Cadence Mineral Regulatory News (KDNC)

29 Jun 2006 07:02

Zest Group PLC29 June 2006 Zest Group plc Interim Report for the period ended 31 March 2006 London, 29 June 2006, Zest Group plc, the independent music production company,record label and music publisher announces its interim results for the six monthperiod ended 31 March 2006. Summary of the period • Acquisition on 31 March 2006 of Greensleeves Records Limited ("Greensleeves") for £3.25m in cash and shares, an independent record label and music publisher which specialises in reggae music. • Greensleeves has a comprehensive reggae back catalogue from the 1980s onwards. With a back catalogue of approximately 400 albums and 900 singles on its label and is currently releasing between 15 and 20 new albums per year and intends to continue its re-issue programme. • Greensleeves has an established promotions office in New York to handle the growing reggae market in the USA. • At the time of the acquisition, Zest also raised new funds of £2.5 million (gross) through a placing of 83,333,334 Ordinary Shares at 3p to be used in part to finance the costs of the Greensleeves acquisition and associated costs and provide some additional working capital • The Group recorded a loss before and after taxation of £204,000 for the six months ended 31 March 2006 • Update on artist rosta includes completion of the Nasio Fontaine album ' Universal Cry' and its June launch and chart success for Sean Paul where Greensleeves publishing has interests in 8 songs on his hit album 'The Trinity' Commenting, Steve Weltman, Chief Executive of Zest Group plc, said: "The key event during the period was the acquisition of Greensleeves on the lastday of the period which puts the Group in a strong position in the internationalreggae market and we believe will enable us to move the Group into a profitableposition. We are in the process of reorganising the Greensleeves business and weare continuing to look for potential acquisition targets." Enquiries: John Bick tel: 020 7451 9800 Chairman's Statement I am pleased to present the results of the Company for the six month period to31 March 2006. During the period the Group incurred costs of £188,000 and the amortisation ofrecording and publishing contracts amounted to £20,000. After accounting fornet interest receivable of £4,000, the Group recorded a loss before and aftertaxation of £204,000. On 31 March we completed the acquisition of Greensleeves Records Limited ("Greensleeves") an established, independent record label and music publisherwhich specialises in reggae music, for a consideration of £3.25 millioncomprising a cash payment of £3.0 million and the issue of 8,333,334 OrdinaryShares (valued at 3p per share). As a consequence of the acquisition, the Groupacquired a record product catalogue independently valued at £7.1 million. Inaddition, Greensleeves acquired the property occupied by Greensleeves in the UKfor a consideration of £662,500. Greensleeves is based in Isleworth, Middlesex, and has a promotions office inNew York. The company has an established presence in a number of the specialistreggae markets throughout the world and, in particular, the UK, the USA, Japan,France, Germany, Benelux, Canada and Scandinavia. The acquisition of Greensleeves has made Zest one of the largest independentreggae publishers and record labels in Europe and will enable the Group toachieve profitability in the current year. Since the acquisition the Zestmanagement team has been working to maximise Greensleeves' growth potentialthrough the development of a number of business areas identified at the time ofAdmission, as follows: • Greensleeves owns a significant number of album masters, of which approximately 10 per cent. have not been released in CD format. The company intends to release the majority of these album masters in CD format as well as making them available for electronic distribution; • Greensleeves has a significant number of album and single masters which have not been released as compilation albums and the Directors intend to expand that area of the business; • The Directors believe that there is a market for further mid-priced albums, based on Greensleeves' existing catalogue, which it intends to address; • Currently Greensleeves produces a number of compilations on vinyl, a lucrative area of the reggae and dance markets, and the Directors intend to increase production of vinyl compilations; • The Directors believe that Greensleeves' CDs can be manufactured at lower cost than currently being achieved; • During 2005, Greensleeves concluded a ring tones deal in Japan and the Directors intend to pursue similar deals in other territories; and • Greensleeves has concluded agreements with iTunes and Napster to distribute catalogues electronically. The management team has continued to make progress across a number of theseareas and the Board is confident of making further progress throughout theyear. Zest Music and Zest Songs During the period we concluded the recording of the new Nasio Fontaine album 'Universal Cry' for release on the Greensleeves label thereby maximizing itscommercial potential. Tara Chin has been finalizing the recording and mixing of her debut album whereshe has co-written all the songs with another Zest songwriter Tony Fennell. Outlook We are in the process of reorganising the Greensleeves business following itsacquisition in March and we will report to shareholders at the full year withfurther progress in this area. We are encouraged by the progress ofGreensleeves' publishing, particularly its ongoing participation as a publisherof various Sean Paul songs from his hit album 'The Trinity' on whichGreensleeves has interests in 8 songs. The album has spent 38 weeks on theAmerican Billboard 200 Album Chart peaking at number 7 and it has been certifiedPlatinum in the US for sales in excess of one million copies. New singles fromthe album are also due for release in the USA and Europe. I am pleased to say that we have completed a new distribution deal in the USAwith Ryko distribution which we believe will provide us with strong distributionchannels to all the major retail chains as well as the independent stores inthis territory. Nasio Fontaine's new album 'Universal Cry' was released in the USA on 6 June andUK, European and Far East releases will follow from late June through to August.Early reaction from radio plays of the new songs has been encouraging andNasio commenced touring the USA in June and this continues through July withEuropean dates to follow. Finally we are continuing to look for potential acquisition targets and willreport to shareholders on progress when it is appropriate to do so. Richard Griffiths Chairman 29 June 2006 Zest Group plc Profit and loss accountfor the period ended 31 March 2006 Six month Period from Period from period incorporation incorporation to to to 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Note Administrative expenses (208) (151) (355) Operating loss (208) (151) (355) Interest receivable and similar income 4 - 3 Loss on ordinary activities before and 3 / 4 (204) (151) (352)after tax Loss per share (pence) 2 (0.25) (0.46) (0.66) Zest Group plc Balance sheetAs at 31 March 2006 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) £000 £000 £000 NoteFixed assetsLicence agreements 117 154 137Record product catalogues 3,542 - -Tangible assets 675 - 3 4,334 154 140 Current assetsStocks of finished goods and goods for 377 - -resalePrepaid royalties 453 153 302Debtors 1,645 28 49Cash at bank and in hand 6 1,148 335 526Total current assets 3,623 516 877 Creditors: amounts falling due within one (2,519) (93) (71)year Net current assets 1,104 423 806 Total assets less current liabilities 5,438 577 946 Creditors: amounts falling due after more than (1,962) - -one year Net assets 3,476 577 946 Capital and reservesCalled up share capital 4 434 184 205Share premium account 4 3,598 544 1,093Profit and loss account 4 (556) (151) (352) Equity shareholders' funds 3 3,476 577 946 Zest Group plc Cash flow statementfor the period ended 31 March 2006 Six month Period from Period from period incorporation incorporation to to to 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) Note £000 £000 £000 Net cash outflow from operating 5 (341) (239) (614)activities Returns on investments and servicing of financeInterest received 4 - 3 4 - 3 Capital expenditure and financialinvestmentPayments to acquire tangible fixed assets (672) - (4)Payments to acquire intangible fixed - (154) (157)assets (672) (154) (161) Acquisitions and disposalsPurchase of subsidiary undertaking (3,088) - -Cash acquired with subsidiary undertaking 273 - - (2,815) - - Net cash outflow before financing (3,824) (393) (772) FinancingIssue of shares 2,500 845 1,425Share issue costs (16) (117) (127)New long term loans 1,962 - - 4,446 728 1,298 Increase in cash 6 622 335 526 Zest Group plc Notes to the Interim Reportfor the period ended 31 March 2006 1. Basis of preparation The Interim Report was approved by the Directors on 28 June 2006. The InterimReport has been prepared using accounting policies consistent with UK generallyaccepted accounting practice, full details of which were set out in theCompany's annual report and accounts for the period ended 30 September 2005. The Interim Report is unaudited and does not constitute statutoryaccounts 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 activitiesafter taxation of £204,000 (period ended 30 September 2005: £352,000, periodended 31 March 2005: £151,000) and on the weighted average number of ordinaryshares in issue during the period of 81,952,382 (period ended 30 September 2005:53,279,921, period ended 31 March 2005: 33,085,472). The impact of share options at 31 March 2005, 30 September 2005 and31 March 2006 is anti-dilutive. 3. Reconciliation of movement in equity shareholders' funds Six month Period from Period from period incorporation incorporation to to to 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Total recognised loss for the period (204) (151) (352)Issue of shares 2,734 728 1,298Net movement in equity shareholders' funds 2,530 577 946Equity shareholders' funds at start of 946 - -periodEquity shareholders' funds at end of 3,476 577 946period 4. Share capital and reserves Share Share Profit and loss capital premium account £000 £000 £000 On incorporation - - -Issue of shares to founders 128 38 -Shares issued 77 1,183 -Costs related to share issue - (128) -Loss for the period - - (352) At 30 September 2005 205 1,093 (352) Shares issued on acquisition of 229 2,521 -GreensleevesCosts related to share issue - (16) -Loss for the period - - (204) At 31 March 2006 434 3,598 (556) 5. Reconciliation of operating loss to cash flows from operating activities Six month Period from Period from period incorporation incorporation to to to 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Operating loss (208) (151) (355)Depreciation - - 1Amortisation 20 - 20Movement in debtors (103) (181) (351)Movement in creditors (50) 93 71 Net cash outflow from operating activities (341) (239) (614) 6. Reconciliation of net cash flow to movement in net (debt) / cash Six month Period from Period from period incorporation incorporation to to to 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Increase in cash 622 335 526Cash flow from increase in debt (1,962) - -Change in net cash from cash flows (1,340) 335 526Opening net cash 526 - -Closing net (debt) / cash (814) 335 526 7. Publication of non-statutory accounts The financial information set out in this Interim Report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The figures for the period ended 30 September 2005 have been extractedfrom the statutory financial statements. The auditors' report on thosefinancial statements was unqualified and did not contain a statement undersection 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange