RNS Number:1108R
Pilat Media Global PLC
31 March 2008
Press Release
31
March 2008
Pilat Media Global PLC
("Pilat Media" or the "Company")
Preliminary Announcement of Results for year ended 31 December 2007
Pilat Media Global plc (AIM:PGB), the London-based AIM-listed supplier of
business management software to the media industry around the world, today makes
its preliminary announcement of results for the year ended 31 December 2007.
Highlights:
* Turnover £18.4 million (2006: £19.4 million)
* Profit from operations £1.6 million (2006: 3.2 million)
* Profit before tax £1.3 million (2006: £3.3 million)
* Adjusted EPS 1.80 p (2006: 4.58 p)
* Technology upgrade nearly completed
* AT&T contract proves IBMS suitability for tier-one IPTV service providers
* Significant first contract win in Africa with SABC
* Backlog from existing contracts provides good visibility into 2008
* Healthy pipeline of new contract opportunities
Commenting on the results, Michael Rosenberg, Chairman of Pilat Media Global
plc, said: "2007 has been a year of consolidation for Pilat Media following
record increases in revenue and profit in 2006. The Group's client base is
robust and the recent contract wins with AT&T and SABC demonstrate Pilat Media's
prominent position as one of the major suppliers of business management software
to the media industry, in particular in emerging verticals such as IPTV."
"The technology upgrade is being well received by both existing and potential
clients and we are confident of growing the business in the current financial
year."
For further information:
Pilat Media Global plc
Avi Engel, Chief Executive Officer Tel: +44 (0) 20
8782 0700
Martin Blair, Chief Financial Officer
aengel@pilatmedia.com
www.pilatmedia.com
mblair@pilatmedia.com
Shore Capital
Alex Borrelli Tel: +44 (0) 20
7408 4090
alex.borrelli@shorecap.co.uk
www.shorecap.co.uk
Media enquiries:
Abchurch
Chris Lane / Gareth Mead Tel: +44 (0) 20
7398 7700
chris.lane@abchurch-group.com
www.abchurch-group.com
Chairman and Chief Executive's Statement
2007 was a year of consolidation for Pilat Media. Significant progress has been
accomplished towards achieving the longer term goal of cementing our position as
a market leading provider of new generation business management software for
airtime scheduling, content acquisition, media trafficking and advertising sales
for both traditional and new media companies.
As previously announced the strategic technology upgrade project designed to
strengthen our competitive advantage has taken slightly longer than previously
planned. This has translated to an increased amount of management time and
financial resources being spent on this project. This upgrade is now reaching
its final steps and we are happy with the market's reaction to the result as the
nearly completed IBMS version 6 ("V6") is already being demonstrated to clients
and prospects. We have also invested heavily in digesting the 50% increase in
business achieved in the breakthrough year of 2006, and have now completed most
of the large scale and demanding software adaptation and enhancements requested
by and partly paid for by the new large and strategic clients. We plan to make
these clients our flagship reference sites to help promote ourselves into
additional large scale clients.
We have also signed up two new important contracts, with SABC and with AT&T, and
these are both of primary importance to our future - SABC given it is our first
in developing Africa and of course AT&T for being our first and so prominent
IPTV contract. However, these two contracts were closed later than previously
planned and have coincided with the cancellation of a major project where we had
previously won the competitive tender and had already been generating
significant revenues. This contract was cancelled by the client for their own
internal reasons, unrelated to Pilat and the other vendors that were also
involved. Due to these delays, the growth we had hoped to achieve despite the
heavy delivery load described above to maintain our track record of steady year
upon year growth, did not materialise.
At £18.4 million, it is for the first time in our six years of history as an
independent public company that revenues were slightly lower than in the
previous year. These revenues are at such a level that keeps us on the same
year-upon-year revenue growth trajectory we have established since we started in
2002, which we plan to continue. As we remained confident that other contracts
would be won in the near future we decided to continue to grow our core teams in
order to ensure that we had sufficient resources to support new business
opportunities. The 5.2% revenue shortfall on the previous year and the
deliberate continuation of the organisational expansion for the future has
caused profits from operations, compared with the record profits of 2006, to
drop by half, to approximately £1.6 million.
We feel confident that equipped with the new IBMS V6, the much enhanced delivery
and management capacity we have built over the last few months and the quality
of our first class client base which includes some of the world's most prominent
broadcasters, content and service providers, we can now return to growth. Our
headcount at 31 December 2007 at 284 (including 46 contractors to provide
flexibility) is up 8.4% from last year but more than the quantity it is the
continuously enriched experience and the dedication of our hard working staff
that we count on to bring about more business. The backlog of contracted and
additional revenues the existing contracts may generate in 2008 can potentially
reach 2007's level and we are working on a pipeline of some thirty new
opportunities, worth over £30 million in total. We hope to convert some of these
to new contracts during 2008 to fuel growth in 2008 and 2009.
Clients
Together with the two new clients joining in 2007, SABC and AT&T, Pilat Media's
client-base is now 53 strong. It represents wide diversity and breadth of
different client types and needs, in terms of revenues supported (from a few
millions to multi billion), number of users (from a few tens to over a
thousand), transmission platforms (satellite, cable, terrestrial and IP),
business models (public, commercial-funded, subscription or transaction based),
content packaging (linear and on demand) and depth of IBMS use (one module,
several modules or the whole suite).
The South African Broadcast Company ("SABC"), our first African client, is South
Africa's national public service broadcaster providing a comprehensive range of
programmes and services, employing 3,500 staff, with annual revenues of £316
million. SABC's television network comprises four television channels reaching
74% of the total adult TV-viewing population in South Africa. SABC also
operates 18 radio stations locally and Channel Africa in the rest of the
continent. IBMS will serve as the SABC's central content management and channel
scheduling system. The opportunity to also sell IBMS-Sales to support the
SABC's advertising sales operation may open up in the future.
AT&T requires no introductions. Being one of the world's largest
telecommunication companies it was very gratifying to be selected by them to
become part of their IPTV rollout. We started working with them in the summer
of 2007 under a Letter of Intent and through the second half of 2007 we
completed the initial installation. The signing of the AT&T contract is a
strategic step forward for Pilat Media as it confirms IBMS's suitability for the
tier-one IPTV service providers. Not only can IBMS support the cable-like IPTV
modus operandi but its openness for combining support for national, local and
even personalised ad insertion must be attractive to the large IPTV operators.
We continued to make good progress on the implementations that were ongoing at
the beginning of the year. The two largest, multi-station/channel
implementations, at CTV of Canada and Fox Television Stations ("FTS") in the USA
have passed the critical milestones of first go-live, with CTV now live at five
of its specialty channels and FTS live on its first station. In both IBMS
deployments all stations and channels are connected to a central database for an
end-to-end use, programming to ad-sales billing. Timelines in both projects have
been extended in line with the further enlarged scope as significant amount of
additional fee-earning software refinement and customisation work has been
ordered and is being delivered prior to the roll out process continuing through
2008 and 2009. Other large and multi-year implementation projects where scope
has grown and timelines extended to match include the BBC World Service, Media
General, CBS, and ESPN STAR Sports.
Revenues
The distribution of revenues across clients is similar to previous years. The
large and long-implementation contracts are accounted for using contract
accounting whereby the upfront licence and implementation fees are recognised
progressively according to the projects' milestones reached. These contracts
contributed 55% to 2007's revenues (59% of revenues in 2006). The reliance on
the largest 3 clients has reduced and they contributed 15.3%, 12.7%, and 7.7%
respectively compared with 26%, 16.8% and 9.5% in 2006, respectively.
As significant new work was added to the long-term implementation projects and
due to the late signing of the new license deals, the proportion of licence fees
included in total revenue decreased from 30% in 2006 to 26% in 2007.
Maintenance revenues however grew to £3.2 million (2006: £2.9 million),
representing 17% of total revenues (2006: 15%). The growth is due to new
installations that have been completed on contracts such as RTE and TV4. The
predictable, recurring and high margin maintenance income will continue to rise
as existing long term implementations and the new contracts signed go live. The
total maintenance revenue the existing customers will generate when they are all
live will be approximately £5.6 million.
The balance of revenues results from professional services covering project
management, requirement analysis, customisation, integration, data migration,
training and general handholding, and altogether representing 56% of 2007
revenues (2006: 55%). These services were delivered as part of new
implementation projects to the above mentioned clients, as well as to many of
the live clients, including Discovery, Sky Italia, "five", TV4 and SBS
Australia.
The 12 North American clients contributed 56% of total revenues in 2007 (2006:
58%), the 33 European and African clients, now including SABC contributed 32%
(2006: 33%) and the 9 Australasian clients contributed 12% of revenues (2006:
9%).
Research and Development
The strategic technology upgrade project continues to make progress and is on
target for completion in the second quarter of 2008. The converted IBMS-Content
modules are being delivered to the first clients and the conversion of
IBMS-Sales modules is almost complete. The upgraded IBMS V6 should strengthen
our competitiveness and enable management focus and resources to be transferred
to other fee earning purposes.
The software development work is carried out by a team of fifty software
engineers at our development centre in Israel, where the cost of quality
developers is lower than in the UK. The cost incurred during 2007 was £2.47
million. The cumulative cost, which totalled £4.91 million at 31 December 2007,
will be amortised over the product's useful life (estimated as approximately ten
years) once the conversion is complete. At that time we will reduce the
development headcount to suit the ongoing needs and to make this downsizing
practical the conversion team was built to include some 50% of external
consultants.
In addition to the above once-in-a-decade research and development investment we
continue to invest in functional and technical improvements to meet the needs of
existing and prospective clients. We continued to add improvements to the new
Business Intelligence module developed in 2006, adding many new reports and
features. In addition as a result of our work with ESPN STAR Sports we added
many new features making IBMS even more powerful for the scheduling of live
events. Last but not least, Pilat funded R&D efforts have been invested in
enhancing already operational new capabilities and prototyping some new ones in
the area of VOD scheduling and rights management and addressable advertising
campaigning and insertion.
Research and development costs in 2007 were £3.37 million, representing 18.3% of
revenues compared to £2.4 million and 12.3% respectively in 2006.
Impact of IFRS
The financial statements for the year ended 31 December 2007 are the first set
of accounts that have been prepared under the International Financial Reporting
Standards ("IFRS"). Whilst the adoption of these standards has not impacted how
we have reported our trading activity, there have been a number of significant
changes in the presentation and content of the information presented on the
income statement and balance sheet.
The most significant change to the income statement has been the requirement to
attribute a fair value to the currency forward contracts that we have put in
place to protect our future Canadian Dollar and US Dollar based receipts from
devaluation against the UK pound and reduce our exposure to fluctuations in
exchange rates. We have two such contracts in place, one for the exchange of up
to 11.2 million Canadian Dollars on certain dates between 1 January 2008 and 25
September 2009 at exchange rates defined as either 1.9475 or 2.08 and the second
one for the exchange of up to US$ 1 million each month starting in January 2008
at a rate of US $1.9595 to the British pound. At 31 December 2007 the Canadian
dollar forward contract, which is being treated as an ineffective hedge with
fair value adjustments taken to the income statement, showed a notional loss of
£343,000 which based on current rates we expect to significantly reduce at the
end of Q1 2008. The US dollar forward contract was treated under the hedge
accounting rules and over time the fair value adjustment will change. It is our
policy to hedge against exchange rate fluctuations and we believe the contracts
we currently have in place will contribute towards minimizing our exchange rate
exposure.
Under UK GAAP the acquisition of Media Line was classified as goodwill, however
under IFRS the customer contracts and the intellectual property of Media Line
were reclassified as intangible assets, which increased the value of the
intangible assets and consequently the corresponding deferred tax liability.
Share options were also treated differently under IFRS and this has resulted in
additional increase in the deferred tax liability.
Profitability
The profit from operations of £1.58 million achieved in 2007 represents 8.6% of
revenues (2006: 16.7%). Gross profit declined slightly to 53% of revenues
(2006: 58.6%) as a result of lower licence fees and some higher costs. The
profit before tax has been impacted by fair value adjustments of the Canadian
Dollar forward contract of £343,000. At the end of Q1 2008 we expect to see
most of this fair value adjustment significantly reduce as the marked to market
fair value is expected to be significantly higher at the end of March.
The current tax charge shows a small credit, however due to a large deferred tax
charge resulting from high first year allowances on the capitalised development
costs and a reduction in the deferred tax on the share option expense caused by
the lower share price, the overall provision for tax for the year is 42.6%
(2006: 31.4%).
We have identified ways to potentially reduce the tax charge in future years and
subject to some further analysis and preparations, and subject to the necessary
approvals, we may decide to implement these proposals for improved
tax-efficiency.
Basic earnings per share
Basic earnings per share are 1.25 pence (2006: 4.16 pence) down by 70%. The
basic earnings per share before the fair value adjustment for losses on
derivatives are 1.67 pence (2006: 4.16 pence), down 60%. The fully diluted
earnings per share before the fair value adjustment for losses on derivatives
are 1.61 pence (2006: 4.00 pence). Attributable profit and basic earnings per
share are reconciled below:
Attributable Profit Basic Earnings per
share
2007 2006 2007 2006
£ £ pence pence
Change
Reported 736,987 2,289,452 1.25 4.16
(70%)
Hedge accounting 247,049 - 0.42 -
ineffectiveness - after tax
Share option expense 76,777 233,729 0.13 0.42
(69%)
Adjusted 1,060,813 2,523,181 1.80 4.58
(61%)
Balance Sheet
Year on year there was not much change in the net asset position of the company,
with net assets declining by £53,000. However, non-current assets increased by
£1.8 million primarily as a result of the increase in capitalised software
costs. Current assets showed a decrease of £711,000 resulting from the decline
in cash balances (£2.7 million) offset by an increase in receivables being a
£362,000 increase in trade receivables and a £1.59 million increase in accrued
income.
There has been a substantial increase in long term liabilities. This is due to
increases in deferred taxation liabilities resulting from the IFRS treatment of
the Media Line acquisition and increases in capital allowances which have
reduced the current tax payable. In addition, long term liabilities have
increased as a result of the fair value adjustments on forward currency
contracts. Current liabilities have decreased by £892,000 as a result of a
reduction in the current tax payable to the extent that there is a small
repayment due.
Cash flow
There was a surplus in the net cash flow from operations of £380,000 which
together with the cash received from the exercise of share options offset the
income taxes that were paid. In 2007 we continued to invest in the technology
upgrade project described above and as a result cash balances declined by £2.7
million.
Board and senior management
During the year we made a number of changes to the Board and senior management.
In November two new non-executive directors joined the Board, Mr Kobi Livne and
Mr Menahem Shalgi. Both Mr Shalgi and Mr Livne have had distinguished careers
in senior management, primarily at Amdocs, the multi billion dollar software
group. In his last role at Amdocs Mr Shalgi led Amdocs' M&A group and was
responsible for a number of acquisitions ranging in size from a few hundred
million dollars to in excess of one billion dollars. In his last role Mr. Livne
was responsible for all of Amdocs operations outside North America where he
managed more then 2,500 employees with revenues in excess of US$600 million.
We have also embarked upon a management restructuring process aiming to expand
our decision making capacity, widen the front of business development
initiatives we can cope with simultaneously and intensify our efforts in each of
the three key areas we set ourselves for further improvement: Product, Delivery
and Sales. We are pleased to have been able to attract Mr. Tuval Lava as our
new Chief Operating Officer who joined in December. Mr Lava, also ex-Amdocs,
brings a wealth of senior software and services delivery as well as business
development experience. In his last role before joining Pilat he served as the
President of Amdocs' Asia Pacific Division.
Mr. Ron Barlev, who served as COO until Mr. Lava's joining, left the board and
the day to day operations management of the business to be able to lead in a
much more focused way our product design and road mapping work as well as to
intensify our efforts in the search for and the development of opportunities for
broadening the product portfolio organically or through M&A. Ron now serves as
EVP Product strategy and his team includes Bob Lamb (our CTO), Geoff Hutton (our
Chief Functional Architect) and Matt Taylor (heading up the Business Analysis
group).
The third component in the restructuring plan currently being worked on is the
significant expansion of our sales and marketing workforce to increase our
capacity to address the many opportunities we now see in the market place.
Key Performance Indicators
The Board uses a number of financial and non-financial key performance
indicators to manage the business. None of the KPI's can be judged in isolation
of each other nor can they be used without due interpretation for the reasons
that have caused the changes.
The main financial KPIs the Board uses are:
2007 2006 2005
% change in revenues (5.2%) 49.5% 7.9%
% net profit from operations 8.58% 16.7% 17.9%
Revenue per employee £77,436 £85,265 £83,678
As mentioned earlier the growth in revenues in 2006 was exceptional and if the
growth in revenues from 2005 to 2007 is averaged then the yearly growth is
almost 20%, in line with our year-up-on- year target average. The Board also
took a conscious decision to keep increasing the number of staff so that it
could meet the demand it believes will result from the strong pipeline. As a
result of this the net profit percentage has decreased from the levels achieved
in 2006.
The non-financial KPIs used by the Board are:
2007 2006 2005
Number of new IBMS contracts signed 2 6 3
Number of new staff hired 61 46 58
Staff turnover 16% 13% 16%
In addition to the number of new contracts signed the Board makes a qualitative
judgement about the significance of the new contracts signed in terms of their
value for our reputation and for opening new opportunities in new market
segments not previously penetrated. In this respect both SABC (first in Africa)
and in particular AT&T (first major IPTV) score very highly as indicated above.
Outlook
Our market position is as strong as ever. The changing broadcast technology for
linear as well as on demand viewing and the triple screen convergence (TV, PC
and mobile) are opening up additional content exploitation vehicles and with
that create larger but more complex airtime inventory for advertising to be
placed .This in turn presents new business opportunities and threats for our
traditional customers and attract new players such as the telcos. Both
traditional players and the new entrants must therefore look for new generation
business management systems like IBMS to meet the challenges they face. As in
any attractive markets we also face increasing competition but overall we
believe that despite the current uncertain economic climate, which might cause
some delays, the underlying opportunity for us is greater than the threats.
With improved product offering benefiting from an intensive 2.5 year technology
upgrade investment and enhanced management and delivery capacity resulting from
reorganization and continued up-staffing, we are better prepared to meet our
challenge of making 2008 a year of further growth. The backlog of already
contracted business and the additional revenues the existing contracts typically
generate bring us already close to 2008's revenue level, and the almost thirty
opportunities we compete on, even at a modest conversion ratio, can bring about
the expected growth in revenues in 2008. We hope to be able to make some
announcements in the near future.
To complete the reorganisation, we are in the process of enlarging our sales
force to intensify the sales efforts and broaden our geographical reach beyond
the countries where we have been selling so far. We are also reviewing our cost
structure and have plans in place to gradually lower the software development
and maintenance costs by better utilizing our international set up and focusing
our recruitment of new technical staff in the lower cost locations in which we
operate.
We would like to thank our clients, investors, suppliers and dedicated team for
their support and loyalty and look forward optimistically to making Pilat Media
a continuing success story.
Michael Rosenberg
Avi Engel
Chairman Chief
Executive Officer
31 March 2008 31
March 2008
CONSOLIDATED INCOME STATEMENTS
Year ended
31 December
2007
2006
£
£
REVENUE 18,429,883
19,440,437
Cost of sales (8,662,919)
(8,041,433)
GROSS PROFIT 9,766,964
11,399,004
Operating costs and expenses:
Research and development (3,366,750)
(2,384,648)
Selling and marketing (1,180,395)
(1,295,817)
General and administrative (3,244,404)
(3,976,910)
Share option expense (76,777)
(233,729)
Amortisation (317,077)
(264,231)
Total operating costs and expenses (8,185,403)
(8,155,335)
PROFIT FROM OPERATIONS 1,581,561
3,243,669
Hedge accounting ineffectiveness (343,123)
-
Finance Income 72,368
93,093
Finance costs (27,889)
-
PROFIT BEFORE TAX 1,282,917
3,336,762
Current taxation (68,091)
1,153,535
Deferred taxation 614,021
(106,225)
Total taxation (545,930)
(1,047,310)
PROFIT AFTER TAX 736,987
2,289,452
EARNINGS PER SHARE
Basic 1.25p
4.16p
Diluted 1.21p
4.00p
Note: The profit from operations for the period arises from the Group's
continuing operations.
CONSOLIDATED BALANCE SHEETS
2007
2006
ASSETS £
£
NON-CURRENT ASSETS
Intangible assets 7,506,058
5,355,856
Property, plant and equipment 574,162
586,944
Trade and other receivables -
300,000
Deferred tax 268,959
-
8,349,179
6,242,800
CURRENT ASSETS
Trade and other receivables 15,444,063
13,487,837
Taxation 56,303
-
Cash and cash equivalents 720,534
3,444,206
16,220,900
16,932,043
TOTAL ASSETS 24,570,079
23,174,843
CAPITAL AND RESERVES
Called up share capital 2,960,117
2,935,991
Share premium account 9,045,412
8,860,551
Capital redemption reserve 50,000
50,000
Merger reserve (853,955)
(853,955)
Share option reserve 639,916
1,113,577
Other reserve 3,108,000
3,108,000
Cumulative translation reserve 116,650
68,888
Cash flow hedge reserve (444,562)
-
Retained earnings 3,772,042
2,990,483
EQUITY SHAREHOLDERS' FUNDS 18,393,620
18,273,535
LIABILITIES
NON-CURRENT LIABILITIES
Deferred taxation 1,248,871
42,621
Fair value of derivative 960,570
-
2,208,401
42,621
CURRENT LIABILITIES
Trade and other payables 3,967,018
3,695,315
Taxation -
883,377
Provisions -
279,995
3,967,018
4,858,687
TOTAL LIABILITIES 6,176,459
4,901,308
SHAREHOLDERS' EQUITY AND LIABILITIES 24,570,079
23,174,843
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital Share Cumulative Cash
flow
Redemption Option Translation
Hedge
Share Share Reserve Merger Reserve Other Reserves
Reserve Retained
Capital Premium Reserve Reserves
Profit Total
£ £ £ £ £ £
£ £ £
Balance at 1 2,935,991 8,860,551 50,000 (853,955) 1,113,577 3,108,000 68,888
- 2,990,483 18,273,535
January 2007
Profit for the - - - - - - -
- 736,987 736,987
period
Exchange
translation
differences
on foreign
operations - - - - - - 47,762
- - 47,762
Total recognised
income and expense - - - - - - 47,762
- 736,987 784,749
Fair value
movements on cash
flow hedges - - - - - - -
(617,447) - (617,447)
Deferred tax on
fair value
movements on cash
flow hedges - - - - - - -
172,885 - 172,885
Net profits /
(losses) recognised
directly in equity - - - - - -
(445,562) (445,562)
IFRS adjustment re
share options - - - - 71,570 - -
- - 71,570
Deferred tax
movement - - - - (517,209) - -
- 13,373 (503,836)
Investor share
option lapse - 73,600 - - (73,600) - -
- - -
Transfer on share
option exercises /
lapses - - - - (31,199) - -
- 31,199 -
Share option charge
for the period - - - - 76,777 - -
- - 76,777
Proceeds of issue
of shares 24,126 111,261 - - - - -
- - 135,387
Balance at
31 December
2007 2,960,117 9,045,412 50,000 (853,955) 639,916 3,108,000 116,650
(444,562) 3,772,042 18,393,620
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital Share
Cumulative
Redemption Option
Translation
Share Share Reserve Merger Reserve Other
Reserves Retained
Capital Premium Reserves
Profit
Reserve
Total
£ £ £ £ £
£ £ £
Balance at
1 January
2006 2,529,103 5,196,081 50,000 (853,955) 396,259 3,108,000
- 668,989 11,094,477
Profit for the
period - - - - - -
- 2,289,452 2,289,452
Exchange translation
differences on
foreign operations - - - - - -
68,888 - 68,888
Total recognised
income and expense - - - - - -
68,888 2,289,452 2,358,340
IFRS adjustment re
share options - - - - 53,221 -
- - 53,221
Deferred tax movement - - - - 388,810 -
- - 388,810
Investor Share option - 135,633 - - (135,633) -
- - -
exercise
Transfer on share
option exercises /
lapses - - - - (32,042) -
- 32,042 -
Proceeds of share
issue (net of
expenses) 406,888 3,528,837 - - 209,233 -
- - 4,144,958
Share option charge
for the period - - - - 233,729 -
- - 233,729
Balance at 31 2,935,991 8,860,551 50,000 (853,955) 1,113,577 3,108,000
68,888 2,990,483 18,273,535
December 2006
CONSOLIDATED STATEMENTS OF CASH FLOWS
2007
2006
£
£
Net cash inflow from operating activities a 380,237
743,252
Income taxes paid (791,541)
(635,409)
Interest paid (27,889)
-
Net cash from operating activities (439,193)
107,843
Interest received 72,368
93,093
Cash flow from investing activities b (2,730,782)
(3,534,712)
Cash flow from financing activities c 135,386
3,401,862
Net change in cash and cash equivalents (2,962,221)
68,086
Cash and cash equivalents at beginning of period 3,444,206
3,522,387
Exchange gains / (losses) on cash and bank overdraft 238,549
(146,267)
Cash and cash equivalents at end of period 720,534
3,444,206
APPENDICES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
Year to December 31
2007 2006
£ £
Reconciliation of net profit to net cash inflow from operating
activities
a
Profit before tax
1,282,917 3,336,762
Finance income
(72,368) (93,093)
Interest paid
27,889 -
Depreciation and amortisation
598,670 503,340
Share option expense
76,777 233,729
Loss on derivative instruments
343,123 -
Increase in trade and other receivables
(1,834,395) (4,037,108)
(Decrease) / Increase in trade and other payables
(42,376) 799,622
Net cash outflow from operating activities
380,237 743,252
Cash flow from investing activities
b
Purchase of property, plant and equipment
(268,852) (459,354)
Capitalised software development costs
(2,467,279) (1,719,746)
Sale of property, plant and equipment
5,349 -
Purchase of subsidiary undertakings
- (1,355,612)
Net cash outflow from investing activities
(2,730,782) (3,534,712)
Cash flow from financing activities
c
Proceeds from the issue of share capital
135,386 3,443,086
Equity share issue expenses
- (41,224)
Net cash generated from financing activities
135,386 3,401,862
SIGNIFICANT ACOUNTING POLICIES
GENERAL
Pilat Media Global plc is a public listed company, incorporated and domiciled in
England and quoted on the AIM stock market and the Tel Aviv Stock Exchange. The
Group provides business management software to broadcasters globally.
Basis Of Preparation
The financial information for the year ended 31 December 2007 has not been
audited and does not constitute the Company's statutory financial statements
within the meaning of S240 of the Companies Act 1985. The preliminary report
was approved by the Board on 30 March 2008. The statutory accounts for the year
ended 31 December 2007 have not been filed with the Registrar of Companies nor
reported on by the Company's auditors. They will be circulated to the
shareholders in April 2008 and the Annual General Meeting is arranged to take
place on 25 June 2008. The comparative results for the year ended 31 December
2006 are an abridged version of the audited financial statements which have been
filed with the UK Registrar of Companies and contain an unqualified audit
opinion and have been converted to International Finance Reporting Standards as
detailed in the subsequent notes
Basis Of Accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), as adopted by the European Union, for
the first time. The financial statements have been prepared under the
historical cost basis. Information on the impact on accounting policies and
financial results resulting from the conversion from UK Generally Accepted
Accounting Practice ("UK GAAP") to IFRS is provided later in this report.
At the date of authorisation of this report the following Standards and
Interpretations which have not been applied in these financial statements were
in issue but not yet effective or endorsed (unless otherwise stated):
IFRS 8 Operating Segments (endorsed)
IFRIC 11 Group and Treasury Share Transactions (endorsed)
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 IAS19 The limit on a defined benefit asset, minimum funding
requirements of their interaction
Amendment to IAS1 and IAS23
The directors anticipate that the adoption of these Standards and
Interpretations as appropriate in future periods will have no material impact on
the financial statements of the Group when the relevant standards and
interpretations come into effect for periods commencing on or after 1 January
2008.
Transitional arrangements
The Group has taken the following optional exemptions contained in IFRS 1 '
First-time Adoption of International Financial Reporting Standards' in preparing
the Group's balance sheet on transition to IFRS at 1 January 2006:
* Cumulative translation differences - the cumulative translation differences for
all foreign
subsidiaries have been set to zero at 1 January 2006 and exchange differences
arising prior to
this date will not be recycled to the income statement.
* Business combinations - the Group has elected not to apply IFRS 3 Business
Combinations
retrospectively to past business combinations (business combinations that occurred
before the date
of transition to IFRS).
Based on the above exemptions there are no transitional adjustments to the 1
January 2006 opening balance sheet.
Basis Of Consolidation
The consolidated financial statements incorporate the financial statements of
Pilat Media Global plc ("the Company") and enterprises controlled by the Company
(its subsidiaries), together "the Group" made up to 31 December each year.
Control arises when the Company has the ability to direct the financial and
operating activities of an entity so as to obtain benefit from its activities.
The excess of cost of acquisition over the fair values of the Group's share of
identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair value of identifiable net assets acquired
(i.e. discount on acquisition) is recognised directly in the income statement.
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the Group. The costs of an acquisition are measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at the acquisition date irrespective of the extent of any minority
interest.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the Group.
All intra-group transactions, balances, and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
Revenue Recognition
Revenue is derived from the sale, integration and implementation of broadcast
management software and the subsequent provision of maintenance services.
Revenue from the sale of software licences is recognised in full when persuasive
evidence of an agreement exists, when delivery and acceptance of the software by
the customer has occurred, when the fee is fixed and determinable and when
collectability is considered probable.
Revenue from integration and implementation services is recognised on a
percentage-to-completion basis. Under the percentage-to-completion method,
provisions for estimated losses on uncompleted contracts are recognised in the
period in which the likelihood of such losses is determined. The
percentage-to-completion is measured by monitoring progress using records of
actual time incurred to date on the project compared with the total estimated
project requirement.
Revenue from maintenance services is recognised on a straight-line basis over
the term of the maintenance agreement once the licence acceptance conditions
have been met. Revenue not recognised in the income statement under this policy
is classified as deferred income in the balance sheet.
Revenue allocable to other products and services is recognised as the products
are delivered or services are provided.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any accumulated impairment losses. The cost of an item of property, plant
and equipment comprises its purchase price and any costs directly attributable
to bringing the asset into use.
Depreciation is calculated on a straight-line basis to write down the assets to
their estimated residual value over their useful economic lives at the following
rates
* Furniture 20%
* Computer equipment 33%
* Office equipment 20%
* Motor vehicles 25%
* Leasehold improvements are depreciated over the life of the lease
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. The gain or loss arising on the
disposal or retirement of an asset is determined as the difference between the
sale proceeds and the carrying amount of the asset and is recognised in the
income statement.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
The Group as lessee
Assets held under finance leases are initially recognised as property, plant and
equipment at an amount equal to the fair value of the leased assets or, if
lower, the present value of the minimum lease payments at the inception of the
lease, and then depreciated over their useful economic lives. Lease payments
are apportioned between repayment of capital and interest. The capital element
of future lease payments is included in the balance sheet as a liability.
Interest is charged to the income statement so as to achieve a constant rate of
interest on the remaining balance of the liability.
Rentals payable under operating leases are charged to the income statement on a
straight-line basis over the lease term. Operating lease incentives are
recognised as a reduction in the rental expense over the lease term.
Internally-Generated Intangible Assets - Research and Development Expenditure
Expenditure on research activities is recognised as an expense in the period in
which it is incurred.
An internally-generated intangible asset arising from the Group's computer
software development initiative is recognised only if all of the following
conditions are met:
* an asset is created that can be identified (such as software and new processes);
* it is probable that the asset created will generate future economic benefits;
* the development cost of the asset can be measured reliably;
* the product or process is technically and commercially feasible; and
* sufficient resources are available to complete the development and to either sell or
use the
asset.
Development costs meeting these criteria are capitalised and amortised on a
straight-line basis over their useful lives, which is currently estimated as 10
years, once the related software product is available for use.
Where no internally-generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.
Other Intangible Assets
Intangible assets purchased separately, such as software licences that do not
form an integral part of related hardware, are capitalised at cost and amortised
over their useful economic life. Intangible assets acquired through a business
combination such as customer contracts and intellectual property are initially
measured at fair value and amortised over their estimated useful economic life
of 10 years.
Retirement Benefit Costs
Payments to defined contribution retirement benefit plans are charged as an
expense as they fall due. Payments made to state-managed retirement benefit
schemes are dealt with as payments to defined contribution plans where the
Group's obligations under the schemes are equivalent to those arising in a
defined contribution retirement benefit plan.
Impairment of Tangible and Intangible Assets Excluding Goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Group estimates the
recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Provisions
Provisions are made where there is uncertainty over the amount to be paid or
received. Once the amount is known with reasonable certainty then the provision
is released.
Financial Instruments
The following policies for financial instruments have been applied in the
preparation of the Group's financial statements. Financial assets and financial
liabilities are recognised on the Group's balance sheet when the Group becomes a
party to the contractual provisions of the instrument.
Cash and cash equivalents
For the purpose of preparation of the cash flow statement, cash and cash
equivalents includes cash at bank and in hand, short term bank overdraft, and
short term deposits with an original maturity period of three months or less.
Trade and other receivables
Trade and other receivables do not carry any interest and are stated at their
fair value as reduced by appropriate allowances for estimated irrecoverable
amounts.
Trade payables
Trade payables are not interest bearing and are stated at their fair value.
Financial and equity liability
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the group after
deducting all of its liabilities.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received,
net of direct issue costs.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption, are accounted for on an accrual basis and
are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise and recognised in the income
statement over the term of the borrowing using the effective interest rate
method.
Derivative financial instruments
Transaction exposures resulting from purchases in foreign currencies may be
hedged by forward foreign currency transactions. Group policy aims to minimise
any exposure with the intention of protecting the buying margin from
fluctuations in the value of the foreign currency.
Derivative financial instruments used by the Group are stated at fair value.
Hedges are classified as either fair value hedges when they hedge the exposure
to changes in the fair value of a recognised asset or liability; or cash flow
hedges where they hedge exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised asset or
liability or a forecasted transaction.
Gains or losses from remeasuring fair value hedges, which meet the conditions
for hedge accounting, are recorded in the income statement, together with the
corresponding changes in the fair value of the hedged instruments attributable
to the hedged risk.
The portion of any gains or losses of cash flow hedges, which meet the
conditions for hedge accounting and are determined to be effective hedges, are
recognised directly in equity. The gains or losses relating to the ineffective
portion are recognised immediately in the income statement.
When the hedged firm commitment results in the recognition of an asset or a
liability, then, at the time the asset or liability is recognised, the
associated gains or losses that had previously been recognised in equity are
included in the initial measurement of the acquisition cost or other carrying
amount of the non-financial asset or liability. For all other cash flow hedges,
the gains or losses that are recognised in equity are transferred to the income
statement in the same year in which the hedged firm commitment affects the net
profit and loss.
For derivatives that do not qualify for hedge accounting, any gains or losses
arising from changes in fair value are recognised immediately in the income
statement. Hedge accounting is discontinued when the hedging instrument expires
or is sold, terminated or exercised, or no longer qualifies for hedge
accounting. At that point in time, any cumulative gain or loss on the hedging
instrument recognised in equity is kept in equity until the forecasted
transaction occurs. If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognised in equity is transferred to the income
statement.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated by using tax rates that have
been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and
liabilities in a transaction which affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled. Deferred tax is
charged or credited in the income statement, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.
Foreign Currencies
Transactions in currencies other than pound sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated foreign currencies
are retranslated at the rates prevailing on the balance sheet date. Non-monetary
assets and liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair
value was determined. Gains and losses arising on retranslation are included in
the income statement for the period, except for exchange differences on
non-monetary assets and liabilities where the changes in fair value are
recognised directly in equity.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward contracts (see above for details of the Group's accounting
policies in respect of such derivative financial instruments).
The income statement and balance sheet of foreign operations and foreign
entities are translated into the functional currency (pound sterling) on
consolidation at the average rates for the period and the rates prevailing at
the balance sheet dates respectively. Exchange gains and losses arising on the
translation of the Group's net investment in foreign operations and foreign
entities, are recognised as a separate component of shareholders' equity. On
disposal of foreign operations and foreign entities, the cumulative translation
differences are recycled to the income statement and recognised as part of the
gain or loss on disposal.
The most important foreign currencies for the Group is the US Dollar and the
Canadian Dollar. The relevant exchange rates for these currencies to sterling
were:
31 December 31 Dec 2007 31 December 31 Dec 2006
2007 average closing 2006 average closing
US dollar 1.9920 1.9843 1.8561 1.9621
Canadian dollar 2.1420 1.96069 2.0952 2.2758
Share-Based Payments
The Group operates equity-settled, share-based compensation plans. The fair
value of the employee service received in exchange for the grant of the options
is recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date the Group revises
its estimates of the number of options that are expected to become exercisable.
It recognises the impact of the revision to original estimates, if any, in the
income statement, with a corresponding adjustment to equity.
Fair value is measured by use of a binomial or a Black-Scholes valuation model,
whichever is more appropriate to the instrument granted. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effect of non-transferability, exercise restrictions and behavioural
considerations.
The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are
exercised.
In accordance with the transitional provisions of IFRS2, the Standard has been
applied retrospectively to all grants of equity instruments after 7 November
2002 that were unvested as of 1 January 2006, and to liabilities for share-based
transactions existing at 1 January 2006.
Segmental Reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are
subject to risks and returns that are different from those of segments operating
in other economic environments. Management considers the business segment to be
the primary segment and the geographical segment to be the secondary segment.
Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future. Whilst the
directors believe that the estimates and assumptions used in the preparation of
the financial statements are reasonable, the resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates
that have a significant risk of causing material adjustment to the carrying
values of assets and liabilities within the next financial year are discussed
below.
Customer contracts and intellectual property
The computation of the fair value of customer contracts and intellectual
property acquired is based on an estimate of the future cash flows arising from
the ownership of these assets. Differences in the actual cash flows from those
anticipated may give rise to impairment in the value.
Share options
In computing the fair values of options granted to employees an estimate of
forfeiture has been made based on historical leaver information. The actual
rate of forfeiture is likely to be different which will mean the actual charge
for share options may differ.
Stage of project completion
In computing the value of revenue to be recognised on long term contracts an
estimate has been made of the resources that will be required to complete the
contract. Differences in the actual resources required to complete the project
may mean that revenue recognition is increased or decreased at faster rates.
1 SEGMENTAL ANALYSIS
a) Analysis of group results:
2007
2006
IBMS Media Pro Total IBMS
Media Pro Total
£ £ £ £
£ £
Revenue 17,317,365 1,112,518 18,429,883 17,891,000
1,549,437 19,440,437
Profit / (Loss) from 1,681,997 (100,436) 1,581,561 2,748,241
495,428 3,243,669
operations
Other losses - net (343,123) - (343,123) -
- -
Finance income 71,969 399 72,368 91,153
1,940 93,093
Finance costs (18,392) (9,497) (27,889) -
- -
Profit / (Loss) 1,392,451 (109,534) 1,282,917 2,839,394
497,368 3,336,762
before tax
Income tax expense (576,468) 30,538 (545,930) (898,210)
(149,100) (1,047,310)
Profit / (Loss) after 815,983 (78,996) 736,987 1,941,184
348,268 2,289,452
tax
Other Information
Capital expenditure - 260,573 8,279 268,852 457,158
2,196 459,354
tangible
Capital expenditure -
intangible
2,467,279 - 2,467,279 1,719,746
- 1,719,746
Depreciation and
amortisation
560,842 32,522 593,364 486,229
17,112 503,341
Balance Sheet
Total Assets 24,147,158 422,921 24,570,079 22,276,539
898,304 23,174,843
Total Liabilities 6,080,559 95,900 6,176,459 4,618,929
282,379 4,901,308
b) The Group's revenue and profit before tax were all derived from its
principal activity. Sales and operating profit were made in the following
geographical markets:
Turnover Operating
profit
2007 2006 2007
2006
£ £ £
£
Europe, Middle East and Africa "EMEA" 5,944,127 6,396,003 713,929
1,067,183
Americas 10,294,287 11,352,749 1,224,477
1,894,225
Australasia 2,191,469 1,691,685 (356,845)
282,261
18,429,883 19,440,437 1,581,561
3,243,669
The above geographical location has been provided based on the destination of
services provided
There is a requirement to report segment assets and additions by location,
however the Directors believe this information will be misleading as the Group
is a software company with more than 75% of its assets located in the UK but
deriving the majority of its revenue outside of the UK.
2. Earnings per share
Adjusted Earnings Per Share
The calculations of adjusted basic and diluted earnings per ordinary 2007
2006
share are based on the following adjustments to results:
£
£
Reported profit for the financial period 736,987
2,289,452
Forward contracts: transactions not qualifying as hedges 343,123
-
Deferred tax on forward contracts (96,074)
-
Share option expense 76,777
233,729
Adjusted profit for the financial period 1,060,813
2,523,181
Basic adjusted earnings per share 1.80p
4.58p
Fully diluted adjusted earnings per share 1.74p
4.41p
Basic and diluted earnings per share is based on the profit after tax and on the
following weighted average number of shares in issue.
Year to 31 December Year to 31 December
2007 2006
Basic 59,064,910 55,087,071
Adjustments:
Issue of outstanding share options 2,005,658 2,141,479
Diluted 61,070,568 57,228,550
3. RECONCILIATION OF UK GAAP TO IFRS
Year ended 31 December 2006 Income Statement
IFRS
adjustments
UK GAAP
Restated
£
£ £
REVENUE 19,440,437 -
19,440,437
Cost of sales (8,041,433) -
(8,041,433)
GROSS PROFIT 11,399,004 -
11,399,004
Operating costs and expenses:
Research and development (2,384,648) -
(2,384,648)
Selling and marketing (1,295,817) -
(1,295,817)
General and administrative (A) (3,908,022) (68,888)
(3,976,910)
Share option expense (233,729) -
(233,729)
Amortisation (B) - (264,231)
(264,231)
Total operating costs and expenses (7,822,216) (333,119)
(8,155,335)
PROFIT FROM OPERATIONS 3,576,788 (333,119)
3,243,669
Investment income 93,093 -
93,093
PROFIT BEFORE TAXATION 3,669,881 (333,119)
3,336,762
Income tax expense (1,082,970) 35,660
(1,047,310)
PROFIT AFTER TAXATION 2,586,911 (297,459)
2,289,452
EARNINGS PER SHARE
Basic 4.70p (0.54p)
4.16p
Diluted 4.52p (0.52p)
4.00p
3. RECONCILIATION OF UK GAAP TO IFRS (Continued)
Balance Sheet 31 December 2006
IFRS
adjustments
UK GAAP
Restated
£
£ £
ASSETS
NON-CURRENT ASSETS
Intangible assets (B)
- Trademark -
2,210
2,210
- Development costs 2,447,107
2,447,107
- Customer contracts - 2,402,263
2,402,263
- Intellectual property - 504,276
504,276
- Goodwill 2,374,275 (2,374,275)
-
Property, plant and equipment 586,944 -
586,944
Deferred income tax (C) 176,554 (176,554)
-
Trade and other receivables 300,000 -
300,000
Total non-current assets 5,887,090 355,710
6,242,800
CURRENT ASSETS
Trade and other receivables 13,487,837 -
13,487,837
Cash and cash equivalents 3,444,206 -
3,444,206
16,932,043 -
16,932,043
TOTAL ASSETS 22,819,133 355,710
23,174,843
CAPITAL AND RESERVES
Called up share capital 2,935,991 -
2,935,991
Share premium account 8,860,551 -
8,860,551
Capital redemption reserve 50,000 -
50,000
Merger reserve (853,955) -
(853,955)
Share option reserve (C) 542,163 571,414
1,113,577
Other reserve 3,108,000 -
3,108,000
Retained earnings (A) + (B) 3,287,942 (297,459)
2,990,483
Cumulative translation reserve (A) - 68,888
68,888
EQUITY SHAREHOLDERS' FUNDS 17,930,692 342,843
18,273,535
LIABILITIES
NON-CURRENT LIABILITIES
Deferred taxation (C) - 42,621
42,621
CURRENT LIABILITIES
Trade and other payables 3,695,315 -
3,695,315
Taxation 883,377 -
883,377
Provision 309,749 (29,754)
279,995
4,888,441 (29,754)
4,858,687
TOTAL LIABILITIES 4,888,441 12,867
4,901,308
SHAREHOLDERS' EQUITY AND LIABILITIES 22,819,133 355,710
23,174,843
(A) Translation reserves
The translation reserve results from exchange gains and losses arising on the
translation of the Group's net investment in its overseas operating
subsidiaries. The foreign exchange impact of translating foreign operations
since 1 January 2006 is £68,888 for the year ended 31 December 2006
(B) Amortisation of Intangibles
The intangible assets acquired as a result of the Media Line acquisition have
been restated from goodwill to customer contracts and intellectual property and
are amortised from the date of acquisition. Under IFRS the creation of the
intangibles creates a deferred tax adjustment
(C) Deferred income tax
Under IFRS there is a deferred tax liability as a result of creation of the
intangibles. This has been offset by the deferred tax asset created for share
based payments and the translation reserve
Balance Sheet 31 December 2005
IFRS
adjustments
UK GAAP
Restated
£
£ £
ASSETS
NON-CURRENT ASSETS
Intangible assets - development costs 727,361
- 727,361
Property, plant and equipment 311,676
- 311,676
Deferred income tax (C) 159,210
129,383 288,593
Total non-current assets 1,198,247
129,383 1,327,630
CURRENT ASSETS
Trade and other receivables 9,020,186
- 9,020,186
Cash and cash equivalents 3,522,387
- 3,522,387
12,542,573
- 12,542,573
TOTAL ASSETS 13,740,820
129,383 13,870,203
CAPITAL AND RESERVES
Called up share capital 2,529,103
- 2,529,103
Share premium account 5,196,081
- 5,196,081
Capital redemption reserve 50,000
- 50,000
Merger reserve (853,955)
- (853,955)
Share option reserve (C) 266,876
129,383 396,259
Other reserve 3,108,000
- 3,108,000
Retained earnings 668,989
- 668,989
EQUITY SHAREHOLDERS' FUNDS 10,965,094
129,383 11,094,477
CURRENT LIABILITIES
Trade and other payables 2,357,257
- 2,357,257
Taxation 418,469
- 418,469
2,775,726
- 2,775,726
SHAREHOLDERS' EQUITY AND LIABILITIES 13,740,820 129,383
13,870,203
4 CAPITAL AND RESERVES
SHARES ISSUED
During the year 482,496 ordinary shares were issued for cash consideration of
£135,387.
SHARE PREMIUM
The share premium account is the additional amount over and above the nominal
share capital that is received for shares issued less any share issue costs.
CAPITAL REDEMPTION RESERVE
This reserve arose from the redemption of redeemable preference shares.
MERGER RESERVE
The acquisition by the company of Pilat Media Limited in February 2002 was
accounted for in accordance with the merger accounting principles set out in UK
Financial Reporting Standard 6 and Schedule 4(A) of the Companies Act 1985
whereby the consolidated financial statements were presented as if the business
previously carried out through Pilat Media Limited had always been owned and
been controlled by the company.
IFRS 3 and the transitional requirements of IFRS 1 allow prospective application
for all business combinations subsequent to the transition date (1 January
2006). Accordingly this acquisition has not been re-stated in accordance with
that standard.
SHARE OPTION RESERVE
The share option reserve includes an expense based on the fair value of share
options issued since 7 November 2002 and the fair value of share options issue
to Company investors as part of a placing of the Company's shares.
OTHER RESERVE
The other reserve represents a non-refundable capital contribution made by Pilat
Technologies International Limited on the demerger in February 2002 which was
used to repay the debts owed by Pilat Media Limited to Pilat Technologies
International Limited.
CUMULATIVE TRANSLATION RESERVE
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of operations that do not have a
sterling functional currency. Exchange differences are classified as equity and
transferred to the Group's translation reserve. Such translation differences
are recognised in the income statement in the period in which the operation is
disposed of.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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