RNS Number:0328Q
Parallel Media Group PLC
22 September 2003
22 September 2003
Parallel Media Group Plc
Final Results for the period ended 22 January 2003
Chairman's statement
Dear Shareholder,
It is my responsibility, as Chairman, to present to you the Report and Accounts
of Parallel Media Group Plc ("PMG") which was called World Sport Group Plc ("
World Sport Group") until 20 January 2003 for the extended period from 31
December 2001 until the de-merger of World Sport Group Limited and other
interests on 20 January 2003. These accounts bear very little relationship to
the current Parallel Media Group Plc but complete the shareholder reporting
affairs of the former World Sport Group.
Turnover for the period was GBP30.28 million (GBP18.46 million for 6 months
ended 30 December 2001) and the loss reported was GBP11.39 million, (GBP77.17
million for 6 months ended 30 December 2001). Audited financial statements for
the short 6 month period ending 30 December 2001 are set out in the prospectus
dated 23 December 2002.
Dividend policy
It is inappropriate to consider the payment of a dividend, but it is the Board's
intention to adopt a progressive dividend policy as soon as possible.
Reasons for the delay in publishing the Annual Report and Accounts
Delays have been experienced in obtaining signed, audited accounts from some of
the demerged businesses. Shareholders may well be aware that World Sport Group's
shares were suspended from trading on AIM between July and December 2002 because
of its inability to file accounts.
Your Board is confident that, with the publishing of these accounts, this will
now become a problem of the past and trading on AIM will be restored.
Post balance sheet board changes
Shareholders will be aware of Board changes. I wish to extend my personal thanks
to outgoing non-executive directors Leonard Fine and Ron Littleboy for their
contributions. Unfortunately, Ron Littleboy has made a claim against your
Company for fees which are disputed by your Company.
Graham Axford joined the Board on 31 January 2003 and was recently appointed
Deputy Chairman. I am also pleased to welcome Gerald Andrews to the Board as
Finance Director. Gerald joined the Board on 21 April 2003 from the NEC where he
was Finance and Resources Director.
Asian PGA Tour Limited ("ATL") and other assets
You will recall that the principal asset of your company is its 49.9% interest
(0.1% being held by me) in ATL. Despite SARS and the consequential temporary
devastation of business in Asia, I believe that the prospects for ATL's
businesses are good. This is not a view shared by your Company's joint venture
partners, World Sport Group (Asia) Limited and Seamus O'Brien (the "B"
shareholders), who began to claim, barely three weeks post de-merger, that ATL
was insolvent. As ATL is your Company's major asset, your Board felt obliged to
protect your Company's interest by committing US$2.58 million of loans to ATL.
We strongly disputed the assertions of Tony Morgan and Seamus O'Brien, the "B"
shareholders' nominee directors, who were former directors of World Sport Group,
and, as you would expect, we commissioned a report into the working capital and
solvency of ATL by an independent firm of Chartered Accountants and Insolvency
Practitioners who concluded in their report dated May 2003, inter alia, that the
problem facing the company was that of a shareholder dispute. Various steps
have been taken by the Board to resolve these difficulties including attempts to
utilise the dispute resolution mechanisms in the joint venture agreement but
none of these has so far proved to be an effective solution (such dispute is
anticipated to be the possible subject of future arbitration proceedings).
On 23 August 2003, ATL received notice from Asian PGA Tour Berhad ("APGA") that
it was withdrawing the Master Rights Agreement ("MRA") under which ATL is
entitled to exploit exclusively all commercial rights relating to the Asian PGA
Tour. Your Board challenged the rights of APGA to do this obtaining an interim
ex parte injunction against APGA in the High Court of Malaya on 5 September
2003.
The effect of the shareholder dispute and subsequent impact of SARS has meant
that loans made by PMG to ATL have remained in that company for longer than was
originally intended. Furthermore, as at the time of writing a further US$710,000
due to PMG by ATL in respect of sponsorship sales commissions, remains
outstanding.
Although the final outcome of its robust action to protect PMG's principal asset
is uncertain, assuming ATL can uphold the validity of the MRA, ATL's prospects
are undiminished and I believe that both ATL and APGA will prosper. Indeed, as
your Company's largest shareholder, I am determined that your Company will
succeed and have remained steadfast in my offer of additional financial support
post 22nd January 2003 should this become desirable.
Immediately following the purported termination of the MRA, similar action was
taken in respect of our South American rights. Once again we protected this
robustly and an ex parte interim injunction has been obtained in our favour in
the British Virgin Islands.
Internal investigations
Graham Axford has assumed the responsibility for looking closely into certain
matters connected to and flowing from the original reversal of World Sport Group
businesses into Orchard Furniture Plc in August 2001, together with aspects of
the 2003 de-merger.
Graham Axford has submitted his preliminary reports to the regulatory
authorities.
As shareholders will appreciate, it is highly appropriate that the Board obtains
independent legal advice to look into these contentious, important matters.
Specialist partners from Nicholson Graham & Jones are assisting in respect of
these investigations.
I must however stress to shareholders that all discoveries made by Graham Axford
relate to matters relating to World Sport Group prior to and including the 2003
de-merger, and in the opinion of your Board, there is unlikely to be any
negative financial impact upon the net worth of your Company, Parallel Media
Group Plc. Any suggestion that PMG is under investigation is, in the opinion of
your Board, untrue and unfounded. Matters meriting attention relate solely to
World Sport Group and must be distinguished from PMG.
Outstanding fees
Outstanding fees to professional advisers in respect of both the 2001 reversal
into Orchard Furniture Plc and the 2003 de-merger will not be paid until
decisions have been made by the authorities.
Other appointments
Shareholders will also be aware that we have replaced our nominated advisor.
Relationships between your Company and Seymour Pierce broke down with PMG being
given only days to find a replacement. I am pleased that CFA accepted the role.
Together with our new Directors, they provide refreshing independence and clear
objectivity.
St Brides Media and Finance Limited have been appointed as the Company's
Financial PR adviser.
Further funding and PMG's new Asian partners
I am very pleased to announce that terms have been agreed with Tibbles
participation Corp ( a company registered in the BVI and connected with Tan Sri
Mohd Rizali Abdul Rahman and Datuk Hassan Abas) whereby US$1,000,000 will be
invested into Parallel Media Asia Limited, a new joint venture company
controlled by PMG to hold our interest in ATL.
Equally with Snowy Invest & Trade Inc (a company registered in the BVI and
connected with Tan Sri Mohd Rizali Abdul Rahman and Datuk Hassan Abas), trusts
of which I am a beneficiary will invest in a new 5 year secured convertible loan
in PMG to raise a total of GBP2.22 million which your Board believes is more
than sufficient for PMG to overcome the difficult trading conditions resulting
from its dispute with its joint venture partners in ATL and the unlawful attempt
by APGA to seek to terminate the MRA. Details of the proposed fundraising are
provided in the accompanying circular, for which shareholder approval is sought
at the forthcoming EGM on 17 October 2003.
Yours sincerely,
David Ciclitira.
Chairman
22 September 2003
Parallel Media Group plc
Financial report
Overview to 22nd January 2003
In this period, the Group's continuing business activities generated a profit
before tax of #2.0 million. Including discontinued operations, the Group
reported a total pre-tax loss of #11.6 million. The adjusted loss per share
figure for the period was 22.13p, against a prior year earnings per share figure
of 19.23p.
Accounting Review
In the course of finalising the Group's financial statements the Directors
undertook a review of the carrying value of goodwill. As a result of the
review, the Board agreed that all of the goodwill acquired during the year
should be fully written down and that the remaining written down value of #3.5
million be transferred to investments in joint ventures.
Turnover
Turnover for the period was #30.28 million. It should be noted that the
financial statements for the period to 31 December 2003 will show a large
decrease on this figure due to the de-merger from The World Sport Group Limited.
Operating Profit
After deducting rights fees, golf prize money and other direct costs from the
Group's gross revenues, the continuing business activities generated a gross
profit during the period of #3.57 million. The operating loss before
amortisation and impairment of goodwill, and exceptional administrative expenses
equalled #1.38 million.
Exceptional Administrative Expenses and Exceptional Items
The exceptional item of #7,754,000 comprises the profit on sale the sale of
Parallel Formula Ltd of #821,000 and the profit on the de-merger of The World
Sport Group Limited of #6,933,000. The profit on the de-merger is made up of a
profit on sale of net liabilities of #7,230,000 and the net loss incurred on the
cancellation of net group indebtedness of #297,000.
The exceptional items included in administrative expenses of #1,574,000 comprise
redundancy costs of #869,000 (#610,000 of which is included in discontinued
operations), provisions against loans receivable of #389,000, and costs relating
to the share issue of #316,000.
De-merger
On 13 November 2002 World Sport Group (Jersey) Limited ('WS Jersey') entered
into an agreement to dispose of the entire issued share capital of The World
Sport Group Limited ('WSGL') to Park House Holdings Limited ('Park House'), a
company to which Seamus O'Brien, the then Chief Executive of Parallel Media
Group plc and Anthony Morgan, a then Non-Executive Director of the Parallel
Media Group plc, are related by virtue of being directors of Park House and
having an interest in its share capital. The main elements of the disposal are
set out below.
This Disposal Agreement was completed on 20 January 2003. The consideration
paid to WS Jersey for the purchase of WSGL by Park House was #1 million.
#500,000 was paid on completion with the balance of #500,000 being settled, in
accordance with the agreement, on 31 March 2003. The Disposal Agreement also
required an irrevocable waiver by Park House of all loans made by it to all
companies in the Group and the re-designation of the Ordinary Shares in the
Parallel Media Group plc ("the Company") to which Park House became entitled
under the Capital Reconstruction as Park House Deferred Shares which were
subsequently cancelled.
All inter-group indebtedness (to the extent the board of each Group company to
which such debt is owed believed the prospects of recovery of such debt from any
other Group company were negligible) for the period up to and including the '
Effective Date' of 31 August 2002 was assigned to either of two shelf companies
incorporated in the BVI, each being a "BVI Newco". Following the assignment by
the relevant Group company creditor to a BVI Newco of the right to recover such
indebtedness owed to it, all such indebtedness was waived by the relevant BVI
Newco. Other than with respect to such waived indebtedness, each company of
the then Group remained liable for its own liabilities. Appropriate indemnities
were secured and given for all such liabilities. Provision was also made that
any receivables received by an incorrect Group company after the Effective Date
be held on trust and paid to the correct post completion Group.
Warranties have been given by WS Jersey and the Company relating to title to its
shares in WSGL, its authority and capacity to enter into the Disposal Agreement
(and all ancillary documents) and certain additional warranties relating to
commitments of the WSGL Group. The total liability of the Group under the
warranties does not exceed #1 million.
The warranty period in relation to all warranties to be given by Park House and
Seamus O'Brien and Anthony Morgan within the Disposal Agreement will expire
following the preliminary announcement of the consolidated financial results of
the Parallel Media Group plc for the period ending 31 December 2003 unless the
Warrantor admits its liability in respect of a claim or if Counsel of 10 years
standing provides a written opinion that the claim is reasonably likely to
succeed, in which case the period shall extend to the preliminary announcement
of the financial results of the Group for the year ending 31 December 2004. The
warranty period for warranty claims against WS Jersey and PMG will expire on 31
March 2004 unless the Group admits its liability in respect of a claim or if
Counsel of 10 years standing provides a written opinion that the claim is
reasonably likely to succeed, in which case the period shall extend to 31 March
2005.
In order that a "clean break" was achieved between the businesses of the Group
and WSGL following Completion, a reorganisation of the Group was undertaken (as
detailed more specifically below). The businesses held by WSGL and its
subsidiaries following the reorganisation predominantly comprised the football
and cricket rights. The reorganisation required a number of different actions.
These are set out below.
In particular:
(i) on 7 November 2002:
a. WS Jersey acquired the entire issued share capital of World Sport
Group (Americas) Limited (and thereby indirectly its holdings in its subsidiary
WSG Americas Inc. and its associated company Tour de Las Americas Enterprises
Limited) from WSGL; and
b. WS Jersey was assigned the trade marks to the name "Birdie'' from
Birdie Holdings Limited and its subsidiary, Birdie Management Services Limited.
(ii) on 22 November 2002 the Group transferred its 33.3% shareholding in
Hong Kong Golf Promotions Limited to ATL;
(iii) post completion of the disposal agreement, prior to the period end:
a. the Company acquired the 49 per cent. shareholding of Ladies European
Tour Enterprises Limited previously owned by WSG Europe Limited;
b. World Sport Group (Asia) Limited acquired the 25 per cent.
shareholding in Sportal Asia Limited from the Group; and
c. The Group transferred its 500 shares in Sports Media (Asia) Limited
to WSGA.
Asian PGA Tour Limited ('ATL') Joint Venture Agreement
As part of the demerger, a reorganisation of the Asian golf business was
undertaken and the Company subscribed for 499 shares in the issued share capital
of ATL which comprises 49.9 per cent of its entire issued share capital. The
Group retains its interest in Asian golf by virtue of this share holding in ATL.
The rights and obligations of the Group under agreements relating to the
rights to market the Singapore Masters, Malaysian Open and the Asian Nations Cup
(subject to the consent of Malaysian Golf Association) were agreed to be
assigned/transferred to ATL. As part of this Asian reorganisation, on 22
January 2003 a joint venture agreement was entered into between the Company,
WSGA, Seamus O'Brien, Anthony Morgan, David Ciclitira, ATL and Park House to
govern the business of ATL and the relationship between its shareholders. ATL
is owned 49.9 per cent. by the Group, 0.1 per cent. by David Ciclitira, 49.9 per
cent by WSGA and 0.1 per cent by Seamus O'Brien.
The Group receives an income stream arising from its appointment as exclusive
sales agent for sponsorship rights for ATL equal to (a) 20 per cent. of the
first US$25 million of sales receipts received in relation to the relevant
sponsorship rights for that year and (b) thereafter 10 per cent of any further
annual sales receipts for that year.
Interest and Taxation
The Group paid net interest of #0.67 million arising from its overdraft, and the
structure of its banking facilities over the period. There was a small tax
charge relating to overseas tax payable.
Loss/Earnings Per Share
Adjusted loss per share in the period was 22.13p compared to earnings per share
of 19.23p in the period ended 30 December 2001. The adjusted loss is based upon
the attributable profit of the continuing operations after adjusting for
goodwill and all exceptional items. At the end of this period, the Company made
no final dividend recommendation.
Parallel Media Group plc
Consolidated profit and loss account for the period ended 22 January 2003
Period ended 22 January 2003 Total
6 months ended 30
December 2001
Continuing
operations Discontinued Total
#'000 #'000 #'000 #'000
Turnover 13,643 16,640 30,283 18,464
Cost of Sales (10,078) (14,055) (24,133) (7,213)
Gross Profit 3,565 2,585 6,150 11,251
Administrative Expenses (8,963) (16,144) (25,107) (86,968)
Other operating Income - - - 15
Operating (loss)/profit before goodwill
amortisation and exceptional items (1,382) (12,949) (14,331) 2,156
Impairment of Goodwill - exceptional (2,502) - (2,502) (74,065)
Goodwill amortisation (550) - (550) (1,607)
Administrative expenses - exceptional (964) (610) (1,574) (2,186)
Operating Loss (5,398) (13,559) (18,957) (75,702)
Share of operating profit/(loss) in associates (355) 681 326 (969)
Exceptional items - profit on sale of subsidiary 7,754 - 7,754 -
Exceptional items - cost of fundamental
restructuring - - - (362)
Profit/(loss) on ordinary activities before
interest and tax 2,001 (12,878) (10,877) (77,033)
Interest receivable - 133 133 181
Amounts written off investments (82) - (82) -
Interest payable (29) (778) (807) (375)
Profit/(loss) on ordinary activities before tax 1,890 (13,523) (11,633) (77,227)
Tax on profit/(loss) on ordinary activities - (4) (4) (16)
Profit/(loss) on ordinary activities after tax 1,890 (13,527) (11,637) (77,243)
Minority interests - 246 246 70
Profit/(loss) for the financial period 1,890 (13,281) (11,391) (77,173)
(Loss)/earnings per share
-basic and diluted (136.45p) (845.54p)
- adjusted (22.13p) 19.23p
Parallel Media Group plc
Statement of total recognised gains and losses for the period ended 22 January
2003
Period ended 6 months ended
22 January 30 December
2003 2001
#'000 #'000
Profit/(loss) for the financial period
- Group (11,717) (76,204)
- Associated undertakings 326 (969)
(11,391) (77,173)
Currency translation differences on foreign currency net investments
- Group 2,260 216
- Associated undertakings 332 67
Total recognised gains and losses for the period (8,799) (76,890)
Parallel Media Group plc
Balance sheets at 22 January 2003
Group Company
22 January 30 December 22 January 30 December
2003 2001 2003 2001
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets - 11,007 - -
Tangible assets 120 1,100 - -
Joint venture - share of gross assets 1,150 - - -
Joint venture - share of gross (2,229) - - -
liabilities
Goodwill in joint venture 3,500 - - -
2,421 - - -
Investments 499 1,756 4,300 10,332
3,040 13,863 4,300 10,332
Current assets
Debtors - Due within one year 2,412 16,512 1,061 362
- Due after one year 300 1,169 - -
2,712 17,681 1,061 362
Cash 2,674 2,305 2,210 -
5,386 19,986 3,271 362
Creditors: amounts falling due
within one year (5,155) (19,656) (2,946) (648)
Net current assets/(liabilities) 231 330 325 (286)
Total assets less current liabilities 3,271 14,193 4,625 10,046
Creditors: amounts falling due
after one year - (26) - -
Provisions for liabilities and charges
Associates (299) (5,301) - -
Net assets 2,972 8,866 4,625 10,046
Capital and reserves
Called up share capital 12,145 11,453 12,145 11,453
Share premium account 26,363 24,277 26,363 24,277
Other reserves 5,591 5,591 5,591 5,591
Profit and loss account (41,151) (32,352) (39,474) (31,275)
Shareholders' funds - equity 2,948 8,969 4,625 10,046
Minority interest - equity 24 (103) - -
2,972 8,866 4,625 10,046
The financial statements were approved by the board of directors on 22 September
2003 and were signed on its behalf by:
David Ciclitira Gerald Andrews
Chairman Finance Director
Note: Copies of full accounts are being posted to shareholders today, and are
available on the Company's website www.parallelmediagroup.com. Copies may also
be collected from the Company's registered office, 56 Ennismore Gardens, London
SW7 1AJ.
This information is provided by RNS
The company news service from the London Stock Exchange
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FR SEAFMESDSEEU