MUBL.L Regulatory News (MUBL)

14 Jul 2005 07:01

Air Music & Media Group PLC14 July 2005 Date: 14 July 2005On behalf of: Air Music and Media Group plc ("Air Media" or "the Group")Embargoed until: 0700hrs Air Music and Media Group plcPreliminary Results for the Year Ended 31 March 2005 Air Music and Media Group plc ('Air Media' or 'the Group') (AIM: AMU), the UKpublisher and distributor of affordable entertainment to over 55 countries,today announces its preliminary results for the year ended 31 March 2005. Financial highlights include: • A record 126% increase in profit before tax, interest, goodwill amortisation and exceptional items to £4.3m (2004: £1.9m)• Group turnover grew 216% to £49.8m (2004: £15.8m)• Maiden dividend of 0.012p per share• Normalised earnings per share 0.90p (2004: 0.68p) - Normalised EPS calculated on the basis of profit after tax, adding back goodwill amortisation and exceptional items, using basic weighted average number of shares Operational highlights include: • £37.15m (excluding costs) acquisition of Redworth Ltd in October 2004, providing new customers, distribution channels and routes to market. John French, Chairman of Air Media, commented: "I am pleased to announce that Air Media has enjoyed another record year ofgrowth in profits. The contribution of Music Box has had an impact on theGroup's revenues during the period of strongest trading in a seasonal business.From an operational perspective, the acquisition has demonstrated that there area number of synergies, particularly in distribution, to be further exploited.With the continued strong performance of the Group's North American operations,the Board will be recommending a maiden dividend of 0.012 pence per share forthe second half-year trading period. "The Board has completed a strategic review and restructuring as part of itscommitment to driving distribution synergies across the enlarged group. As aresult, the Group has started the new financial year aggressively addressingareas contained within the strategic review and will continue to examine anyacquisition opportunities that could further enhance the development of theGroup." - Ends - For further information and publication quality photographs: Air Music and Media Group plc www.airmusicandmedia.comJohn French, Chairman 078 3672 2482 Redleaf CommunicationsEmma Kane/Duncan McCormick 020 7955 1410 or 07876 338339 Seymour PierceMark Percy 020 7107 8000 Chairman's Statement Introduction This financial year has seen a significant change in the Group structure asexpressed in the results for the financial year to 31 March 2005. The majorelement of change is primarily a result of the acquisition of Redworth inOctober 2004 and, in particular, the impact of its principal trading subsidiaryMusic Box Leisure. The consideration for the acquisition comprised an initial payment of £17.15m incash and loan notes with the balance satisfied by the issue of 100,000,000ordinary shares. Further consideration has been made on a performance relatedbasis satisfied by the issue of 130,276,185 ordinary shares. In trading terms, Music Box Leisure made a significant impact on the Group'strading during the last six months of the financial year. I am also pleased toreport that we have also seen a strong performance from Legacy, our NorthAmerican operation, which has continued to show consistent growth. Financials Results for the 12 months ending 31st March 2005, include a six-monthcontribution from Redworth and its subsidiaries. This period includes thestrongest trading months in a seasonal business. The Group's activities havegenerated a 216% increase in turnover to £49.8m (2004: £15.8m) with a 126%increase in profit before tax, interest, goodwill amortisation and exceptionalitems to £4.3m (2004: £1.9m). Acquisitions contributed £35.4m to turnover and£4.1m to profit before tax, interest and goodwill amortisation. Normalisedearnings per share are 0.90p (2004: 0.68p). In view of this performance theBoard is recommending a maiden dividend of 0.012 pence per share for the secondhalf-year trading period. The rapidly maturing DVD market in the UK has resulted in a number of changes tomarket influences and pricing that affected our budget priced DVD offering,originally acquired with Hollywood DVD. This had a significant impact on thesecond half results and has caused the Directors to consider the ongoing valueof the existing budget DVD business. The Directors have concluded that aprovision for goodwill impairment of £2.1m is required against the carryingvalue of goodwill which arose from the acquisition of Hollywood DVD. The Groupis actively seeking alternative DVD product opportunities to strengthen its DVDportfolio. As part of its commitment to driving distribution synergies across the enlargedGroup, the Board has completed a strategic review and restructuring. As aresult, an exercise is underway to move all UK distribution through the Group'sdistribution centre in Lancashire and the Board expects to see benefits fromthis in the second half of this year. The Board I am pleased to report that the team of Non Executive Directors was strengthenedduring the course of the year with the appointment of Nick Fisher on the 1stDecember 2004. Nick is joint chief executive of International Greetings plc, aleading AIM listed company, and brings with him a wealth of experience in bothcorporate and related industry sectors. His experience is complementary to thatof Roger Putnam, Chairman of Ford UK. The Board would like to thank all employees for their contribution during thelast twelve months in assisting the management to achieve these results. Summary The Group has begun the new financial year actively looking at opportunities toenhance performance further following the completion of the acquisition ofRedworth, and its trading subsidiary Music Box Leisure Limited. A strategicreview has identified operational savings in several areas and opportunitiesthat exist through the increased exploitation of product and the expansion ofthe customer base. While the retail sector in general terms is experiencing some difficulties, theDirectors believe the sector in which the Group operates can continue to providegrowth opportunities for existing products. The current policy is to address aggressively areas identified in the strategicreview as a prime objective. The Group will, however, continue to examine anyacquisition opportunities that could further enhance the development of theGroup. John FrenchChairman July 2005 Consolidated Profit and Loss AccountFor the year ended 31 March 2005 Existing Activities 2005 Acquisition 2005 Total 2005 Total 2004 £ £ £ £ Group turnover 14,396,391 35,430,409 49,826,800 15,760,074 Cost of sales (10,217,110) (28,895,413) (39,112,523) (10,561,278)Gross profit 4,179,281 6,534,996 10,714,277 5,198,796 Distribution costs (644,255) (504,291) (1,148,546) (870,972) Administrative expenses - recurring (3,527,716) (2,677,525) (6,205,241) (2,612,856) Exceptional item (2,129,949) - (2,129,949) - Administrative expenses (5,657,665) (2,677,525) (8,335,190) (2,612,856) Group operating profit (2,122,639) 3,353,180 1,230,541 1,714,968 Interest receivable and similar income 65,654 8,812 Interest payable and similar charges (495,234) (107,103) Profit on ordinary activities before taxation 800,961 1,616,677 Taxation (1,327,770) (569,601) (Loss)/Profit on ordinary activities after (526,809) 1,047,076taxation Dividends (44,389) - Retained (loss)/profit for the financial year (571,198) 1,047,076 Basic earnings per share (0.19)p 0.58p Diluted earnings per share (0.15)p 0.56p Normalised earnings per share 0.90p 0.68p The profit and loss account has been prepared on the basis that all operationsare continuing operations. There are no recognised gains or losses in the year other than the loss for theyear. Consolidated Balance Sheet at 31 March 2005 2005 2004 £ £ £ £ Fixed AssetsIntangible assets 36,204,161 8,331,736Tangible assets 608,314 156,579 36,812,475 8,488,315Current AssetsStocks 7,983,122 1,550,234Debtors 11,283,096 5,723,712Cash at bank and in hand 3,584,405 2,223,399 22,850,623 9,497,345Creditors : Amounts falling due within one year (22,626,298) (7,582,226)Net Current Assets 224,325 1,915,119Total Assets Less Current Liabilities 37,036,800 10,403,434 Creditors : Amounts falling due after more than one year (4,136,530) (2,769,445) Net Assets 32,900,270 7,633,989 Capital and Reserves Called up share capital - equity interests 9,247,642 4,931,658Shares to be issued 10,000,000 -Share premium 14,343,376 2,824,689Profit and loss account 2,109,048 2,677,438Merger reserve (2,799,796) (2,799,796)Shareholders' Funds 32,900,270 7,633,989 Consolidated Cashflow StatementFor the year ended 31 March 2005 2005 2004 £ £ £ £ Net cash inflow from operating activities (Note 1) 4,292,758 1,384,703 Returns on investments and servicing of finance Interest received 65,654 8,812Interest paid (413,328) (95,711) Net cash outflow from returns on investments and servicing of (347,674) (86,899)finance Taxation Corporation tax paid (770,825) (556,731) Tax paid (770,825) (556,731) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (260,575) (75,058)Receipts from sale of tangible fixed assets 3,000 13,406Payments to acquire intangible fixed assets (303,435) (693,973)Receipts from sale of intangible fixed assets 3,494 73,979 Net cash outflow from capital expenditure and financial investment (557,516) (681,646) Acquisitions and disposalsPurchase of subsidiary undertaking (16,686,687) (419,627)Net cash acquired with subsidiary 3,272,764 -Deferred consideration paid for subsidiary (371,901) (81,250) Net cash outflow from acquisitions and disposals (13,785,824) (500,877) Cash outflow before financing (11,169,081) (441,450) FinancingIssue of ordinary share capital 5,126,000 1,975,000Expenses paid in connection with share issue - (67,175)Repayments of short term debt - (651,145)Repayments of long term debt (739,322) (295,577)Hire purchase repayments (14,703) (17,465)New secured loan 5,475,326 -New short-term borrowings 3,000,000 - 12,847,301 943,638Increase in cash in the year 1,678,220 502,188 Notes to the Consolidated Cashflow Statement For the year ended 31 March 2005 1 Reconciliation of operating profit to 2005 2004 net cash inflow from operating £ £ activities Operating profit 1,230,541 1,714,968 Depreciation charges 208,589 64,754 Amortisation of intangible assets 1,475,031 530,149 Exceptional item 2,129,949 - (Profit) on disposal of tangible assets (1,841) (2,969) (Increase)/Decrease in stock (50,787) 260,768 Decrease/(Increase) in debtors 852,579 (2,754,713) (Decrease)/Increase in creditors within (1,554,694) 1,575,560 one year Net effect of foreign exchange 3,391 (3,814) differences Net cash inflow from operating 4,292,758 1,384,703 activities 2 Analysis of net debt At 1.4.2004 Cash Movement Other Movements At 31.3.2005 £ £ £ £ Cash in hand, at bank 2,223,399 1,361,006 - 3,584,405 Overdraft (948,304) 317,214 - (631,090) 1,275,095 1,678,220 - 2,953,315 Debt due within one year (256,577) (4,683,875) - (4,940,452) Debt due after one year (1,035,205) (4,626,026) - (5,661,231) Obligations under hire purchase (75,383) 14,703 (3,779) (64,459) (1,367,165) (9,295,198) (3,779) (10,666,142) Total (92,070) (7,616,978) (3,779) (7,712,827) 3 Reconciliation of cash flow to movement in net debt 2005 2004 £ £ Increase in cash in the year 1,678,220 502,188 Change in net debt resulting from (9,295,198) 964,187 cashflows Change in net debt resulting from other changes (3,779) (92,848) Net (debt) at beginning of the year (92,070) (1,465,597) Net (debt) at the end of the year (7,712,827) (92,070) Notes to the Consolidated Cashflow Statement For the year ended 31 March 2005 4 Purchase of subsidiary undertakings 2005 2004 £ £ Net assets acquired: Intangible assets - 82,595 Tangible assets 401,200 13,408 Stock 6,382,101 120,277 Debtors 6,223,343 100 Cash at bank 3,272,764 - Creditors: Amounts falling due within (9,827,814) (216,280) one year 6,451,594 100 Goodwill 31,809,090 2,030,725 38,260,684 2,030,825 Satisfied by: Shares allotted 10,000,000 375,000 Cash (including expenses) 16,686,687 419,627 Loan notes 1,573,997 - Deferred consideration 10,000,000 1,236,198 38,260,684 2,030,825 The subsidiary undertaking acquired during the year contributed £3,859,215 tothe group's net operating cash flow, and utilised £64,816 for capitalexpenditure. 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