19 Sep 2007 07:00
Motive Television PLC
Half Yearly Report 30 June 2007
Chairman's Statement
I am pleased to announce Motive Television PLC's ("Motive" or "the Group") results for the six-month period ended 30 June 2007.
HIGHLIGHTS
- Turnover increased by 163% to ‚£1,462,000 compared to the six-months 30 June 2006 - Group losses reduced to ‚£182,000; (2006: ‚£197,000) - Cash at bank and in hand up 80% to ‚£1,464,000 (2006: ‚£813,000) - Four operating companies now acquired
OVERVIEW
Motive Television is now a growing group of four young television production companies, led by talented and ambitious producers. The Group is now well-positioned to take advantage of growing demand for content and to participate in the continuing consolidation of the independent television production sector.
During the period the Group continued to seek out opportunities in the UK independent television production sector and was in active discussions with a number of companies. However, the Group did not complete these transactions owing to continuing high price expectations in the early part of 2007.
Accordingly, as announced, the Group extended its strategy to include theformation of start-up companies, the first of which, Luminous Productions Ltd,led by distinguished entertainment producer Cillian de Buitlƒ©ar, wasestablished during the period. Whilst such start-ups will require fundingduring the early stages the board believes that this strategy presents betterlong-term value than over-paying for established companies.As announced on 21 August 2007 the Group acquired a 50.6% interest inManchester-based Scarlet Television Ltd for a purchase consideration of‚£14,999. Led by award-winning producer Paula Trafford, Scarlet was establishedtwo years ago and has already produced many highly-regarded programmes for awide range of UK broadcasters, including "Diana's Last Summer", shown recentlyon ITV 1.
Motive is now well positioned to expand and has:
- four operating subsidiaries. - expertise in comedy, factual, factual entertainment, multi-cultural, sports and entertainment shows - representation in three main centres, Dublin, Manchester and London - an active customer base that has expanded to include all the major UK and Irish broadcasters as well as overseas broadcasters
The board will continue to keep central overhead costs under careful review,
Cash at bank and in hand at the end of the period was ‚£1,464,000. Interest on cash balances of ‚£16,000 was received during the period.
DETAILED OPERATIONAL REVIEW
A recent highlight was on 22nd August 2007, when three of the expanded Group's programmes were broadcast on the same night: Little Miss Jocelyn (BBC2), Diana's Last Summer (ITV 1) and What's Eating Victoria Beckham (Five Life),.
The Group's Irish acquisition, Motive Television Ltd, based in Dublin, has nowsigned contracts and is in production on all of its main productions for theyear (No Place Like Home and The Ernst & Young GOAL Challenge for RTĉۡ and Partof What We Are for Setanta Sports). A significant number of pitches arecurrently being considered by RTĉۡ and we are optimistic about prospects forthe company.Motive's first acquisition in the UK, Brown Eyed Boy, traded profitably duringthe period and has now completed production on series 2 of its comedy seriesfor BBC 2, Little Miss Jocelyn, starring Jocelyn Jee Esien. The first serieswas nominated for a Bafta and was repeated in August 2007 on BBC2. Thedirectors expect this transmission to enhance sales of DVD's in the UK. Threenew pilot-stage comedy programmes were produced for broadcasters during theperiod: Dan Clark's How not To Live Your Life; and Splitting Cells, (both forBBC3); and Meet the Bandais, for Channel 4.Scarlet Television has signed up actor Richard E Grant to present a number ofnew programmes for ITV. The first two documentaries, Ronald Dahl's RevoltingRule Book and Elementary My Dear Viewer: The Sherlock Holmes Story will bedelivered to the broadcaster this month and air later this year on ITV3. ITVhas also commissioned Supersize Babies. And the Crime and InvestigationNetwork has commissioned the factual series Making a Monster, in whichforensic psychologist Kerry Daynes investigates the word's most notoriousserial killers.Luminous Productions is now operational and ideas are being formulated for anumber of shows and early development meetings are being progressed withbroadcasters. Whilst Luminous is not expected to make a contribution thisfinancial year, Managing Director Cillian de Buitlĩar is well-respected in theindustry and we have high expectations for the future.
SUMMARY
Motive is an interesting and growing group of independent production companiesin an expanding sector. The directors believe that public and private marketvalues for the television production sector have now fallen to more realisticlevels and the Group anticipates being able to complete future transactions atmore acceptable valuation multiples. The Group will continue to seekattractive acquisition opportunities. Motive's growing scale will make iteasier for us to acquire target companies without incurring the significantcosts of a reverse takeover and I am confident that we will continue to buildthe group both organically and by acquisition.
Mick Pilsworth
Chairman
For additional information contact:
Mick Pilsworth, Chairman, Motive Television 07968 008836Liam Murray, City Financial Associates 020 7492 4777Gerry Buckland (Press relations) 07774 860011
The Company's website may be found at www.motivetelevision.co.uk
Notes for editors:
Motive Television PLC ("Motive") is an AIM-listed media investment company specialising in television rights owners. It was established in May 2005 and is led by an experienced team of industry sector experts.
Directors
Mick Pilsworth - Executive Chairman
Mick has worked in the television industry since 1979. He began his career atLondon Weekend Television plc and in 1986 became controller of corporatedevelopment at Television South, also known as TVS Television, responsible formergers and acquisitions. From 1993 to 2002 he was the chief executive officerof the Chrysalis TV Division of Chrysalis Group plc, having founded thebusiness from its inception as a division of the Chrysalis Group plc. Mickbuilt the business through both organic growth and a number of mergers andacquisitions. Chrysalis Group plc withdrew from the television sector in 2003and sold its TV division for ‚£45 million to a management buy-in group backedby Bridgepoint Capital Limited.
Prior to joining Chrysalis in 1993, Michael was from 1990 managing director of SelecTV plc, a USM-listed independent television production company.
Alistair King F.C.A. - Finance Director
Alistair is a Chartered Accountant and Member of the Chartered Institute ofTaxation. After qualifying as a Chartered Accountant in 1984, Alistair workedfor KPMG in a number of management positions before leaving to become apartner in a firm of practising accountants. In 1995 he set up his ownconsultancy business specialising in providing strategic advice, consultancyservices and management information to a number of companies, both listed andprivate.
Ian Carysfort Buckley, A.C.A. - Non-executive Director
Ian Buckley was finance director of SelecTV plc and helped bring about its sale to Pearson Group plc. He is a chartered accountant with wide experience of the independent television production and distribution sector. Since leaving SelecTV in 1996 he has run his own merger and acquisitions consultancy, Carysfort Limited, specialising in the independent television production sector.
Leonard Ryan - Non-executive Director
Leonard Ryan is, with Michael O'Rourke, one of the two founding shareholdersand co-chief executives of Setanta Sport Holdings Limited, a global sports,media and broadcasting group with interests in satellite delivered televisionsports channel and radio stations.
Michael O'Rourke - Non-executive Director
Michael is co-founder and co-chief executive of Setanta Sport Holdings Limited with Leonard Ryan.MOTIVE TELEVISION PLC
CONSOLIDATED INCOME STATEMENTfor the six months ended 30 June 2007 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 (restated) Note (unaudited) (unaudited) (unaudited) ‚£ ‚£ ‚£ Revenue 1,462,483 555,653 1,327,224Cost of sales (1,104,314) (376,526) (972,373) Gross Profit 358,169 179,127 354,851 Administrative expenses (554,916) (393,770) (849,070) Operating loss (196,747) (214,643) (494,219) Finance income 16,198 17,446 30,042Finance costs (1,903) - (642) Finance costs - net 14,295 17,446 29,400 Loss before tax (182,452) (197,197) (464,819) Tax expense (2,098) - 32,190 Loss for the period (184,550) (197,197) (432,629)
Loss per share - basic and diluted (.17)p (0.29)p (0.55)pCONSOLIDATED BALANCE SHEETas at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 (unaudited) (unaudited) (unaudited) ‚£ ‚£ ‚£ Non-current assetsGoodwill 613,394 628,394 628,394Tangible fixed assets 39,261 26,463 27,368Deferred tax asset 45,261 19,071 51,261 697,916 673,928 707,023 Current assetsInventories - 2,498 -Trade receivables 196,094 283,375 80,611Cash at bank 1,463,612
812,967 1,133,813 1,659,706 1,098,840 1,214,424
Total assets 2,357,622 1,772,768 1,921,447
Equity
Issued share capital 1,086,066
686,066 1,086,066Share Premium 895,428 814,928 895,428Merger reserve 155,467 155,467 155,467Retained Earnings (723,624) (346,287) (551,574)Total equity 1,413,337 1,310,174 1,585,387 Current liabilitiesTrade and other payables 944,285
462,594 261,941Bank overdraft - - 74,119 944,285 462,594 336,060
Total equity and liabilities 2,357,622 1,772,768 1,921,447 CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 June 2006 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 (unaudited) (unaudited) (unaudited) ‚£ ‚£ ‚£Cash flows from operating activitiesCash generated from /(absorbed by) operations (note 5) 410,371 (414,241) (656,515)Net interest received 14,295 17,446 29,400Taxation received 3,902 - 4,212 Net cash generated from(absorbed by) operating activities 428,568 (396,795) (622,903) Cash flows from investing activitiesPayments to acquire subsidiary - (227,196) (227,196)Cash acquired with subsidiary - 242,914 242,914 - 15,718 15,718Payments to acquiretangible fixed assets (24,650) (12,197) (19,862) Net cash (used in) from investing activities (24,650) 3,521 (4,144) Cash flows from financing activitiesProceeds from issue of shares - - 480,500 Net cash from financing activities
- - 480,500 Net increase (decrease)in cash and bank balances 403,918 (393,274) (146,547) Cash at bank and bank overdraftsat beginning of period 1,059,694 1,206,241 1,206,241 Cash at bank and bank overdraftsat end of period 1,463,612 812,967 1,059,694 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the period ended 30 June 2007 Share Share Merger Retained Capital premium reserve earnings Total (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) ‚£ ‚£ ‚£ ‚£ ‚£Equity at 1 January 2006 647,733 738,261 155,467 (166,457) 1,375,004Loss for the six monthsended 30 June 2006 - - - (197,197) (197,197)Cost of share based awards - - - 17,367 17,367Issue of shares onacquisition 38,333 76,667 - - 115,000Equity at 30 June 2006 686,066 814,928 155,467 (346,287) 1,310,174 Loss for six monthsended 31 December 2006 - - - (235,432) (235,432)Cost of share based awards - - - 30,145 30,145Issue of shares for cash 400,000 80,500 - - 480,500Equity at 31 December 2006 1,086,066 895,428 155,467 (551,574) 1,585,387 Loss for six monthsended 30 June 2007 - - - (184,550) (184,550)Cost of share based awards - - - 12,500 12,500 Equity at 30 June 2007 1,086,066 895,428 155,467 (723,624) 1,413,337 1 GENERAL INFORMATION Motive Television Plc (the "Company") is a companydomiciled in England whose registered office address is Windsor House, BarnettWay, Barnwood, Gloucester, GL4 3RT. The condensed consolidated interimfinancial statements of the Company for the six months ended 31 December 2006comprise the Company and its subsidiaries (together referred to as "theGroup").
The condensed consolidated interim financial statements do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.
The financial information for the year ended 31 December2006 has been extracted from the statutory accounts (which were prepared underUK GAAP) for that period and adjusted as shown in note 6 below to restate inaccordance with International Financial Reporting Standards ("IFRS"). Thisnote includes reconciliations of equity and the loss for comparative periodsreported under UK GAAP to those reported for those periods under IFRS. Theauditors' report on the statutory accounts was unqualified and did not containa statement under Section 237 of the Companies Act 1985. A copy of thosefinancial statements has been filed with the Registrar of Companies. The Group's date of transition to IFRS was 1 January 2006and condensed consolidated interim financial statements have been prepared inaccordance with the first time adoption provisions set out in IFRS 1First-time Adoption of International Financial Reporting Standards. Thecondensed consolidated interim financial statements do not include all of theinformation required for full annual financial statements.
The condensed consolidated interim financial statements were authorised for issue on
19th September 2007.
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The condensed consolidated financial statements are unaudited and have been prepared in accordance with IFRS adopted by the EU.
The condensed consolidated financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
Basis of consolidation
The condensed consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June 2007. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Minority interests in the net assets of consolidatedsubsidiaries are identified separately from the Group's equity therein.Minority interests consist of the amount of those interests at the date of theoriginal business combination (see below) and the minority's share of changesin equity since the date of the combination. Losses applicable to the minorityin excess of the minority's interest in the subsidiary's equity are allocatedagainst the interests of the Group except to the extent that the minority hasa binding obligation and is able to make an additional investment to cover thelosses.
The results of subsidiaries acquired during the period are included in the consolidated income statement from the effective date of acquisition.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using thepurchase method. The cost of the acquisition is measured at the aggregate ofthe fair values, at the date of exchange, of assets given, liabilitiesincurred or assumed, and equity instruments issued by the Group in exchangefor control of the acquiree, plus any costs directly attributable to thebusiness combination. The acquiree's identifiable assets, liabilities andcontingent liabilities that meet the conditions for recognition under IRFS 3are recognised at their fair value at the acquisition date. Goodwill arising on acquisition is recognised as an assetand initially measured at cost, being the excess of the cost of the businesscombination over the Group's interest in the net fair value of theidentifiable assets, liabilities and contingent liabilities recognised. If,after reassessment, the Group's interest in the net fair value of theacquiree's identifiable assets, liabilities and contingent liabilities exceedsthe cost of the business combination, the excess is recognised immediately inprofit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.
Goodwill
Goodwill arising on consolidation represents the excess ofthe cost of acquisition over the Group's interest in the fair value of theidentifiable assets and liabilities of a subsidiary, at the date ofacquisition. Goodwill is initially recognised as an asset at cost and issubsequently measured at cost less any accumulated impairment losses. Goodwillwhich is recognised as an asset is reviewed for impairment at least annually.Any impairment is recognised immediately in profit or loss. For the purpose of impairment testing, goodwill isallocated to each of the Group's cash generating units expected to benefitfrom the synergies of the combination. Cash generating units to which goodwillhas been allocated are tested for impairment annually, or more frequently whenthere is an indication that the unit maybe impaired. If the recoverable amountof the cash generating unit is less than the carrying amount of the unit, theimpairment loss is allocated first to reduce the carrying amount of anygoodwill allocated to the unit and then to the other assets of the unit prorata on the basis of the carrying amount of each asset in the unit. Animpairment loss recognised for goodwill is not reversed in a subsequentperiod.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.
Property, plant and equipment
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost less estimated residual value of tangible fixed assets over their expected useful lives at the following rates:-
Plant and equipment Over three to four years
Income recognition
Turnover represents the fair value of services provided during the period ontelevision production assignments. Turnover is recognised as contract activityprogresses and the right to consideration is earned. Fair value reflects theamounts expected to be recoverable from customers and is based on time spentand costs incurred to date as a percentage of total anticipated productioncosts. Unbilled turnover is included as amounts recoverable under contractswithin debtors. Other turnover in respect of subsequent sales of completedproductions is recognised at the date the sale is agreed and the product isshipped.Where the Group receives non-refundable advances for the sale of distributionrights of a production, the Group recognises the amount that is non-refundableas income in the year. The Group also accrues the cost of any royalties thatare payable to writers and performers of the production.
The Group recognises income from existing royalty agreements as they accrue.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Foreign currencies
The individual financial statements of each Group company are presented in thecurrency of the primary economic environment in which it operates (itsfunctional currency). For the purpose of the consolidated financialstatements, the results and financial position of each Group company areexpressed in pounds sterling, which is the functional currency of the Company,and the presentation currency for the consolidated financial statements.In preparing the financial statements of the individual companies,transactions in currencies other than the entity's functional currency(foreign currencies) are recorded at the rates of exchange prevailing on thedates of the transactions. At each balance sheet date, monetary assets andliabilities that are denominated in foreign currencies are retranslated at therates prevailing on the balance sheet date. Non-monetary items that aremeasured in terms of historical cost in a foreign currency are notretranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit and loss for the period.
For the purpose of presenting consolidated financial statements, the assetsand liabilities of the Group's foreign operations are translated at exchangerates prevailing on the balance sheet date. Income and expense items aretranslated at the average exchange rates for the period, unless exchange ratesfluctuate significantly during that period, in which case the exchange ratesat the date of transactions are used. Exchange differences arising, if any,are classified as equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRS as Sterling denominated assets and liabilities.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporarydifferences and deferred tax assets are recognised to the extent that it isprobable that taxable profits will be available against which deductibletemporary differences can be utilised. Such assets and liabilities are notrecognised if the temporary difference arises from the initial recognition ofgoodwill or from the initial recognition (other than in a businesscombination) of other assets and liabilities in a transaction that affectsneither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered.Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Share based awards
The Group has applied the requirements of IFRS 2 Share based payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005.
The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
Fair value is measured by use of the Binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Leases
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
Retirement benefit costs
The Group operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged as an expense as they fall due.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and othershort-term, highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrumentis any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
3 LOSS PER SHARE
The loss per share is based on a loss for the period of ‚£184,550 (six monthsended 30 June 2006: ‚£197,197 year ended 31 December 2006: ‚£432,629) and theweighted average of ordinary shares in issue for the period of 108,606,667(2006: 67,328,889, year ended 31 December 2006: 78,606,666).
4 RESTATEMENT OF RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Certain professional fees amounting to ‚£14,189 were treated as part of thecost of acquisition of Brown Eyed Boy Limited in the 2006 interim accounts. Inthe audited financial statements this treatment was reconsidered and the costswritten off in the year. The income statement for the six-months ended 30 June2006 has been restated to reflect this revised treatment.
5 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
Cash generated from (absorbed by) operations
6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 (unaudited) (unaudited) (unaudited) ‚£ ‚£ ‚£Operating loss (196,747) (214,643) (494,219)
Depreciation of tangible fixed assets 12,757 3,425 10,185Decrease in stocks - 687 3,185(Increase) decrease in debtors (115,483) (118,824) 80,228Increase (decrease) in creditors 697,344 (102,253) (303,406)Share based payments 12,500 17,367 47,512 Cash generated from (absorbed by) operations 410,371
(414,241) (656,515)
6 EXPLANATION OF TRANSITION TO IFRS
As stated in note 1, these are the Group's first condensed consolidated interim financial statements for part of the period covered by the first annual consolidated financial statements prepared in accordance with IFRS.
The accounting policies in note 2 have been applied in preparing theconsolidated condensed interim financial statements for the six months ended30 June 2007, the financial information for the period ended 30 June 2006 andyear ended 31 December 2006 and the preparation of an opening IFRS balancesheet at 1 January 2006 (the Group's date of transition).
In preparing its opening IFRS balance sheet, comparative information for the six months ended 30 June 2006 and for the year ended 31 December 2006, the Group has adjusted amounts reported previously in financial statements prepared in accordance with UK GAAP.
An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.
RECONCILIATION OF PROFIT AND LOSS ACCOUNT
6 months to 30 June 2006 Year to 30 December 2006 Previous Transition IFRS Previous Transition IFRS GAAP to IFRS GAAP to IFRS restated Note unaudited unaudited audited unaudited ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Revenue 555,653 - 555,653 1,327,224 - 1,327,224Cost of sales (376,526) - (376,526) (972,373) - (972,373) Gross Profit 179,127 - 179,127 354,851 - 354,851 Administrativeexpenses (iii) (419,315) 25,545 (393,770) (905,314) 56,244 (849,070) Operating loss (240,188) 25,545 (214,643) (550,463) 56,244 (494,219) Financial income 17,446 - 17,446 30,042 - 30,042Financial costs - - - (642) - (642)
Finance costs - net 17,446 - 17,446 29,400 - 29,400 Loss before tax (222,742) 25,545 (197,197) (521,063) 56,244 (464,819) Tax expense (ii) - - - - 32,190 32,190 Loss for the period (222,742) 25,545 (197,197) (521,063) 88,434 (432,629) Attributable to:Equity holders of thecompany (223,290) 26,093 (197,197) (437,368) 4,739 (432,629)Minority interests (i) 548 (548) - (83,695) 83,695 - (222,742) 25,545 (197,197) (521,063) 88,434 (432,629) Loss per share -Basic and DilutedEquity holders (.31)p .02p (.29)p (.56)p .01p (.55)p
RECONCILIATION OF BALANCE SHEET
As at 1 January 2006 As at 31 December 2006 Previous Transition IFRS Previous Transition IFRS GAAP to IFRS GAAP to IFRS Note unaudited unaudited audited unaudited ‚£ ‚£ ‚£ ‚£ ‚£ ‚£Non-current assetsGoodwill (iii) 240,959 16,355 257,314 550,888 77,506 628,394Tangible fixed assets 10,815 - 10,815 27,368 - 27,368Deferred tax asset (ii) - - - - 51,261 51,261 251,774 16,355 268,129 578,256 128,767 707,023 Current assetsInventories 3,185 - 3,185 - - -Trade receivables 123,158 - 123,158 80,611 - 80,611Cash at bank 1,206,241 - 1,206,241 1,133,813 - 1,133,813 1,332,584 - 1,332,584 1,214,424 - 1,214,424 Total assets 1,584,358 16,355 1,600,713 1,792,680 128,767 1,921,447 EquityIssued share capital 647,733 - 647,733 1,086,066 - 1,086,066Share Premium 738,261 - 738,261 895,428 - 895,428Merger reserve 155,467 - 155,467 155,467 - 155,467Retained Earnings (182,812) 16,355 (166,457) (572,668) 21,094 (551,574) 1,358,649 16,355 1,375,004 1,564,293 21,094 1,585,387Minority interests (i) - - - (107,673) 107,673 - 1,358,649 16,355 1,375,004 1,456,620 128,767 1,585,387 Current liabilitiesTrade and otherpayables 225,709 - 225,709 261,941 - 261,941Bank overdraft - - - 74,119 - 74,119 225,709 - 225,709 336,060 - 336,060 Total equity andliabilities 1,584,358 16,355 1,600,713 1,792,680 128,767 1,921,447 Notes(i) Minority interests
IFRS only permits a debit balance on minority interests to be recognised on anentity's balance sheet if the minority has a binding obligation to cover thedeficit. The debit balance previously reflected in accordance with UK GAAP hastherefore been reversed as has the credit to the consolidated income statementfor the year ended 31 December 2006 and six months ended 30 June 2006 inrespect of the minority's share of the losses of Brown Eyed Boy Limited.Goodwill arising on acquisition is also increased by ‚£23,977 as a consequenceof minority's share of the net liabilities as at the date of acquisition notbeing recognised as an asset of the Group.
(ii) Deferred tax
The Group has recognised a deferred tax asset in respect of certain unutilisedtax losses where in the directors' opinion it is probable that those losseswill be utilised in the future. The directors have not previously recognisedsuch losses as assets under UK GAAP due to the more stringent tests forrecognition contained in FRS 19.
This amendment also means that goodwill on the acquisition of Brown Eyed Boy Limited is reduced by ‚£19,071 as a consequence of the recognition of a deferred tax asset in respect of unutilised tax losses as at the date of acquisition.
(iii) Goodwill
In accordance with UK GAAP the Group previously made a charge to its profit and loss account to write off goodwill over its estimated useful economic life. This is not permitted or required by IFRS. Amortisation of goodwill charged to the income statement in 2006 has therefore been reversed.
A summary of the adjustments to the carrying value of goodwill at 31 December 2006 is as follows:
Deferred tax asset of Brown Eyed Boy Limited now recognised at date of acquisition (see (ii) above)
(19,071)
Minority share of net liabilities of Brown Eyed Boy at date of acquisition (see (i) above)
23,977
Eliminate accumulated amortisation
72,600
77,506
At 1 January 2006 the only adjustment related to the elimination of accumulated amortisation.
MOTIVE TELEVISION PLC