Final Results

RNS Number : 4840I

Parallel Media Group PLC

25 July 2012

 



25.07.12

Parallel Media Group plc

("PMG" or "the Group")

Final Results for the year ended 31 December 2011

Parallel Media Group Plc, a leading sports marketing and digital media group, announces its final results for the year ended 31 December 2011.

Financial Highlights

·    The loss for the financial year was reduced to £0.4 million (2010: loss £1.3 million)

·    The loss per share fell to 2.2p (2010: Loss per share 24.1p).

·    Administration costs decreased to £1.9 million (2010: £2.8 million)

·    The net liabilities of the Group have reduced by £1.0m.

·    At 31 December 2011, the Group has a positive balance sheet with net assets of £0.4 million.

Operational Highlights

2011 was a transformational time for PMG. During this period, we:

·    Acquired a 50% interest in Parallel Smart Media, a company which develops smart media channels for mobile devices, for £1million.

·    Raised £1.2 million of new capital in August 2011 for the development of the Smart Media business.

·    Formed a joint venture with Arena for development of temporary event structures in Korea.

·    Launched Parallel Media Korea, a new sports event business in Seoul .

Post Year End Highlights - the Company has:

·    Established a new joint venture company Parallel Smart Media Asia (subsequently renamed Parallel Media Group Asia (PMGA)) based in Singapore to utilise PSM's smart media platforms to develop business areas in sponsorship rights, acquisition and sales, out of home advertising sales, as well as entertainment and art projects.

·    In April 2012, staged the most successful Ballantine's Championship to date.

·    Increased its interest in Parallel Smart Media to 75%.

·    Established Parallel Smart Media Asia Alpha Entertainment PTE Ltd, a joint venture with Alpha Entertainment Private Ltd to promote K-POP concerts throughout Asia.

·    Raised £500,000 of new working capital in April 2012 for the development of PMGA and the new joint venture with Alpha Entertainment.

·    Established Parallel Media Italia, a 50/50 joint venture in Milan, to develop sports marketing in Italy and the 2015 Milan Expo.

·    Created Froggies Media, a joint venture in Paris for the development of smart media platforms in France.

Chairman of PMG, David Ciclitira, commented: "I am very excited by the company's prospects, and look forward to the remainder of 2012 and 2013 with confidence."

For further information, please contact:

Parallel Media Group                                                                                    020 7225 2000

David Ciclitira

Northland Capital Partners Limited                                                020 7796 8800

Luke Cairns, Edward Hutton

Bishopsgate Communications

Nick Rome/Sam Allen                                                                       020 7562 3350

[e-mail]

CHAIRMAN'S STATEMENT

Overview

During this period of global uncertainty, Parallel Media Group plc (PMG) has continued to make progress, focussing especially on Asian emerging markets, while continuing to grow the traditional events and sponsorship business, and build long-term assets. 2011 saw PMG reduce its operational loss considerably.

Operational Review

In the short to medium term, the core of PMG's business will continue to be the promotion of golf tournaments in mainstream Asian markets. In addition to the Ballantine's Championship, PMG is currently in negotiations for the creation of a second golf tournament on the European Tour calendar.

In April 2011, the Ballantine's Championship was held at the prestigious Black Stone Golf Course just outside of Seoul. The touranament, which was sponsored by Hyundai, Korean Telecom, Korean Insurance, Bank of America, Emirates Airline and Omega was won by Lee Westwood.

In July 2011, PMG completed the acquisition of a 50% interest in Parallel Smart Media (PSM) and is now in discussions with various third parties, including sponsors and editorial partners, to create smart media channels for portable devices. PMG also opened new offices in Singapore and Seoul to develop new business across Asia, with particular focus on golf, lifestyle and music.

Financial Highlights

- The loss for the financial year was reduced to £0.4 million (2010: loss £1.27 million) - The loss per share fell to 2.2p (2010: Loss per share 24.1p).
- Administration costs decreased to £1.9 million (2010: £2.9 million)
- The net liabilities of the Group have reduced by £1.0m.

- At 31 December 2011, the Group has a positive balance sheet with net assets of £0.4 million.

Operational Highlights


2011 was a transformational time for PMG. During this period, we:

    -  Acquired a 50% interest in Parallel Smart Media, a company which develops smart media channels for mobile devices, for £1million.

    -  Raised £1.2 million of new capital in August 2011 for the development of the Smart Media business.

    -  Formed a joint venture with Arena for development of temporary event structures in Korea.

    -  Launched Parallel Media Korea, a new sports event business in Seoul.

 Post Year End Highlights - The Company Has:

    - Established a new joint venture company Parallel Smart Media Asia (subsequently renamed Parallel Media Group Asia (PMGA)) based in Singapore to utilise PSM's smart media platforms to develop business areas in sponsorship rights, acquisition and sales, out of home advertising sales, as well as entertainment and art projects.

    -  In April 2012, staged the most successful Ballantine's Championship to date.

    -  Increased its interest in Parallel Smart Media to 75%.

    -  Established Parallel Smart Media Asia Alpha Entertainment PTE Ltd, a joint venture with Alpha Entertainment Private Ltd to 
promote K-POP concerts throughout Asia.

    -  Raised £500,000 of new working capital in April 2012 for the development of PMGA and the new joint venture with Alpha 
Entertainment.

    -  Established Parallel Media Italia, a 50/50 joint venture in Milan, to develop sports marketing in Italy and the 2015 Milan Expo.

    -  Created Froggies Media, a joint venture in Paris for the development of smart media platforms in France.

Financial Review

Turnover for the year was £6.4 million (2010: £6.7 million).  The reduction in turnover is due to our reduced commission structure in relation to the Hong Kong Open. Gross margins decreased to 31% (2010: 34%) resulting in gross profits for the year of £2.0 million (2010: £2.2 million). 

Administration costs decreased to £1.9 million (2010: £2.9 million), partly due to the renegotiation in 2010 of PMG's core contracts and the capital restructuring and partly due to costs of £0.5 million being recharged to the Parallel Smart Media Joint Venture in 2011, resulting in a profit before interest, tax, depreciation, amortisation and exceptional items of £0.1 million (2010: loss before interest, tax, depreciation and amortisation of £0.6 million). The loss for the financial year was £0.4 million (2010: loss £1.3 million). The loss per share is 2.2p (2010: Loss per share 24.1p).

The net liabilities of the Group have reduced by £1.0m. At 31 December 2011, the Group has a positive balance sheet with net assets of £0.4 million.

Group Structure

PMG is simplifying the group structure underneath its umbrella name into five companies - Parallel Media Championships, Parallel Media Group Asia, Parallel Smart Media, Parallel Media Korea and Parallel Media Italia. In addition the Group has outsourced its management accounting operations in order to reduce costs and increase efficiency.

http://www.rns-pdf.londonstockexchange.com/rns/4840I_1-2012-7-25.pdf

Parallel Media Italia (PMI) is a joint venture between PMG and Italian media company, Media Makers. PMI is developing new projects across the sport, entertainment and lifestyle sectors with a particular focus on the 2015 Milan EXPO.

Parallel Media Golf (formerly Parallel Media Europe), which is wholly owned by PMG, houses the non Ballantine's Championship golf tournaments such as the Kazakhstan Open golf tournament and is seeking to expand its portfolio with the addition of further tournaments in Asia.

The Ballantine's golf tournament is housed in a separate company called Parallel Media Championships Ltd.

Parallel Smart Media (PSM), which is 75% owned by PMG, is a digital service provider for the professional networks, education, conferencing, sports and entertainment sectors for the latest generation of phone and tablet devices.

Parallel Media Korea (PMK), which is a wholly owned subsidiary of PMG, is focused on strengthening PMG's position within the South Korean sports events sector and allows for significant expansion of operations in this region.

Parallel Media Group Asia (PMGA) (formerly Parallel Smart Media Asia), which is 51% owned by PMG, has a focus on sponsorship rights, acquisition and sales, out of home advertising sales as well as entertainment and art projects. PMGA has entered into a joint venture with Singapore and Korea based HW Alpha PTE Ltd, to promote K-Pop concerts in Asia.

Future Prospects

In April 2012, Parallel Media Championships enjoyed a successful Ballantine's Championship, generating revenues of over US$8 million, up 5% on 2011, with over 45,000 people attending the tournament.

In line with its strategy to become one of the leading golf promoters in Asia, Parallel Media Golf has agreed a new date for an event on the European Tour calendar to be hosted in Asia and we expect to announce new sponsors in the near future. In addition, Parallel Media Golf is also negotiating the launch of two new men's golf tournaments in Asia - which are scheduled to commence in 2013.

PMK, which has been responsible for the staging and sale of secondary sponsorship of the Ballantine's Championship, is also in discussions to launch a new Ladies Golf Tournament in Korea from 2013, building on the success of the Korean Ladies Masters.

PMGA is also involved in the development of smart media applications within the Asian markets. In addition, PMGA has set up a joint venture with Alpha Entertainment Private Ltd. to promote K-POP artists throughout the region. The first concert on June 16^th 2012, featuring Shinwha, was a resounding success both in terms of sponsorship and ticket sales. A further three concerts are scheduled to take place in the next six months.

In January 2012, PMG successfully completed the acquisition of a further 25% interest in PSM for a consideration of £200,000, increasing its stake to 75%.

PSM has implemented some important changes over the past six months with the production of its technology being relocated from Korea to the Ukraine. This move allows PSM to work more efficiently with its developers and to be more cost effective.

As a result, PSM is launching the first channel to be produced out of Ukraine -a new Korean Eye App, which will be available for download by the end of July 2012.

I would like to take this opportunity to thank my fellow board members, Serenella Ciclitira, Leonard Fine and Ranjit Murugason, and all of our hard working staff around the world. I would also like to welcome all of the new members of staff including our new COO, KD Han, who has recently joined us after 27 years in a senior management position with Korean Air.

We now have an extremely strong Asia-based team in place and look forward to further developing operations in the coming months. PMGA, based in Singapore, is headed up by Jin Wei Toh who joined from the Sports Marketing agency IMG. The President of Parallel Media Korea is Sonia Hong who prior to joining PMK was Secretary General of Visit Korea Year 2010-2012.

Martin Capstick, based in Hong Kong, runs our golf division and has been involved in over 50 golf tournaments throughout 9 different countries, including the promotion of 15 PGA European Tour events.

As with many businesses, the last couple of years have been challenging but I am personally excited about the future and look forward to the rest of 2012 and 2013 with confidence.

David Ciclitira

Chairman

24 July 2012

Consolidated Income Statement for the year ended 31 December 2011

		2011	2010
	Note	£'000	£'000
Continuing operations
Revenue	4	6417	6651
Cost of sales	5	-4420	(4406)
Gross profit		1997	2245
Administrative expenses		-1920	(2945)
Administrative expenses-Foreign exchange		31	77
Profit/(Loss) before interest, tax, depreciation,		108	(623)
amortisation and exceptional items
Depreciation of fixed assets		(5)	(7)
Amortisation of intangibles		(220)	(155)
Operating (Loss) before exceptional Items	6	(117)	(785)
Exceptional items	6a	(101)	-
Operating (Loss) after exceptional Items		(218)	(785)
Finance Costs- non recurring	9	-	(86)
Finance Costs	9	(111)	(398)
Investment income		-	-
Share of post acquisition loss of Joint Venture		(46)	-
(Loss) on ordinary activities before tax	4	(375)	(1269)
Taxation	11	-	-
(Loss) for the year		(375)	(1269)
Attributable to:
Non-controlling interests		-	-
Equity holders of the parent		(375)	(1269)
(Loss) for the financial year		(375)	(1269)
(Loss) per share
-basic	12	(2.2p)	(24.1p)
-diluted	12	(2.2p)	(24.1p)

Statements of Comprehensive Income for the year ended 31 December 2011

					Group
				2011	2010
				£'000	£'000
(Loss) for the year				(375)	(1269)
Other comprehensive income
Exchange difference on translation of foreign operations				29	(34)
Total comprehensive expense for the year				(346)	(1303)
Total comprehensive expense attributable to:
Equity holders of the parent				(350)	(1301)
Non- controlling interest				4	(2)
				(346)	(1303)

Statements of Financial Position as at 31 December 2011

	Note	Group			Company
		2011	2010	2011	2010
		£'000	£'000	£'000	£'000
Non current assets
Property, plant and equipment	13	1	6	1	6
Intangible assets- Tournament rights	14	2002	2138	2002	2138
Intangible assets-Development costs	14	219	306	219	306
Investment in Joint Venture	15	1319	-	-	-
Investments	15	12	12	2111	1100
Total non current assets		3553	2462	4333	3550
Current assets
Trade and other receivables	16	1917	1388	1231	1045
Cash and cash equivalents	17	22	142	19	139
Total current assets		1939	1530	1250	1184
Current liabilities
Financial liabilities-Borrowings	18	250	104	250	104
Financial liabilities-Convertible loans	19	-	39	-	39
Deferred income	20	1299	958	-	-
Trade and other payables	20	2546	2598	4339	2874
Total current liabilities		4095	3699	4589	3017
Net current liabilities		(2156)	(2169)	(3339)	(1833)
Non current liabilities
Financial liabilities-Borrowings	21	667	896	667	896
Deferred tax	23	354	-	-	-
Total Non-Current Liabilities		1021	896	667	896
Net assets/(liabilities)		376	(603)	327	821
Equity
Share capital	24	3463	3362	3463	3362
Share premium		6653	5429	6653	5429
Other reserves		557	557	557	557
Capital redemption reserve		5034	5034	5034	5034
Foreign exchange reserve		13	(12)	-	-
Retained earnings		(15210)	(14835)	(15380)	(13561)
Equity attributable to equity holders of the parent		510	(465)	327	821
Non-controlling interests		(134)	(138)	-	-
		376	(603)	327	821

Statements of changes in equity for the year ended 31 December 2011

The table below shows the statement of changes in equity for the year ended 31 December 2011

	Ordinary Share	Share	Equity	Other	Capital	Forex	Retained	Subtotal	Non Controlling	Total
	Capital	Premium	Reserves	Reserves	Redemption	Reserve	Earnings		Interests
Group
At 31 December 2010	3362	5429	-	557	5034	(12)	(14835)	(465)	(138)	(603)
Loss for the year	-	-	-	-	-	-	(375)	(375)	-	(375)
Foreign exchange	-	-	-	-	-	25	-	25	4	29
Total comprehensive income	-	-	-	-	-	25	(375)	(350)	4	(346)
Issued share capital	101	1504	-	-	-	-	-	1605	-	1605
Share issue costs	-	(280)	-	-	-	-	-	(280)	-	(280)
At 31 December 2011	3463	6653	-	557	5034	13	(15210)	510	(134)	376
Company
At 31 December 2010	3362	5429	-	557	5034	-	(13561)	821	-	821
Loss for the year	-	-	-	-	-	-	(1819)	(1819)	-	(1819)
Issued share capital	101	1504	-	-	-	-	-	1605	-	1605
Share issue costs	-	(280)	-	-	-	-	-	(280)	-	(280)
At 31 December 2011	3463	6653	-	557	5034	-	(15380)	327	-	327

The table below shows the statement of changes in equity for the year ended 31 December 2010

Ordinary Share Share Equity Other Capital Forex Retained Subtotal Non contolling Total Capital Premium Reserves Reserves Redemption reserve earnings Interests Group At 31 December 2009 3070 2091 57 557 5034 20 (13566) (2737) (136) (2873) Loss for the year - - - - - - (1269) (1269) - (1269) Foreign exchange - - - - - (32) - (32) (2) (34) Total comprehensive income - - - - - (32) (1269) (1301) (2) (1303) Issued share capital 292 3338 - - - - - 3630 - 3630 Conversion of shares - - (57) - - - - (57) - (57) At 31 December 2010 3362 5429 - 557 5034 (12) (14835) (465) (138) (603) Company At 31 December 2009 3070 2091 57 557 5034 - (12326) (1517) - (1517) Loss for the year - - - - - - (1235) (1235) - (1235) Issued share capital 292 3338 - - - - - 3630 - 3630 Conversion of shares - - (57) - - - - (57) - (57) At 31 December 2010 3362 5429 - 557 5034 - (13561) 821 - 821

Statements of cashflows for the year ended 31 December 2011

					Group		Company
				2011	2010	2011	2010
				£'000	£'000	£'000	£'000
Cash flows from operating activity
Operating (loss)				(218)	(785)	(1704)	(753)
Depreciation				5	7	5	7
Amortisation of intangibles-Tournament rights				136	136	136	136
Amortisation of intangibles-Development costs				87	19	87	19
(Increase)/decrease in receivables				(936)	(104)	(593)	(297)
Increase/(decrease) in payables				289	305	1465	443
Foreign exchange on non-operating activities				4	(23)	(4)	(23)
Increase in translation reserve				25	(35)	-	-
Cash (used in) from operations				(608)	(480)	(608)	(468)
Cash flow from investing activities
Acquistion of development costs				-	(71)	-	(71)
Interest received				-	1	-	1
Net cash (used in) investing activities				-	(70)	-	(70)
Cash flow from financing activities
(Repayment) of bank facility				146	(247)	146	(247)
Cash received from convertible loans				-	-	-	-
Convertible loans repaid				(39)	(494)	(39)	(494)
Cash proceeds from issue of new shares				721	950	721	950
Loans received				-	1200	-	1200
Loans repaid				(229)	(783)	(229)	(783)
Interest paid				(111)	(228)	(111)	(230)
Net cash generated from financing activities				488	398	488	396
Cash and cash equivalents at beginning of the year				142	322	139	309
Net decrease in cash and cash equivalents				(120)	(152)	(120)	(142)
Exchange losses on cash and cash equivalents				-	(28)	-	(28)
Cash and cash equivalents at end of the year				22	142	19	139

Notes to the financial information

1.  Basis of preparation

     These financial statements have been prepared on the historical cost basis and in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

     The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements which are disclosed in note 3.

A separate income statement for the parent company has not been presented as permitted by section 408 of the Companies Act 2006.

     The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2013. The forecasts incorporate trading assumptions, including increased sponsorship from existing tournaments, new sponsorship revenues, and revenues from new products. The forecasts show that the group has sufficient cash to meet liabilities as they fall due. 

     The directors believe these forecasts to be realistic, and consequently have prepared the financial statements on the going concern basis, which assumes that the group will continue in operational existence for the foreseeable future.

1.1.          Adoption of standards effective in 2011

     The financial statements are prepared in accordance with International Financial Reporting Standards and Interpretations as adopted by the EU in force at the reporting date.

a)  New and amended standards adopted by the group.

      There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2011 that would be expected to have a material impact on the group.

b)  New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2011 and not early adopted.

      The standards and interpretations that have been issued, but are not yet effective are:

- IAS 19 Employee Benefits

- IFRS 9 Financial Instruments: Classification, measurement and recognition

- IFRS 10 Consolidated Financial Statements

- IFRS 12 Disclosure of interests in other entities

- IFRS 13 Fair Value Measurement

- IFRS 7 Financial Instrument:  Disclosure

- IAS 12 Income Taxes

- IFRS 1 First time adoption of IFRS

- IFRS 11 Joint arrangements

- IAS 1 Presentation of financial statements

2. Accounting policies

2.1 Consolidation and investments

     The consolidated financial statements incorporate the results of the Company and all of its subsidiary undertakings as at 31 December 2011 using the acquisition method of accounting. Under the purchase method the results of subsidiary undertakings are included from the date of acquisition (see Note 2.19). On disposal, the results are included up to the date of disposal.  Inter-company balances, transactions, and unrealised gains/losses are eliminated on consolidation.

2.2 Intangible Assets - Tournament rights

     The rights to promote European Tour golf events were acquired in September 2006 and included in the statement of financial position 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 acquired are held at cost less amortisation and are reviewed on an annual basis for impairment.

2.3 Intangible Assets - Development costs

     Development costs are included in the statement of financial position at cost less any impairment provision. Development costs are only recognised where it can be demonstrated that the project is technically feasible; where there is a clear intention to complete the project; that there is ability to use or sell the asset; that there is a high probability of future economic benefits and expenditure can be measured reliably.

2.4 Investment in joint venture

     A joint venture is an entity over which the group has joint control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The investment in a joint venture is initially recognised at cost and adjusted for the group's share of the changes in the net assets of the joint venture after the date of acquisition, and for any impairment in value. If the group's share of losses of a joint venture exceeds its interest in the joint venture, the group discontinues recognising its share of further losses.

.

2.5 Property, Plant & Equipment

     Depreciation is provided on office equipment and fixtures & fittings at 20% on a straight line basis.

2.6 Impairment of assets

     The carrying amounts of the Group's assets, other than inventories, are reviewed at each statement of financial position 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 value in use and fair value less costs to sell.

      An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit 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.

2.7 Financial instruments

      The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

      Financial instruments are recognised on trade date when the group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transactions costs that are directly attributable to the acquisition or issue of the financial instrument.

      Financial instruments are derecognised on trade date when the group is no longer a party to the contractual provisions of the instrument.

2.7.1 Available-for-sale financial assets

      Available-for-sale financial assets comprise equity investments. Subsequent to initial recognition available-for-sale financial assets are stated at fair value. Movements in fair values are taken to other comprehensive income, with the exception of impairment losses which are recognised in profit or loss. 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 cash flow analysis. When an investment is disposed of, any cumulative gains and losses previously recognised in other comprehensive income are recognised in profit or loss. Dividends are recognised in profit or loss when the right to receive payments is established.

2.8 Trade receivables

     Trade receivables are stated at their amortised cost. Trade receivables are reduced by appropriate allowances for estimated irrecoverable amounts.

2.9 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.

2.10 Trade payables

     Trade payables are stated at their amortised cost.

2.11 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.

2.12 Share based payments

     Options are measured at fair value at grant date using the 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 results in the recognition of a liability at its current fair value.

2.13 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.

2.14 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.

2.15 Leases

     Rentals under operating leases are charged to the Income Statement on a straight line basis over the lease term.

2.16 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 statement of financial position.

     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 statement of financial position date.

     The group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with 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 amounts of the deferred tax assets are reviewed at each statement of financial position 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 assets to be recovered.

2.17 Segmental reporting

     Segments are distinguishable components of the Group that are engaged either in Event Promotion, Sales and Consultancy, or Smart Media, which are subject to risks and rewards that are different from one another. Disclosure of segment results is provided in note 4 of the financial statements.

2.18 Foreign currencies

     Monetary assets and liabilities expressed in foreign currencies are translated at the rates of exchange ruling at the statement of financial position 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 other comprehensive income. All other exchange differences have been charged to the Income Statement.

2.19 Compound financial instruments - Convertible loans

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.

2.20            Business Combinations

      Business combinations are accounted for using the purchase method. The consideration for acquisition is measured at the fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Company in order to obtain control of the acquiree (at the date of exchange). Costs incurred in connection with the acquisition are recognised in profit or loss as incurred.

      Where a business combination is achieved in stages, previously held interests in the acquiree are remeasured to fair value at the acquisition date (date the Group obtains control) and the resulting gain or loss, is recognised in profit or loss.

      Adjustments are made to fair values to bring the accounting policies of acquired businesses into alignment with those of the group. The costs of integrating and reorganising acquired businesses are charged to the post acquisition profit or loss.

      If the initial accounting is incomplete at the reporting date, provisional amounts are recorded. These amounts are subsequently adjusted during the measurement period, or additional assets or liabilities are recognised when new information about its existence is obtained during this period.

4   Segment Reporting

Operating Segments

     The group is organised into two main segments Event Promotion and Sales & Consultancy, with a third segment, Smart Media, having assets and liabilities at 31 December 2011, but only trading through the Joint Venture in the later part of 2011.

     Parallel Sports is the Event Promotion brand and operates professional golf tournaments in Asia which are sanctioned by The European Tour and Ladies European Tour.

The Sales and Consultancy division is comprised of three units

§ Parallel Thinking is the sales and consultancy brand based in London and works with major international brands and federations on sports related marketing opportunities and projects.

§ Parallel Media Korea has been established to provide a greater focus on the development of new opportunities in the Korean market, providing sales and marketing presence in Korea which enhances existing sports properties and provides a platform for the creation of new properties.

§ Parallel Media Worldwide is responsible for the worldwide distribution of TV rights.

Segment results for the year

Operating Segments	Event Promotion		Sales & Consultancy		Consolidated
	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	6,044	5,697	373	954	6,417	6,651
Segment result	1,647	1,291	350	954	1,997	2,245
Exceptional item	(101)				(101)
Segment result-after exceptional item	1,546	1,291	350	954	1,896	2,245
Unallocated corporate expenses					(2,114)	(3,030)
Operating Loss					(218)	(785)
Finance costs					(111)	(484)
Share of loss of Joint Venture					(46)	-
Loss for the year					(375)	(1,269)

Revenue by major customers Operating Segments	Event Promotion		Sales & Consultancy		Consolidated
	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000
Client 1	4,197	4,429	-	-	4,197	4,429
Other Clients	1,847	1,268	373	954	2,220	2,222
Total by client and segment	6,044	5,697	373	954	6,417	6,651

Geographic analysis Operating Segments	Revenues		Non-current Assets
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
South Korea	6,044	5,697	1,800	506
Hong Kong	-	-	1,446	1,569
UK	373	954	307	386
Total by geography	6,417	6,651	3,553	2,461

Operating Segments	Event Promotion		Sales & Consultancy		Smart Media		Consolidated
	2011	2010	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets	2,588	2,339	332	850	1,800	-	4720	3,189
Unallocated corporate assets							772	803
Consolidated total assets							5,492	3,992
Segment liabilities	(2,092)	(2,077)	(321)	(69)	(354)	-	(2,767)	(2,146)
Unallocated corporate liabilities							(2,349)	(2,449)
Consolidated total liabilities							(5,116)	(4,595)
Net assets/(liabilities)							376	(603)

Other Segment Information for the year

Operating Segments	Event Promotion		Sales & Consultancy		Consolidated
	2011	2010	2011	2010	2011	2010
	£'000	£'000	£'000	£'000	£'000	£'000
Depreciation of tangible assets	-	(1)	(5)	(6)	(5)	(7)
Capital expenditure on intangible assets	-	-	(3)	164	(3)	164
Amortisation of intangible assets	(136)	(136)	(84)	(19)	(220)	(155)

5.    Cost of sales

The Group's Cost of Sales comprises:

	2011	2010
	£'000	£'000
Prize purse and sanction fees	2,057	2,240
Commissions payable	53	106
Direct delivery costs	2,310	2,060
Cost of Sales	4,420	4,406

6     Operating loss on ordinary activities before tax

	2011	2010
	£'000	£'000
This is stated after charging:
Depreciation	5	7
Amortisation	220	155
Operating lease rentals - land & buildings	49	29
Loss/(gain) on foreign exchange	(31)	(77)

6a    Exceptional Item

The exceptional item is in respect of a retrospectively agreed payment relating to the Ballantine's Championships of 2009 and 2010.

9.   Finance Costs

		2011	2010
		£'000	£'000
On fair value of convertible extension premium			86
Finance costs - non recurring		-	86
On convertible loans		30	85
On other loans		30	226
Interest on related party loans		-	21
On bank overdrafts		1	12
On loan guarantee from related parties		50	54
Finance costs - recurring		111	398

11.   Tax

-	Year ended 31 December 2011	Year ended 31 December 2010
	£'000	£'000
UK Corporation tax in respect of current year:	-	-
Current taxation	-	-
Total tax charge for the year	-	-

Loss on ordinary activities before tax	(375)	(1,269)
The tax assessed for the year is lower than the standard UK corporation tax rate of 26.5% (2010 - 28%) due to the following factors:
(Loss)/Profit on ordinary activities at the standard rate of corporation tax of 26.5% (2010 - 28%)	(99)	(355)
Effect of:
Expenses not deductible for tax purposes	5	7
Tax losses utilised in year - not recognised through deferred tax	(5)	(7)
Tax losses carried forward - deferred tax not recognised	(99)	(355)
Total tax charge for the year	-	-

12. Earnings 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.

	2011	2010
(i) Basic
Loss for the financial year (£'000)	(375)	(1,269)
Weighted average number of shares in issue	17,339,456	5,257,672
Loss per share	(2.2p)	(24.1p)
(ii) Diluted
Loss for the financial year (£'000)	(375)	(1,269)
Add back interest charged on convertible loans where the impact of these loans is dilutive (£'000)	30	57
Diluted Loss (£'000)	(345)	(1,212)

Weighted average number of shares in issue	17,339,456	5,257,672
Weighted average of potential dilutive effect of ordinary shares issuable under Convertible loan agreements	-	-
	17,339,456	5,257,672
Fully diluted Loss per share	(2.2p)*	(24.1p)*

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

      14.   Intangible Assets

Tournament rights

	2011	2010
Group and 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 start of year	575	440
Amortisation for the year	136	135
Cumulative amortisation at end of year	711	575
Net book value at start of year	2,138	2,273
Net book value at end of year	2,002	2,138

Tournament rights are the rights to promote European Tour golf events acquired in a market transaction 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

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.

	2011	2010
Group and Company	£'000	£'000
Cost
Cost at start of year	396	325
Additions in the year	(3)	71
Cost at end of year	393	396
Amortisation
Cumulative amortisation at start of year	90	71
Amortisation for the year	84	19
Cumulative amortisation at end of the year	174	90
Net book value at start of year	306	254
Net book value at end of year	219	306

 

15.  Investments

	Group			Company
	2011	2010	2011		2010
	£'000	£'000	£'000		£'000
Investment in subsidiaries	-	-	2,111		1,100
Investment in joint venture	1,319	-	-		-
Other investments-available for sale	12	12	-		-
	1,331	12	2,111		1,100

Subsidiaries	Company
Investments in subsidiaries are stated at fair value at the date of acquisition less impairment:	£'000
At 1 January 2011	1,100
Addition in the year	1,011
At 31 December 2011	2,111

In July 2011, PMG acquired Parallel Media Korea (New Media) Limited and Parallel Media (Africa) Limited for a consideration of £1,010,947. Parallel Media Korea (New Media) Limited has a Joint Venture with Talspace, its Korean partner, for the development and sale of new technology solutions. Parallel Media Korea (New Media) Limited owns 50% of the ordinary  share capital of Parallel Smart Media Limited, the Joint Venture. See Note 30 for further details.

 

Joint Venture	Group
The investment in Joint Venture is stated at fair value at the date of acquisition less the group's post acquisition share of losses:	£'000
At 1 January 2011	-
Addition in the year Share of post acquisition losses	1,365 (46)
At 31 December 2011	1,319

Joint Venture

The financial statements of Parallel Smart Media Limited show the following:

	31/12/11	31/12/10
	£'000	£'000
Turnover	-	-
Profit/(loss) before tax	(146)	-
Taxation	-	-
Profit after tax	(146)	-
Fixed assets- intangibles-development costs	599	-
Current assets	5	-
Liabilities due within one year	(740)	-
Liabilities due after one year	-	-
Other investments available for sale	£'000	£'000
At 1 January 2011	12	-
At December 2011	12	-

 

16.   Trade and other receivables

	Group		Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Trade receivables	514	909	52	695
Amounts owed by subsidiaries	-	-	44	-
Amounts owed by joint venture	599	-	537	-
Other receivables	543	205	500	160
Prepayments and accrued income	261	274	98	190
	1,917	1,388	1,231	1,045

At 31 December 2011 all amounts included under trade receivables are due within one year. Group and Company trade receivables include £0.8m due from related parties (2010: £0.68m). (see note 27 for further information).

17.   Cash and cash equivalents

	Group		Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Sterling Bank Accounts	(6)	(24)	(6)	(24)
Euro Bank Accounts	15	139	15	139
Dollar Bank Accounts	13	27	10	24
	22	142	19	139

18.   Financial Liabilities - Borrowings

	Group		Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Bank facility	250	104	250	104
	250	104	250	104

19.   Financial Liabilities - Convertible Loans

	Group		Company
	31 December 2011	31 December 2010	31 December 2011	31 December 2010
	£'000	£'000	£'000	£'000
Convertible loans due in less than one year	-	39	-	39

As at 31 December 2011, there were no convertible loans. All convertible loans together with accrued interest were converted and / or repaid during the year.

20.   Trade and other payables and deferred income

	Group		Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Trade payables	1,799	1,961	775	833
Amounts owed to subsidiary entities	-	-	2,961	1,462
Other payables	271	189	260	250
Other tax and social security	150	81	147	82
Accruals and deferred income	326	367	196	247
Trade and other payables	2,546	2,598	4,339	2,874

	Group		Company
	2011	2010	2011	2010
Deferred income	1,299	958	-	-

Deferred income of £1,299,000 (2010 - £958,000) is income received in advance as at 31 December which will be recognised as revenue in the following year when services are rendered. 

21.   Non-Current Liabilities 

	Group		Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Bank facility	667	896	667	896
Other loans	-	-	-	-
	667	896	667	896

At the 31 December 2011, amounts payable to Lloyds bank totalled £917k (of which £250k is included in current liabilities and £667k is included in non-current liabilities above). The loan is repayable in 48 consecutive monthly instalments representing principal and interest commencing on the date which is 12 months after the date the loan was borrowed (i.e. a effective term of five years with a one year  repayment holiday). The loan carries interest payable at 3% over base rate. The loan may be repaid early at the discretion of the company. The loan is secured by personal guarantees provided by David Ciclitira.  

23.              Deferred taxation

The actual and potential liability to deferred tax is nil.  Due to the availability of tax losses, subject to agreement with the HM Revenue and Customs, there is an estimated deferred tax asset of £4,173k which has not been recognised in these accounts (31 December 2010: £4,074k). The deferred tax asset is based on gross losses of £14,706k (2010: £14,331k). No deferred tax asset has been recognised due to the uncertainty over making sufficient profits in the future against which the losses may be recovered.

The fair value of the two subsidiaries acquired during the year ended 31 December 2011, together with the joint venture of one of these subsidiaries, was £1011k. The deferred tax liability of £354k in respect of the excess of the fair value on acquisition over the book value of the assets acquired has been recognised in these accounts.

24.       Called up share capital

The Authorised Share Capital is set out in the table below:

	2011	2010
	£'000	£'000
Authorised Share Capital
316,989,608 ordinary shares of 2.2p	6,974	6,974
199,831,545 deferred shares of 0.5p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	9,997	9,997

The Issued Share Capital is set out in the table below:

	2011	2010
	£'000	£'000
Issued and fully paid as at 31 December 2011
20,019,751 ordinary shares of 2.2p	440	339
199,831,545 deferred ordinary shares of 0.5p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	3,463	3,362

Reconciliation of the number of shares outstanding is:	2011	2010
	(number)	(number)
Ordinary shares of 0.01p each in issue  at start of year	-	467,072,593
Ordinary shares of 0.01p each issued during the period	-	598,951,267
Ordinary shares of 0.01p each at consolidation	-	1,066,023,860
Ordinary shares of 0.01p each in issue at end of year	-	-
Consolidation of ordinary shares at 220:1
Ordinary shares of 2.2p following consolidation	15,437,437	4,845,563
Ordinary shares of 2.2p each issued during the period	4,582,314	10,591,874
Ordinary shares of 2.2p each in issue at end of year	20,019,751	15,437,437
Issued and fully paid deferred shares	(number)	(number)
Deferred shares of 0.5p each in issue	199,831,545	199,831,545
Deferred B shares of £19.60	103,260	103,260

Called up share capital (Cont.)

(i)     Ordinary shares: during the year ordinary shares were issued as follows:

	2011
	(number)
Ordinary shares of 2.2p each issued during the year
1 August  2011 at 35p per share	1,153,746
3 August 2011  at 35p per share	3,428,568
Total shares of 2.2p each issued during the year	4,582,314

1 August 2011- Being £403,811 equivalent settlement of amounts owed to Luna Trading Lim1 August 2011- Being £403,811 equivalent settlement of amounts owed to Luna Trading Limited and Stuart Mison on the acquisition of Parallel Media Korea (New Media) Ltd and Parallel Media (Africa) Limited by Parallel Media Group plc - (See Note 27) for details. 3 August 2011- Being £1.2 million new share issue for cash

(ii) Deferred Shares

The deferred shares do not entitle their holders to receive any dividend or other distribution, they do not entitle their holders to receive notice of or to attend, speak or vote at any General Meeting of the Company, and they do not entitle their holders on a return of assets on a winding-up of the Company or otherwise only to the repayment of the capital paid up on such Deferred Shares and only after repayment of the capital paid up on each Ordinary Share in the capital of the Company and the payment of a further £100,000 on each such Ordinary Share (£1,000,000 in the case of each deferred B share).

27. Related Parties

Walbrook Trustees (Jersey) Limited:

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. During the year ended 31 December 2010, the Tokyo Settlement provided convertible loans totalling £1.175m to the company, which were converted during 2010.

	2011	2010
	£'000	£'000
Opening balance at 1 January	-	(1,296)
Interest charged in the year (not paid)	-	(30)
Settled by the issue of ordinary shares	-	1,326
Closing balance at 31 December	-	-

 

Luna Trading - Loan balances and conversions:

Luna Trading Ltd is a company under the control of David Ciclitira. The movements in the payable balances due to the company in 2011 were as follows:

 

Luna Trading Limited	2010
	£'000
At 31 December 2009	296
Net interest carried and expenses paid by PMG on behalf of Luna Trading Limited as at 31 December	(15)
Costs incurred to convert Luna loan and short-term loans	55
Balance of Luna loan at 3 October 2010	336
Amount of loan converted	(175)
Interest on short term Luna loan payable but not paid during the year	30
Net movement in PMG/Luna balances in November and December 2010	(77)
Amount loan outstanding as at 31 December 2010	114
Loan guarantee interest paid	50
Expenses incurred	(146)
Payments made	139
Total loan amounts outstanding to Luna at 31 December 2011	157

 

Luna Trading Ltd is the company through which PMG contracts with D Ciclitira for consulting and business services. During the year ended 31 December 2011, Luna Trading Ltd charged PMG (and PMG paid) for Consultancy fees in respect of directors' remuneration of £221,000 (2010 - £221,000) and remote office costs of £41,000 (2010 - £39,000).

During the year, the company acquired 100% of the equity interests of Parallel Media Korea (New Media) Limited and Parallel Media (Africa) Limited from Luna Trading and Mr S Mison. The total consideration of £1.011m was settled by the cancellation of amounts owed to PMG by Luna Trading of £607k and the issue of ordinary shares totalling £400k to Luna Trading Limited and £4k to Mr S Mison.

Related Parties (continued)

During the year ended 31 December 2010, David Ciclitira agreed to provide a personal guarantee of £1 million to Lloyds bank to support medium term PMG loans. As consideration for providing a personal guarantee, Luna Trading charges interest at 5% per annum of the guarantee amount for the period of the guarantee. In addition David Ciclitira 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 market value, Parallel Media (Championships) Limited (a wholly owned subsidiary of PMG which holds rights to the company's major sporting events).

Parallel Media Korea (New Media) Limited

Following the acquisition of Parallel Media Korea (New Media) Limited -PMK(NM)- on 29 July 2011, PMG provided funding of £65,000 to finance the running costs of the company. These costs were in respect of Parallel Smart Media Limited, the joint venture, and were recharged to Parallel Smart Media Limited in 2011.

Parallel Smart Media Limited

During the year ended 31 December 2011, PMG recharged expenses of £597,000 to Parallel Smart Media Limited and was charged licence fees of £93,750. At 31 December 2011, trade debtors, for both the group and the company, included £597,000 owed by Parallel Smart Media Limited. Parallel Smart Media Limited is the joint venture owned by Parallel Media Korea (New Media) Limited and Talspace.

Parallel Contemporary Arts Limited:

During the year PMG incurred costs in the staging and management of Art Projects owned by Parallel Media Contempory Arts Limited, a company under the control of David Cicilitira. Recoverable debtor amounts outstanding as at 31 December 2011 are £133,085 (2010 - £71,116). These amounts were repaid in full after the statement of financial position date.

 

END

 

 

FR SEEFEIFESELW