RNS Number:1949R
Parallel Media Group PLC
22 October 2003
Parallel Media Group plc
Interim Results for the period ended 30 June 2003
Chairman's statement
Introduction
These interim results cover the period from 23 January 2003 to 30 June 2003. It
is the first time I have been able to report formally on the demerged group
following the disposal of the former World Sport Group (WSG) businesses. As a
sports marketing, media and management company, our efforts are now focussed on
developing these businesses, with particular focus on the marketing and sales
activity related to our international golf and rugby properties and our
television broadcast, production and distribution arm.
As expected, the first quarter started well with solid performance in our key
Asian golf markets arising from the staging of the Singapore Masters and
Malaysian Open tournaments. However, this good start was counteracted by three
significant events. Firstly, the SARs outbreak in Asia led to a sharp,
prolonged decline in economic activity in the region. Secondly, the Iraq War
resulted in a pre-emption, without compensation, of our airtime on CNBC Sports
due to 24 hour war coverage with a consequent shortfall in advertising revenues.
Finally, as shareholders will already be aware, a serious dispute regarding the
future of our Asian joint venture business (ATL) emerged with our partners. As
you will already be aware, the Company has robustly defended its position within
ATL, but in doing so has incurred unanticipated legal costs. The combination of
these main factors lies behind the operating loss before goodwill, amortisation
and exceptional items of #725,000 for the period as shown in these accounts.
As part of the process of defending our investment in ATL (the Company's major
asset), Parallel Media Group plc has provided substantial financial support to
ATL in the form of loans totalling US$2.58 million. Whilst we remain resolute
and confident regarding the outcome of our actions to protect our investment in
ATL, your Board has taken the view that it would be prudent to make a provision
of #795,000 in these interim results against the recovery of these loans. When
also taking into account the Company's share of the operating loss in ATL for
the period as well as some other less material items, the total loss for the
period is #2.09million. I have not stated prior period comparison figures
within the body of my statement as, following the disposal of the former WSG
businesses, they may be unhelpful and misleading. They are, however, set out on
the face of the unaudited, interim profit and loss account.
Despite the undoubted difficulties the Company has faced during this period,
work has continued in the reorganisation of the Group to better meet the needs
of the business in the future. Firstly, I was pleased to be able to announce at
the recent EGM the retention of the Master Rights Agreement relating to the
South American golf tour, Tour de las Americas. This agreement provides a
platform from which this area of our business should now develop. Furthermore,
we have taken the opportunity to restructure our business interests in South
Africa. In addition, in terms of the current state of our Asian market, I am
able to report that, as anticipated, both the Nations Cup and Macau Open golf
tournaments have recently been successfully staged. Planning for the
forthcoming Thailand and Hong Kong events continues apace. Finally, and most
importantly, I am delighted to confirm that at our recent EGM held on 17 October
2003, the necessary shareholder resolutions to facilitate further investment in
the business, as set out in the Circular issued to shareholders on 22 September
2003, were passed and this will now be concluded. I look forward both to Tan
Sri Mohd Rizali Abdul Rahman joining our Board and to working with our new
investor/partners to build the Company.
I should also like to extend my sincere thanks to my fellow directors and staff
for their unstinting application and support through what has been a challenging
and difficult period, but one which I have every expectation will provide a
solid basis of optimism for the future.
David Ciclitira
Chairman
22 October 2003
Parallel Media Group plc
Consolidated profit and loss account for the period ended 30 June 2003
__________________________________________________________________________________________
Period ended 6 months ended Period ended
30 June 2003 30 June 2002 22 January 2003
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Turnover: Group and share of joint venture 4,216 12,846 30,283
Less share of turnover of joint venture (2,134) - -
Turnover 2,082 12,846 30,283
Cost of Sales (1,045) (9,633) (24,133)
Gross profit 1,037 3,213 6,150
Administrative Expenses (2,557) (10,623) (25,107)
Other operating Income - - -
Operating loss before goodwill amortisation
and exceptional items (725) (5,503) (14,331)
Impairment of goodwill - exceptional - (577) (2,502)
Goodwill amortisation - (275) (550)
Administrative expenses - exceptional 2 (795) (1,055) (1,574)
Operating loss (1,520) (7,410) (18,957)
Share of operating loss in joint ventures (479) - -
Share of operating profit/(loss) in associates 12 (41) 326
Exceptional items - profit on sale of - - 7,754
subsidiary
Loss on ordinary activities before interest
and tax (1,987) (7,451) (10,877)
Interest receivable 2 - 133
Amounts written off investments (81) - (82)
Interest payable (28) (488) (807)
Loss on ordinary activities before tax (2,094) (7,939) (11,633)
Tax on loss on ordinary activities - (1) (4)
Loss on ordinary activities after tax (2,094) (7,940) (11,637)
Minority interests 6 (353) 246
Loss for the financial period (2,088) (8,293) (11,391)
Loss per share
- basic and diluted 3 (9.42p) (99.77p) (136.45p)
- adjusted 3 (5.83p) (76.83p) (22.13p)
Parallel Media Group plc
Consolidated balance sheet as at 30 June 2003
__________________________________________________________________________________________
30 June 30 June 22 January
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Intangible assets - 10,732 -
Tangible assets 103 938 120
Joint venture - share of gross 829 - 1,150
assets
Joint venture - share of gross (2,254) - (2,229)
liabilities
Goodwill in joint venture 3,403 - 3,500
1,978 - 2,421
Investments 429 1,372 499
2,510 13,042 3,040
Current assets
Debtors - Due within one year 3,494 15,205 2,412
- Due after one year - 510 300
3,494 15,715 2,712
Cash - 213 2,674
3,494 15,928 5,386
Creditors: amounts falling due
within one year (4,778) (24,333) (5,155)
Net current (liabilities)/assets (1,284) (8,405) 231
Total assets less current 1,226 4,637 3,271
liabilities
Creditors: amounts falling due
after one year - (20) -
Provisions for liabilities and
charges
Associates (312) (2,881) (299)
Net assets 914 1,736 2,972
Capital and reserves
Called up share capital 1,108 11,453 12,145
Share premium account - 24,277 26,363
Other reserves 5,591 5,591 5,591
Profit and loss account (5,803) (39,819) (41,151)
Shareholders' funds - equity 896 1,502 2,948
Minority interest - equity 18 234 24
914 1,736 2,972
The interim results, which are unaudited, were approved by the board of
directors on 21 October 2003.
Parallel Media Group plc
Consolidated cash flow statement for the period ended 30 June 2003
__________________________________________________________________________________________
30 June 30 June 22 January
Note 2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash outflow from operating activities 4 (1,700) (2,063) (1,053)
Returns on investments and servicing of finance
Interest paid (28) (488) (807)
Interest received 2 - 133
Loan to joint venture (1,590) - -
Dividend received from associated - 392 250
undertaking
Net cash outflow from returns on investments
and servicing of finance (1,616) (96) (424)
Tax paid
Overseas withholding tax paid - (1) (3)
- (1) (3)
Capital expenditure
Payments to acquire tangible fixed assets (23) (92) (437)
Receipts from sales of tangible fixed assets - - 27
Net cash outflow from capital expenditure
and financial investment (23) (92) (410)
Acquisitions and disposals
Purchase of subsidiary undertaking - - (31)
Net cash acquired with subsidiary - 10 327
Sale of subsidiary undertaking 500 - 498
Net overdrafts sold with subsidiary - - 1,552
Sale of associated undertaking - 364 251
Sale of other investments 14 - -
514 374 2,597
Net cash (outflow)/inflow before management
of liquid resources & financing
(2,825) (1,878) 707
Financing
Proceeds from new ordinary share issues - - 2,078
Loan from shareholder - - 700
Loan from director - - 415
- - 3,193
(Decrease)/increase in cash (2,825) (1,878) 3,900
Parallel Media Group plc
Interim Results for the period ended 30 June 2003
Notes forming part of the interim results for the period ended 30 June 2003
1. Accounting policies
The interim results have been prepared on the basis of the accounting policies
as set out in the Group's 22 January 2003 statutory accounts.
The figures for the period ended 22 January 2003 do not constitute statutory
accounts as they have been extracted from the statutory accounts which have been
filed with the Registrar of Companies. The auditors' report on those financial
statements which was issued on 22 September 2003 was qualified and contained a
reference to a fundamental uncertainty, details of which are shown below.
"We planned our audit so as to obtain all the information and explanations which
we considered necessary in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. However,
the evidence available to us has been limited because:
a) we have not been given access to the preliminary reports submitted to the
regulatory authorities as referred to under "Internal investigations" in the
Chairman's statement and accordingly we are unable to form an opinion as to the
financial impact, if any, of the matters included therein upon these financial
statements; and
b) the Group has been unable to obtain sufficient reliable information in
respect of the results for the period of certain former subsidiary and
associated companies of the Group, following their disposal on 21 January 2003,
and has had to rely on unaudited management information. We have been unable to
carry out the audit procedures that we consider necessary in respect of losses
of #3,413,000 included in the operating loss arising from discontinued
activities of #13,559,000 and losses of #532,000 included in share of operating
profit in associates of #681,000. Any misstatement in these amounts would be
fully offset by an equal and opposite misstatement in the exceptional profit
arising on the disposal of discontinued operations and would not affect the
Group's net assets at 22 January 2003.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Fundamental uncertainty - Going concern
In forming our opinion, we have considered the adequacy of the disclosures made
in note 1 of the financial statements concerning the directors' proposals to
raise additional capital in order to ensure the Group has sufficient funding for
its immediate working capital requirements and the Group's current dispute with
Asian PGA Berhad over the Master Rights Agreement held by its joint venture
company Asian PGA Tour Limited. The preparation of the financial statements on a
going concern basis assumes that the fundraising proposals will be approved by
the shareholders at the forthcoming Extraordinary General Meeting and that the
required level of working capital facilities will therefore be available. It
also assumes that the Group's interest in the Asian PGA Tour will not be
adversely affected by the current dispute and its level of income as a sales
agent will be in line with the directors' forecasts. In view of the significance
of these issues we consider that they should be drawn to your attention but our
opinion is not qualified in this respect.
Qualified opinion arising from limitations in audit scope
Except for any adjustments that might have been found to be necessary had we had
access to the preliminary reports to the regulatory authorities and, except for
any adjustments that might have been found to be necessary had the Group been
able to obtain sufficient reliable financial information concerning the results
of former subsidiary and associated companies, in our opinion the financial
statements give a true and fair view of the state of affairs of the Company and
the Group as at 22 January 2003 and of the loss of the Group for the period then
ended and have been properly prepared in accordance with the Companies Act 1985.
In respect alone of the limitations on our work relating to the preliminary
reports to the regulatory authorities and the results of certain former
subsidiary and associated companies, we have not obtained all the information
and explanations which we considered necessary for the purpose of our audit."
Parallel Media Group plc
Interim Results for the period ended 30 June 2003
Notes forming part of the interim results for the period ended 30 June 2003
(continued)
1. Accounting policies (continued)
The accounting policies included in the financial statements for the period
ended 22 January 2003 included the following basis of preparation note.
"Basis of preparation - Going concern
The financial statements have been prepared on a going concern basis which
assumes that the Group will continue in operational existence for the
foreseeable future. The directors intend to raise the necessary funding to meet
the Group's immediate requirements by the issue of #2.22 million Variable Rate
Secured Convertible Loan Stock and a $1 million subscription into a new joint
venture company, details of which are included in a document issued today and
which are subject to shareholder approval. The going concern basis is also
dependent upon the level of income arising from the Group's Asian golfing
interests through its current joint venture agreement, Asian PGA Tour Limited
(ATL). ATL's rights under the Master Rights Agreement are currently the subject
of a dispute with Asian PGA Berhad, the golfing authority which holds these
rights, further details of which are given in the document. This dispute may
affect the Group's ability as exclusive sponsorship sales agent for ATL to
attract sponsorship for events being staged by ATL. The Group is also in dispute
with its ATL joint venture partner over non-compliance with the terms of the
joint venture agreement which is affecting ATL's ability to sign sponsorship
contracts. 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).
The financial statements do not include any adjustments which would be required
if the proposed issue of loan stock were not approved by the shareholders or if
the necessary funding were not received or if the ATL disputes were not resolved
and the Group's level of income as sales agent were not in line with the
directors' forecasts."
It should be noted that the fund raising proposals referred to above were
approved by the shareholders at an Extraordinary General Meeting held on 17
October 2003.
These interim results are unaudited and do not constitute statutory accounts.
2. Exceptional administrative items
The exceptional item of #795,000 included in administrative expenses, relates to
a provision against a loan receivable from the Group's joint venture
undertaking.
In the 6 months ended 30 June 2002 the exceptional items of #1,055,000 included
in administrative expenses, comprised redundancy costs of #1,030,000 and a loss
on the sale of an associated undertaking of #25,000.
Parallel Media Group plc
Interim Results for the period ended 30 June 2003
Notes forming part of the interim results for the period ended 30 June 2003
(continued)
3. (Loss)/earnings per share
(i) Basic Period ended 6 months ended Period ended
30 June 2003 30 June 2002 22 January 2003
(unaudited) (unaudited) (audited)
Loss for the financial period (#2,088,000) (#8,293,000) (#11,391,000)
Number of shares in issue (weighted average as adjusted
for
the capital reorganisation in January 2003) 22,166,740 8,312,530 8,348,329
Loss per share (9.42p) (99.77p) (136.45p)
(ii) Diluted
Diluted loss and earnings per share is calculated on the same basis as basic
loss and earnings per share because the effect of the potential ordinary shares
(share options) reduces the net loss per share and is therefore anti-dilutive.
(iii) Adjusted earnings per share
The adjusted earnings per share figure shown below is calculated on attributable
profit excluding goodwill, discontinued operations, exceptional items included
in administrative expenses, and exceptional items included after operating
profit. This calculation has been used as it is deemed to give a more
appropriate indication of the earnings of the continuing operations of the
Group.
Period ended 6 months ended Period ended
30 June 2003 30 June 2002 22 January 2003
(unaudited) (unaudited) (audited)
EPS Earnings EPS Earnings EPS Earnings
Pence #'000s Pence #'000s Pence #'000s
Basic loss per share (9.42p) (2,088) (99.77p) (8,293) (136.45p) (11,391)
Impairment of goodwill - - 6.94p 577 29.97p 2,502
Amortisation of goodwill - - 3.31p 275 6.59p 550
Discontinued operations - - - - 159.09p 13,281
Administrative expenses - Exceptional
(continuing operations only)
3.59p 795 12.69p 1,055 11.55p 964
Exceptional items - - - - (92.88p) (7,754)
Adjusted loss per share (5.83p) (1,293) (76.83p) (6,386) (22.13p) (1,848)
Parallel Media Group plc
Interim Results for the period ended 30 June 2003
Notes forming part of the interim results for the period ended 30 June 2003
(Continued)
4. Reconciliation of operating loss to net cash outflow from operating
activities
Period ended 6 months ended Period ended
30 June 2003 30 June 2002 22 January 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating loss after exceptional items (1,520) (7,410) (11,203)
Amortisation of goodwill - 275 550
Impairment of goodwill - 577 2,502
Depreciation 40 209 634
Loss on sale of fixed assets - 14 24
Loss on sale of associates - 25 638
Gain on disposal of subsidiaries - - (8,051)
Write down of investments - 20 -
Provision against loan to joint venture 795 - -
Decrease/(increase) in debtors (479) (109) 3,880
Increase/(decrease) in creditors (536) 3,978 9,320
Foreign exchange - 358 653
Net cash outflow from operating activities (1,700) (2,063) (1,053)
5. Post balance sheet events
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. The Group 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.
This interim injunction was then subject to an inter parte hearing on 23
September 2003 and was upheld.
On 17 September 2003 the Company sold its holding in Worldsport South Africa Pty
Limited for Rand 1.2 million.
Terms have been agreed with Tan Sri Mohd Rizali Abdul Rahman, Datuk Hassan Abas
and 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 to hold the Group's interest in Asian PGA Tour Limited.
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 the Group's chairman is a beneficiary will invest in a new 5 year
secured convertible loan in PMG to raise a total of #2.22 million. The
authority to issue the convertible loan was gained at an Extraordinary General
Meeting held on 17 October 2003.
6. Other
Copies of unaudited interim results have not been sent to shareholders, however
copies are available on request from the Company Secretary at 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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