Final Results
31 March 2009
Parallel Media Group plc
("PMG" or the "Company")
Final Results for the year ended 31 December 2008
Highlights
* PMG successfully staged three events (UBS Hong Kong Open, Ballantine's
Championship and Ladies Korean Masters).
* Turnover increased 83% to £9.5 million from £5.2 million in 2007.
* The Group generated a profit before interest of £222,000 (2007: Loss before
interest of £1.8 million).
* Loss per share is 0.06 pence (2007: 0.58 pence loss per share).
* Capital restructuring completed in October 2008.
Contact Details
For more information please contact:
Martin Doherty +44 (0) 20 7225 2000
Finance Director, Parallel Media Group
Plc
Tony Rawlinson / Antony Legge +44 (0) 20 7492 4777
Dowgate Capital Advisers Limited
www.parallelmediagroup.com
The Annual Report and Financial Statements will be sent to all shareholders
today. Further copies will be available to the public from the company's
registered office and also at the company's website www.parallelmediagroup.com.
CHAIRMAN'S STATEMENT AND EXTRACTS FROM THE DRIECTORS' REPORT
Parallel Media Group plc ("PMG" or the "Group") has continued to invest during
2008 in the development of long term revenue generating sports assets. These
assets form the foundations on which PMG intends to grow its future business by
providing guaranteed revenues out to 2018.
SUMMARY OF FINANCIAL RESULTS
Turnover increased 83% to £9.5 million from £5.2 million in 2007 with PMG
staging three events in 2008 compared to two in 2007 whilst at the same time
increasing other revenue streams in sponsorship sales and consulting. Gross
margin fell slightly reflecting a change in the mix of revenues and the lower
margin generated on the two inaugural events. The margins on these events are
expected to increase as the events mature and more secondary sponsors are
secured. Operating expenses for the period were marginally down on 2007 (after
adjusting for the one-off recognition in 2007 of £1.13 million of costs)
reflecting the Company's tight control of costs. The Group generated a profit
before interest of £222,000 (2007: Loss before interest of £1.8 million). Loss
per share is 0.06 pence (2007: 0.58 pence loss per share).
During the year the Group raised a total of £1 million (£0.2 million was raised
through the issue of convertible loan notes and medium term financing of £0.8
million was drawn down). The Group repaid loans totalling £1.2 million and a
further loan of £0.1 million was cancelled by mutual agreement on withdrawal
from an investment. The overall result was a net cash decrease for the year of
£0.1 million. At the end of the year the Group had net debt of £3.2 million
(2007: £3.1 million).
IN ASIA
In March 2008 PMG successfully staged the inaugural Ballantine's Championship
in Korea. This event, co-sanctioned by the PGA European Tour, Asian Tour and
the KPGA, is now the largest golf tournament in Korea.
In November 2008 PMG staged the 50th edition of the UBS Hong Kong Open,
co-sanctioned by the PGA European Tour, the Asian Tour and the Hong Kong Golf
Association. Revenues for the UBS Hong Kong Open increased in 2008, with PMG
securing a number of new secondary sponsors, including BMW, Emirates, Rolex,
Hugo Boss, UPS, ECCO, Titleist, PCCW, J W Marriott, Ballantine's, Fuji Film,
Grosse Golf, Heineken, Samsung, Tibet Water and Jebsen Wine.
November also saw PMG staging the inaugural Ladies Korean Masters co-sanctioned
by the Ladies European Tour and the KLPGA and sponsored by the Saint Four Golf
Club; as well as the second edition of the Omega Mission Hills World Cup of
Golf for which PMG receives commission for the length of the contract (2007 -
2018) for the introduction of Omega as Title Sponsor.
UBS has reconfirmed its commitment for the Hong Kong Open 2009 event which now
has a confirmed date before the inaugural Dubai World Championship, the richest
tournament in golf. However, UBS will not be exercising its option to extend
title sponsorship beyond this year. Discussions are now underway with several
potential replacement title sponsors to complement the growing list of
secondary sponsors and PMG is confident that it will be able to replace UBS
given the length of time available to it.
PMG has managed to secure a new date for the 2009 Ballantine's Championship in
Korea (April 23 - 26). At the time of writing PMG has secured additional
secondary sponsorship for the 2009 event and expect that the remaining
secondary sponsors will be sold out for the 2010 event.
OUTSIDE ASIA
In November 2008, PMG renegotiated its contract with the Ladies European Tour
(LET) which provides for additional long term revenues for the distribution of
the Worldwide LET TV rights. PMG continues to act as strategic advisor to Omega
on its worldwide portfolio and in particular in relation to the World Cup of
Golf.
PMG is continuing to develop its relationship with Global (the new owners of
GCAP media and Capital Radio 95.8FM) in regards to the 2012 London Olympics.
New opportunities and introductions to prospective sponsors continue to be made
and PMG expect to improve visibility of these revenue streams in 2009. PMG has
continued to develop this agreement in 2008 and expects to derive Olympic
revenues in 2010-12.
PMG is currently developing bespoke hospitality and experience packages for
international corporate clients for the FIFA 2010 World Cup in South Africa,
the benefits of which are expected to flow through in Q4 2009 and 2010.
CAPITAL RESTRUCTURE
In October 2008, PMG consolidated the shareholder structure and reduced the
number of shareholders from 9,000 to 250. Convertible loans totalling £0.73
million were repaid during the year and new convertible loans totalling £0.2
million were agreed. The conversion and or repayment dates for all outstanding
convertibles was extended from 30 September 2008 to 1 July 2010.
FIFPRO AWARDS 2006 JUDGEMENT
RAM Media Limited (in Administration) has successfully pursued a case for
damages against the Greek Government in respect of the non-payment of fees for
the proposed 2006 FIFPRO awards. The court has awarded €2.3 million plus a
proportion of costs to date to RAM Media Limited (in Administration). PMG is
the largest creditor of RAM Media Limited (in Administration) with a claim in
excess of €1 million. The Company expects to recover a material proportion of
this claim during the year ending 31 December 2009. No amount has been included
in these financial statements for the recovery of any amounts, which have been
fully provided for in previous years.
FUTURE PROSPECTS
The worldwide economic downturn has affected all areas of marketing including
sports sponsorship. PMG believes that in spite of the market difficulties its
blue chip long term sports assets will endure the worst of the downturn. PMGs
belief would seem to be supported by the recent signature of new contracts for
the Ballantine's Championship, many of which were negotiated during the first
quarter of 2009.
The most important asset of the Company is its staff and I would like to thank
my fellow directors and staff for their invaluable continuing support.
David Ciclitira
Chairman
30 March 2009
CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2008
Year ended Year ended
31 December 31 December
2008 2007
Note £'000 £'000
Continuing Operations
Revenue 3 9,500 5,195
Cost of Sales 4 (7,358) (3,744)
Gross Profit 2,142 1,451
Administrative Expenses (1,799) (3,033)
Foreign Exchange 53 (36)
Impairment Loss on revaluation of (38) (112)
investments
Profit on disposal of investments - 32
Profit before interest, tax, 358 (1,698)
depreciation and amortisation
Amortisation of Intangibles (136) (136)
Operating Profit/(Loss) 222 (1,834)
Finance Costs (508) (286)
Investment income 16 14
Loss on ordinary activities before tax (270) (2,106)
Taxation - -
Loss for the year (270) (2,106)
Attributable to:
Minority interests - (1)
Equity holders of the parent (270) (2,105)
Loss for the financial year (270) (2,106)
Loss per share
- basic 6 (0.06p) (0.58p)
- diluted 6 (0.06p) (0.58p)
CONSOLIDATED AND COMPANY BALANCE SHEETS as at 31 December 2008
GROUP GROUP COMPANY COMPANY
31 December 31 December 31 December 31 December
2008 2007 2008 2007
restated
Note £'000 £'000 £'000 £'000
Non - Current Assets
Property, Plant & 22 24 22 24
Equipment
Intangible Assets 7 2,409 2,545 2,409 2,545
Development Costs 7 161 - 161 -
Investments 17 180 1,105 1,230
Total Non-current Assets 2,609 2,749 3,697 3,799
Current assets
Trade receivables 8 851 655 1,305 919
Cash 728 837 724 835
Total Current Assets 1,579 1,492 2,029 1,754
Current Liabilities
Financial Liabilities - 9 514 716 514 716
borrowings
Financial Liabilities - 10 208 2,868 208 2,868
convertible loans
Trade & Other payables 11 3,290 2,796 3,230 2,735
Total Current 4,012 6,380 3,952 6,319
Liabilities
Net Current Liabilities (2,433) (4,888) (1,923) (4,565)
Non - Current 12 (3,186) (422) (3,186) (422)
Liabilities - Financial
borrowings
Net Liabilities (3,010) (2,561) (1,412) (1,188)
Equity
Share capital 3,070 3,064 3,070 3,064
Share premium 2,091 2,077 2,091 2,077
Equity element of 57 92 57 92
convertible loans
Other reserves 557 557 557 557
Capital redemption 5,034 5,034 5,034 5,034
reserve
Foreign exchange reserve (41) 177 - -
Retained earnings (13,631) (13,453) (12,221) (12,012)
Total Equity (2,863) (2,452) (1,412) (1,188)
Minority Interests (147) (109) - -
Equity attributable to (3,010) (2,561) (1,412) (1,188)
equity holders of the
parent
STATEMENTS OF TOTAL RECOGNISED INCOME AND EXPENSE for the year ended 31
December 2008
GROUP GROUP COMPANY COMPANY
31 December 31 December 31 December 31 December
2008 2007 2008 2007
restated
£'000 £'000 £'000 £'000
Income and Expense Items
recognised directly in
Equity
Exchange difference on (218) (67) - -
translation of foreign
operations - Group
Equity element of old 92 - 92 -
convertible loans
written-off
Total Income & Expense (126) (67) 92 -
Items recognised directly
in Equity in the year
Loss for the year (270) (2,106) (301) (1,928)
Total Recognised Income & (396) (2,173) (209) (1,928)
Expense for the year
Attributable to:
Equity holders of the (358) (2,172) (209) (1,927)
parent
Minority Interest (38) (1) - (1)
(396) (2,173) (209) (1,928)
CONSOLIDATED CASHFLOW STATEMENTS for the year ended 31 December 2008
GROUP GROUP COMPANY COMPANY
31 31 31 December 31 December
December December
2008 2007 2008 2007
£'000 £'000 £'000 £'000
restated
£'000 £'000 £'000 £'000
Cash flows from operating
activity
Operating profit/(loss) 222 (1,834) 192 (1,657)
Depreciation 8 7 8 5
Impairment loss on revaluation 38 112 - 112
of investments
Profit on sale of investments - (32) - -
Development costs capitalised (161) - (161) -
(Increase)/decrease in debtors (196) (345) (389) (514)
Increase in creditors 592 925 592 984
Increase in share capital re: 20 - 20 -
elimination of debt
Increase in translation (259) - - -
reserve
Cash generated from/(used in) 529 (995) 527 (898)
operations
Cash flow from investing
activities
Purchase of property, plant & (6) (8) (6) (8)
equipment
Sale of other investments - 100 - -
Interest received 16 14 16 14
Net cash generated from 10 101 10 1
investing activities
Cash flow from financing
activities
Bank facility repaid (188) - (188) -
Cash received from convertible 198 350 198 350
loans
Issue of shares - 862 - 862
Loan received 761 751 761 751
Loans repaid (480) (381) (480) (381)
Costs incurred re: share (106) - (106) -
consolidation
Interest paid (417) (80) (417) (79)
Net cash (used in)/generated (809) 1,426 (809) 1,427
from financing activities
Cash and cash equivalents at 837 305 835 305
beginning of the year
Exchange gains on cash and 161 - 161 -
cash equivalents
Net (decrease)/increase in (270) 532 (272) 530
cash and cash equivalents
Cash and cash equivalents at 728 837 724 835
end of year
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2008
1. ACCOUNTING POLICIES
Basis of preparation
From 1 January 2007 the Group and Company have prepared financial statements in
accordance with IFRS as adopted by the European Union, and with those parts of
the Companies Act 1985 applicable to companies reporting under IFRS.
At the balance sheet date the Group had net liabilities of £3.0m and net
current liabilities of £2.4m. The directors have prepared trading and cash flow
forecasts for the Group for the period to 31 December 2010. The forecasts
incorporate trading assumptions, including increased sponsorship from existing
tournaments and new sponsorship revenues, and other payment scheduling
assumptions relating to agreements reached with certain of the Group's
suppliers. In addition, the directors have commenced negotiations for
additional loan funding, should this be required. The directors believe their
forecasts to be realistic, and are confident that the Group can continue to
meet its liabilities as they fall due. Consequently the directors have prepared
the financial statements on the going concern basis, which assumes that the
Group will continue in operational existence for the foreseeable future.
The financial statements are prepared in accordance with International
Financial Reporting Standards and Interpretations in force at the reporting
date. The Company has not adopted any standards or interpretations in advance
of required implementation dates. It is not expected that adoption of standards
or interpretations which have been issued by the International Accounting
Standards Board but not adopted, will have a material impact on the financial
statements.
Significant Judgements and Estimates
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that effect the
application of policies and reported amounts in the financial statements. The
area involving a high degree of judgement or complexity is the valuation of
intangible assets with a carrying value of £2.4m. The intangible assets
represent rights to operate golf events on dates in the European Tour Calendar
and are included in the financial statements at cost of acquisition less
amortisation. Management are required to assess potential impairment and
confirm the appropriateness of the useful life and amortisation period which
may materially impact results for the year.
Basis of consolidation
The consolidated financial statements incorporate the results of the Company
and all of its subsidiary undertakings as at 31 December 2008 using the
purchase method of accounting. Under the purchase method the results of
subsidiary undertakings are included from the date of acquisition. On disposal,
the results are included up to the date of disposal. Inter-company balances,
transactions, and unrealised gains/losses are eliminated on consolidation.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations are taken to shareholders' equity. When a
foreign operation is partially disposed or sold, exchange differences that were
recorded in equity are recognised in the income statement as part of the gain
or loss on sale.
Intangible Assets
The rights to promote European Tour golf events were acquired in September 2006
and included in the Balance Sheet as intangible assets in the audited financial
statements for the year ended 31 December 2006. These assets are amortised over
their expected life of 20 years. Intangible Assets are held at cost less
amortisation.
Impairment
The carrying amounts of the Group's assets, other than deferred tax assets, are
reviewed at each Balance Sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated. The recoverable amount of assets is the
greater of their net selling price and value in use.
An impairment loss is recognised whenever the carrying amount of an asset
exceeds its recoverable amount. Impairment losses are recognised in the income
statement. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation, if no
impairment loss had been recognised.
Property, Plant & Equipment
Depreciation is provided on office equipment, fixtures & fittings so as to
write them off over their anticipated useful lives. Office equipment, fixtures
& fittings are depreciated at 20% on a straight line basis.
The carrying amounts of property, plant and equipment are reviewed for
amendments to the residual value, this is performed annually or sooner, if
there is an indication that they may be impaired.
Development costs
Development costs are included in the Balance Sheet at cost less any impairment
provision. Development costs are only recognised where it can be demonstrated
that the project is commercially feasible; where there is a clear intention to
complete the project; that there is ability to use or sell the asset and that
there is a high probability of future economic benefits and expenditure can be
measured reliably.
Trade receivables
Trade receivables are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.
Cash and cash equivalents
Cash equivalents comprise short-term, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
Trade payables
Trade payables are stated at their nominal value.
Segmental reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other
segments. The Group's primary reporting format is business segments.
Revenue recognition
Revenue includes sponsorship, management fees, sales & consulting fees, and
income from sales of broadcasting rights.
Revenue is recognised when the Group has earned the right to receive
consideration for its performance, measured on the following basis:
(i) Management fees and other fees earned - on rendering of services to third
parties.
(ii) Income from sale of sponsorship and commercial rights - on a straight line
basis in accordance with the terms of the agreement.
(iii) Income from sale of broadcasting rights - on delivery of the programmes
to broadcasters in accordance with the terms of the agreement.
Barter transactions
When services are rendered in exchange for dissimilar goods or services, the
revenue generated for the services rendered is measured at the fair value of
the goods or services received, adjusted for the amount of any cash or cash
equivalents transferred.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies are translated
at the rates of exchange ruling at the Balance Sheet date. Transactions in
foreign currencies are translated at the rate ruling at the date of the
transaction. Differences on exchange arising on translation of subsidiaries are
charged directly to equity. All other exchange differences have been charged to
the Income Statement.
Deferred taxation
Deferred tax is provided in full using the balance sheet liability method.
Deferred tax is the future tax consequences of temporary differences between
the carrying amounts and tax bases of assets and liabilities shown on the
balance sheet.
The amount of deferred tax provided is based on the expected manner of recovery
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
The Group does not recognise deferred tax liabilities, or deferred tax assets,
on temporary differences associated with Parallel Media Group plc investments
in subsidiaries, as it is not considered probable that the temporary
differences will reverse in the foreseeable future.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. The carrying amount of the deferred tax assets are reviewed at each
balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset
to be recovered.
Leases
Rentals under operating leases are charged to the Income Statement on a
straight line basis.
Available for sale financial assets
Available for sale financial assets comprise equity investments (and exclude
investment in subsidiaries). Subsequent to initial recognition, available for
sale financial assets are stated at fair value. Movements in fair values are
taken directly to equity, with the exception of impairment losses which are
recognised in the Income Statement. Fair values are based on prices quoted in
an active market, if such a market is available. If an active market is not
available, the Group establishes the fair value of financial instruments by
using a valuation technique, usually discounted cashflow analysis. When an
investment is disposed, cumulative gains and losses previously recognised in
equity are included in the Income Statement. Dividends are recognised in the
Income Statement when the right to receive payments is established.
Interest-bearing borrowings (other than Compound financial instruments)
Interest-bearing borrowings are stated at amortised cost using the effective
interest method. The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the
financial liability.
Compound financial instruments
Compound financial instruments comprise both liability and equity components.
At issue date, the fair value of the liability component is estimated by
discounting its future cash flows at an interest rate that would have been
payable on a similar debt instrument without any equity conversion option. The
liability component is accounted for as a financial liability.
The difference between the net issue proceeds and the liability component, at
the time of issue, is the residual or equity component, which is accounted for
as an equity instrument. Transaction costs that relate to the issue of a
compound financial instrument are allocated to the liability and equity
components of the instrument in proportion to the allocation of the proceeds.
The interest expense on the liability component is calculated by applying the
effective interest rate for the liability component of the instrument.
Share based payments
Options are measured at fair value at grant date using Black-Scholes model. The
fair value is expensed on a straight line basis over the vesting period, based
on an estimate of the number of options that will eventually vest. Cash settled
share based payment transactions result in the recognition of a liability at
their current fair value.
2. SEGMENT REPORTING
Business Segments
The Group is organised into two main divisions Event Promotion and Consultancy
& Sales. The Event Promotion division is based in Hong Kong and operates
professional golf tournaments in Asia which are Sanctioned by The European Tour
and Ladies European Tour. The Consultancy and Sales division is based in the
London headquarters and works with major international brands and federations
on sports related marketing opportunities and projects. The Business and
Geographic segment results are set out below:
Event Event Sales & Sales &
Promotion Promotion Consultancy Consultancy
(Asia) (Asia) (Europe) (Europe) Consolidated Consolidated
£'000 £'000 £'000 £'000 £'000 £'000
2008 2007 2008 2007 2008 2007
Revenue 8,681 4,610 819 585 9,500 5,195
Segment result 1,025 670 654 412 1,679 1,082
Unallocated (1,457) (2,916)
corporate
expenses
Operating profit 222 (1,834)
/loss
Finance costs (508) (286)
Investment 16 14
income
Loss (270) (2,106)
Other information
Other Event Event Sales & Sales &
information Promotion Promotion Consultancy Consultancy
(Asia) (Asia) (Europe) (Europe) Consolidated Consolidated
2008 2007 2008 2007 2008 2007
£'000 £'000 £'000 £'000 £'000 £'000
Segment 3,072 2,894 369 325 3,441 3,219
assets
Unallocated 747 1,022
corporate
assets
Consolidated 4,188 4,241
total assets
Segment (2,346) (1,628) (18) (2) (2,364) (1,630)
liabilities
Unallocated (4,834) (5,172)
corporate
liabilities
Consolidated (7,198) (6,802)
total
liabilities
Net (3,010) (2,561)
liabilities
Capital - - 6 8 6 8
Expenditure
Depreciation (2) - (6) (7) (8) (7)
Amortisation (136) (136) - - (136) (136)
of
intangibles
Impairment (38) (112) - - (38) (112)
loss on
revaluation
of
investments
3. REVENUE
The Group's revenue comprises:
Year ended Year ended
31 December 31 December
2008 2007
£'000 £'000
Event sponsorship sales 8,681 4,610
Sales commission & 648 434
consulting
TV distribution 171 151
9,500 5,195
4. COST OF SALES
The Group's Cost of Sales comprises:
Year ended Year ended
31 December 31 December
2008 2007
£'000 £'000
Prize purse and sanction 3,699 2,058
fees
Commissions payable 190 150
Direct delivery costs 3,469 1,536
7,358 3,744
5. EMPLOYEES
The average headcount during the year ended 31 December 2008 decreased as
follows:
Year ended Year ended
31 December 31 December
2008 2007
Group
The average number of
employees including
directors during the year
was:
(Number) (Number)
Administration 17 19
£'000 £'000
The aggregate payroll
costs including directors
were:
Wages, salaries and fees 896 1,159
Social security costs 43 47
Compensation for loss of - 59
office
939 1,265
Company
The average number of
employees including
directors during the year
was:
(Number) (Number)
Administration 14 16
£'000 £'000
The aggregate payroll
costs including directors
were:
Wages, salaries and fees 804 931
Social security costs 32 39
Compensation for loss of - 59
office
836 1,029
6. LOSS PER SHARE
The basic earnings per share is calculated by dividing the loss attributable to
equity shareholders by the weighted average number of shares in issue during
the year. In calculating the diluted earnings per share, outstanding share
options, warrants and convertible loans are taken into account where the impact
of these is dilutive.
Year ended Year ended
31 December 31 December
2008 2007
(i) Basic
Loss for the financial year (£'000) (270) (2,106)
Weighted average number of shares in 422,540,236 364,205,784
issue
Loss per share (0.06p) (0.58p)
(ii) Diluted
Loss for the financial year (£'000) (270) (2,106)
Add back interest charged on 169 137
convertible loans where the impact of
these loans is dilutive (£'000)
Revised Loss (£'000) (101) (1,968)
Weighted average number of shares in 422,540,236 364,205,784
issue
Weighted average of potential dilutive
effect of ordinary shares issuable
under:
- Convertible loan agreements 671,650,685 212,744,775
- Employee share schemes 13,031,063 18,803,958
- Warrants 42,038,635 20,578,805
1,149,260,619 616,333,332
Loss per share (0.06p)* (0.58p)*
* The fully diluted Loss per share is the same as the Basic Loss per share. It
is not reduced as a result of dilution.
7. INTANGIBLE ASSETS
Intangible Assets
2008 2007
Group & Company £'000 £'000
Cost
Cost at start of year 2,713 2,713
Additions in the year - -
Cost at end of year 2,713 2,713
Amortisation
Cumulative amortisation at 168 32
start of year
Amortisation for the year 136 136
Cumulative amortisation at 304 168
end of year
Net book value 2,409 2,545
Intangible Assets are the rights to promote European Tour golf events acquired
in September 2006. These assets are carried at cost less amortisation.
Amortisation is calculated to write-off the assets over their expected useful
life of 20 years.
Development Costs
2008 2007
Group & Company £'000 £'000
Cost
Cost at start of year - -
Additions in the year 161 -
Cost at end of year 161 -
Development costs are incurred in the creation of new media assets and
propositions, the benefits of which are expected to be derived in future years.
Development costs are written-off over the expected useful life of the asset.
The development assets are assessed for impairment annually.
The amortisation process begins once the asset or proposition is implemented
operationally.
8. TRADE AND OTHER RECEIVABLES
Group Group Company Company
31 December 31 December 31 December 31 December
2008 2007 2008 2007
restated
£'000 £'000 £'000 £'000
Amounts owed from - - 472 355
Group undertakings
Trade receivables 347 509 337 417
Other receivables 122 123 114 129
Prepayments and 382 23 382 18
accrued income
851 655 1,305 919
At 31 December 2008 all amounts included under Trade Receivables are due within
one year. In December 2007 the Company inter-company debtor was understated by
£205,000. This has been restated for comparative purposes. There was no impact
on the consolidated Group as a result.
9. FINANCIAL LIABILITIES - BORROWINGS
Group Company Group Company
2008 2007 2008 2007
£'000 £'000 £'000 £'000
Bank facility 116 305 116 305
Medium Term Lending 398 411 398 411
(repayable < one
year)
514 716 514 716
10. FINANCIAL LIABILITIES - CONVERTIBLE LOANS
The value of the convertible loans at the balance sheet date has been
determined in accordance with IAS 32, as described more fully under Accounting
Policies, Note 1. IAS 32 requires the separate recognition of the debt and
equity components of the amounts received, with equity components shown
directly in equity reserves.
Group Company Group Company
31 December 31 December 31 December 31 December
2008 2007 2008 2007
£'000 £'000 £'000 £'000
Convertible loans due 208 2,868 208 2,868
in less than one year
Convertible loans due 2,235 - 2,235 -
in more than one year
During the year, amendments were made to convertible debt instruments to extend
the conversion or repayment dates from 30 September 2008 to 1 July 2010. These
amendments meet the IAS39 definition of having undergone significant
modification and subsequently the original convertibles are treated as having
been extinguished and a new convertible instrument created. The new (amended)
convertible loan agreements can be summarised as follows:
Debt Element of
Convertibles Loans
(£000) Description Interest at Conversion price
Eurolibor +
208 Loans convertible or 3% 0.25p
repayable by latest
31 December 2009
included in current
liabilities
2,235 Loans convertible or 4% 0.25p
repayable on 1 July
2010 included in
Non-current
liabilities
2,443
11. TRADE AND OTHER PAYABLES
Group Company Group Company
31 December 31 December 31 December 31 December
2008 2007 2008 2007
£'000 £'000 £'000 £'000
Other payables 267 328 267 326
Other tax and 57 122 55 122
social security
Accruals 589 963 589 963
Deferred income 930 853 930 853
3,290 2,796 3,230 2,735
12. NON-CURRENT LIABILITIES - FINANCIAL BORROWINGS
Group Company Group Company
31 December 31 December 31 December 31 December
2008 2007 2008 2007
£'000 £'000 £'000 £'000
Convertible 2,235 - 2,235 -
loans (1 to 2
years)
Loans (1 to 2 129 129 129 129
years)
Other Payables - 53 - 53
Medium term 822 240 822 240
lending (1 to 2
years)
3,186 422 3,186 422
Other loans
The loan of £129,000 is payable to 56 Ennismore Gardens ELY Ltd (a company
under the control of D Ciclitira). This loan is unsecured and non interest
bearing.
13. RELATED PARTIES
Walbrook Trustees (Jersey) Limited is a company who are trustees of a
discretionary trust (the Tokyo Settlement) of which D Ciclitira is a potential
beneficiary. The Tokyo Settlement provides convertible loans totalling £1.175m
to the Company. During the year, the conversion and/or repayment of the loan
was extended from September 2008 to July 2010. Interest is charged on the loan
at Eurolibor +4%. The convertible loan amount at 31 December 2008 was:
31 December 31 December
2008 2007
£'000 £'000
At 1 January 2008 (1,175) (1,175)
Interest charged (52) -
At 31 December 2008 (1,227) (1,175)
Elysian Group Ltd, Luna Trading Ltd and 56 Ennismore Gardens ELY Ltd are
companies under the control of D Ciclitira, On 24 October 2008, at the General
Meeting it was agreed that D Ciclitira be granted an option to convert loans
totalling £336,000. The movements in the payable balances due to these
companies in 2008 were as follows:
Elysian Luna 56 Ennismore
Group Trading Gardens
Ltd Ltd ELY Ltd
£'000 £'000 £'000
At 31 December 2007 (89) (0) (247)
Repayment of 9
balances
At 31 December 2008 (80) (0) (247)
Luna Trading Ltd provided a guarantee on a £300,000 bridging loan facility
provided by Royal Bank of Scotland. Luna Trading charges interest at 1.5% per
month for provision of this guarantee. Luna Trading Ltd is the company through
which PMG contract with D Ciclitira for consulting and business services.
During the year ended 31 December 2008, Luna Trading Ltd invoiced PMG (and PMG
paid) for Consultancy fees of £221,000. Under the agreement PMG paid for remote
office costs of £39,000, loan guarantee and interest amounts of £96,000 and the
reimbursement of business expenses of £69,000.
The movements in the payable balances due to related parties in the year ended
31 December 2007 were as follows:
Elysian Luna 56 Ennismore
Group Trading Gardens
Ltd Ltd ELY Ltd
£'000 £'000 £'000
At 31 December 2006 (157) (121) (253)
Repayment of 68 121 6
balances
At 31 December 2007 (89) (0) (247)
14. FINANCIAL INFORMATION
The financial information in this announcement does not comprise statutory
accounts for the purpose of Section 240 of the Companies Act 1985 and have been
extracted from the company's consolidated accounts for the period to 31
December 2008. The statutory accounts for the company for the year ended 31
December 2008 will be filed following the Company's annual general meeting. The
auditors' reports on the accounts are unqualified and did not include a
statement under Section 237 (2) or (3) of the Companies Act 1985.
Whilst the information included in this announcement has been prepared in
accordance with the recognition and measurement criteria of IFRSs, this
announcement does not itself contain sufficient information to comply with
IFRSs.
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