R4E.L Regulatory News (R4E)

11.08.11

PIVOT ENTERTAINMENT GROUP PLC

("Pivot Entertainment" "the Group")

Unaudited interim results for the six months ended 31 May 2011

Pivot Entertainment Group plc (AIM: PVT), the transatlantic media and entertainment company, today announces its unaudited interim results for the six months ended 31 May 2011.

Key Points

Financials

·; 11.7% increase in turnover to £39.4 million (6 months ending 31 May 2010: £35.2 million). 

·; Pre-tax losses of £994,000 - compared to a loss of £3.1m during the previous period.

·; Loss per share 1.79p - compared to a loss of 17.06p per share during the previous period.

Restructuring and divestment activity

·; Restructuring complete with the sale of The Finishing Touch (Corporate Events) Ltd and First Artist Sport Ltd.

·; Balance sheet strengthened through strategic investment totalling £2.5m.

·; Placings in the period raised £4m.

·; Reduction in bank debt.

·; Board changes including appointment of Jeremy Barbera as CEO, David Stoller as Executive Chairman, Shirley Stapleton as FD and Marcus Yeoman as Non-Executive Director.

Commenting on the results, Chairman David Stoller, said:

"The Board is pleased to have completed the restructuring of the Group. We believe that these changes will significantly improve the future financial performance of Pivot Entertainment and create additional shareholder value. The focus of the Group is now to drive internal growth through business expansion and further integration between our London and New York operations, and external growth through acquisitions that will enable us to enhance our digital and media capabilities and expand our multi market consumer-based platform."

-End-

Contacts:

Pivot Entertainment

Jeremy Barbera/David Stoller/ Shirley Stapleton Tel: +44 20 79930000

Seymour Pierce Limited

Stewart Dickson /Tom Sheldon (Corporate Finance) Tel: +44 20 71078000

Katie Ratner (Joint Broker)

XCAP Securities plc

Adrian Kirk / David Lawman (Joint Broker) Tel: +44 207 101 7070

Bishopsgate Communications Limited

Deepali Schneider/Natalie Quinn Tel: +44 20 75623350

pivotentertainment@bishopsgatecommunications.com

Chairman's Statement

These results reflect the impact of the restructuring activities undertaken by Pivot Entertainment Group plc since the year end. This includes the completion of the refinancing of the AIB facility, the sale of non-core business assets and the strategic investment by Pivot Entertainment LLP. This represents significant progress towards restoring the strength of the Group and our stated goal of reshaping the Group into a highly-focused, transatlantic media and entertainment company.

The restructuring and divestment activity included;

·; Sale of The Finishing Touch (Corporate Events) Ltd in February 2011 to ExEvents Ltd, a subsidiary of Rivington Street Holdings plc for cash considerations of £100,001. In addition, ExEvents has agreed to pay 50% of net profits generated by existing TFT customers over each of the next three years;

·; Sale of First Artist Sport Ltd to Jon and Phil Smith for an initial cash consideration of £1 in May 2011. Additional consideration is payable to the Group equal to the sum of 5 per cent of revenue generated in excess of £3 million in the years ended 30 November 2011 and 2012.

·; The departure of Jon and Phil Smith from the Board with compromise agreements totalling £280,000 paid in cash;

·; The rationalisation and restructuring of the Group will be complete with the winding up of the remaining operations of the Sport division being Promosport SrL, the Italian based football management agency.

The activities directed at restoring the financial and management strength of the Group during this interim period included;

·; Strategic investment in December 2010 by Pivot Entertainment LLP of $4 million (£2.5 million) in the Group via a subscription of 9,900,000 new ordinary shares at 11 pence per share representing £1.1million and an unsecured loan for the remainder, being £1.4 million;

·; Appointments of David Stoller as Executive Chairman and Jeremy Barbera as Chief Executive following investment by Pivot Entertainment LLP. Shirley Stapleton was also appointed to the Board as Finance Director;

·; Placing of 10,000,000 new ordinary shares at a price of 20 pence per share raising £2 million (before expenses) in February 2011, followed in March by a further placing of 8,700,000 new ordinary shares at a price of 23 pence per share, which raised a further £2 million (before expenses);

·; Conversion of Pivot Entertainment unsecured loan of £1.4million (plus interest) into 7,401,615 ordinary shares at a conversion price of 20 pence per share in March 2010;

·; Conclusion of a new £14.8million revolving credit facility with Allied Irish Bank and a reduction in bank debt from the year end value of £18.0 million through funds raised for the share placing;

·; Appointment of Marcus Yeoman as Non-Executive Director in May 2011.

The results for the 6 months ended 31 May 2011 show the following: 

Summary of results

*Adjusted EBITDA is stated before exceptional items.

Shareholders should note that in these results there is a reclassification of continuing and discontinued operations compared to last years' interim results as a consequence of the disposal during the period of The Finishing Touch (Corporate Events) Ltd, which was previously included in continuing operations.

The operating companies achieved solid revenue growth of 11.7% to £39.4 million (6 months ending 31 May 2010: £35.2 million). EBITDA for these operations grew to £1.50 million (6 months ending 31 May 2010: £1.32 million), being a 13.6% increase, shown below.

A strong performance of the theatre marketing business in the US has driven the Group results in this period. EBITDA for discontinued operations shows a reduction in loss of £2.16 million.

Continuing Operations

Following the disposal of the Events Management business, continuing operations comprise the London and NY-based theatre marketing business of Dewynters Ltd and Spot & Company of Manhattan, together with London based signage and fascia display business of Newman Displays Ltd and the NY-based merchandising operations of Dewynters Advertising Inc.

The London theatre marketing business supported the opening of three new musicals; Million Dollar Quartet, Wizard of Oz and Betty Blue Eyes and the opening of Ghost the Musical in Manchester. Looking forward, the book of business continues to be a mix of existing long standing clients, new openings and a diversifying mix of business.

The London signage and fascia display business continues to support both cinematic and theatrical clients. High profile events that they have worked on include the Cannes Film Festival, Thor, Sucker Punch and Hangover Part II. However, the upgrading works currently underway in Leicester Square have meant the relocation of many film premieres to other smaller sites. This has impacted somewhat on budgeted revenues and will continue to do so until the work is complete in 2012. 

New York operations achieved revenue growth during the period based on exceptionally strong billings. The solid performance reflects a leading position in large Broadway musicals opening during the spring of 2011 including Catch Me If You Can, Book of Mormon, Baby It's You, Bengal Tiger, Wonderland and promotions for Cirque Du Soleil-Radio City.

Discontinued Operations

Discontinued operations include Promosport SrL, First Artist Management Ltd and First Rights Ltd as well as the disposals in the period of The Finishing Touch (Corporate Events) Ltd and First Artist Sport Ltd. Promosport was put into liquidation on 23 March 2011. First Artist Management has remained a dormant trading company since the business assets were sold in 2010 and will be dissolved in the second half of the year, along with First Rights Ltd, which ceased trading in October 2010.

Summary and Outlook

The Board is pleased to have completed the restructuring of the Group. We believe that these changes will significantly improve the future financial performance of Pivot Entertainment and create additional shareholder value. The focus of the Group is now to drive internal growth through business expansion and further integration between our London and New York operations, and external growth through acquisitions that will enable us to enhance our digital and media capabilities and expand our multi market consumer-based platform.

David Stoller, Chairman

Pivot Entertainment Group plc

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the six months ended 31 May 2011

Unaudited Condensed Consolidated Balance Sheet

As at 31 May 2011

Unaudited Condensed Consolidated Statement of Changes in Equity

For the six months ended 31 May 2011

Unaudited Condensed Consolidated Statement of Changes in Equity (continued)

For the six months ended 31 May 2011

Unaudited Condensed Consolidated Statement of Cash Flows

For the six months ended 31 May 2011

* In March 2011 the £1.4 million unsecured loan was converted into 7,401,615 ordinary shares at a conversion price of 20p per share.

Unaudited notes to the Condensed Consolidated Interim Financial Statements

For the six months ended 31 May 2011

1 Basis of Presentation

These unaudited condensed consolidated interim financial statements are for the six months ended 31 May 2011. They have been prepared in accordance with recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union. This report should be read in conjunction with the annual financial statements for the year ended 30 November 2010, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Interpretations Committee ('IFRIC') Interpretations and the Companies Act 2006, as applicable to companies reporting under IFRS.

The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The unaudited interim financial statements were approved by the Board on 10 August 2011.

The comparative financial information for the year ended 30 November 2010 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts of Pivot Entertainment Group plc for the year ended 30 November 2010 have been reported on by the Company's auditor, Baker Tilly UK Audit LLP and have been delivered to the Registrar of Companies. The report of the auditor was unqualified but contained an emphasis of matter statement with regard to going concern. The auditor's report did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

The financial information for the six months ended 31 May 2011 is unaudited.

Comparative Information

The Group comparatives have been drawn up to the 6 months ended 31 May 2010.

The comparative results for the 6 months ended 31 May 2010 and the year ended 30 November 2010 show a reclassification of the disposal groups as detailed in note 8 between continuing and discontinuing operations.

Accounting Policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 30 November 2010.

The allocation of provisions between current and non-current liabilities has also been re-stated to reflect the correct payment periods as detailed further in note 16 in the statutory accounts for the year ended 30 November 2010.

Going Concern

These interim condensed consolidated financial statements have been prepared on a going concern basis. Given the circumstances set out below, there remain material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.

During the reporting period, the Group has undergone significant restructuring, including renegotiation of its borrowing facilities, fund raising and the disposal of loss making subsidiaries.

1 Basis of Preparation (continued)

The Directors have prepared and reviewed detailed forecasts which indicate that the Group will have sufficient cash flow to meet its financial obligations as they fall due and return the Group to profitability. The exception to this is further obligations under deferred consideration liabilities. After settling consideration of US$4.1 million in January 2011, the next stage payment of US$4.2 million is payable in October 2011. It is envisaged that per the cash flow forecasts, additional funds will need to be raised, either through equity or debt to settle this liability.

After making enquiries and considering the uncertainties described above, the Directors have concluded that the Group has adequate resources to continuing trading for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the Group interim financial statements.

2 Finance Costs

The foreign exchange gain of £383k is an unrealised one in relation to the revaluation of borrowings and deferred consideration denominated in US$. 

3 Loss per share

The calculations of loss per share are based on the following results and numbers of shares.

The dilutive effect of share options does not impact loss per share as all share options have lapsed or been forfeited in the interim period ended 31 May 2011.

4 Exceptional Costs

5 Goodwill

6 Provisions - Deferred Consideration

The provisions for liabilities relate to deferred contingent consideration. Deferred contingent consideration represents the estimated amounts payable, although the final amounts payable are dependent upon the results of the acquired businesses, this being Spot & Company of Manhattan Inc. and Dewynters Limited. These amounts can be paid either by cash, loan notes or shares, according to each individual transaction.

Deferred consideration is payable as follows:

7 Borrowings

An agreement was reached in April 2011 to enter into a new £14,800,000 revolving credit facility with the lender AIB Group (UK) plc which was approved by shareholders at an EGM on 17 May 2011. Interest will be charged at LIBOR + 3% per annum in the first and second years, LIBOR + 4% for the third year and LIBOR + 5% for the final year. The facility matures in May 2015.

8 Discontinued Operations

Promosport SrL, First Rights Ltd and First Artist Management Ltd have been presented as discontinued operations following the approval by the Group's Board to dispose of or wind up the companies. 

The Finishing Touch (Corporate Events) Ltd and First Artist Sport Ltd were sold in February 2011 and May 2011 respectively and have been presented as disposals in the interim statements.

Details of disposal groups and discontinued operations as at 30 November 2010 can be found in note 17 of the Group financial statements for that period, which did not include The Finishing Touch (Corporate Events) Ltd or First Rights Ltd.

Analysis of the results of discontinued operations

9 Cash generated from operations

10 Interim Report

This document is available on the Group's website at www.pivotentertainment.com.