secondary sponsors and PMG is confident that it will be able to replace UBS given the length of time available to it. PMG has managed to secure a new date for the 2009 Ballantine's Championship in Korea (April 23 - 26). At the time of writing PMG has secured additional secondary sponsorship for the 2009 event and expect that the remaining secondary sponsors will be sold out for the 2010 event. OUTSIDE ASIA In November 2008, PMG renegotiated its contract with the Ladies European Tour (LET) which provides for additional long term revenues for the distribution of the Worldwide LET TV rights. PMG continues to act as strategic advisor to Omega on its worldwide portfolio and in particular in relation to the World Cup of Golf. PMG is continuing to develop its relationship with Global (the new owners of GCAP media and Capital Radio 95.8FM) in regards to the 2012 London Olympics. New opportunities and introductions to prospective sponsors continue to be made and PMG expect to improve visibility of these revenue streams in 2009. PMG has continued to develop this agreement in 2008 and expects to derive Olympic revenues in 2010-12. PMG is currently developing bespoke hospitality and experience packages for international corporate clients for the FIFA 2010 World Cup in South Africa, the benefits of which are expected to flow through in Q4 2009 and 2010. CAPITAL RESTRUCTURE In October 2008, PMG consolidated the shareholder structure and reduced the number of shareholders from 9,000 to 250. Convertible loans totalling #0.73 million were repaid during the year and new convertible loans totalling #0.2 million were agreed. The conversion and or repayment dates for all outstanding convertibles was extended from 30 September 2008 to 1 July 2010. FIFPRO AWARDS 2006 JUDGEMENT RAM Media Limited (in Administration) has successfully pursued a case for damages against the Greek Government in respect of the non-payment of fees for the proposed 2006 FIFPRO awards. The court has awarded Euro2.3 million plus a proportion of costs to date to RAM Media Limited (in Administration). PMG is the largest creditor of RAM Media Limited (in Administration) with a claim in excess of Euro1 million. The Company expects to recover a material proportion of this claim during the year ending 31 December 2009. No amount has been included in these financial statements for the recovery of any amounts, which have been fully provided for in previous years. FUTURE PROSPECTS The worldwide economic downturn has affected all areas of marketing including sports sponsorship. PMG believes that in spite of the market difficulties its blue chip long term sports assets will endure the worst of the downturn. PMGs belief would seem to be supported by the recent signature of new contracts for the Ballantine's Championship, many of which were negotiated during the first quarter of 2009. The most important asset of the Company is its staff and I would like to thank my fellow directors and staff for their invaluable continuing support. David Ciclitira Chairman 30 March 2009 CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2008 Year ended Year ended 31 December 31 December 2008 2007 Note #'000 #'000 Continuing Operations Revenue 3 9,500 5,195 Cost of Sales 4 (7,358) (3,744) Gross Profit 2,142 1,451 Administrative Expenses (1,799) (3,033) Foreign Exchange 53 (36) Impairment Loss on revaluation of (38) (112) investments Profit on disposal of investments - 32 Profit before interest, tax, 358 (1,698) depreciation and amortisation Amortisation of Intangibles (136) (136) Operating Profit/(Loss) 222 (1,834) Finance Costs (508) (286) Investment income 16 14 Loss on ordinary activities before tax (270) (2,106) Taxation - - Loss for the year (270) (2,106) Attributable to: Minority interests - (1) Equity holders of the parent (270) (2,105) Loss for the financial year (270) (2,106) Loss per share - basic 6 (0.06p) (0.58p) - diluted 6 (0.06p) (0.58p) CONSOLIDATED AND COMPANY BALANCE SHEETS as at 31 December 2008 GROUP GROUP COMPANY COMPANY 31 December 31 December 31 December 31 December 2008 2007 2008 2007 restated Note #'000 #'000 #'000 #'000 Non - Current Assets Property, Plant & 22 24 22 24 Equipment Intangible Assets 7 2,409 2,545 2,409 2,545 Development Costs 7 161 - 161 - Investments 17 180 1,105 1,230 Total Non-current Assets 2,609 2,749 3,697 3,799 Current assets Trade receivables 8 851 655 1,305 919 Cash 728 837 724 835 Total Current Assets 1,579 1,492 2,029 1,754 Current Liabilities Financial Liabilities - 9 514 716 514 716 borrowings Financial Liabilities - 10 208 2,868 208 2,868 convertible loans Trade & Other payables 11 3,290 2,796 3,230 2,735 Total Current 4,012 6,380 3,952 6,319 Liabilities Net Current Liabilities (2,433) (4,888) (1,923) (4,565) Non - Current 12 (3,186) (422) (3,186) (422) Liabilities - Financial borrowings Net Liabilities (3,010) (2,561) (1,412) (1,188) Equity Share capital 3,070 3,064 3,070 3,064 Share premium 2,091 2,077 2,091 2,077 Equity element of 57 92 57 92 convertible loans Other reserves 557 557 557 557 Capital redemption 5,034 5,034 5,034 5,034 reserve Foreign exchange reserve (41) 177 - - Retained earnings (13,631) (13,453) (12,221) (12,012) Total Equity (2,863) (2,452) (1,412) (1,188) Minority Interests (147) (109) - - Equity attributable to (3,010) (2,561) (1,412) (1,188) equity holders of the parent STATEMENTS OF TOTAL RECOGNISED INCOME AND EXPENSE for the year ended 31 December 2008 GROUP GROUP COMPANY COMPANY 31 December 31 December 31 December 31 December 2008 2007 2008 2007 restated #'000 #'000 #'000 #'000 Income and Expense Items recognised directly in Equity Exchange difference on (218) (67) - - translation of foreign operations - Group Equity element of old 92 - 92 - convertible loans written-off Total Income & Expense (126) (67) 92 - Items recognised directly in Equity in the year Loss for the year (270) (2,106) (301) (1,928) Total Recognised Income & (396) (2,173) (209) (1,928) Expense for the year Attributable to: Equity holders of the (358) (2,172) (209) (1,927) parent Minority Interest (38) (1) - (1) (396) (2,173) (209) (1,928) CONSOLIDATED CASHFLOW STATEMENTS for the year ended 31 December 2008 GROUP GROUP COMPANY COMPANY 31 31 31 December 31 December December December 2008 2007 2008 2007 #'000 #'000 #'000 #'000 restated #'000 #'000 #'000 #'000 Cash flows from operating activity Operating profit/(loss) 222 (1,834) 192 (1,657) Depreciation 8 7 8 5 Impairment loss on revaluation 38 112 - 112 of investments Profit on sale of investments - (32) - - Development costs capitalised (161) - (161) - (Increase)/decrease in debtors (196) (345) (389) (514) Increase in creditors 592 925 592 984 Increase in share capital re: 20 - 20 - elimination of debt Increase in translation (259) - - - reserve Cash generated from/(used in) 529 (995) 527 (898) operations Cash flow from investing activities Purchase of property, plant & (6) (8) (6) (8) equipment Sale of other investments - 100 - - Interest received 16 14 16 14 Net cash generated from 10 101 10 1 investing activities Cash flow from financing activities Bank facility repaid (188) - (188) - Cash received from convertible 198 350 198 350 loans Issue of shares - 862 - 862 Loan received 761 751 761 751 Loans repaid (480) (381) (480) (381) Costs incurred re: share (106) - (106) - consolidation Interest paid (417) (80) (417) (79) Net cash (used in)/generated (809) 1,426 (809) 1,427 from financing activities Cash and cash equivalents at 837 305 835 305 beginning of the year Exchange gains on cash and 161 - 161 - cash equivalents Net (decrease)/increase in (270) 532 (272) 530 cash and cash equivalents Cash and cash equivalents at 728 837 724 835 end of year NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2008 1. ACCOUNTING POLICIES Basis of preparation From 1 January 2007 the Group and Company have prepared financial statements 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. At the balance sheet date the Group had net liabilities of #3.0m and net current liabilities of #2.4m. The directors have prepared trading and cash flow forecasts for the Group for the period to 31 December 2010. The forecasts incorporate trading assumptions, including increased sponsorship from existing tournaments and new sponsorship revenues, and other payment scheduling assumptions relating to agreements reached with certain of the Group's suppliers. In addition, the directors have commenced negotiations for additional loan funding, should this be required. The directors believe their forecasts to be realistic, and are confident that the Group can continue to meet its liabilities as they fall due. Consequently the directors have prepared the financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future. 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. 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 #2.4m. 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 2008 using the purchase method of accounting. Under the purchase 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. Inter-company balances, transactions, and unrealised gains/losses are eliminated on consolidation. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders' equity. When a foreign operation is partially disposed or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. 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 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 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. Development costs Development costs are included in the Balance Sheet at cost less any impairment provision. Development costs are only recognised where it can be demonstrated that the project is commercially feasible; where there is a clear intention to complete the project; that there is ability to use or sell the asset and that there is a high probability of future economic benefits and expenditure can be measured reliably. Trade receivables Trade receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Cash and cash equivalents Cash equivalents comprise short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 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 business segments. Revenue recognition Revenue includes sponsorship, management fees, sales & 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 sale 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 Monetary 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 is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the balance sheet. The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with Parallel Media Group plc investments in subsidiaries, as it is not considered probable that the temporary differences will reverse in the foreseeable future. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amount of the deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Leases Rentals under operating leases are charged to the Income Statement on a straight line basis. 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, 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. Interest-bearing borrowings (other than Compound financial instruments) Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability. 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 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 result in the recognition of a liability at their current fair value. 2. SEGMENT REPORTING Business Segments The Group is organised into two main divisions Event Promotion and Consultancy & Sales. The Event Promotion division is based in Hong Kong and operates professional golf tournaments in Asia which are Sanctioned by The European Tour and Ladies European Tour. The Consultancy and Sales division is based in the London headquarters and works with major international brands and federations on sports related marketing opportunities and projects. The Business and Geographic segment results are set out below: Event Event Sales & Sales & Promotion Promotion Consultancy Consultancy (Asia) (Asia) (Europe) (Europe) Consolidated Consolidated #'000 #'000 #'000 #'000 #'000 #'000 2008 2007 2008 2007 2008 2007 Revenue 8,681 4,610 819 585 9,500 5,195 Segment result 1,025 670 654 412 1,679 1,082 Unallocated (1,457) (2,916) corporate expenses Operating profit 222 (1,834) /loss Finance costs (508) (286) Investment 16 14 income Loss (270) (2,106) Other information Other Event Event Sales & Sales & information Promotion Promotion Consultancy Consultancy (Asia) (Asia) (Europe) (Europe) Consolidated Consolidated 2008 2007 2008 2007 2008 2007 #'000 #'000 #'000 #'000 #'000 #'000 Segment 3,072 2,894 369 325 3,441 3,219 assets Unallocated 747 1,022 corporate assets Consolidated 4,188 4,241 total assets Segment (2,346) (1,628) (18) (2) (2,364) (1,630) liabilities Unallocated (4,834) (5,172) corporate liabilities Consolidated (7,198) (6,802) total liabilities Net (3,010) (2,561) liabilities Capital - - 6 8 6 8 Expenditure Depreciation (2) - (6) (7) (8) (7) Amortisation (136) (136) - - (136) (136) of intangibles Impairment (38) (112) - - (38) (112) loss on revaluation of investments 3. REVENUE The Group's revenue comprises: Year ended Year ended 31 December 31 December 2008 2007 #'000 #'000 Event sponsorship sales 8,681 4,610 Sales commission & 648 434 consulting TV distribution 171 151 9,500 5,195 4. COST OF SALES The Group's Cost of Sales comprises: Year ended Year ended 31 December 31 December 2008 2007 #'000 #'000 Prize purse and sanction 3,699 2,058 fees Commissions payable 190 150 Direct delivery costs 3,469 1,536 7,358 3,744 5. EMPLOYEES The average headcount during the year ended 31 December 2008 decreased as follows: Year ended Year ended 31 December 31 December 2008 2007 Group The average number of employees including directors during the year was: (Number) (Number) Administration 17 19 #'000 #'000 The aggregate payroll costs including directors were: Wages, salaries and fees 896 1,159 Social security costs 43 47 Compensation for loss of - 59 office 939 1,265 Company The average number of employees including directors during the year was: (Number) (Number) Administration 14 16 #'000 #'000 The aggregate payroll costs including directors were: Wages, salaries and fees 804 931 Social security costs 32 39 Compensation for loss of - 59 office 836 1,029 6. LOSS 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 2008 2007 (i) Basic Loss for the financial year (#'000) (270) (2,106) Weighted average number of shares in 422,540,236 364,205,784 issue Loss per share (0.06p) (0.58p) (ii) Diluted Loss for the financial year (#'000) (270) (2,106) Add back interest charged on 169 137 convertible loans where the impact of these loans is dilutive (#'000) Revised Loss (#'000) (101) (1,968) Weighted average number of shares in 422,540,236 364,205,784 issue Weighted average of potential dilutive effect of ordinary shares issuable under: - Convertible loan agreements 671,650,685 212,744,775 - Employee share schemes 13,031,063 18,803,958 - Warrants 42,038,635 20,578,805 1,149,260,619 616,333,332 Loss per share (0.06p)* (0.58p)* * The fully diluted Loss per share is the same as the Basic Loss per share. It is not reduced as a result of dilution. 7. INTANGIBLE ASSETS Intangible Assets 2008 2007 Group & Company #'000 #'000 Cost Cost at start of year 2,713 2,713 Additions in the year - - Cost at end of year 2,713 2,713 Amortisation Cumulative amortisation at 168 32 start of year Amortisation for the year 136 136 Cumulative amortisation at 304 168 end of year Net book value 2,409 2,545 Intangible Assets are the rights to promote European Tour golf events acquired in September 2006. These assets are carried at cost less amortisation. Amortisation is calculated to write-off the assets over their expected useful life of 20 years. Development Costs 2008 2007 Group & Company #'000 #'000 Cost Cost at start of year - - Additions in the year 161 - Cost at end of year 161 - Development costs are incurred in the creation of new media assets and propositions, the benefits of which are expected to be derived in future years. Development costs are written-off over the expected useful life of the asset. The development assets are assessed for impairment annually. The amortisation process begins once the asset or proposition is implemented operationally. 8. TRADE AND OTHER RECEIVABLES Group Group Company Company 31 December 31 December 31 December 31 December 2008 2007 2008 2007 restated #'000 #'000 #'000 #'000 Amounts owed from - - 472 355 Group undertakings Trade receivables 347 509 337 417 Other receivables 122 123 114 129 Prepayments and 382 23 382 18 accrued income 851 655 1,305 919 At 31 December 2008 all amounts included under Trade Receivables are due within one year. In December 2007 the Company inter-company debtor was understated by #205,000. This has been restated for comparative purposes. There was no impact on the consolidated Group as a result. 9. FINANCIAL LIABILITIES - BORROWINGS Group Company Group Company 2008 2007 2008 2007 #'000 #'000 #'000 #'000 Bank facility 116 305 116 305 Medium Term Lending 398 411 398 411 (repayable < one year) 514 716 514 716 10. FINANCIAL LIABILITIES - CONVERTIBLE LOANS The value of the convertible loans at the balance sheet date has been determined in accordance with IAS 32, as described more fully under Accounting Policies, Note 1. IAS 32 requires the separate recognition of the debt and equity components of the amounts received, with equity components shown directly in equity reserves. Group Company Group Company 31 December 31 December 31 December 31 December 2008 2007 2008 2007 #'000 #'000 #'000 #'000 Convertible loans due 208 2,868 208 2,868 in less than one year Convertible loans due 2,235 - 2,235 - in more than one year During the year, amendments were made to convertible debt instruments to extend the conversion or repayment dates from 30 September 2008 to 1 July 2010. These amendments meet the IAS39 definition of having undergone significant modification and subsequently the original convertibles are treated as having been extinguished and a new convertible instrument created. The new (amended) convertible loan agreements can be summarised as follows: Debt Element of Convertibles Loans (#000) Description Interest at Conversion price Eurolibor + 208 Loans convertible or 3% 0.25p repayable by latest 31 December 2009 included in current liabilities 2,235 Loans convertible or 4% 0.25p repayable on 1 July 2010 included in Non-current liabilities 2,443 11. TRADE AND OTHER PAYABLES Group Company Group Company 31 December 31 December 31 December 31 December 2008 2007 2008 2007 #'000 #'000 #'000 #'000 Other payables 267 328 267 326 Other tax and 57 122 55 122 social security Accruals 589 963 589 963 Deferred income 930 853 930 853 3,290 2,796 3,230 2,735 12. NON-CURRENT LIABILITIES - FINANCIAL BORROWINGS Group Company Group Company 31 December 31 December 31 December 31 December 2008 2007 2008 2007 #'000 #'000 #'000 #'000 Convertible 2,235 - 2,235 - loans (1 to 2 years) Loans (1 to 2 129 129 129 129 years) Other Payables - 53 - 53 Medium term 822 240 822 240 lending (1 to 2 years) 3,186 422 3,186 422 Other loans The loan of #129,000 is payable to 56 Ennismore Gardens ELY Ltd (a company under the control of D Ciclitira). This loan is unsecured and non interest bearing. 13. RELATED PARTIES Walbrook Trustees (Jersey) Limited is a company who are trustees of a discretionary trust (the Tokyo Settlement) of which D Ciclitira is a potential beneficiary. The Tokyo Settlement provides convertible loans totalling #1.175m to the Company. During the year, the conversion and/or repayment of the loan was extended from September 2008 to July 2010. Interest is charged on the loan at Eurolibor +4%. The convertible loan amount at 31 December 2008 was: 31 December 31 December 2008 2007 #'000 #'000 At 1 January 2008 (1,175) (1,175) Interest charged (52) - At 31 December 2008 (1,227) (1,175) Elysian Group Ltd, Luna Trading Ltd and 56 Ennismore Gardens ELY Ltd are companies under the control of D Ciclitira, On 24 October 2008, at the General Meeting it was agreed that D Ciclitira be granted an option to convert loans totalling #336,000. The movements in the payable balances due to these companies in 2008 were as follows: Elysian Luna 56 Ennismore Group Trading Gardens Ltd Ltd ELY Ltd #'000 #'000 #'000 At 31 December 2007 (89) (0) (247) Repayment of 9 balances At 31 December 2008 (80) (0) (247) Luna Trading Ltd provided a guarantee on a #300,000 bridging loan facility provided by Royal Bank of Scotland. Luna Trading charges interest at 1.5% per month for provision of this guarantee. Luna Trading Ltd is the company through which PMG contract with D Ciclitira for consulting and business services. During the year ended 31 December 2008, Luna Trading Ltd invoiced PMG (and PMG paid) for Consultancy fees of #221,000. Under the agreement PMG paid for remote office costs of #39,000, loan guarantee and interest amounts of #96,000 and the reimbursement of business expenses of #69,000. The movements in the payable balances due to related parties in the year ended 31 December 2007 were as follows: Elysian Luna 56 Ennismore Group Trading Gardens Ltd Ltd ELY Ltd #'000 #'000 #'000 At 31 December 2006 (157) (121) (253) Repayment of 68 121 6 balances At 31 December 2007 (89) (0) (247) 14. FINANCIAL INFORMATION The financial information in this announcement does not comprise statutory accounts for the purpose of Section 240 of the Companies Act 1985 and have been extracted from the company's consolidated accounts for the period to 31 December 2008. The statutory accounts for the company for the year ended 31 December 2008 will be filed following the Company's annual general meeting. The auditors' reports on the accounts are unqualified and did not include a statement under Section 237 (2) or (3) of the Companies Act 1985. Whilst the information included in this announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. END
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