Interim Results
22nd August 2011
PARALLEL MEDIA GROUP PLC
("PMG" OR THE "GROUP")
INTERIM RESULTS
FOR THE 6 MONTHS ENDED 30 JUNE 2011
Parallel Media Group Plc (AIM:PAA), a leading sports marketing and media group,
announces its interim results for the period ended 30th June 2011.
Highlights
* Successfully promoted and delivered the Ballantine's Championship, the
largest golf tournament in South Korea which this year moved to Seoul
* 3% increase in turnover to £6.0 million (2010: £5.8million)
* 8% increase in gross profit to £1.6 million (2010: £1.5 million)
* 21% increase in operating profit to £441,000 (2010: £365,000)
* 414% increase in net profit after tax to £396,000 (2010 profit £77,000)
Post Balance Sheet Highlights:
* Placing to raise £1.2 million at a 55.5% premium to the then share price of
22.5p
* Successful acquisition of 50% of PSM (Parallel Smart Media)
* PSM has already produced Smart Media Viewing Platforms (SMVP) for Darren
Clarke, Indonesian Eye and Korean Eye and has a strong pipeline of
opportunities
Chairman of PMG, David Ciclitira, commented:
"The first six months of this year have been a positive period for Parallel
Media Group plc, as we have continued to grow the traditional events and
sponsorship business in Asia, whilst continuing to invest in a revolutionary
new Smart Media Platform with global applications in sport, culture, and
lifestyle.
"We are pleased to receive continued and growing support from existing
directors and shareholders whilst also welcoming some new shareholders as we
embark on the next exciting phase of this journey."
Contact Details
For more information please contact:
Parallel Media Group Plc
David Ciclitira +44 (0) 20 7225 2000
Chairman
Northland Capital Partners Limited
Edward Hutton, Luke Cairns +44 (0) 20 7796 8800
Bishopsgate Communications +44 (0)20 7562 3350
Deepali Schneider, Natalie Quinn
pmg@bishopsgatecommunications.com
www.parallelmediagroup.com
CHAIRMAN'S STATEMENT
Overview
The first six months of this year have been a positive period for Parallel
Media Group plc, as we have continued to grow the traditional events and
sponsorship business in Asia, whilst continuing to invest in a revolutionary
new Smart Media Platform with global applications in sport, culture, and
lifestyle. In this period under review and subsequently PMG has:
* Successfully completed the Ballantine's Championship in Korea
* Raised new Capital
* Developed and acquired a 50% interest in Parallel Smart Media
Operational Review
As mentioned at the release of the 2010 full year results in June 2011, in the
short term, the core of PMG's business will continue to promote successful
Golfing Tournaments in mainstream Asian Markets. PMG has successfully moved the
Ballantine's Championship in Korea to Seoul and extended our partnership with
Pernod Ricard until 2013 which provides strong profit growth potential. PMG has
agreed a new date for an event on the European Tour calendar to be hosted in
China and we expect to announce new sponsors in the near future. PMG is in
discussions to also launch a new Ladies Golf Tournament in Korea from 2012,
building on the success of the Korean Ladies Masters.
In July 2011 PMG successfully completed the acquisition of a 50% interest in
PSM (Parallel Smart Media) and has now launched significant marketing
activities to capitalise on this new media platform opportunity. This enables
consumers to dynamically stream multiple live and on-demand content on smart
devices including Apple IOS, Android, Windows and Blackberry Tablet OS. We are
working with international sportsmen and women, federations, cultural
institutions, and brands and have a strong pipeline of opportunities for our
products and services in this rapidly growing and dynamic market.
Within a short period, PSM has produced Smart Media Viewing Platforms (SMVP)
for Darren Clarke, Indonesian Eye, sponsored by Prudential, and Korean Eye,
sponsored by Standard Chartered. It is in discussions with multiple clients for
the new SMVP, details of which will be announced over the next few months.
Financial Review
Turnover for the six months to 30 June 2010 increased 3% to £6.0million (2010:
£5.8million), due mainly to increased secondary sponsorship for the
Ballantine's Championship. The gross profit for the period increased 8% to £
1.6million (2010: £1.5 million). Gross margins are expected to continue
improving as events mature and demand for secondary sponsorship increases.
The operating profit for the period increased 21% to £0.44 million (2010:
profit £0.36 million). The profit for the period after finance costs and tax
increased 414% to £396,000 (2010: profit £ 77,000), which has been particularly
rewarding after the lean and challenging market conditions of the last 12
months.
After significant investments in PSM, the cash balance at the 30 June 2011 was
a positive £0.18 million (2010: £0.32 million).
Post Balance Sheet Events
PMG in July 2011 successfully completed the acquisition of a 50% interest in
Parallel Smart Media (a venture now co-owned by PMG and Korean technology
company Talspace ) for a consideration of £1 million. In addition to these
exciting business developments, your company in July 2011 successfully effected
a placing to raise £1.2 million of new ordinary share capital at a 55.5%
premium to the then share price of 22.5p in order to provide working capital to
accelerate the investment in the business. As part of the Placing David
Ciclitira and Ranjit Murugason, both directors of the Company, purchased
250,000 and 142,857 Placing Shares respectively.Since 30 June 2010 and taking
into account the July placing, PMG has affected a transformation in the capital
structure of the business with a net improvement of some £3.9 million. PMG has
converted and/or repaid convertible loan note holders, repaid previously
expensive medium term debt, agreed new long-term bank facilities and raised
capital in support of growth. This provides a strong and solid base from which
to advance. We are pleased to receive continued and growing support from
existing directors and shareholders whilst also welcoming some new shareholders
as we embark on the next exciting phase of this journey.
Stakeholders
I would like to thank our board members, major stakeholders and staff who
continue to contribute to PMG's success. I would also like to take the
opportunity to welcome new staff into our world class team and I hope that you
will join me in wishing them every success in their respective roles.
David Ciclitira
Chairman
19 August 2011
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Notes 6 months to 6 months to 12 months to
30 June 30 June 31 December
2011 2010 2010
unaudited unaudited audited
£'000 £'000 £'000
Continuing operations
Revenue 6,013 5,836 6,651
Cost of Sales (4,397) (4,340) (4,406)
Gross Profit 1,616 1,496 2,245
Administrative Expenses (1,154) (1,123) (2,945)
Foreign Exchange 62 92 77
Earnings before interest, tax, 524 465 (623)
depreciation and amortisation
Depreciation and Amortisation of (83) (100) (162)
intangibles
Operating Profit / (Loss) 441 365 (785)
Finance cost (45) (288) (484)
Profit on ordinary activities 396 77 (1,269)
before tax
Taxation - - -
Profit for the period 396 77 (1,269)
Attributable to:
Minority Interests - - -
Equity Holders of the parent 396 77 (1,269)
396 77 (1,269)
Earnings per share 4
Basic 2.6p 3.6p (24.1p)
Diluted 2.6p 3.3p (24.1p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2011
6 months to 6 months to 12 months to
30 June 30 June 31 December
2011 2010 2010
unaudited unaudited audited
£'000 £'000 £'000
Profit / (Loss) for the year 396 77 (1,269)
Other comprehensive income
Exchange difference on translation of 25 (46) (34)
foreign operations
Tax effect of changes in other
comprehensive income
Total comprehensive income for the year 421 31 (1,303)
Total comprehensive income attributable
to:
Equity holders of the parent 417 25 (1,301)
Minority interest 4 6 (2)
421 31 (1,303)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2011
Notes 31
30 June 30 June December
2011 2010 2010
unaudited unaudited audited
£'000 £'000 £'000
Non-current assets
Property, Plant & Equipment 3 8 6
Intangible Assets 2,070 2,205 2,138
Development Costs 294 481 306
Investments 12 12 12
Total non-current assets 2,379 2,706 2,462
Current Assets
Trade Receivables 1,898 1,756 1,388
Cash 186 319 142
Total current assets 2,084 2,075 1,530
Current Liabilities:
Financial Liabilities - borrowings 6 250 1,193 104
Financial Liabilities - loans 7 39 613 39
Trade & Other payables 3,602 3,622 3,556
Total current liabilities 3,891 5,428 3,699
Net current assets/(liabilities) (1,807) (3,354) (2,169)
Non- current liabilities - 8 (750) (2,207) (896)
financial borrowings
Net Liabilities (178) (2,854) (603)
Equity
Share Capital 9 3,362 3,070 3.362
Share premium 5,429 2,091 5,429
Equity element of convertible - 57 -
loans
Other reserves 557 557 557
Capital redemption reserve 5,034 5,034 5,034
Foreign translation reserve 13 (33) (12)
Retained earnings (14,439) (13,488) (14,835)
Total Equity (44) (2,712) (465)
Minority Interest (134) (142) (138)
Equity attributable to equity (178) (2,854) (603)
holders of the parent
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2011
30 June 30 June 31 Dec
2011 2010 2010
unaudited unaudited audited
£'000 £'000 £'000
Cash flows from operating activities
Operating Profit / (Loss) 441 365 (785)
Depreciation 3 5 7
Amortisation of intangibles - Tournament 68 68 136
rights
Amortisation of intangibles - development 12 27 19
costs
Increase in debtors (509) (404) (104)
Increase in creditors 45 389 305
Foreign exchange on non-operating (27) (52) (23)
activities
Increase in translation reserve 29 (60) (35)
Cash generated from operating activities 62 338 (480)
Cash flow from investing activities
Acquisition of development costs - (254) (71)
Interest received - - 1
Net cash used in investing activities - (254) (70)
Cash flow from financing activities
Repayments of bank facility - (64) (247)
Convertible loans repaid - - (494)
Cash proceeds from issue of new shares - 950
Loan received - 200 1,200
Loan repaid - (105) (783)
Interest paid (45) (83) (228)
Net cash used in financing activities (45) (52) 398
Cash and cash equivalents at beginning of 142 322 322
the year
Exchange (loss) / gains on cash and cash 27 (35) (28)
equivalents
Net (decrease)/increase in cash and cash 17 32 (152)
equivalents
Cash and cash equivalents at end of the 186 319 142
period
CONSOLIDATED CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Capital Non
Share Share Equity Other redemption Forex Retained Sub controlling
Capital Premium reserve reserves reserve reserve earnings total interest Total
At
1 January 3,362 5,429 - 557 5,034 (12) (14,835) (465) (138) (603)
2011
Profit for
the period - - - - - - 396 396 - 396
Foreign
exchange - - - - - 25 - 25 - 25
Non
controlling
interest - - - - - - - - 4 4
movement
At
30 June 3,362 5,429 - 557 5,034 13 (14,439) (44) (134) (178)
2011
The table below sets out the movements in reserve for the six months ended 30
June 2010
Capital Non
Share Share Equity Other redemption Forex Retained Sub controlling
Capital Premium reserve reserves reserve reserve earnings total interest Total
At
1 January 3,070 2,091 57 557 5,034 20 (13,566) (2,737) (136) (2,873)
2010
Profit for
the period 77 77 77
Foreign
exchange (52) (52) (52)
Non
controlling
interest - (6) (6)
movement
At
30 June 3,070 2,091 57 557 5,034 (33) (13,489) (2,713) (142) (2,854)
2010
NOTES TO THE FINANCIAL INFORMATION
1. Basis of Preparation
The condensed financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance
with the International Accounting Standard (IAS) 34 Interim Financial
Reporting.
The condensed consolidated Interim Financial Statements should be read in
conjunction with the annual financial statements for the year ended 31 December
2010, which have been prepared in accordance with International Financial
Reporting Standards. The comparative figures shown for the year ended 31
December 2010 do not constitute statutory accounts as they have been extracted
from the statutory accounts which have been filed with the Registrar of
Companies. These interim results are unaudited and do not constitute statutory
accounts.
2. Significant Accounting Policies
The condensed financial statements have been prepared under the historical cost
convention. The same accounting policies, presentation and method of
computation are followed in these condensed financial statements as were
applied in the preparation of the Group's financial statements for the year
ended 31 December 2010
3. Segment Information
The group is organised into two main divisions Event Promotion and Consultancy
and Sales. The Event Promotion 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, sports federations and tourist boards on
sports and lifestyle projects, brand development, sales and marketing
opportunities.
Event Promotion Sales & Consultancy Consolidated
Asia Europe
6 months 6 months 6 months 6 months 6 months 6 months
to to to to to to
30 June 30 June 30 June June 30 June June
2011 2010 2011 2010 2011 2010
£'000 £'000 £'000 £'000 £'000 £'000
Group
Revenue 5,556 5,415 457 420 6,013 5,836
Segment result 1,159 1,076 457 420 1,616 1,496
Unallocated
corporate overhead (1,175) (1,131)
Operating profit 441 365
Finance Costs (45) (288)
Investment income -
Profit for the 396 77
period
Segment Assets 2,626 2,465 293 456 2,919 2,921
Unallocated
corporate assets 1,544 1,860
Consolidated total 4,463 4,781
assets
Segment (1,961) (1,906) (363) (491) (2,324) (2,396)
liabilities
Unallocated
corporate (2,317) (5,239)
liabilities
Consolidated total (4,641) (7,635)
liabilities
Net liabilities (178) (2,854)
4. Earnings per Share
The basic earnings per share is calculated by dividing the profit 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
6 months 6 months ended
to to 31
30 June 30 June December
2011 2010 2010
(i) Basic
Profit (loss) for the period (£'000) 396 77 (1,269)
Weighted average number of shares in issue (No.) 15,437,437 2,123,057 5,257,672
Earning (loss) per share (p) 2.6 p 3.6 p (24.1p)
(ii) Fully diluted
Profit for the period (£'000) 396 77 (1,269)
Add back interest charged on convertible loans 2 59 57
(£'000)
Revised Profit for the period (£'000) 398 136 (1,212)
Weighted average number of shares in issue (No.) 15,437,437 2,123,057 5,257,672
Ordinary shares issuable under convertible loan - 2,032,161 -
agreements *
15,437,437 4,155,218 5,257,672
Diluted Earnings per share (p) 2.6 p* 3.3p** (24.1p)*
* * Ordinary shares issuable under outstanding convertible loan agreements,
share options and warrants are anti-dilutive.
* ** The 2010 weighted average number of shares have been adjusted to take
account of the share consolidation in 31 August 2010 for comparative
purposes. New ordinary shares of 2.2p each were issued in exchange for 220
ordinary share of 0.01p.
5. Dividends - No dividend was recommended or paid for the period under review
6. Financial Liabilities - Borrowings
31
30 June December
2011 2010
£'000 £'000
Bank borrowings 250 104
The bank borrowings represent amounts due to Lloyds Bank Plc in less than one
year. The total amount outstanding to Lloyds Bank as at 30 June 2011 and 31
December 2010 is £1 million repayable in 48 consecutive monthly instalments.
See note 8 for details.
7. Current Liabilities - Financial Borrowings - Loans
30 June 31 December
2011 2010
£'000 £'000
Convertible loans 39 39
Short term loans - -
39 39
The balance outstanding represents convertible loans due for conversion or
repayment by 31 December 2011.
8. Non-Current Liabilities - Borrowings
30 June 31 December
2011 2010
£'000 £'000
Bank loan > 1 year 750 896
750 896
The 2011 bank loan represents amounts due to Lloyds Bank in more than one year.
Lloyds Bank has provided a loan totalling £1 million. The loan is repayable in
48 consecutive monthly instalments from August 2011 (an effective 5 year term
with a one year repayment holiday). The loan carries interest payable at 3%
over base and may be repaid early at the discretion of the company. The loan is
secured by personal guarantees provided by the David Ciclitira concert party.
9. Issued Share Capital
Issued share capital as at 30th June 2011 is comprised as follows:
* 15,437,437 ordinary shares of 2.2 pence being £0.34 million;
* 199,831,545 deferred ordinary shares of 0.5p each being £0.99 million*
* 103,260 deferred B shares of £19.60 being £2.02 million*
* The deferred ordinary shares do not entitle their holders to receive dividend
or other distribution nor do they entitle their holders to receive notice,
attend speak or vote at any General Meeting of the Company. The rights of
deferred share holders are set out in full in the financial statements as at 31
December 2010 on page 33.
10. Related Parties
Walbrook Trustees (Jersey) Limited is a company who are trustees of a
discretionary trust (the Tokyo Settlement) of which David Ciclitira is a
potential beneficiary.
The Tokyo Settlement provided convertible loans totalling £1.175 million to the
company. Interest was charged on the loan at Euro Libor + 4%. The convertible
loan was converted in full in 2010.
Period Year
ended ended
30 June 31 December
2011 2010
£'000 £'000
Opening balance - (1,296)
Interest charged (not paid) - (30)
Settled by the issue of ordinary shares - 1,326
Closing balance - -
Luna Trading Limited is a company under the control of David Ciclitira, which
provides consultancy services loans and guarantees to Parallel Media Group Plc
as follows:
Period Year
ended ended
30 June 31 December
2011 2010
£'000 £'000
Opening balance due to Luna 161 296
Net interest earned and expenses paid by PMG on - (15)
behalf of Luna
Costs incurred to convert Luna loan and short - 55
term loans
Balance of the Luna loan as at 31 October 2010 - 336
Amount of loan converted - (175)
Amount of loan outstanding 161 161
Luna Intercompany balances
Opening balance (47)
Interest / Guarantees on loans 25 30
Net movement in PMG/Luna balances (14) (77)
Amount of intercompany balances (36) (47)
Total of loan and intercompany amounts payable 125 114
to Luna trading
The Luna loan of £161,000 is convertible at 35 pence per ordinary share and/or
repayable. Luna Trading is the company through which PMG contract with D
Ciclitira for consulting and business services. During the period, Luna Trading
charged PMG for consultancy fees of £110,000 and remote office costs of £
19,500.
In 2010, Luna Trading Limited, David and Serenella Ciclitira agreed to provide
persona guarantees of £1 million to Lloyds Bank to support long term PMG loans.
As consideration for providing the guarantees, Luna trading charges 5% per
annum of the guarantee amount for the period of the guarantee. In addition
David Cicilitira has been granted a fixed and floating charge over the
Company's assets for the period of the guarantee and has been granted an option
to acquire at fair value, Parallel Media (Championships) Limited (a wholly
owned subsidiary of PMG which holds the rights to the Company's major sporting
events).
Luna Trading - Trading Balances
During the year ended 31 December 2009, Parallel Media Group plc traded with
Parallel Media (Africa) Limited, a company under the control of Luna Trading
Limited. Amounts invoiced by PMG during 2009 totalled £188,439 and were
outstanding from Luna Trading Limited at 30 June 2011. This company was
acquired by the Group on 29 July 2011 (see Post Balance Sheet Events).
During the year ended 31 December 2009, Parallel Media Group plc traded with
Parallel Media Korea (New Media) Limited (formerly Parallel Media (Korea)
Limited), a company under the control of Luna Trading Limited. Amounts invoiced
by PMG during 2009 totalled £80,947 and were outstanding at 30 June 2011. This
company was acquired by the Group on 29 July 2011 (see Post Balance Sheet
Events).
During the year ended 31 December 2010, Parallel Media Group plc invoiced Luna
Trading Limited for the costs incurred in the development of Parallel Smart
Media Limited (a joint venture with Talspace) for £337,182. The investment in
Parallel Smart Media Limited is owned by Parallel Media (Korea) Limited
(formerly Parallel Media (Korea) Limited). Parallel Media Korea (New Media)
Limited and Parallel Media (Africa) Limited were acquired by the Group on 29
July 2011 (see Post Balance Sheet Events).
Parallel Contemporary Arts Limited
During the year PMG incurred costs in the staging and management of Art
Projects owned by Parallel Media Contemporary Arts Limited, a company under the
control of David Ciclitira. Recoverable debtor amounts relating to Korean Eye
outstanding as at 30 June 2011 are £70,666. Other recoverable debtor amounts
relating to Korean Eye and Indonesian Eye as at 30 June 2011 are £ 43,550.
11. Post Balance Sheet Events
Acquisition
Luna, Parallel Media Korea (New Media) Limited and Talspace jointly developed a
series of smart phone applications for the live streaming and digital media
presentation of sporting events. The worldwide rights for the Parallel Smart
Media brand, which is the name which has been assigned to these new technology
products, and associated development agreements cover sales and distribution
rights in all international markets outside of Korea. These rights are held
through Parallel Media Korea (New Media) Limited and will be deployed in
Parallel Media (Africa) Limited as part of the worldwide rollout.
On 29 July 2011, shareholders ratified the acquisition of Parallel Media Korea
(New Media) Limited and Parallel Media (Africa) Limited by PMG.
On 29 June 2011, Luna Trading and Stewart Mison, agreed to sell and PMG agreed
to buy Parallel Media Korea (New Media) Limited and Parallel Media (Africa)
Limited for a total consideration of £1,010,947 to be satisfied by:
£
Cancellation of the amounts owed by £606,568
Luna to PMG
Issue of ordinary shares to Luna at the £404,379
placing price
Total £1,010,947
This agreement was ratified by shareholders on 29 July 2011. Full details were
provided in the Financial Statements for the year ended 31 December 2010 - see
pages 38 and 39.
Other
In July 2011, Luna Trading Limited settled £119,889 to PMG creditors of which £
87,500 was subsequently settled by PMG (to Luna Trading) by the issue of
ordinary shares at the placing price of 35p.
Placing
On 28 July 2011, PMG announces that it has raised £1.2 million before expenses,
by way of a placing of 3,428,568 new ordinary shares in the Company at a price
of 35 pence per share with both existing shareholders and new investors
The proceeds of the placing will be used to provide working capital to develop
the Company's existing business and support the roll out of its new smart media
platform, Parallel Smart Media ("PSM").
As part of the consideration for the Acquisition of Parallel Media Korea (New
Media Limited) and Parallel Media (Africa) Limited, the Company allotted
1,153,746 new ordinary shares to Luna Trading Limited (a company controlled by
David Ciclitira).
On completion of the above transactions there is 20,019,752 ordinary shares in
issue. Following the issue and allotment of the Placing Shares and
Consideration Shares and Admission the interests of Mr Ciclitira and Mr
Murugason in the issued share capital of the Company are as follows:
David Ciclitira* 39.66%
Ranjit Murugason 4.8%
* David Ciclitira's interest includes his direct interest, that of Luna Trading
Limited and that of the other members of the Concert Party as defined in the
circular published by the Company dated 9 August 2010.
12. Other
Copies of unaudited interim results have not been sent to shareholders, however
copies are available at www.parallelmediagroup.com or on request from the
Company Secretary at the company's Registered Office: 3-12 Harbour Yard,
Chelsea Harbour, London, SW10 0XD
13. Approval of Interim Financial Statements
The interim financial statements were approved by the board of directors on 19
August 2011
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