Final Results
Parallel Media Group PLC
30 June 2004
Parallel Media Group plc
Final Results for the period ended 31 December 2003
Chairman's statement
This year has been a time of challenges for Parallel Media Group Plc ('PMG') but
with this has seen the introduction of a major Malaysian partner, the expansion
of our international tour licences, the vigorous defence of the Company's assets
and the positioning of the Company for ongoing growth by implementing cost
reduction strategies and raising additional funds.
Turnover for the period was £7.5million with a loss of £4.3 million. Since the
end of the financial year of 31 December 2003, closer involvement with our
Malaysian partners has strengthened our financial position, and in February 2004
our Malaysian partners invested some £678,484 by way of 5 year convertible loan
at LIBOR interest plus 3% p.a. which is convertible at 6p per Ordinary Share and
£513,738 by way of unsecured loan. Currently the Board is in the final stages
of securing a US$3 million working capital facility from Bumiputra-Commerce Bank
Berhad of Malaysia.
Key assets
In Asia, the Company, through its joint venture holding company, Parallel Media
Asia (2003) Limited ('PM Asia'), acquired 100% of the Asian PGA Tour Limited ('
ATL') which includes the right to promote the Hong Kong Open, Singapore Masters,
Malaysian Open and TCL Classic. The purchase, consideration of US$500,000, was
funded by a subscription for new shares in PM Asia.
In addition, the Company has entered into an agreement with the PGA European
Tour for the creation of an 'Asian Series' within their European Tour schedule.
Under this agreement, the PGA European Tour and ATL will be joint promoters of
ATL's existing events and selective future events. PMG also has the exclusive
right to market the commercial rights to the Asian Series with the television
rights being jointly exploited by the PGA European Tour and a group subsidiary
Parallel Television (2001) Limited.
In Europe, a group subsidiary Parallel Media Europe Limited ('PME') has entered
into a new ten year agreement with the Ladies European Tour ('LET'). This
includes the rights to sell the LET's sponsorship, and in this regard the
Company has already signed a contract with Robe di Kappa as the new Ladies Tour
Title sponsor, to distribute LET's international television coverage and to act
as exclusive promoter of selected events. PMG's subsidiary Parallel Media Italy
continued to progress clearing a small profit during 2003.
In the Americas, the group's 82.5% owned subsidiary (89% owned at 31 December
2003), PGAA Media ('PGAA'), revised its 50 year agreement with the PGA de las
Americas regarding the Tour de Las Americas so as to give the Company exclusive
commercial and television rights to the tour's events which are currently
sponsored by American Express.
It is the Board's belief that the aforementioned developments, all of which have
been achieved between the period end and today, significantly enhance your
Company's long term prospects.
Corporate
The Company has also decided to restructure the Board to put the Company in the
best position for this coming period of growth. I will be spending a
considerable portion of my time overseas developing the international aspects of
the business and hence I am delighted to announce that Tan Sri Mohd Razali Abdul
Rahman has agreed to become Non Executive Chairman of the Company following the
forthcoming AGM. I will be taking up a new role as Group President and Chief
Executive. Now that the roles of Chairman and Chief Executive have been split,
Graham Axford has completed his temporary tenure as Managing Director and wishes
to relinquish his executive role as a Director with effect from 30 June but has
accepted the Board's invitation to remain as a consultant to the Company
Director representing PMG on the Boards of PGAA Media and Parallel Media Italia.
Information on Proposed Director Tan Sri Mohd Razali Abdul Rahman ('RAR')
RAR, aged 56 is a Malaysian. He holds a bachelor's Degree in Commerce from the
University of Newcastle, Australia and a Master's Degree in Financial Management
from the University of Queensland, Australia. He is a Fellow of the Australian
Society of Certified Public Accountants.
He is currently the Chairman of Peremba (Malaysia) Sdn Bhd, a group with
interests in investment holding, property development, hospitality and leisure
and mechanical, electrical and instrumentation engineering. RAR is a major
shareholder of the Peremba Group, Snowy Invest & Trade Inc as well as Tibbles
Participation Corp.
RAR is also a Director and Chairman of Landmarks Berhad ('LB') and a Director
and Chairman of Saujana Consolidated Berhad ('SCB'). Both companies are listed
on the Main Board of the Bursa Malaysia Securities Berhad (formerly known as the
Kuala Lumpur Stock Exchange).
Corporate Governance
As the Group grows it intends, as far as it is practicable for a Company of its
size, increasingly to observe the principles of good governance as set out in
The Combined Code as annexed to the Listing Rules of the UK Listing Authority.
The Board believes that the cost of full compliance with The Combined Code would
not be justified at this stage of its development; however, it is committed to
complying with all areas of Section 1 of the Combined Code, over the coming
twenty four months.
ATL
Following the acquisition of 100% of the Company by PMA and PMG the boards of
these companies have commissioned a review by PKF of ATL. The scope of this
review includes the period when ATL was not managed solely by its current
management. The Board of PMG has asked Graham Axford in his capacity as a
consultant to supervise related matters whilst the Board, lead by myself,
continue to concentrate on the future development of the Group.
Annual and Extraordinary General Meeting
An AGM and EGM of the Company is being convened to be held at 10am on 20th
August 2004 at the National Liberal Club, Whitehall Place, London, SW1A 2HE, and
the formal notice is contained in the Annual Report and Accounts which is being
sent to shareholders. In addition to the usual resolutions, additional
resolutions which permit conversion of the convertible loan provided by Snowy,
referred to above, are to be proposed.
The Special Resolution is to grant the Directors power to allot equity
securities for cash otherwise than in proportion to existing holdings upon any
exercise of the Conversion Rights.
In addition, as at the period end, the Company's net assets were half or less of
its called-up share capital, and accordingly, Section 142 of the Act requires
the Board to convene an Extraordinary General Meeting of the Company (which
shall be held immediately following the AGM to be held at 10am on 20th August
2004) to consider whether any, and if so what, steps are necessary to deal with
this situation. The additional funding lines, mentioned above, which we are
currently finalising have addressed this position and have provided sufficient
facilities for the company's needs and your Board feels that no further steps
are necessary.
Outlook
The last year has been a very challenging and at times difficult period for the
Company. In such an environment I am proud that the Company has not only
continued to survive but is now in a position to take advantage of its unique
assets. Without doubt this Company would not be in the position it is today
without the tremendous support of its staff and shareholders and I thank them,
and in particular Graham Axford, for their effort and dedication.
Yours faithfully
David Ciclitira.
Chairman
30 June 2004
Parallel Media Group plc
Financial report
Overview to 31 December 2003
In this period, the Group's shows a retained loss of £4.3 million. The adjusted
loss per share figure for the period was 17.95p, against a prior period earnings
per share figure of 22.13p.
Accounting Review
During the period Datuk Hassan Adas, Tan Sri Mohd Razali Abdul Rahman and
Tibbles Participation Corp subscribed for $1.0 million of new share capital in
Parallel Media Asia (2003) Limited (PMA), resulting in them owning 50% of the
share capital of PMA Limited with Parallel Media Group plc owning the remaining
50%. The Group transferred its 49.9% holding in Asian PGA Tour Limited (ATL) to
PMA Limited. In the consolidated accounts, as the Group retained control of
PMA's board, PMA is treated as a subsidiary company and ATL is treated as a
joint venture undertaking of PMA.
Turnover
Turnover for the period was £7.5 million compared to turnover of £13.6 million
relating to continuing operations in the prior period. The major reason for
this decrease is the fact that ATL was a 100% subsidiary of the Group through
the period ended 22 January 2003 whereas in the current period due to the
de-merger from The World Sport Group Limited it has been treated as a joint
venture.
Operating Profit
After deducting rights fees and other direct costs from the Group's gross
revenues, the continuing business activities generated a gross profit during the
period of £2.2 million. The operating loss before exceptional administrative
expenses equalled £2.8 million.
Exceptional Administrative Expenses and Exceptional Items
The exceptional items comprise of the following:
(i) The net loss on the sale of two associated undertakings totalling £180,000,
this is made up of the loss on the sale of Worldsport South Africa (Pty) Limited
of £190,000 and the profit on the sale of Ladies European Tour Enterprises
Limited £10,000.
(ii) The net profit on the sale of two subsidiary companies totalling £247,000,
this is made up of the loss on sale of Parallel Media Germany GmbH of £22,000
and the profit on the effective disposal of 50% of the share capital of Parallel
Media Asia (2003) Limited of £269,000.
The exceptional items included in administrative expenses for the period
comprise provisions against loans receivable of £409,000.
Net liabilities
The net liabilities of the Group at the period end are £2.0 million one of the
major factors for this is that, as outlined in the accounting review above, the
Group's ownership of ATL was reduced to 24.95%. This reduction in shareholding
led to the decision to reduce the carrying value of goodwill held in respect of
the ATL joint venture, the result was an impairment of £1.5 million being
charged to the profit and loss account in the period as part of the 'Share of
operating loss in joint ventures' line.
It should be noted that in March 2004 PMA purchased the remaining 50% of the
share capital of ATL. Goodwill was generated on the purchase therefore unless
there are considered to be further impairments to goodwill the net asset
position will improve.
Another factor that would lead to an improvement in the net assets of the Group
would be any conversion of the convertible loans into ordinary share capital.
Interest and Taxation
The Group paid net interest of £0.15 million arising from overdrafts it had
during the period, loan interest and convertible loan interest. There was a
small tax charge relating to overseas tax payable.
Loss/Earnings Per Share
Adjusted loss per share in the period was 17.95p compared to 22.13p in the
period ended 22 January 2003. The adjusted loss as shown in Note 12 to the
accounts 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 31 December 2003
Period ended 31 December 2003 Total
Continuing Period ended 22
operations January 2003
Discontinued Total
£'000 £'000 £'000 £'000
Turnover: Group and share of joint venture 7,495 50 7,545 30,283
Less share of turnover of joint venture (3,439) - (3,439) -
Turnover 4,056 50 4,106 30,283
Cost of Sales (1,894) (34) (1,928) (24,133)
Gross Profit 2,162 16 2,178 6,150
Administrative Expenses (5,032) (348) (5,380) (25,107)
Other operating Income - - -
Operating (loss)/profit before goodwill
amortisation and exceptional items (2,461) (332) (2,793) (14,331)
Impairment of Goodwill - exceptional - - - (2,502)
Goodwill amortisation - - - (550)
Administrative expenses - exceptional (409) - (409) (1,574)
Operating Loss (2,870) (332) (3,202) (18,957)
Share of operating loss in joint ventures (2,566) - (2,566) -
Share of operating profit in associates - 314 314 326
Exceptional items - profit on sale of - 247 247 7,754
subsidiary
Exceptional items - loss on sale of associated
undertaking - (180) (180) -
(Loss)/profit on ordinary activities before
interest and tax (5,436) 49 (5,387) (10,877)
Interest receivable - - - 133
Amounts written off investments - - - (82)
Interest payable (147) - (147) (807)
(Loss)/profit on ordinary activities before (5,583) 49 (5,534) (11,633)
tax
Tax on profit/(loss) on ordinary activities (3) - (3) (4)
(Loss)/profit on ordinary activities after tax (5,586) 49 (5,537) (11,637)
Minority interests 1,192 - 1,192 246
(Loss)/profit for the financial period (4,394) 49 (4,345) (11,391)
Loss earnings per share
-basic and diluted (19.57p) (136.45p)
- adjusted (17.95p) (22.13p)
Parallel Media Group plc
Statement of total recognised gains and losses for the period ended 31 December
2003
Period ended Period ended
31 December 22 January
2003 2003
£'000 £'000
Profit/(loss) for the financial period
- Group (2,093) (11,717)
- Joint ventures (2,566) -
- Associated undertakings 314 326
(4,345) (11,391)
Currency translation differences on foreign currency net investments
- Group (81) 2,260
- Joint ventures 193 332
Total recognised gains and losses for the period (4,233) (8,799)
Parallel Media Group plc
Balance sheets at 31 December 2003
Group Company
31 December 22 January 31 December 22 January
Note 2003 2003 2003 2003
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 13 - - - -
Tangible assets 14 89 120 11 -
Joint venture - share of gross assets 15 705 1,150 - -
Joint venture - share of gross 15 (2,474) (2,229) - -
liabilities
Goodwill in joint venture 15 1,817 3,500 - -
48 2,421 - -
Investments 15 224 499 2,822 4,300
361 3,040 2,833 4,300
Current assets
Debtors - Due within one year 16 1,130 2,412 1,680 362
- Due after one year 16 2,000 300 1,259 -
3,130 2,712 2,939 1,061
Cash 565 2,674 201 2,210
3,695 5,386 3,140 3,271
Creditors: amounts falling due
within one year 17 (3,514) (5,155) (2,656) (2,946)
Net current assets/(liabilities) 181 231 484 325
Total assets less current liabilities 542 3,271 3,317 4,625
Creditors: amounts falling due
after one year:
Convertible loans 17 (2,220) - (2,220) -
Other loans 17 (181) - (181) -
Provisions for liabilities and charges
Associates 15 (156) (299) - -
Net (liabilities)/assets (2,015) 2,972 916 4,625
Capital and reserves
Called up share capital 19 1,110 12,145 1,110 12,145
Share premium account 21 - 26,363 - 26,363
Other reserves 21 5,591 5,591 5,591 5,591
Profit and loss account 21 (7,984) (41,151) (5,785) (39,474)
Shareholders' funds - equity (1,283) 2,948 916 4,625
Minority interest - equity (732) 24 - -
(2,015) 2,972 916 4,625
The financial statements were approved by the board of directors on 30 June 2003
and were signed on its behalf by:
David Ciclitira
Chairman
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