Final Results

RNS Number : 2674J

Zest Group PLC

26 March 2010

 



Zest Group plc

Preliminary Results

for the twelve months ended 30 September 2009

Chairman's Statement

I present the results of the Group for the year ended 30 September 2009. 

Results
During the year the Group recorded a loss before taxation from continuing operations of £283,000 (2008: loss £1,280,000). There was a loss per share on continuing operations of 0.2p (2008: loss per share 0.7p) and no loss per share on discontinued activities (2008: loss per share 0.3p).

Operational review

During the year the Group has continued to seek to exploit the publishing and recording rights arising from its retained roster of artists which include Tara Chinn, Nasio Fontaine and Tony Fennell.

The Company is in the process of compiling all the Tara Chinn Masters with a view to releasing them late in 2010.

Zest is seeking to conclude a new worldwide distribution deal for Nasio Fontaine's five albums of which it owns 100% of the masters and publishing rights which will commence towards the end of this calendar year.

Tony Fennell is a songwriter and producer signed to Zest.  The Company holds 100% of all his publishing rights.  Currently, Tony has a co-write on a new Warner Bros artist Fabio Lendrum's new album which will be released by them late this summer.  The song, entitled "Trouble", will be the first single taken from this album and at the time of writing has been serviced to the club circuit in the United Kingdom to enable Warner's to start their promotional campaign.  Tony will continue to write and co-write both in the UK and USA this year.

Loss of capital

The financial statements show that the Company's net assets are less than half its called up share capital.  In the circumstances, the directors of the Company are obliged by section 656 of the Companies Act 2006 to convene a general meeting for the purposes of considering whether any, and if so what, steps should be taken to deal with the Company's current financial position.  We considered this issue at the Company's previous annual general meeting, and will do so again at the forthcoming annual general meeting.

Board changes

On 13 January 2009 Jon Crawley resigned from the Board to pursue other business interests. The Board would like to thank Jon for his contribution to the Company.  On 27 January 2010 David Lenigas was appointed to the Board.

Capital restructuring

During the period the Company's capital base has been restructured through the conversion of each former Ordinary Share of 0.25p each into one New Ordinary Share of 0.01p each and one Deferred Share of 0.24p each. Since the period end 300,000,000 New Ordinary Shares have been issued for cash, raising £300,000.  Further details of this are provided in note 5 of these financial statements.

Outlook

The Company will continue to seek to optimise the value of existing artists and where the opportunity arises, seek to add further rights by signing new artists and songwriters.  In addition, Zest continues to look for potential acquisition opportunities and to explore alternative routes to securing shareholder value.

Richard Griffiths
Chairman

26 March 2010

CONSOLIDATED INCOME STATEMENT

For the year ended 30 September 2009

			2009	2008
	Note		£'000	£'000
Administrative expenses - amortisation of intangible assets			-	(20)
- impairment of intangible assets			-	(78)
- reversal of impairment/(impairment) of advance payments to artists			60	(533)
- other administrative expenses			(347)	(469)
Total administrative expenses			(287)	(1,100)
Loss from operations			(287)	(1,100)
Finance costs			-	(187)
Finance income			4	7
Loss before taxation			(283)	(1,280)
Taxation	3		-	-
Loss for the year from continuing activities			(283)	(1,280)
Loss from discontinued operations			-	(475)
Loss after taxation and retained loss attributable to the equity holders of the company			(283)	(1,755)
Loss per ordinary share (pence)	4
Basic and diluted
Continuing operations			(0.2)p	(0.7)p
Discontinued operations			-	(0.3)p
			(0.2)p	(1.0)p

There were no recognised gains or losses other than the loss for the financial year.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2009

	Share capital	Share premium	Share based payment reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
At 1 October 2007	434	3,598	126	(2,304)	1,854
Total income and expense - loss for the year		-	-	(1,755)	(1,755)
Employee share based compensation	-	-	40	-	40
At 30 September 2008	434	3,598	166	(4,059)	139
Total income and expense - loss for the year	-	-	-	(283)	(283)
Employee share based compensation	-	-	11	-	11
At 30 September 2009	434	3,598	177	(4,342)	(133)

CONSOLIDATED BALANCE SHEET

At 30 September 2009

			2009	2008
	Note		£000	£000
ASSETS
Non-current assets
Intangible assets			-	-
Property, plant and equipment			1	1
			1	1
Current assets
Trade and other receivables			12	133
Cash and cash equivalents			5	62
Total current assets			17	195
Total assets			18	196
LIABILITIES
Current liabilities
Trade and other payables			151	57
Total liabilities			151	57
EQUITY
Share capital	5		434	434
Share premium			3,598	3,598
Share based payment reserve			177	166
Retained earnings			(4,342)	(4,059)
Total (capital deficiency)/equity attributable to equity holders of the Company			(133)	139
Total equity and liabilities			18	196

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2009

			2009	2008
			£000	£000
Cash flows from operating activities
Continuing operations
Loss after taxation			(283)	(1,280)
Adjustments for:
Amortisation of intangible assets			-	20
Depreciation of property plant and equipment			-	1
Impairment of intangible fixed assets			-	78
Equity settled share based payments			11	40
Finance cost			-	187
Finance income			(4)	(7)
Decrease in trade and other receivables			121	608
Increase/(decrease) in trade and other payables			94	(323)
Net cash outflow from operating activities from continuing operations			(61)	(676)
Discontinued operations
Net cash inflow from operating activities from discontinued operations			-	519
Net cash outflow from operating activities			(61)	(157)
Cash flows from investing activities
Continuing operations
Purchase of property, plant and equipment			-	(1)
Finance cost			-	(49)
Finance income			4	7
Net cash inflow/(outflow) from investing activities from continuing operations			4	(43)
Discontinued operations
Net cash inflow from investing activities from discontinued operations			-	2,029
Net cash generated from investing activities			4	1,986

CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)

For the year ended 30 September 2009

Cash flows from financing activities
Continuing operations
Repayment of loans			-	(1,799)
Net cash outflow from financing activities from continuing operations			-	(1,799)
Net change in cash and cash equivalents			(57)	30
Cash and cash equivalents at 1 October			62	32
Cash and cash equivalents at 30 September			5	62

1         basis of preparation

The Group financial statements have been prepared under the historical cost convention, in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs).  The Company's shares are listed on the AIM market of the London Stock Exchange.

The principal accounting policies are detailed in the Group's annual report and financial statements.

Going concern

The Directors note the substantial losses that the Group has made for the year ended 30 September 2009 and the net liabilities position at that date.  The Directors have prepared cash flow forecasts for the period ending 31 March 2011 which take account of the current cost structure of the Group, which is significantly reduced from the cost structure in the year ended 30 September 2009, and the post 30 September 2009 equity issue which raised £300,000.  These forecasts demonstrate that the Group has sufficient finance facilities available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements.  Accordingly, the financial statements have been prepared on a going concern basis.

2         segmental information

a)        Primary reporting format - business segment

As defined under International Accounting Standard 14 "Segment Reporting" (IAS 14), the only material business segment the Group has is that of music publishing.

b)       Secondary reporting format - geographical segment

Under the definitions contained in IAS 14 the only material geographic segment that the Group operates in is the UK.

3         Taxation - continuing operations

There is no tax credit on the loss for the current or prior year.

The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:

				2009	2008
				£'000	£'000
Loss before tax	`			(283)	(1,280)
Loss multiplied by standard rate of corporation tax in the UK of 28% (2008: 28%)				(79)	(358)
Effect of:
Disallowable expenses				1	50
Deferred tax asset not recognised				78	308
Current tax charge for year				-	-

The Group has tax losses in the UK, subject to Her Majesty's Revenue and Customs approval, of approximately £3,482,000 (30 September 2008: £3,199,000) available for offset against future operating profits.  The Group has not recognised any deferred tax asset in respect of these losses, which would amount to £974,000 (2008: £896,000) due to there being insufficient certainty regarding its recovery.

4         LOSS PER SHARE

The calculation of the basic loss per share is calculated by dividing the consolidated loss attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

					2009	2008
					£'000	£'000
Loss attributable to equity holders of the Group
Continuing operations					(283)	(1,280)
Discontinued operations					-	(475)
					(283)	(1,755)

					2009	2008
					Number	Number
Weighted average number of shares for calculating loss per share					173,619,050	173,619,050

The impact of the share options and share warrant is anti dilutive.

5         share capital

		2009	2008
		£'000	£'000
Authorised
4,000,000,000 ordinary shares of 0.01p		400	-
4,000,000,000 deferred shares of 0.24p		9,600	-
4,000,000,000 ordinary shares of 0.25p		-	10,000
		10,000	10,000
Allotted, issued and fully paid
173,619,050 deferred shares of 0.24p		417	-
173,619,050 ordinary shares of 0.01p (2008: 173,619,050 ordinary shares of 0.25p)		17	434
		434	434

Following the approval of its shareholders at the Company's general meeting on 3 September 2009, all existing issued and unissued ordinary shares in the capital of the Company ('Ordinary Shares') of 0.25p each were each converted into one Ordinary Share of 0.01p each and one deferred share of 0.24p each.  Application was  made for 173,619,050 Ordinary Shares of 0.01p each to be admitted to trading on AIM and admission of these 173,619,050 Ordinary Shares of 0.01p each occurred on 4 September 2009. Following this issue there were 173,619,050 Ordinary Shares of 0.01 pence each in issue (each of which are voting shares) at 30 September 2009.

Since the year end a further 300,000,000 Ordinary Shares of 0.01p each have been issued for a placing for cash raising £300,000 (announced on 6 November 2009).

The deferred shares have no voting rights and are not eligible for dividends.

6           publication of non-statutory accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

The summarised consolidated balance sheet at 30 September 2009 and the summarised consolidated income statement,  consolidated statement of changes in equity,  consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under Section 498 of the Companies Act 2006.

The accounts for the year ended 30 September 2009 will be posted to shareholders and laid before the company at the Annual General Meeting on 22 April 2010. Copies will also be available from Zest Group plc's Registered Office: Kitwell House, The Warren, Radlett, Hertfordshire, WD7 7DU and via the website (www.zestmusic.com) in accordance with AIM Rule 26.

Enquiries:

Zest Group Plc Steve Weltman, Chief Executive [phone] W.H. Ireland James Joyce/ David Porter [phone]

 

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