Half-yearly Report

PARALLEL MEDIA GROUP PLC ("PMG" OR THE "GROUP") INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2007 CHAIRMAN'S STATEMENT Overview The first half of 2007 has been one of the most exciting in the Group's history. After the upheavals of the corporate restructuring in late 2006, we took ownership of the UBS Hong Kong Open and the TCL Classic. This period has seen Parallel Media Group PLC (PMG) secure two large contracts that should considerably enhance the financial performance of the Group in 2008 and beyond. PMG has been appointed to be the exclusive commercial partner of Mission Hills in China (the world's largest golf complex), for a period of 12 years. This partnership includes the World Cup of Golf format, the title sponsorship of which PMG has sold to Omega. In the same period, PMG created a new golf tournament in Korea with Pernod Ricard as title sponsor (The Ballantine's Championship). This event is co-sanctioned by the European Tour and Korean PGA and will have the largest prize-purse in Korean golf, one of the world's fastest growing golf markets. More recently, PMG has renewed a three year agreement with the National Federation of Golf in the Republic of Kazakhstan ("NFGK") to continue to promote the Kazakhstan Open with the aim of making this a full European Tour event by 2010. Financial Review The Group's results for the half-year ended 30 June 2007 are the first results to be reported under IFRS and accounting policies applied are consistent with those that will apply in the next (full IFRS) annual accounts. The PMG business in the six month period to 30 June 2007 is significantly changed from the same period in 2006 by the acquisition of the two major golfing events referred to above. The profile of revenue and costs as a result, is not directly comparable between periods. The turnover for the 6 month period to 30 June 2007 was £1,873,000 (2006: £1,477,000) and comprised event revenues for the TCL Classic in China and consulting and sales revenues for the period. Building the Group's increased inventory has led to an increase in costs for the period. In the period under review the operating loss was £170,000 compared to a profit of £126,000 in the same period last year. The loss for the period after finance costs was £323,000 compared to a profit in 2006 of £9,000. As in previous years, Turnover in 2007 is significantly weighted to the second half of the year. In the last 12 months we have taken significant steps to transform the balance sheet position, moving from negative net assets of £5.06m in June 2006 to negative £1.19m in June 2007. We are reviewing plans to simplify the capital structure over the next 12 months. Board I would like to take this opportunity to thank our Board members who have contributed immensely to the turnaround we are experiencing. I would also like to thank the major stakeholders in the business who are tremendously supportive and increasingly active in helping us shape and deliver business growth. Future Prospects In 2007 we are building sponsorship and sales assets and are now looking much stronger in 2008 and beyond with high quality earnings visible for some years ahead. The combination of new business wins and an exciting pipeline of opportunities will enable the group to grow rapidly. David Ciclitira Chairman 28 September 2007 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 6 months to 6 months to Year ended 30 June 30 June 31 December Notes 2007 2006 2006 unaudited unaudited audited £'000 £'000 £'000 Continuing operations Revenue 5 1,873 1,477 4,561 Cost of sales (1,181) (627) (2,738) Gross profit 692 850 1,823 Administrative expenses (819) (670) (1,266) EBITDA * (127) 180 557 Amortisation and depreciation (75) (2) (36) Restructuring costs - - (399) Profit/(loss) on disposal of investments 32 (52) - Operating (loss)/profit (170) 126 122 Share of operating loss in associates - - (329) Profit on sale of associated undertakings - - 770 Finance cost (153) (123) (204) (Loss)/profit on ordinary activities before tax (323) 3 359 Taxation - - - (Loss)/profit for the period (323) 3 359 Attributable to: Minority interests (1) (6) (1) Equity holders of the parent (322) 9 360 (323) 3 359 Earnings/(loss) per share 3 Basic (0.09p) 0.04p 0.43p Diluted (0.09p) 0.04p 0.30p * EBITDA - Earnings (excluding non-recurring items) before interest, tax, deprecation and amortisation is shown to provide additional investor information. The calculation of Earnings per Share is based on the profit / (loss) on ordinary activities as required by IAS 33. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 As at As at As at 30 June 30 June 31 December Notes 2007 2006 2006 unaudited unaudited audited £'000 £'000 £'000 Non-current assets Property, plant & equipment 27 15 23 Intangible assets 2,613 - 2,681 Investments 180 567 243 Receivables due in more than one year - 1,168 - Total non-current assets 2,820 1,750 2,947 Current Assets Trade receivables 1,290 1,420 406 Cash 571 5 305 Total current assets 1,861 1,425 711 Current liabilities: Financial Liabilities - borrowings (753) (581) (778) Trade & other payables (1,812) (1,436) (1,644) Total current liabilities (2,565) (2,017) (2,422) Net current assets/(liabilities) (704) (592) (1,711) Non-current liabilities Financial liabilities - borrowings (3,309) (6,218) (2,808) Total non-current liabilities (3,309) (6,218) (2,808) Net liabilities (1,193) (5,060) (1,572) Equity Share capital 2 2,860 1,110 2,481 Share premium account 1,865 - 1,560 Other reserves 5,682 5,776 5,679 Retained earnings (11,492) (11,824) (11,183) Equity attributable to equity holders of the parent (1,085) (4,938) (1,463) Minority interest (108) (122) (109) (1,193) (5,060) (1,572) CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2007 6 months to 6 months to 30 June 30 June Year ended 2007 2006 31 December 2006 unaudited unaudited audited Note £'000 £'000 £'000 Net cash (used in) / generated from operating activities 4 (874) (188) 945 Investing activities Payments to acquire fixed assets (11) - (11) Sale of associated companies - - 1,605 Costs incurred on sale of associated companies - - (252) Sale of other investments 95 - 15 Purchase of golf events - - (2,065) Net cash generated from/(used in) investing activities 84 0 (708) Financing Activities Bank facility repaid (25) - (1,058) New bank facility - - 300 Cash received from convertible loans 350 124 1,276 Convertible loans repaid - - (2,186) Issue of shares 684 - 1,235 Loan received 340 - 100 Loans repaid (227) - - Loan received from director - - 356 Interest paid (66) (38) (62) Net cash generated from / (used in) financing activities 1,056 86 (39) Net increase / (decrease) in cash and cash equivalents 266 (102) 198 Cash and cash equivalents at beginning of the year 305 107 107 Cash and cash equivalents at end of year 571 5 305 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2007 Share Premium Retained Minority Other Share Capital Account Earnings Interests Reserves Total £'000 £'000 £'000 £'000 £'000 £'000 6 months ended 30 June 2006 As at 1 January 2006 1,110 - (11,860) (123) 5,765 (5,108) Profit for the period - - 9 - - 9 Foreign exchange - - 27 - - 27 Minority interest arising during the period - - - 1 - 1 Issue of convertible loans in period - - - - - 0 Convertible loans converted/repaid in the period - - - - 11 11 As at 30 June 2006 1,110 - (11,824) (122) 5,776 (5,060) Year ended 31 December 2006 As at 1 January 2006 1,110 - (11,860) (123) 5,765 (5,108) Issued during the year 1,371 - - - - 1,371 Share premium arising in year - 1,841 - - - 1,841 Costs written off against share premium - (281) - - - (281) Profit for the year - - 360 - - 360 Transfer between reserves - - 40 - (40) 0 Credit arising on share options - - 33 - - 33 Foreign exchange - - 244 - - 244 Minority interest arising during the period - - - 14 - 14 Issue of convertible loans in year - - - - 31 31 Convertible loans converted/repaid in the year - - - - (77) (77) As at 31 December 2006 2,481 1,560 (11,183) (109) 5,679 (1,572) 6 months ended 30 June 07 As at 1 January 2007 2,481 1,560 (11,183) (109) 5,679 (1,572) Issued during the period 379 - - - - 379 Share premium arising in period - 417 - - - 417 Costs written off against share premium - (112) - - - (112) Profit for the period - - (322) - - (322) Foreign exchange - - 13 - - 13 Issue of convertible loans in period - - - - 4 4 As at 30 June 2007 2,860 1,865 (11,492) (109) 5,683 (1,193) NOTES TO THE FINANCIAL INFORMATION 1. Accounting Policies Basis of preparation: The Groups financial statements were prepared in accordance with UK GAAP until 31 December 2006. From 1st January 2007 the group will prepare its consolidated financial statements in accordance with IFRS as adopted for use in the EU. The next annual financial statements of Parallel Media Group plc (PMG) will be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU applied in accordance with provisions of the Companies Act 1985. IFRS transition: The Groups results for the half year ended 30 June 2007 are the first results to be reported under IFRS. The Groups date of transition to IFRS is 1 January 2006 and the adoption date is 1 January 2007. Basis of consolidation: The consolidated financial statements incorporate the results of the Company and all of its subsidiary undertakings as at 30 June 2007 using the acquisition method of accounting. Under the acquisition method the results of subsidiary undertakings are included from the date of acquisition. On disposal, the results are included up to the date of disposal. Goodwill and Intangible Assets The rights to promote European Tour golf events were identified as Goodwill in the audited financial statements for the year ended 31 December 2006. This goodwill has been reclassified as Intangible Assets as required through the adoption of IAS 38. The effect of this change is that the Intangibles will be amortised over their expected life of 20 years. If the events had continued to be classified as Goodwill, they would have been subject to an annual impairment review, with no obligation to amortise them over their expected useful life. Intangible Assets are held at fair value. Investments There has been no change to the value of investments as a result of moving to IFRS. Any change in fair values will be shown in the Income Statement in the calculation of profit or loss. Non-Statutory accounts: The half-year figures for the period ended 30 June 2007 and the full year figures for the year ended 31 December 2006 do not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. A copy of the statutory accounts for that year under UK GAAP has been filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group's Equity and its net income are provided in Note 6. 2. Share Capital Shares in issue (No.) Share Capital £ Ordinary shares of 0.5p in issue at 1 January 2007 296,429,269 1,482,146 Ordinary shares of 0.5p issued during the period 75,641,024 378,205 Ordinary shares of 0.5p in issue at 30 June 2007 372,070,293 1,860,351 Deferred ordinary shares of 0.5p in issue at 1 January 2007 199,831,545 999,158 Total shares in issue at 30 June 2007 571,901,838 2,859,509 As at 30 June 2007 there were 372,070,293 Ordinary shares of 0.5p in issue. Convertible loan note holders have options to convert 223,462,583 shares of 0.5p in 2008, which may be expected to convert and/or be redeemed. The deferred shares in issue do not entitle their holders to receive any dividend, other distribution or infer any rights other than repayment. They are therefore excluded for the purpose of EPS calculation. 3. Earnings per Share 6 months to 6 months to Year ended 31 30 June 30 June December 2007 2006 2006 Earnings £ £ £ Earnings for the purpose of basic EPS (322,199) 9,000 360,000 Earnings for the purpose of diluted EPS (263,199) 22,000 420,000 Number of shares No. No. No. Weighted average number of shares for the purposes of basic EPS 345,586,372 22,203,505 82,769,941 Weighted average number of shares for the purposes of diluted EPS 562,662,216 32,015,352 140,393,211 Basic EPS (0.09p) 0.04p 0.43p Diluted EPS (0.09p) 0.04p 0.30p 4. Reconciliation of operating loss to net cash outflow from operating activities 6 months ended 6 months Year ended 31 30 June 2007 ended 30 June December 2006 2006 £'000 £'000 £'000 Operating (Loss) / Profit (170) 178 520 Depreciation 7 2 4 Amortisation of intangibles 68 - 32 Profit on disposal of investments (32) - - Share based payment adjustment - - 33 (Increase)/decrease in debtors (831) (482) 1364 Increase in creditors 84 113 (907) Foreign exchange - 1 (101) Net cash outflow from operating activities (874) (188) 945 5. Operating Segments Analysis Analysis by geographical market Pre-tax Turnover (loss)/profit Net assets/(liabilities) 6 months 6 months Year 6 months 6 months Year 6 months 6 months Year to to ended to to ended to to ended 30 June 30 June 31 Dec 30 June 30 June 31 Dec 30 June 30 June 31 Dec 2007 2006 2006 2007 2006 2006 2007 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Group Asia 1,629 1,041 3,489 (309) (32) 411 57 (251) (10) Europe 239 384 997 (17) 64 285 (567) (3,977) (870) Americas 4 52 75 3 29 (8) (684) (780) (692) 1,873 1,477 4,561 (323) 61 688 (1,193) (5,007) (1,572) Associates Asia - - - - (52) (329) - (52) - Europe - - - - - - - - - Americas - - - - - - - - - 0 0 0 0 (52) (329) 0 (52) 0 Total 1,873 1,477 4,561 (323) 9 359 (1,193) (5,060) (1,572) Turnover : Analysis by sport 6 months to 30 6 months to Year ended 31 June 2007 30 June 2006 December 2006 £'000 £'000 £'000 Golf 1,764 1,219 3,876 Rugby 53 52 315 Football - 183 231 Sailing 56 23 139 Total 1,873 1,477 4,561 Costs are centralised by geographic area. There is no appropriate allocation of costs or assets used by the directors in the management of the business by "Sport type". No profit or loss or net asset segmentation analysis is therefore provided on this basis. 6. Transition to IFRS The date of transition from UK GAAP to IFRS is 1 January 2006. Parallel Media Group PLC reported under UK GAAP in its previously published financial statements for the year ended 31 December 2006. Analysis of the financial statements as at 1 January 2006, and subsequent periods shows that no adjustments are required to equity or profit as a result of the transition to IFRS for the statements at the date of transition, the six months ended 30 June 2006 or the full year ended 31 December 2006. There are however significant presentational changes to the results for each of the periods and these adjustments have been made. 7. Other Copies of unaudited half-yearly results have not been sent to shareholders, however, copies are available on our website at www.parallelmediagroup.com or can be requested from the Company Secretary at the Company's Registered Office: 3-12 Harbour Yard, Chelsea Harbour, London SW10 0XD. Contact:- Martin Doherty, Chief Financial Officer Parallel Media Group plc Tel: +44 20 7225 2000 Ross Andrews, Nominated Adviser City Financial Associates Limited Tel: + 44 (0) 20 7492 4777

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