Half-yearly Report

Half-yearly Report

Media Corporation PLC

Media Corporation Plc
("Media Corp" or the "Group")

Interim results for the six months ended 31 March 2012

The Board of Media Corp, the AIM quoted advertising network and gaming operator, is pleased to announce its interim results for the period ended 31 March 2012.

Financial Highlights

  • Revenues of £16.7 million (2011: £13.3 million) an increase of 26%
  • Gross profit of £1.9 million (2011: £2.6 million) a decrease of 27%
  • Loss before tax of £1.3 million (2011: Loss £437,000).
  • Cash balances of £0.52 million (March 2011: £1.5. million)

Justin Drummond, Chairman of Media Corp, commented:

“This has been a very difficult period for the Group, though I believe with the acquisition of Intabet Limited together with further financing, announced today, the Group can now look forward. I am stepping down today, following the announcement of the Intabet acquisition and I am confident that in Phil Jackson and Adam Fraser Harris, who are being appointed as Chairman and Interim CEO respectively, the Group is in being left in experienced and capable hands.

I remain a major shareholder in Media Corp and believe that with the acquisition, new direction and senior management team the Group has an exciting and, I hope, a prosperous future ahead.”

Contacts:

Media Corporation Plc   Tel: +44 20 7618 9000
Phil Jackson, Chairman
Adam Fraser-Harris, Chief Executive Officer
Nilesh Jagatia, Finance Director
 
Northland Capital Partners Limited Tel: + 44 20 7796 8800
Luke Cairns / Rod Venables (Nomad)
Katie Shelton (Broking)

 

XCAP Securities (Joint Broker) Tel: + 44 207 101 7070
Jon Bellis / Karen Kelly
 
Bishopsgate Communications Tel: + 44 20 7562 3350
Ivana Petkova / Nick Rome

mediacorp@bishopsgatecommunications.com

 

Chairman’s Statement

Introduction

At the end of the last financial year, whilst the Group had made progress across certain divisions, the management was actively looking for further growth and further acquisitions. However, trading over the first half of the financial year has been very challenging and in the face of continued losses the Group has disposed of underperforming assets and has suspended Purple Lounge operations, as announced on 27 April.

Advertising Network

Trading at Eyeconomy in the first sixth months, whilst weaker than the same period last year, has remained profitable. It is anticipated that this division will continue to trade profitably as we continue to expand the number of websites and therefore advertising volumes under management.

Internet Gaming

Whilst revenues grew, losses increased significantly during the first sixth months of the financial year. This was largely due to us changing poker suppliers and negative press related to a legal action from CD Casino which is detailed below.

Since acquiring Purple Lounge the Company has invested over £900,000 in Purple Lounge. With the erosion of Purple Lounge’s margin the continued financial support of Purple Lounge was becoming unsustainable and resulted in the suspension of the Casino and Poker room and, at the Group’s request, the suspension of the Maltese gaming licence. We plan to restructure this business with a view to reducing costs significantly (a process which is already underway) whilst maintaining the existing customer base and player balances.

The suspension of Purple Lounge has resulted in the joint venture with the Hippodrome, as announced on 26 January 2012, to be put on hold whilst a full review of the Group’s gaming operations is undertaken. The board remain in discussions with the Hippodrome in the hope of resurrecting the venture.

There will be further announcements made in relation to this restructuring in due course.

Internet Publishing

In keeping with its stated strategy of selling its underperforming publishing assets the Group announced the sale of www.onthebox.com, www.forexspace.com and associated domain names for an aggregate of £250,000 payable in cash on the 11 April 2012. The two sites were on the Group's balance sheet at £130,000 and so the sale represented a profit of £120,000 for Media Corp. In addition the directors estimate that the sale will save the Group approximately £350,000 per annum in staff and associated costs. Forexspace had only recently been launched and was yet to generate any material revenues for the Group and Onthebox was loss making in the year to September 2011.

Litigation

On 15 February 2012, the Company announced that it had received a claim form and particulars of claim (together the ‘Claim’) in respect of legal action taken against the Company and Search Focus Limited, a dormant subsidiary of the Company, by CD Casino.com Limited. The Claim is for in excess of £300,000 and is in respect of an agreement dating back to February 2007. The Board also announced that it had taken legal advice and considered the Claim to be spurious and without foundation and that it would be defended vigorously. The Company has filed a robust defence and would anticipate that this will finalise in favour of the Company in due course.

Acquisitions

Shareholders will be aware of the management’s efforts to secure two substantial acquisitions in the gaming sector which led to press speculation as to the proposed acquisition of Gaming Media Group (“GMG”) which in turn led to the suspension in trading of the Company’s shares on 16 April 2012.

Whilst progress was made with this acquisition, discussions continued with the other potential acquisition. As announced today the decision was taken not to proceed with the GMG acquisition. Instead the Company has agreed to acquire Intabet Limited which could be achieved more swiftly and without the significant cost that would have been involved with the acquisition of GMG which would have been deemed a reverse takeover transaction under the AIM Rules for Companies.

Intabet Limited

The Company has today announced details of the acquisition of Intabet Limited (“Intabet”), a new and unique online betting platform, for a consideration of £1.53m million which would be satisfied by the issue to the vendors of 152,719,840 new ordinary shares of 1p in the Company.

As part of the acquisition of Intabet, Phil Jackson and Adam Fraser-Harris, part of the Intabet management team,, have agreed to join the Board of Media Corp with immediate effect as non-executive chairman and interim CEO respectively. In the light of the acquisition and the new Board appointments, myself and Sara Vincent have resigned from the Board with immediate effect and have left the Group.

Financing

The Company has also announced today that it has entered into a loan agreement to draw down up to £750,000 (the ‘Loan’) to provide working capital for Intabet and the enlarged group.

Consolidated Unaudited Income Statement

for the six months ended 31 March 2012

     
Six Months ended Six Months ended Year Ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
 
Revenue £'000 £'000 £'000
Total revenue 16,700 13,329 35,145
Cost of sales (14,785)   (10,750)   (29,416)
Gross profit 1,915   2,579   5,729
 
Administrative expenses (3,237) (3,017) (7,107)
             
Analysis of administrative expenses:
Distribution costs (1,701) (1,492) (3,801)
Administrative expenses (1,801) (1,525) (3,081)
Exceptional gain 265 (225)
         
    (3,237)   (3,017)   (7,107)
 
Operating loss (1,322) (438) (2,866)
 
Finance income 1   1   1
 
Loss before income tax (1,321) (437) (2,865)
 
Income tax expense -   -   -
 
Loss from continuing activities attributable to equity holder of the Company. (1,321) (437) (2,865)
 
 

Loss per share attributable to equity holders of the Company

Pence per share Pence per share Pence per share
Basic (0.37p) (0.14p) (0.87p)
Diluted (0.37p) (0.14p) (0.88p)
 
Consolidated unaudited statement of recognised income and expense

for the six months ended 31 March 2012

     
Six Months ended Six Months ended Year Ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
 
Currency translation differences 66 62 (129)
Total income/(expense) recognised directly in equity 66 62 (129)
Loss for the year (1,321)   (437)   (2,865)
Total recognised (expense)/income for the year (1,255)   (375)   (2,994)
 
Consolidated unaudited balance sheet

as at 31 March 2012

     
Six Months ended Six Months ended Year Ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Assets
Non current assets
Property, plant and equipment 241 100 18
Intangibles 2,857 6,153 3,038
Investments 187   188   191
3,285   6,441   3,247
Current assets
Trade and other receivables 653 1,999 913
Cash at bank and in hand 518   1,437   2,032
1,171   3,436   2,945
Total assets 4,456   9,877   6,192
 
Liabilities
Current liabilities
Trade and other payables (2,667) (4,476) (3,495)
Current tax liabilities -   -   -
(2,667)   (4,476)   (3,495)
Total liabilities (2,667)   (4,476)   (3,495)
Total assets less liabilities 1,789   5,401   2,697
Equity
Share capital 5,412 5,088 5,088
Share premium 13,150 13,118 13,118
Other Reserves 1,422 1,422 1,422
Translation reserves 434 647 368
Retained Earnings (18,629)   (14,874)   (17,299)
Total shareholders equity 1,789   5,401   2,697
 
Consolidated unaudited statement of changes in shareholders’ equity

for the six months ended 31 March 2012

           
Group Share Share Currency Other Retained
capital premium translation reserves earnings Total
reserve
£000 £000 £000 £000 £000 £000
                     
At 30 September 2009 4,798 12,943 536 1,422 (13,764) 5,935
Loss for the year - - - - (1,398) (1,398)
Share based payments - - - - 6 6
Currency translation differences - - (39) - - (39)
Sale of own shares - 154 - - 719 873
Issue of shares 290   21   -   -   -   311
At 30 September 2010 5,088 13,118 497 1,422 (14,437) 5,688
Loss for the year - - - - (2,865) (2,865)
Share based payments - - - - 3 3
Currency translation differences - - (129) - - (129)
Issue of shares -   -   -   -   -   -
At 30 September 2011 5,088 13,118 368 1,422 (17,299) 2,697
Loss for the year - - - - (1,321) (1,321)
Share based payments

-

- - - (9) (9)
Currency translation differences

-

- 66 - - 66
Issue of shares 324   32   -   -   -   356
At 31 March 2012

5,412

  13,150   434   1,422   (18,629)   1,789
 
Consolidated unaudited cash flow statements

for the six months ended 31 March 2012

     
Six Months ended Six Months ended Year Ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Operating loss (1,197) (438) (1,378)
Depreciation and amortisation 125 185 186
Impairment of intangibles - - -
Decrease/(increase) in receivables 223 (1,330) (243)
Increase/(decrease) in payables (828) 1,038 55
Other cash movements 74 26 (49)
Taxes paid (125) - -
Share based payments -   -   -
Net cash (used in)/generated by operating activities (1,728)   (519)   (1,429)
 
Investing activities
Interest received 1 1 1
Purchase of property, plant and equipment (230) (56) (5)
Purchase of intangibles - (80) (161)
Disposal of Domain names –net sales proceeds - - 1,515
         
Net cash (used in)/generated by investing activities (229)   (135)   1,350
 
Financing activities
Issue of share capital 356 - -
         
Net cash used in financing activities 356   -   -
 
Net (decrease)/increase in cash and cash equivalents (1,601) (654) (79)
Cash and cash equivalents at beginning of period 2,032 2,153 2,153
Effects on exchange movements 87   (62)   (42)
Cash and cash equivalents at end of period 518   1,437   2,032
 

Note: A further £250,000 was received on 4 April 2012 from the disposal of onthebox.com and forexspace.com.

Notes to the accounts

1. Basis of preparation

These consolidated interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 31 March 2012 have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). The same accounting policies, presentation and methods of computation are followed in the consolidated set of financial statements as applied in the Group's latest audited financial statements for the year ended 30 September 2011.

These consolidated interim financial statements do not constitute Statutory Accounts under the Companies Act 2006, have not been audited, and do not include all of the information required for full annual financial statements. They should be read in conjunction with the Group's consolidated annual financial statements for the year ended 30 September 2011. The auditors' opinion on those Statutory Accounts was unqualified and did not draw attention to any other matters required by the Companies Act 2006. The Statutory Accounts for the year ended 30 September 2011 have been delivered to the Registrar of Companies.

The comparative figures presented are for the six months ended 31 March 2011 and the year ended 30 September 2011

Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Sales of goods are recognised when goods are delivered and title has passed. Sales of services are recognised when the service has been completed and invoiced to the customer.

Goodwill

The directors undertake an impairment review of goodwill at the end of each annual reporting period.

2. Segmental analyses

The Group's primary segment information is based on its operating divisions:   Six Months ended   Six Months ended   Year Ended
31 March 2012 31 March 2011 30 September 2011
£'000 £'000 £'000
Turnover analysis by business segment:
Advertising Network 1,451 3,182 7,240
Internet Gaming 15,211 10,006 27,630
Internet Publishing 37   142   275
Total continuing operations 16,700   13,329   35,145
 
Trading profit
Advertising Network 8 109 (120)
Internet Gaming (417) 12 (283)
Internet Publishing (912) (559) (2463)
         
Operating loss (1,322)   (438)   (2,866)
 
Net finance income 1 1 1
 
Loss before income tax (1,321)   (437)   (2,865)
 
Income tax expense - - -
         
Loss from continuing activities (1,321)   (437)   (2,865)
 
 
Balance Sheet
Assets
Advertising Network 752 1,011 927
Internet Gaming 739 2,286 1,022
Internet Publishing 2,965   6,580   4,243
4,456   9,877   6,192
Liabilities
Advertising Network (914) (871) (1,933)
Internet Gaming (1,521) (3,344) (2,527)
Internet Publishing (232)   (261)   965
(2,667)   (4,476)   (3,495)

3. Taxation

There is no provision for UK Corporation tax due to tax losses.

Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Recognition of the deferred tax asset is limited to the extent that the company anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. The deferred tax balance has not been discounted. The Group has a deferred tax asset of £Nil (2011: £Nil).

4. Loss per share

  Six Months ended   Six Months ended   Year Ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
£000 £000 £000
Loss for the purpose of basic and diluted earnings per share (1,321)   (437)   (2,865)
 
Numbers
Weighted average number of ordinary shares for the purpose of basic earnings per share 356,516,039 323,445,648 323,445,648
Effective of dilutive potential ordinary shares:
Share warrants 1,900,000 3,900,000 1,900,000
         
Weighted average number of ordinary shares for the purpose of diluted earnings per share 258,416,039   327,345,648   325,345,648
 
Pence Pence Pence
Loss per share – basic (0.37p) (0.14p) (0.87p)
Loss per share – diluted (0.37p) (0.14p) (0.88p)
 

5. Dividends

The Directors do not recommend the payment of a dividend.

6. Copies of interim results

Copies of the interim results are available at the Group´s web site at www.mediacorpplc.com. Copies may also be obtained from the Group´s registered office: Media Corporation plc, No1 Poultry, London EC2R 8JR.

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