MUBL.L Regulatory News (MUBL)

8 Dec 2006 07:00

Air Music & Media Group PLC08 December 2006 8 December 2006 AIR MUSIC & MEDIA GROUP PLC ("AIR GROUP" or "THE GROUP") INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2006 The Board of Air Group, the UK distributor of home entertainment products, ispleased to announce its interim results for the six months ended 30 September2006. HIGHLIGHTS: •Sales for the period: £27.8 million (2005: £29.8 million); •Profit before taxation and goodwill amortisation: £996,000 (2005: £986,000, before exceptional items); •Net debt reduced to £4.1 million (2005: £10.7 million); •Music Box Leisure recently extended its sole supply agreements with Co-op and Moto outlets; •Play Media pilot retail operation closed down in September 2006; and •Efforts to improve margins and reduce overheads have resulted in maintained profit levels. Peter Cowgill, Chairman of Air Group said: "Whilst I consider that the tradingresults for the period ending 30 September 2006 were broadly in line withexpectations, Air Group is currently in its most critical trading period of theyear and a further trading update will be provided at the end of January 2007.The Group is significantly dependent on performance of the UK retail sector ingeneral and the supermarket sector in particular. The Board continues to reviewthe Group's operations and is confident in the strength of Air Group'sunderlying business plan." --ENDS-- Enquiries: AIR MUSIC & MEDIA GROUP PLC Tel: 0161 767 1620Peter Cowgill, Chairman BISHOPSGATE COMMUNICATIONS LIMITED Tel: 020 7562 3350Dominic Barretto AIR MUSIC & MEDIA GROUP PLCINTERIM REPORT 2006 CHAIRMAN'S STATEMENT I am pleased to announce the interim results for the six months to 30 September2006. This is the first period in two years where there are comparable resultsfor the group, following the significant acquisition of Redworth Group,comprising Music Box Leisure and ESD Wholesale, in late 2004. Group results Sales for the period were £27.8 million (2005: £29.8 million). Operating profitbefore goodwill amortisation was £1,279,000 (2005: £1,300,000, beforeexceptional items). Goodwill amortisation was £876,000 (2005: £863,000). Netinterest charge was £283,000 (2005: £314,000). Profit before taxation andgoodwill amortisation was £996,000 (2005: £986,000, before exceptional items).Basic loss per share for the period was 1.1p (2005: loss per share 9.1p).Normalised earnings per share (after adjusting for goodwill amortisation and, inthe previous period, exceptional items) was 4.1p (2005: 4.1p). Sales at the Group's trading subsidiaries were as follows: 30 September 30 September 2006 2005 £ million £ million Change Music Box Leisure 19.7 18.9 4%ESD Wholesale 4.9 5.9 -17%Air Music and Media Sales 1.3 2.6 -50%Legacy Entertainment 1.3 2.4 -46%Play Media 0.6 - - 27.8 29.8 -7% Operational update Sales at Music Box Leisure ("MBL"), the core of the Group, have held up well andcontinue to perform as expected. MBL has recently extended its sole supplyagreements with Co-op and Moto outlets and is continuing to target high footfallretail outlets. ESD Wholesale ("ESD") has seen sales to independent retailers fall in theperiod. The sector has experienced very tough trading in the period and AirGroup has seen credit insurance cover being cut back. In accordance with itscredit policies the Group has reduced trade with retailers where credit cover isunavailable. The Board has focused on Air Group's buying skills to improvemargins, which has gone some way to alleviating the impact on profits. As stated in the Annual Report, the Group is working hard at increasing theprofitability at Air Music and Media Sales ("AMM Sales") which has impacted ontop line sales growth. Higher margin internal sales (not reflected in the tableabove) represented over 40% of AMM Sales total turnover. Performance at Legacy Entertainment, Air Group's stand alone operation in NorthAmerica, was disappointing and is an area of focus for the management team.Having concluded an investigation into the merits of a claim for understatedmechanical royalties, the group is in dispute over the amount of the claim withthe Harry Fox Agency. No settlement has yet been reached and there has been nochange to the provision carried in the subsidiary's accounts. The group concluded its pilot of a retail operation, Play Media, and closed theoperation down in September 2006. Whilst Group sales are lower than in the previous year, efforts to improvemargins and to reduce overheads have resulted in maintained profit levels. The group continued to repay its borrowings and remained comfortably within itsbanking covenants in the period. Net debt was reduced to £4.1 million (31 March2006: £6.4 million 30 September 2005: £10.7 million). Share options In recognition of their valuable contribution, the group issued options toemployees over 186,581 shares at an exercise price of 79p during the period. Outlook Whilst I consider that the trading results for the period ending 30 September2006 were broadly in line with expectations, Air Group is currently in its mostcritical trading period of the year and a further trading update will beprovided at the end of January 2007. The Group is significantly dependent onperformance of the UK retail sector in general and the supermarket sector inparticular. The Board continues to review the Group's operations and isconfident in the strength of Air Group's underlying business plan. Peter CowgillChairman 8 December 2006 AIR MUSIC & MEDIA GROUP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)FOR THE PERIOD ENDED 30 SEPTEMBER 2006 6 months to 6 months to Year ended 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited Note £'000 £'000 £'000 Turnover 27,796 29,845 72,287 Cost of sales 3 (21,786) (24,444) (58,431) --------- --------- ---------Gross profit 6,010 5,401 13,856 Distributioncosts (635) (765) (1,653) Administrativeexpenses 4 (4,972) (5,563) (10,572) --------- --------- --------- Groupoperatingprofit/(loss) 403 (927) 1,631 Interest, net (283) (314) (698) --------- --------- --------- Profit/(loss)on ordinaryactivitiesbeforetaxation 120 (1,241) 933 Taxation 5 (301) (76) (1,064) --------- --------- --------- Loss onordinaryactivitiesafter taxation (181) (1,317) (131) Dividends - - (60) --------- --------- --------- Retained lossfor the period (181) (1,317) (191) ========= ========= ========= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESLoss for theperiod (181) (1,317) (191)Exchangeadjustmentsoffset inreserves (12) - 56 --------- --------- ---------Totalrecognisedlosses for theperiod (193) (1,317) (135) ========= ========= ========= Basic loss pershare 6 (1.1)p (9.1)p (0.8)p ========= ========= ========= Diluted lossper share 6 (1.1)p (9.1)p (0.8)p ========= ========= ========= AIR MUSIC & MEDIA GROUP PLCCONSOLIDATED BALANCE SHEET (UNAUDITED)AS AT 30 SEPTEMBER 2006 As at As at As at 30.09.2006 30.09.2005 31.03.2006 Note Unaudited Unaudited Audited £'000 £'000 £'000Fixed AssetsIntangibleassets 33,151 34,963 34,142Tangible assets 344 419 591 ------------- ----------- ---------- 33,495 35,382 34,733 ============= =========== ==========Current AssetsStocks 5,958 8,828 7,965Debtors 9,004 10,790 11,136Cash at bankand in hand 1,544 2,334 2,205 ------------- ----------- ---------- 16,506 21,952 21,306 Creditors:Amountsfalling duewithin oneyear 7 (14,964) (22,032) (19,818) ------------- ----------- ----------Net CurrentAssets/(liabilities) 1,542 (80) 1,488 ------------- ----------- ---------- Total Assetsless CurrentLiabilities 35,037 35,302 36,221 Creditors:Amounts dueafter morethan one year (1,059) (3,084) (2,034) Provision forliabilitiesand charges 8 (627) - (643) ------------- ----------- ----------Net Assets 33,351 32,218 33,544 ============= =========== ========== Capital and Reserves Called upshare capital- equityinterests 9 12,872 12,672 12,673Shares to beissued 9 - - 206Share Premium 9 21,454 21,447 21,447Profit andLoss Account 9 1,825 899 2,018Merger Reserve 9 (2,800) (2,800) (2,800) ------------- ----------- ----------Shareholders'Funds 33,351 32,218 33,544 ============= =========== ========== AIR MUSIC & MEDIA GROUP PLCCONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)FOR THE PERIOD ENDED 30 SEPTEMBER 2006 6 months to 6 months to Year ended 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited £'000 £'000 £'000 £'000 £'000 £'000Net cash inflow/(outflow) fromoperating activities (Note 1) 3,454 (466) 5,099 Returns on investments andservicing of finance Interest received 33 42 64Interest paid (316) (356) (762) ------- ------ ------Net cash outflow from returnson investments and servicing offinance (283) (314) (698) Taxation Corporation tax paid (697) (1,722) (2,046) ------- ------ ------Tax paid (697) (1,722) (2,046) Capital expenditure andfinancial investment Payments to acquire tangiblefixed assets (109) (66) (197)Receipts from sale of tangiblefixed assets - 75 68Payments to acquire intangiblefixed assets (1) (46) (25) ------- ------ ------Net cash outflow from capitalexpenditure and financialinvestment (110) (37) (154) Acquisitions and disposals Purchase of subsidiaryundertakings - (81) (108)Net cash acquired withsubsidiary undertakings - - (143)Disposal of subsidiary (35) 1 -Deferred consideration paid forsubsidiary - (403) (623) ------- ------ ------Net cash outflow fromacquisitions and disposals (35) (483) (874) Equity dividends paid toshareholders - - (60) ------ ------ ------Cash inflow/(outflow) beforefinancing 2,329 (3,022) 1,267 FinancingRepayments of short term debt (2,000) - -Repayments of long term debt (984) (998) (1,997)Hire purchase repayments - (63) (64) ------- ------ ------ (2,984) (1,061) (2,061) ------ ------ ------Decrease in cash in the period (655) (4,083) (794) ====== ====== ====== AIR MUSIC & MEDIA GROUP PLCNOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 SEPTEMBER 2006 1. Reconciliation of operating profit to net cash inflow from operating activities 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited £'000 £'000 £'000 Operating profit/(loss) 403 (927) 1,631Depreciation charges 107 136 454Amortisation of intangible assets 991 1,082 2,254Loss on disposal of tangible assets 248 (21) 17Exceptional items - non cash charges - 680 -Decrease/(increase) in stock 2,007 (1,303) (276)Decrease/(increase) in debtors 2,130 50 (10)(Decrease)/increase in creditorswithin one year (2,437) (167) 1,040Net effect of foreign exchangedifferences 5 4 (11) --------- --------- ---------Net cash inflow/(outflow) fromoperating activities 3,454 (466) 5,099 ========= ========= ========= 2. Analysis of net debt Cash Other At 1.04.2006 Movement Movements At 30.9.2006 £'000 £'000 £'000 £'000 Cash in hand, at bank 2,205 (655) (6) 1,544 ---------- --------- --------- ----------- Debt due within one year (6,570) 2,034 - (4,536)Debt due after one year (2,034) 950 25 (1,059)Obligations under hire (1) - 1 -purchase contracts ---------- --------- --------- ----------- (8,605) 2,984 26 (5,594) ---------- --------- --------- ----------- Total (6,400) 2,329 20 (4,051) ========== ========= ========= =========== 3. Reconciliation of cash flow to movement in net debt 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited £'000 £'000 £'000 (Decrease)/increase in cash in theperiod (655) (4,083) (794)Change in net debt resulting from cashflows 2,984 1,061 2,061Change in net debt resulting fromexchange differences (6) - 45Change in net debt resulting from otherchanges 26 - -Net debt at beginning of the period (6,400) (7,712) (7,712) --------- --------- ---------Net debt at the end of the period (4,051) (10,734) (6,400) ========= ========= ========= AIR MUSIC & MEDIA GROUP PLCNOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 SEPTEMBER 2006 1. Accounting policies The interim financial statements have been prepared on the basis of theaccounting policies set out in the Annual Report and Accounts for the year ended31 March 2006. 2. Financial information The financial information contained in this document is unaudited and does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The figures for the financial year ended 31 March 2006 are derived from theconsolidated financial statements of Air Music & Media Group plc on which anunqualified report has been issued and which have been filed with the Registrarof Companies. 3. Cost of sales Cost of sales included exceptional items of nil for the periods to 30.09.2006and 30.09.2005 and £446,000 for the period to 31.03.2006. 4. Administrative expenses Administrative expenses of £4,972,000 (30.09.2005: £5,563,000 and 31.03.2006:£10,572,000) include amortisation of goodwill of £876,000 (30.09.2005: £863,000and 31.03.2006: £1,740,000). Exceptional items of nil were included in administrative costs for the period to30.09.2006 and £1,364,000 and £1,686,000 in the periods to 30.09.2005 and31.03.2006 respectively. 5. Taxation The taxation charge has been estimated by the Company based on previous taxationadjustments and future rates. 6. Earnings per share The earnings per share has been calculated on the loss on ordinary activitiesafter taxation of £181,000, and the weighted average number of ordinary sharesin issue during the period of 17,162,735 (six months average) in accordance withFRS 22. The earnings per share has been fully diluted to take into account thepotentially dilutive shares held under share option agreements. This increasedthe weighted average number of shares used in the basic EPS calculation from17,162,735 to 17,163,218 used in the fully diluted EPS calculation. Normalised earnings per share, as disclosed below, are calculated using the(loss) after tax for the period, having added back exceptional items (afteradjusting for the effect of tax) and goodwill amortisation charge over the basicand diluted weighted average number of shares in issue during the six monthperiod. AIR MUSIC & MEDIA GROUP PLCNOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 SEPTEMBER 2006 6. Earnings per share (continued) 6 months to 6 months to Year ended 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited £'000 £'000 £'000(Loss) aftertaxation (181) (1,317) (131)Exceptionalitems 0 1,364 2,132Goodwillamortisation 876 863 1,740Taxation onexceptionalitems 0 (310) (518) ---------- ---------- -----------Profit fornormalisedcalculation 696 600 3,223 ========== ========== =========== Basic earningsper share (1.1)p (9.1)p (0.8)p ========== ========== ===========Basicnormalisedearnings pershare 4.1p 4.1p 20.6p ========== ========== =========== Dilutedearnings pershare (1.1)p (9.1)p (0.8)p ========== ========== ===========Dilutednormalisedearnings pershare 4.1p 4.1p 20.5p ========== ========== =========== 7. Creditors: Amounts falling due within one year 6 months to 6 months to Year ended 30.09.2006 30.09.2005 31.03.2006 Unaudited Unaudited Audited £'000 £'000 £'000 Debenture loans 1,574 1,574 1,574Bank loans andoverdrafts 2,962 8,409 4,996Trade creditors 8,717 9,386 9,913Corporation tax 366 177 762Socialsecurity andother taxes 714 442 775Other creditors 34 520 154Hire purchasecontracts - 1 1Accruals anddeferredincome 597 1,523 1,643 --------- ---------- ----------- 14,964 22,032 19,818 ========= ========== =========== 8. Provisions for liabilities and charges Provisions relate to a claim for underpaid mechanical royalty payments in NorthAmerica. The provision is predominantly denominated in US dollars. The movementin the period reflects exchange movement only. AIR MUSIC & MEDIA GROUP PLCNOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 SEPTEMBER 2006 9. Capital and reserves Profit and loss Shares to Share Share Merger account be issued Capital Premium Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2,018 206 12,673 21,447 (2,800) 33,5442006Exchangedifference (12) - - - - (12)Sharesissued - (206) 199 7 - -in theperiodRetainedloss (181) - - - - (181)for the -------- -------- ------- -------- -------- --------periodAt 30September 1,825 - 12,872 21,454 (2,800) 33,3492006 ======== ======== ======= ======== ======== ======== 10. Dividends The directors do not recommend the payment of an interim dividend. 11. Other information The interim statement was approved by the directors of the Company on 8 December2006. A copy of the interim statement will be posted on the Company websitewww.airmusicandmedia.com. This information is provided by RNS The company news service from the London Stock Exchange