Cadence Mineral Regulatory News (KDNC)

28 Jun 2007 07:00

Zest Group PLC28 June 2007 28 June 2007 Zest Group plc ("Zest" or "the Group") Interim Report for the period ended 31 March 2007 Zest Group plc (AIM:ZEST), the independent music production company, recordlabel and music publisher announces its interim results for the six month periodended 31 March 2007. Chairman's Statement I am pleased to present the results of the Group for the six months ended 31March 2007. During the period the Group had turnover of £1,057,000 (2006: £nil) and a lossbefore taxation of £491,000m (2006: loss £204,000). These results include a sixmonth contribution from Greensleeves Records Limited ("Greensleeves"). Therewas a loss per share of 0.28p (2006: loss per share 0.25p) Greensleeves, the international reggae record label and music publisher whichZest acquired at the end of March 2006, released 11 albums during the six monthperiod from 1 October 2006 to 31 March 2007, this was against a physical goodsmarket which has continued to experience difficult trading conditions as hasbeen widely publicised. The work of exploiting the existing catalogue and expanding the distributionnetwork in both non-digital and digital formats at Greensleeves has continuedthroughout the period In October 2006, the Group successfully secured the firstever global agreement for the digital distribution of the entire Greensleevescatalogue with The Orchard, the world's leading digital distributor forindependent labels. Further to this the Group concluded a number of new physicalgoods distribution and licensing deals with distributors in a number of newmarkets for the Greensleeves label, including Australia, New Zealand, Brazil,Argentina, Singapore, South Africa, Thailand and Vietnam. Further territorieswill be added in the coming months. Further output of physical product from Greensleeves existing catalogue isplanned for release from existing material during the current calendar year inaddition to extensive promotion of our albums in digital format through TheOrchard. As part of Greensleeves 30th Anniversary there will be a "Best of Greensleeves"two volume CD and digital format global release with strong marketing andpromotion in several major territories including the UK, USA, Japan, France andGermany. Greensleeves is scheduled to release a further 26 albums during thesecond half of the year. Tara Chinn's album is now completed and entitled "Night Racing." At the time ofwriting the artwork is being finalised and the Group's plans are to launch thealbum in Asia build the story, and then promote the album in Europe and the USA. Nasio Fontaine's records are being released through Greensleeves and acompilation album, "Rise Up" was released on 25th June. This album featurestracks from Nasio's four albums of which three albums have been unavailableglobally for some years. Settlement in relation to Warranties On 31 March 2006 the Company completed the acquisition of Greensleeves for aconsideration of £3.25 million comprising a cash payment of £3,000,000 and theissue of 8,333,334 Ordinary Shares. On 19 June 2007, Zest announced that it hadreached a settlement with the vendors of Greensleeves Records Limited andGreensleeves Publishing Limited in relation to the breach of certain specifiedwarranties given by the vendors at the time of the acquisition of Greensleeves.The settlement comprises a payment of £433,244, plus a sum currently beingdetermined by an audit regarding certain record royalties. The Directors of Zestexpect this amount to be no more than £30,000. Unsecured loan facility The Company has received unsecured funding amounting to £500,000 and is in theprocess of negotiating the formalisation of this facility into a convertibleloan agreement. Aborted Acquisition Project Throughout the period, the Company carried-out certain due diligence work on apotential acquisition which the Directors believed would be entirely in linewith Zest's strategy of acquiring music and music based assets. Unfortunatelythe proposed acquisition did not proceed and the Company incurred certain costswhich will fall into the second half of the current financial year. Outlook Zest continues to look for potential acquisition opportunities and will reportany progress to shareholders in due course. Richard GriffithsChairman27 June 2007 Zest Group plc Profit and loss accountfor the period ended 31 March 2007 (As restated) (As restated) Six month Six month Year period to period to to 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Note Turnover 1,057 - 1,411 Cost of sales (585) - (828) Gross profit 472 - 583 Amortisation of goodwill (102) - (113)Other administrative expenses (792) (245) (1,192) Total administrative expenses (894) (245) (1,305) Operating loss (422) (245) (722) Net interest (69) 4 (76) Loss on ordinary activities before tax (491) (241) (798) Tax on loss on ordinary activities - - 22 Retained loss 3 / 4 (491) (241) (776) Loss per share (pence) 2 (0.28) (0.29) (0.61) Zest Group plc Balance sheetAs at 31 March 2007 (As restated) (As restated) 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 NoteFixed assetsIntangible assets 3,497 3,659 3,599Tangible assets 699 675 694 4,196 4,334 4,293 Current assetsStocks of finished goods and goods for 598 377 422resaleDebtors 2,177 2,098 2,097Cash at bank and in hand 183 1,148 55Total current assets 2,958 3,623 2,574 Creditors: amounts falling due within one (3,190) (2,519) (2,294)year Net current (liabilities)/assets (232) 1,104 280 Total assets less current liabilities 3,964 5,438 4,573 Creditors: amounts falling due after more than (1,454) (1,962) (1,602)one year Net assets 2,510 3,476 2,971 Capital and reservesCalled up share capital 4 434 434 434Share premium account 4 3,598 3,598 3,598Share based payment reserve 4 97 37 67Profit and loss account 4 (1,619) (593) (1,128) Equity shareholders' funds 3 2,510 3,476 2,971 Zest Group plc Cash flow statementfor the period ended 31 March 2007 Six month Six month Year period to period to to 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Note £000 £000 £000 Net cash inflow/(outflow) from operating 5 353 (341) (834)activities Returns on investments and servicing of financeInterest paid (70) - (83)Interest received 1 4 7 (69) 4 (76) Capital expenditure and financialinvestmentPayments to acquire tangible fixed assets (8) (672) (694) (8) (672) (694) Acquisitions and disposalsPurchase of subsidiary undertaking - (3,088) (3,478)Cash acquired with subsidiary undertaking - 273 273 - (2,815) (3,205) Net cash inflow/(outflow) before 276 (3,824) (4,809)financing FinancingIssue of shares - 2,500 2,500Share issue costs - (16) (16)New long term loans - 1,962 1,854Repayment of long term loans (148) - - (148) 4,446 4,338 Increase/ (decrease) in cash 6 128 622 (471) Notes to the Interim Reportfor the period ended 31 March 2007 1. Basis of preparation The interim announcement has been prepared on the basis of accounting policies consistent with those used in the annual report for the year ended 30 September 2006 except that the Company has adopted for the first time, FRS 20 "share based payment". The results for the period ended 31 March 2006 and the year ended 30 September 2006 have been restated to make provisions for share based payments of £37,000 and £67,000 respectively with the corresponding entry being to a share based payment reserve. The interim report has been neither audited nor reviewed by the Group's auditors and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 2. Loss per share The loss per share is calculated on the loss on ordinary activities after taxation of £491,000 (period ended 31 March 2006: £241,000, year ended 30 September 2006: £776,000) and on the weighted average number of ordinary shares in issue during the period of 173,619,050 (period ended 31 March 2006: 81,952,382, year ended 30 September 2006: 127,911,287). The impact of share options at 31 March 2007, 31 March 2006 and 30 September 2006 is anti-dilutive. 3. Reconciliation of movement in equity shareholders' funds (As restated) (As restated) Six month Six month Year period to period to to 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Total recognised loss for the period (491) (241) (776) Share based payment 30 37 67 Issue of shares (net of issue costs) - 2,734 2,734 Net movement in equity shareholders' (461) 2,530 2,025 funds Equity shareholders' funds at start 2,971 946 946 of period Equity shareholders' funds at end of 2,510 3,476 2,971 period Notes to the Interim Report (continued)for the period ended 31 March 2007 4. Share capital and reserves Share based payment Profit and loss Share capital Share premium reserve account £000 £000 £000 £000 At 1 October 2005 (Audited) 205 1,093 - (352) Loss for the period - - - (776) Share based payment - - 67 - Share placing(net of issue costs) 229 2,505 - - At 30 September 2006 (Audited-as 434 3,598 67 (1,128) restated) Loss for the period - - - (491) Share based payment - - 30 - At 31 March 2006 Unaudited 434 3,598 97 (1,619) Share options The fair value of options granted was determined using the Black-Scholes valuation model. There are two different tranches of options granted. Significant inputs into the outstanding share options calculations are as follows: Date of Date first exercisable original grant Grant Market price At 31 March 2007 price at issue date Number Fair value 07 March 2005 After 07 March 2008 3.00p 3.00p 5,100,000 1.92p 06 March 2006 After 06 March 2009 3.25p 3.25p 3,825,000 2.08p • 100% volatility based on expected share price• a risk free interest rate of 4.50% to 4.75%. In total £30,000 of share based expense has been included in the profit and loss account in the period ended 31 March 2007 (period ended 31 March 2006: £37,000, year ended 30 September 2006: £67,000). Notes to the Interim Report (continued)for the period ended 31 March 2007 5. Reconciliation of operating loss to cash flows from operating activities (As restated) (As restated) Six month Six month Year period to period to to 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Operating loss (422) (245) (722) Depreciation 3 - 12 Amortisation 102 20 113 Movement in stocks (176) - (64) Movement in debtors (80) (103) (562) Movement in creditors 896 (50) 322 Share based payment 30 37 67 Net cash inflow / (outflow) from 353 (341) (834) operating activities 6. Reconciliation of net cash flow to movement in net cash / (debt) (As restated) (As restated) Six month Six month Year period to period to to 31 March 31 March 30 September 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) £000 £000 £000 Increase / (decrease) in cash 128 622 (471) Cash flow from increase/ (decrease) in debt 148 (1,962) (1,854) Change in net cash from cash flows 276 (1,340) (2,325) Opening net (debt) / cash (1,799) 526 526 Closing net debt (1,523) (814) (1,799) 7. Publication of non-statutory accounts The financial information set out in this Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ended 30 September 2006 have been extracted from the statutory financial statements. The auditors' report on those financial statements was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985. 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