Last checked at 28 Sep 2007 16:37
PARALLEL MEDIA GROUP PLC ("PMG" OR THE "GROUP") INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2007
CHAIRMAN'S STATEMENT
Overview
The first half of 2007 has been one of the most exciting in the Group'shistory. After the upheavals of the corporate restructuring in late 2006, wetook ownership of the UBS Hong Kong Open and the TCL Classic. This period hasseen Parallel Media Group PLC (PMG) secure two large contracts that shouldconsiderably enhance the financial performance of the Group in 2008 andbeyond.
PMG has been appointed to be the exclusive commercial partner of Mission Hills in China (the world's largest golf complex), for a period of 12 years. This partnership includes the World Cup of Golf format, the title sponsorship of which PMG has sold to Omega.
In the same period, PMG created a new golf tournament in Korea with Pernod Ricard as title sponsor (The Ballantine's Championship). This event is co-sanctioned by the European Tour and Korean PGA and will have the largest prize-purse in Korean golf, one of the world's fastest growing golf markets.
More recently, PMG has renewed a three year agreement with the National Federation of Golf in the Republic of Kazakhstan ("NFGK") to continue to promote the Kazakhstan Open with the aim of making this a full European Tour event by 2010.
Financial ReviewThe Group's results for the half-year ended 30 June 2007 are the first resultsto be reported under IFRS and accounting policies applied are consistent withthose that will apply in the next (full IFRS) annual accounts.
The PMG business in the six month period to 30 June 2007 is significantly changed from the same period in 2006 by the acquisition of the two major golfing events referred to above. The profile of revenue and costs as a result, is not directly comparable between periods.
The turnover for the 6 month period to 30 June 2007 was ‚£1,873,000 (2006:‚£1,477,000) and comprised event revenues for the TCL Classic in China andconsulting and sales revenues for the period. Building the Group's increasedinventory has led to an increase in costs for the period. In the period underreview the operating loss was ‚£170,000 compared to a profit of ‚£126,000 in thesame period last year. The loss for the period after finance costs was‚£323,000 compared to a profit in 2006 of ‚£9,000. As in previous years,Turnover in 2007 is significantly weighted to the second half of the year.In the last 12 months we have taken significant steps to transform the balancesheet position, moving from negative net assets of ‚£5.06m in June 2006 tonegative ‚£1.19m in June 2007. We are reviewing plans to simplify the capitalstructure over the next 12 months.
Board
I would like to take this opportunity to thank our Board members who have contributed immensely to the turnaround we are experiencing. I would also like to thank the major stakeholders in the business who are tremendously supportive and increasingly active in helping us shape and deliver business growth.
Future Prospects
In 2007 we are building sponsorship and sales assets and are now looking muchstronger in 2008 and beyond with high quality earnings visible for some yearsahead. The combination of new business wins and an exciting pipeline ofopportunities will enable the group to grow rapidly.David CiclitiraChairman28 September 2007
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
6 months to 6 months to Year ended 30 June 30 June 31 December Notes 2007 2006 2006 unaudited unaudited audited ‚£'000 ‚£'000 ‚£'000Continuing operationsRevenue 5 1,873 1,477 4,561Cost of sales (1,181) (627) (2,738)Gross profit 692 850 1,823Administrative expenses (819) (670) (1,266) EBITDA * (127) 180 557Amortisation and depreciation (75) (2) (36) Restructuring costs - - (399)Profit/(loss) on disposal of investments 32 (52) -Operating (loss)/profit (170) 126 122Share of operating loss in associates - - (329)Profit on sale of associated undertakings - - 770Finance cost (153) (123) (204)(Loss)/profit on ordinary activities before tax (323) 3 359Taxation - - -(Loss)/profit for the period (323) 3 359Attributable to:Minority interests (1) (6) (1)Equity holders of the parent (322) 9 360 (323) 3 359 Earnings/(loss) per share 3Basic (0.09p) 0.04p 0.43pDiluted (0.09p) 0.04p 0.30p
* EBITDA - Earnings (excluding non-recurring items) before interest, tax, deprecation and amortisation is shown to provide additional investor information. The calculation of Earnings per Share is based on the profit / (loss) on ordinary activities as required by IAS 33.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007 As at As at As at 30 June 30 June 31 December Notes 2007 2006 2006 unaudited unaudited audited ‚£'000 ‚£'000 ‚£'000Non-current assetsProperty, plant & equipment 27 15 23Intangible assets 2,613 - 2,681Investments 180 567 243
Receivables due in more than one year
- 1,168 -Total non-current assets 2,820 1,750 2,947 Current AssetsTrade receivables 1,290 1,420 406Cash 571 5 305Total current assets 1,861 1,425 711 Current liabilities:Financial Liabilities - borrowings (753) (581) (778)Trade & other payables (1,812) (1,436) (1,644)Total current liabilities (2,565) (2,017) (2,422) Net current assets/(liabilities) (704) (592) (1,711)Non-current liabilitiesFinancial liabilities - borrowings (3,309) (6,218) (2,808) Total non-current liabilities (3,309) (6,218) (2,808) Net liabilities (1,193) (5,060) (1,572) EquityShare capital 2 2,860 1,110 2,481Share premium account 1,865 - 1,560Other reserves 5,682 5,776 5,679Retained earnings (11,492) (11,824) (11,183)Equity attributable to equity holders of the parent (1,085) (4,938) (1,463)Minority interest (108) (122) (109) (1,193) (5,060) (1,572)
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2007
6 months to 6 months to 30 June 30 June Year ended 2007 2006 31 December 2006 unaudited unaudited audited Note ‚£'000 ‚£'000 ‚£'000
Net cash (used in) / generated from operating activities 4 (874) (188) 945 Investing activitiesPayments to acquire fixed assets (11) - (11)Sale of associated companies - - 1,605Costs incurred on sale of associated companies
- - (252)Sale of other investments 95 - 15Purchase of golf events - - (2,065)
Net cash generated from/(used in) investing activities
84 0 (708) Financing ActivitiesBank facility repaid (25) - (1,058)New bank facility - - 300
Cash received from convertible loans
350 124 1,276Convertible loans repaid - - (2,186)Issue of shares 684 - 1,235Loan received 340 - 100Loans repaid (227) - -Loan received from director - - 356Interest paid (66) (38) (62)
Net cash generated from / (used in) financing activities 1,056 86 (39) Net increase / (decrease) in cash and cash equivalents 266 (102) 198Cash and cash equivalents at beginning of the year 305 107 107Cash and cash equivalents at end of year 571 5 305
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHS ENDED 30 JUNE 2007
Share Premium Retained Minority Other Share Capital Account Earnings Interests Reserves Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'0006 months ended 30 June 2006As at 1 January 2006 1,110 - (11,860) (123) 5,765 (5,108)Profit for the period - - 9 - - 9Foreign exchange - - 27 - - 27
Minority interest arising during the period - - - 1 - 1Issue of convertible loans in period - - - - - 0Convertible loans converted/repaid in theperiod - - - - 11 11As at 30 June 2006 1,110 - (11,824) (122) 5,776 (5,060) Year ended 31 December 2006As at 1 January 2006 1,110 - (11,860) (123) 5,765 (5,108)Issued during the year 1,371 - - - - 1,371Share premium arising in year - 1,841 - - - 1,841Costs written off against share premium - (281)
- - - (281)Profit for the year - - 360 - - 360Transfer between reserves - - 40 - (40) 0
Credit arising on share options - - 33 - - 33Foreign exchange - - 244 - - 244Minority interest arising during the period - - - 14 - 14Issue of convertible loans in year - - - - 31 31Convertible loans converted/repaid in theyear - - - - (77) (77)As at 31 December 2006 2,481 1,560 (11,183) (109) 5,679 (1,572) 6 months ended 30 June 07As at 1 January 2007 2,481 1,560 (11,183) (109) 5,679 (1,572)Issued during the period 379 - - - - 379
Share premium arising in period - 417 - - - 417Costs written off against share premium - (112)
- - - (112)Profit for the period - - (322) - - (322)Foreign exchange - - 13 - - 13
Issue of convertible loans in period - -
- - 4 4As at 30 June 2007 2,860 1,865 (11,492) (109) 5,683 (1,193)
NOTES TO THE FINANCIAL INFORMATION
1. Accounting Policies
Basis of preparation:
The Groups financial statements were prepared in accordance with UK GAAP until31 December 2006. From 1st January 2007 the group will prepare itsconsolidated financial statements in accordance with IFRS as adopted for usein the EU.The next annual financial statements of Parallel Media Group plc (PMG) will beprepared in accordance with International Financial Reporting Standards (IFRS)as adopted for use in the EU applied in accordance with provisions of theCompanies Act 1985.
IFRS transition:
The Groups results for the half year ended 30 June 2007 are the first resultsto be reported under IFRS. The Groups date of transition to IFRS is 1 January2006 and the adoption date is 1 January 2007.
Basis of consolidation:
The consolidated financial statements incorporate the results of the Companyand all of its subsidiary undertakings as at 30 June 2007 using theacquisition method of accounting. Under the acquisition method the results ofsubsidiary undertakings are included from the date of acquisition. Ondisposal, the results are included up to the date of disposal.
Goodwill and Intangible Assets
The rights to promote European Tour golf events were identified as Goodwill inthe audited financial statements for the year ended 31 December 2006. Thisgoodwill has been reclassified as Intangible Assets as required through theadoption of IAS 38. The effect of this change is that the Intangibles will beamortised over their expected life of 20 years. If the events had continued tobe classified as Goodwill, they would have been subject to an annualimpairment review, with no obligation to amortise them over their expecteduseful life. Intangible Assets are held at fair value.
Investments
There has been no change to the value of investments as a result of moving toIFRS. Any change in fair values will be shown in the Income Statement in thecalculation of profit or loss.
Non-Statutory accounts:
The half-year figures for the period ended 30 June 2007 and the full year figures for the year ended 31 December 2006 do not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. A copy of the statutory accounts for that year under UK GAAP has been filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985.
Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group's Equity and its net income are provided in Note 6.
2. Share Capital
Shares in issue (No.) Share Capital ‚£Ordinary shares of 0.5p in issue at 1 January 2007 296,429,269 1,482,146Ordinary shares of 0.5p issued during the period 75,641,024 378,205Ordinary shares of 0.5p in issue at 30 June 2007 372,070,293 1,860,351 Deferred ordinary shares of 0.5p in issue at 1 January 2007 199,831,545 999,158Total shares in issue at 30 June 2007 571,901,838 2,859,509
As at 30 June 2007 there were 372,070,293 Ordinary shares of 0.5p in issue. Convertible loan note holders have options to convert 223,462,583 shares of 0.5p in 2008, which may be expected to convert and/or be redeemed.
The deferred shares in issue do not entitle their holders to receive any dividend, other distribution or infer any rights other than repayment. They are therefore excluded for the purpose of EPS calculation.
3. Earnings per Share 6 months to 6 months to Year ended 31 30 June 30 June December 2007 2006 2006Earnings ‚£ ‚£ ‚£Earnings for the purpose of basic EPS (322,199) 9,000 360,000Earnings for the purpose of diluted EPS (263,199) 22,000 420,000 Number of shares No. No. No.
Weighted average number of shares for the purposes of basic EPS
345,586,372 22,203,505 82,769,941Weighted average number of shares for the purposes ofdiluted EPS 562,662,216 32,015,352 140,393,211 Basic EPS (0.09p) 0.04p 0.43pDiluted EPS (0.09p) 0.04p 0.30p4. Reconciliation of operating loss to net cash outflow from operatingactivities 6 months ended 6 months Year ended 31 30 June 2007 ended 30 June December 2006 2006 ‚£'000 ‚£'000 ‚£'000Operating (Loss) / Profit (170) 178 520Depreciation 7 2 4Amortisation of intangibles 68 - 32
Profit on disposal of investments (32) - -Share based payment adjustment - - 33(Increase)/decrease in debtors (831) (482) 1364Increase in creditors 84 113 (907)Foreign exchange - 1 (101)Net cash outflow from operating activities (874) (188) 945
5. Operating Segments Analysis
Analysis by geographical market
Pre-tax Turnover (loss)/profit Net assets/(liabilities) 6 months 6 months Year 6 months 6 months Year 6 months 6 months Year to to ended to to ended to to ended 30 June 30 June 31 Dec 30 June 30 June 31 Dec 30 June 30 June 31 Dec 2007 2006 2006 2007 2006 2006 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000
‚£'000 ‚£'000 ‚£'000
GroupAsia 1,629 1,041 3,489 (309) (32) 411 57 (251) (10)Europe 239 384 997 (17) 64 285 (567) (3,977) (870)Americas 4 52 75 3 29 (8) (684) (780) (692) 1,873 1,477 4,561 (323) 61 688 (1,193) (5,007) (1,572)AssociatesAsia - - - - (52) (329) - (52) -Europe - - - - - - - - -Americas - - - - - - - - - 0 0 0 0 (52) (329) 0 (52) 0Total 1,873 1,477 4,561 (323) 9 359 (1,193) (5,060) (1,572) Turnover : Analysis by sport 6 months to 30 6 months to Year ended 31 June 2007 30 June 2006 December 2006 ‚£'000 ‚£'000 ‚£'000Golf 1,764 1,219 3,876Rugby 53 52 315Football - 183 231Sailing 56 23 139Total 1,873 1,477 4,561Costs are centralised by geographic area. There is no appropriate allocationof costs or assets used by the directors in the management of the business by"Sport type". No profit or loss or net asset segmentation analysis istherefore provided on this basis.
6. Transition to IFRS
The date of transition from UK GAAP to IFRS is 1 January 2006. Parallel MediaGroup PLC reported under UK GAAP in its previously published financialstatements for the year ended 31 December 2006. Analysis of the financialstatements as at 1 January 2006, and subsequent periods shows that noadjustments are required to equity or profit as a result of the transition toIFRS for the statements at the date of transition, the six months ended 30June 2006 or the full year ended 31 December 2006. There are howeversignificant presentational changes to the results for each of the periods andthese adjustments have been made.
7. Other
Copies of unaudited half-yearly results have not been sent to shareholders, however, copies are available on our website at www.parallelmediagroup.com or can be requested from the Company Secretary at the Company's Registered Office: 3-12 Harbour Yard, Chelsea Harbour, London SW10 0XD.
Contact:-
Martin Doherty, Chief Financial OfficerParallel Media Group plcTel: +44 20 7225 2000Ross Andrews, Nominated AdviserCity Financial Associates LimitedTel: + 44 (0) 20 7492 4777
PARALLEL MEDIA GROUP PLC