Half Yearly Results and Sale of Partial Interest

RNS Number : 0381T

Parallel Media Group PLC

30 September 2014

 



30 September 2014

PARALLEL MEDIA GROUP PLC

("PMG" OR THE "GROUP")

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

AND

SALE OF PARTIAL INTEREST IN THE SINGAPORE CHAMPIONSHIP

Parallel Media Group Plc (AIM:PAA), a leading sports marketing, media and digital agency, announces its half-yearly results for the period ended 30 June 2014.

Highlights

·      Successfully promoted and delivered The Championship at Laguna

·      Staged The 2^nd Causeway Trophy in June 2014with Prudential as the title sponsor

·      Teamed up again with AIA and AEG to bring Taylor Swift's "Red Tour" show to Kuala Lumpur

Post Balance Sheet Highlights

·     

·      We have created a special purpose vehicle for The Singapore Championship - The Championship (Singapore) Pte Ltd and have sold 15% of the shareholding to third parties for US$$750,000, valuing the company at US$5,000,000

·      In the second half of the financial year PMG brought the 1^st AIA Real Life Festival to Korea, with Lady Gaga headlining.

Chairman of PMG, David Ciclitira, commented: "The first half of 2014 has been disappointing in comparison with the same period in 2013. We have used this period to review the operational structure of the company taking into account that 100% of its revenue is derived from Asia.

Whilst progress in 2014 has been difficult we have maintained our strong position in golf adding an additional date on the European Tour for 2015 and creating The Singapore Championship (previously the Ballantine's Championship in Korea) which has been valued at US$5,000,000 by independent parties as part of the sale of 15% of the Championship (Singapore) Pte Ltd for US$750,000 - which is well in excess of the current market capitalisation of the Group.  With the success of the AIA Real Life: NOW Festival in South Korea, we have significantly increased our opportunities in contemporary music and are confident that we will begin to see in Q4 of 2014 and Q1 2015, the results of the Joint Venture we announced at the end of 2013.

I would like to make a special mention of the Company's Board and Staff worldwide for their considerable efforts and I would, at the same time, like to thank all our stakeholders for their support."

Contact Details

For more information please contact:

Parallel Media Group Plc Tom Downes www.parallelmediagroup.com	[phone]
Sanlam Securities UK Limited Virginia Bull - Corporate Finance www.sanlamsecuritiesuk.com	[phone]

CHAIRMAN'S STATEMENT

The first half of 2014 has been disappointing in comparison with the same period in 2013. We have used this period to review the operational structure of the company taking into account that 100% of its business is now based in Asia.

Whilst progress in 2014 has been difficult we have maintained our strong position in golf adding an additional date on the European Tour for 2015 and selling 15% of The Championship (Singapore) Pte Ltd owning The Singapore Championship for US$750,000 - valuing that company at U$$5,000,000.  In addition we have significantly increased our opportunities in contemporary music and are confident that we will begin to see in Q4 of 2014 and Q1 2015 the results of the Joint Venture we announced at the end of 2013.  

The Championship

As announced on 10 April 2014, the Championship was re-located from Korea to Singapore when it became apparent that, despite positive sponsor negotiations, due to adverse conditions in Korea PMG would not be able to finalise a title sponsor agreement prior to the event dates. It's a great credit to all concerned that despite relocating the event was a success, breaking even. The Championship attracted significant attention in Singapore and as a result the Board has made the decision to leverage this interest by inviting local interested parties, who understand the long term value of a European Tour date in Singapore, to become involved.  Accordingly the Company hasdecided to sell up to 40% of the Championship in Singapore and in order to achieve this the Company has transferredthe assets and rightsrelating to the event into a new wholly owned entity, The Championship (Singapore) Pte Ltd.

The Championship (Singapore) Pte Ltd holds the assets in relation to the Championship in Singapore and PMG now receives a management fee of US$250,000 per annum to manage the event on its behalf. The management fee is for the life of the event.

On 1 September 2014, the Group entered into an agreement with Amarantos Group International Limited and First Alverstone Partners Limited to sell 15% of the equity of The Championship (Singapore) Pte Ltd for US$0.75m (valuing the whole of the equity at US$5.0m). In addition, an option has been entered into with First Alverstone Partners Limited for a further 10% of the company to be sold at the same valuation. The option can be exercised from the date of the agreement until 1 November 2015.

Discussions have commenced for the sale of a further 15% in The Championship (Singapore) Pte Ltd and the Board is hopeful that this will be concluded in 2015. 

As at today's date we are in discussion with two potential title sponsors for the Championship in Singapore and will update shareholders in due course.

As announced in the final results for the financial year ended 31 December 2013 that were released on 19 June 2014, the relocation of the Championship to Singapore has, in the Board's view, been positive for the Company. PMG is now able to run the Championship in Singapore and is also able to continue its existing title sponsor discussions for a "Championship" or similar event in Korea from 2015 onwards. The Group is pleased to confirm that it has now negotiated and agreed a new date on the European Tour for this event in Q3 2015 and discussions are on-going with the potential venue in Korea and with potential sponsors.

Other Golf Events

During the period under review, the Company successfully promoted the Prudential Causeway Trophy and iscurrently in discussion to stage the 2015 edition in either Singapore or Malaysia.

Having undertaken a review of the financial return on events promoted by the Group, the Board has decided that certain smaller, lower margin events are not achieving the desirable thresholds of profitability. Accordingly, we have made a decision not to continue with the Kazakhstan Open, Vietnam Masters and Premier League Golf.  Discussions are under way with Marina Bay Sands in Singapore (the previous title sponsor of the Premier League Golf) to allocate their sponsorship spend to another event in 2015.

Music

PMG successfully concluded the sponsorship on behalf of AIA of Taylor Swift's concerts in Singapore and Malaysia.

The MV Sewol ferry disaster had a huge effect on the general public in Korea and thus on the sponsorship market.  Therefore the only music event we are involved in during 2014 is the AIA Real Life NOW Festival.  In relation to this, we have continued our relationship with AIA and Live Nation for the inaugural AIA Real Life NOW Festival which featured the YG family and Lady Gaga taking place in August 2014. The festival performed in line with management's expectations.

The Group is still engaged to promote the second Blue & White Festival in PyeingChang, the date of which is subject to agreement between the parties.

Furthermore, as announced on 27 December 2013, the Group has negotiated the exclusive rights to promote and help produce Electric Run in South Korea from 2014 through 2016. As a result of the MV Sewol ferry disaster the event scheduled to take place in October 2014 has been cancelled but the remaining five Electric Run events scheduled to take place under the agreement will continue to take place during 2015 and 2016.  Instead, the Group introduced AIA as title sponsor of the AIA Electric Run in Hong Kong which will take place on 28 and 29 November 2014.  Electric Run is the biggest development in Lifestyle Entertainment - a night time 5km run/walk experience, where the participants are an integrated part of the show which features immersive "Lands" of light and sounds that transport the participant into an electric wonderland. Electric Run has been a social networking phenomenon since its launch in 2012 with 5,800,000 Facebook Users reached weekly as well as 976,000 "likes" with a further 4,000 "likes" added daily. There are already 94,000 tagged photos, and the YouTube Channel has over one million video views.

Looking forward to 2015 we are in the final stages of negotiation for several new music related events in Japan details of which will be released as and when appropriate. The Board is hopeful that this will be before the year end.  These will be run through the joint venture announced to shareholders at the end of 2013.  It is our belief that these contracts will be the prelude of a significant increase in business in Japan which is the second largest music market in the world.

Restructure

We have recently completed an overview of the company's operations and will be implementing a further reduction in overheads in all three offices starting in Q4 2014.

As part of this restructure, we have moved our registered office and UK principal place of business to 82 Berwick Street, Soho, London W1F 8TP. Telephone, facsimile and email contact details will remain as currently.

Financial Review

The first six months of 2014 resulted in a substantial fall in revenue when compared to the same period from last year. This was primarily due to the Championship, formally the Ballantine's Championship, being moved from Korea to Singapore at the last minute, running the Singapore Championship with no title sponsor, a considerable reduction in secondary sponsorship and a change in revenue recognition of the prize fund which is no longer included as revenue.  As a result, revenue for the Group reduced from £7.6m to £0.6m. The event did, however, achieve a break even result as announced on 23 May 2014.

Other events that were not staged in 2014, but were in the same period from 2013, included Premier League Golf as well as certain forecasted AIA K-Pop events. In spite of the Singapore Championship breaking even, the result has been a reduction in gross profit for the Group from £1.8m to £0.2m.

On a positive note, the continued operational review has resulted in total administration expenses being reduced from £1.1m to £0.6m; a saving of over £0.5m for the same period last year. The net effect is a loss for the year of £0.4m against a profit of £0.7m for the first six months of 2013.

The Group balance sheet continues to be strong with net assets of £2.5m against £1.2m this time last year, having raised £2m since 30 June 2013.

Post Balance Sheet Events

Following the period end, on 15 and 16 August 2014 the Group acted as marketing partner to Live Nation Korea and agency of record throughout Asia for the inaugural AIA Real Life: NOW festival held at the Jamsil Sports Complex Main Stadium, Seoul. Sponsored by AIA, the Festival was the largest music event undertaken by the Company since the inception of its music division. Promoted by the world's leading live entertainment company, Live Nation, in association with Korea's top artist management firm, YG Entertainment the festival featured some of the world's biggest selling artists, including headline acts, Lady Gaga and YG Family.

In addition, as set out above, the rights for the Singapore Championship have been placed in The Championship (Singapore) Ptd Ltd and  15% of this company has been sold to two third party investors for US$0.75m.

As in previous periods, I have supported the working capital requirements of the Company. The balance of the loans due to me at the period end was £431,328 and as of 30 September 2014 I have provided a further £105,824 to the Group, resulting in an aggregate of £537,152 being provided by me as loans.

The loans have been made in the name of David Ciclitira and entities controlled by him on a short term basis and as yet there are no formal terms for these loans.  The directors (other than myself and Serenella Ciclitira) consider that, having consulted with the Company's Nominated Adviser, the provision of the loans are fair and reasonable in so far as the Company's shareholders are concerned. 

Going forward

I remain positive in spite of the various difficult challenges we faced earlier in the year and I would like to use this opportunity to thank our board and hardworking staff, without whose support our undoubted potential would not be possible.

David Ciclitira

Chairman

Date: 30 September 2014

Consolidated income statement for half year to 30 June 2014

		30 June 2014 unaudited	30 June 2013 unaudited	31 December 2013 audited
	Note	£'000	£'000	£'000
Continuing operations
Revenue		572	7,630	7,817
Cost of sales		(344)	(5,780)	(5,660)
Gross profit		228	1,850	2,157
Other administrative expenses		(554)	(930)	(1,989)
Foreign exchange		7	(95)	96
Depreciation and amortisation of non financial assets		(93)	(91)	(181)
Total admin expenses		(640)	(1,116)	(2,074)
Operating (loss)/profit		(412)	734	83
Finance costs		(31)	(47)	(188)
Share of post acquisition loss of Joint Venture		-	(30)	(81)
(Loss)/profit before tax		(443)	657	(186)
Tax expense		-	-	-
(Loss)/profit for the year		(443)	657	(186)
Attributable to:
Non-controlling interests		-	(27)	-
Equity holders of the parent		(443)	684	(186)
Profit /(loss) for the financial year		(443)	657	(186)
Earnings Profit/(loss) per share
-basic	4	(14.7p)	21.8p*	(6.2p)
-diluted	4	(14.7p)	21.8p*	(6.2p)

* Restated

The accompanying accounting policies and notes form an integral part of the financial statements.

Statement of comprehensive income for half year to 30 June 2014

		Group
	30 June 2014 unaudited	30 June 2013 unaudited	31 December 2013 audited
	£'000	£'000	£'000
(Loss)/profit for the year	(430)	657	(246)
Exchange difference on translation of foreign operations	(13)	-	60
Total comprehensive (expense) / income for the year	(443)	657	(186)
Total comprehensive (expense) / income attributable to:
Equity holders of the parent	(443)	684	(186)
Non - controlling interest	-	(27)	-
	(443)	657	(186)

Statement of financial position for the half year to 30 June 2014

	30 June  2014 (unaudited)	30 June  2013 (unaudited)	31 December 2013  (audited)
	£'000	£'000	£'000
Non current assets
Property, plant and equipment	9	5	3
Intangible assets - Tournament rights	1,662	1,798	1,730
Intangible assets - Development costs	2,901	2,945	2,923
Investment in Joint Venture	-	27	-
Goodwill	200	200	200
Investments	56	2	56
Total non current assets	4,828	4,977	4,912
Current assets
Inventory	8	13	8
Trade and other receivables	1,702	1,909	2,329
Cash and cash equivalents	9	59	24
Total current assets	1,719	1,981	2,361
Current liabilities
Financial liabilities - Borrowings	162	400	162
Trade and other payables	2,902	4,182	3,097
Total current liabilities	3,064	4,582	3,259
Net current liabilities	(1,345)	(2,601)	(898)
Non current liabilities
Financial liabilities - Borrowings	291	436	379
Deferred tax	708	708	708
	999	1,144	1,087
Net assets	2,484	1,232	2,927

Statement of financial position for the half year to 30 June 2014

Equity
Share capital	4,612	3,527	4,612
Share premium	8,741	7,288	8,741
Other reserves	557	557	557
Capital redemption reserve	5,034	5,034	5,034
Foreign exchange reserve	13	13	13
Retained earnings	(16,473)	(15,160)	(16,030)
Equity attributable to equity holders of the parent	2,484	1,259	2,927
Non-controlling interests	-	(27)	-
	2,484	1,232	2,927

Statement of cashflows for the half year to 30 June 2014

	30 June 2014 unaudited	31 December 2013 audited	30 June 2013 unaudited
	£'000	£'000	£'000
Cash flows from operating activity
Operating profit/(loss)	(412)	83	684
Depreciation	3	4	2
Amortisation of intangibles-Tournament rights	68	136	68
Amortisation of intangibles-Development costs	22	41	20
Share based payments	-	325	-
Loss on disposal of investment	-	-	-
Increase in inventory	-	5	-
Decrease/(increase) in receivables	627	137	580
(Decrease)/increase in payables	(195)	(2,558)	(1,098)
Cash generated from/(used in) operations	113	(1,827)	256
Cash flow from investing activities
Acquisition of development costs	-	(4)	(5)
Acquisition of equipment	(9)	-	-
Investment in subsidiaries	-	(54)	-
Investments in joint ventures	-	(28)	(27)
Net cash (used in) investing activities	(9)	(86)	(32)
Cash flow from financing activities
Cash proceeds from issue of new shares	-	2,538	-
Loans received	-	-	-
Loans repaid	(88)	(445)	(180)
Interest paid	(31)	(188)	(47)
Net cash (used in)/generated from financing activities	(119)	1,905	(227)
Cash and cash equivalents at beginning of the year	32	32	32
Net (decrease)/increase in cash and cash equivalents	(15)	(8)	(3)
Cash and cash equivalents at end of the year	17	24	29

Consolidated statement of changes in equity for half year to 30 June 2014

	Ordinary Share Capital	Share Premium	Other Reserves	Capital Redemption	Foreign Exchange Reserve	Retained Earnings	Subtotal	Non controlling Interests	Total
At 31 December 2013	4,612	8,741	557	5,034	13	(16,030)	2,927	-	2,927
Loss for the half year	-	-	-	-	-	(430)	(430)	-	(430)
Foreign Exchange	-	-	-	-	-	(13)	(13)	-	(13)
Total comprehensive income	-	-	-	-	-	(443)	(443)	-	(443)
At 30 June 2014	4,612	8,741	557	5,034	13	(16,473)	2,484	-	2,484

Consolidated statement of changes in equity for the year ended 31 December 2013

	Ordinary Share Capital	Share Premium	Other Reserves	Capital Redemption	Foreign Exchange Reserve	Retained Earnings	Subtotal	Non controlling Interests	Total
At 31 December 2012	3,527	7,288	557	5,034	13	(15,844)	575	-	575
Loss for the year	-	-	-	-	-	(246)	(246)	-	(246)
Foreign exchange	-	-	-	-	-	60	60	-	60
Total comprehensive income	-	-	-	-	-	(186)	(186)	-	(186)
Issued share capital	1,085	1,779	-	-	-	-	2,864	-	2,864
Share issue costs	-	(326)	-	-	-	-	(326)	-	(326)
At 31 December 2013	4,612	8,741	557	5,034	13	(16,030)	2,927	-	2,927

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. The condensed consolidated Half-yearly Financial Statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards. These half-yearly 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 2013.

3.     Segment Information - Changes in Operating Segments

The group now operates under three segments, Sports, Entertainment and Media. The previous segments which are no longer in use were Event Promotion, Sales & Consultancy and Smart Media.

Operating Segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	June 2014	June 2013	June 2014	June 2013	June 2014	June 2013	June 2014	June 2013
Revenue	274	6,399	29	1,172	-	60	303	7,631
Joint ventures	-	-	-	(30)	-	-	-	(30)
Segment result	126	1,623	12	168	-	60	138	1,851
Unallocated corporate expenses							(550)	(1,147)
Operating profit							(412)	704
Finance costs							(31)	(47)
(Loss)/profit for the year							(443)	657

4.     Earnings per Share

The basic earnings per share are 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.

	Six months to		(Restated) Six months to		Year ended
	30 June		30 June		31 December
	2014		2013		2013
(i) Basic
Profit /(loss) for the period (£'000)	(443)		684		(186)
Weighted average number of shares in issue (No.)	3,009,223		3,009,223		3,009,223
Earning/(loss)/profit per share  (p)	(14.7p)		22.7p		(6.2p)
(ii) Fully diluted
(Loss)/profit for the period (£'000)	(443)		684		(186)
Revised Profit/(loss) for the period  (£'000)	(443)		684		(186)
Weighted average number of shares in issue (No.)	3,009,223		3,009,223		3,009,223
Ordinary shares issuable under convertible loan agreements *	-		-		-
	3,009,223		3,009,223		3.009,223
Diluted Earnings per share (p)*	(14.7p)		22.7p		(6.2p)

* The fully diluted gain/loss per share is the same as the basic loss per share as the effects of potential shares are anti-dilutive.

** Restated. Please review note 26 of the full financial statements for reconciliation behind restated weighted shares

5.     Dividends - No dividend was recommended or paid for the period under review

6.     Financial Liabilities - Borrowings

	30 June 2014		30 June 2013
	£'000		£'000
Bank facility	162		250
Other Loan	-		120
Overdraft	-		30
	162		400

The bank facility represents amounts due to Lloyds Bank Plc in less than one year. The total amount outstanding to Lloyds Bank as at 30 June 2014 was £0.45m.  

7.     Non-Current Liabilities  - Borrowings

	30 June 2014		30 June 2013
	£'000		£'000
Bank facility > 1 year	291		306
Other loan > 1 year	-		130
	291		436

The bank facility represents amounts due to Lloyds Bank in more than one year. The total amount owed to Lloyds Bank was £0.45m (of which £0.16m is included in current liabilities and £0.29m in non current liabilities). The loan was restructured in August 2013 and is now repayable in 48 consecutive monthly instalments representing principal and interest. The loan carries interest payable at 4% over base rate. The loan may be repaid early at the discretion of the Group. The loan is secured by personal guarantee provided by David Ciclitira.

8.     Issued Share Capital

Issued share capital as at 30 June 2014 is comprised as follows:

·      3,009,223 ordinary shares of 52.8 pence being £1.589 million;

·      199,831,545 deferred ordinary shares of 0.5p each being £0.999 million*

·      103,260 deferred B shares of £19.60 being £2.024 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 for the year ended 31 December 2012.

9.     Related Parties 

Luna Trading Limited and its subsidiary, Parallel Contemporary Arts Limited (PCA), is a company under the control of David Ciclitira, which provides consultancy services, loans and guarantees to Parallel Media Group Plc.

	Period ended 30 June 2014	Period ended 30 December 2013 (audited)
	£'000	£'000
Opening balance	197	416
Loan guarantee interest paid	19	45
Offsets against PCA balances owed to PMG.	-	(274)
Expenses Incurred	1	426
Payments Made	(82)	(191)
Short term facility agreed at August 2013 fundraise	-	103
Less new loan converted for equity in August 2013 fundraise	-	(281)
Less debt converted to equity in 2nd submission for short term facility	-	(47)
Amounts owed to Luna Trading including consultancy and business services	110	-
Amount owed to PCA	186	-
Total amounts outstanding to Luna Trading Ltd	431	197

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 £0.11m and remote office costs of £0.02m.

10.   Other

Copies of unaudited half-yearly 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:

11.   Approval of Half-Yearly Financial Statements

The half-yearly financial statements were approved by the board of directors on 30 September 2014.

 

END

 

 

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