Final Results and Report and Accounts

RNS Number : 8545H

Parallel Media Group PLC

25 June 2013

 



25^th June 2013

Parallel Media Group PLC

("PMG" or the "Company")

Final Results for the year ended 31 December 2012 and publication of Report and Accounts

PMG, the AIM-quoted sports, entertainment and media agency, announces its final results for the year ended 31^st December 2012

Financial Highlights

The loss for the Group was £0.8 million (2011: loss £0.4 million)

·    The loss per share increased to 2.8p (2011: Loss per share 2.2p).

·    Administrative expenses decreased to £1.8 million (2011: £1.9 million)

·    Turnover for the year was £6.3m (2011: £6.4m)

·    At 31 December 2012, the Group had positive net assets of £0.6million (2011: £0.4 million).

Operational Highlights

2012 was a transformational time for PMG. During this period, we:

·    Raised £500,000 of new working capital for the development of our Singapore operation

·    Acquired a further 25% of Parallel Smart Media ("PSM"), raising the Group's stake in the business to 75%

·    Managed the ADT Caps Ladies Championship.

Post Year End Highlights - the Company has:

·    Staged the first of the AIA K-pop tour concerts on January 5^th in Hong Kong

·    Announced a second AIA K-pop tour concert to take place in Malaysia on 27^th June

·    Created The Blue & White Festival in PyeongChang

·    Staged a 6^th Ballantine's Championship

·    Formed The Causeway Trophy Joint Venture with Laguna National Golf Club to host The Causeway Trophy golf tournament in June 2013, with Prudential as the title sponsor

·    Announced the creation of a second new golf tournament, Premier League Golf at Marina Bay Sands

·    Announced The Volvik Sky Lake Vietnam Masters to be held in September

The estimated contribution of the six events above is £1.7m before overheads in the first six months of 2013 compared to £0.8m for one event in the comparable period of 2012.

Publication of Report and Accounts

The audited annual Report and Accounts for the year ended 31^st December 2012 have been published and are available to be downloaded from the Company's website: www.parallelmediagroup.com.

For further information, please contact:

Parallel Media Group plc (London)                                                     020 7225 2000

Amelia Wix                                                                                          

Northland Capital Partners Limited                                                     020 7796 8800

Luke Cairns, Edward Hutton

CHAIRMAN'S STATEMENT

Overview:

Your company, Parallel Media Group plc ("PMG" or the "Group"), continued to make progress during the year ended 31 December, 2012 in its core businesses of Sport, Entertainment and Media, focussing especially on Asian emerging markets. During the period we have undertaken a restructuring of the Group with a view to simplifying our business proposition.

Following a strategic review, PMG has refocused its business into three distinct areas, Sport, Entertainment and Media:

Sport

This has always been our main area of operation and has been focussed on the staging and promotion of sporting events (in particular golf) around Asia and is exemplified by our flagship event, The Championship. Building on the success of the Ballantine's Championship, The Championship is a men's golf tournament held in South Korea with a prize purse of USD2.5m.

Entertainment

Using our promotional expertise from our experience with the sporting events we have moved into the promotion of entertainment events with an initial focus on the growing K-Pop phenomenon.

For both our sporting and entertainment activities our revenues are earned by way of an event management fee and commission on sponsorship

Media

Utilising our PSM technology we will look to develop and promote interactive media platforms for events around the world.

Our operations are run from the Group's three offices in London, Seoul and Singapore.

The London office has been re-structured as the creative and financial hub of the Group, offering creative solutions to the emerging markets of Asia.

The Singapore office is focused on South-East Asia and specifically the emerging and frontier markets such as Malaysia, Vietnam and Cambodia. Within twelve months of its creation, the Singapore team has staged two K-Pop concerts in Singapore and sold the key title sponsorship for three new golf tournaments in Singapore (the Prudential Causeway Trophy and Premier League Golf sponsored by Marina Bay Sands, a world class luxury Casino and Hotel, an innovative project involving current and past stars from the Premier League), in addition PMG has recently sold the title sponsorship for a new event in Vietnam to two Korean companies.

The office in Seoul has recently staged the widely acclaimed Ballantine's Championship and is in the process of re-launching The Championship in 2014 in partnership with the European Tour. The expanded Championship will also include a series of qualifiers for Korean players to the European Tour and a celebrity based professional-amateur event. The Seoul office has also launched the AIA K-Pop series with contracts for three concerts in 2013 outside Korea.

In the period under review, PMG has:

-   Continued to expand its existing sport business promoting the most successful Ballantine's  

    Championship to-date, the Kazakhstan Open and, the ADT CAPS Championship in Singapore

    last November.

-    Invested in a new operation in Singapore, which has led since the year end to the creation of   

     several new sporting and entertainment events;

-   Raised £500,000 of new working capital in April 2012, of which £350,000 was for the set up of  

    a Singapore based K-Pop business;

-   Acquired a further 25% of Parallel Smart Media ("PSM") in 2012, raising the Group's stake in   

    the business to 75%; PSM develops smart media channels for mobile devices; and

-   Established an office in Milan, to focus on event development as well as promoting projects in the 

    sport, entertainment, arts and new media sectors. It will also concentrate on developing 

    marketing and communication opportunities for the 2015 Milan Expo.

Subsequent to year-end, PMG has:

-   Focussed its operations into three core elements, namely, Sport, Entertainment and Media based  

    in the Group's offices in London, Seoul and Singapore.

Sport

-   Staged a 6th Ballantine's Championship, the last in its current form, before The Championship is   

    expanded to become a multi sponsor event with a greater focus on showcasing the young stars of   

    the future and helping the emerging Korean golfing stars to qualify for European Tour events.

-    

-   Launched three new events, two in Singapore, the Prudential Causeway Trophy and Premier

    League Golf presented by MBS and one in Vietnam.

Entertainment

-   Created AIA K-Pop, to promote K-Pop concerts with AIA, the largest independent listed pan-Asian

    life insurance group. The first concert in January 2013 was a sell-out and further deals have been  

    signed for concerts in Malaysia and Hong Kong.

-   Created the Blue & White Festival, to help promote the region of PyeongChang in the run-up to 

    the 2018 Winter Olympics.

Media

-   Entered into a Joint Venture agreement with Pico Global Services, one of the leading event

    companies in Asia, to form Pico TV, a media company specialising in creating digital platforms for  

    events and exhibitions.

Financial Review

Turnover for the year was £6.3 million (2011: £6.4 million). Gross margins decreased to 23% (2011: 31%) resulting in gross profit for the year of £1.4 million (2011: £2.0 million).  The reduction in profit was mainly attributable to a one off increase to the star player fund of The Ballantine's Championship.

The administration costs did decrease to £1.8 million (2011: £1.9 million), due to the re-structuring of the London office in the second half of 2012 resulting in a Group loss before interest, tax, depreciation, amortisation and exceptional items of £0.4 million (2011: profit £0.1 million). The loss on ordinary activities before tax for the financial year was £0.8 million (2011: loss £0.4 million). Loss per share is 2.8p (2011: Loss per share 2.2p).

The Group also spent £0.2m on the acquisition of 25% of PSM and incurred costs of £0.2m for the investment in the new Singapore operation. In addition the group bore one-off costs related to the Kazakhstan Open of £71k and has written down £60k of development costs.

At 31 December 2012, the Group has a stronger balance sheet with net assets of £0.6 million (2011: £0.4 million).

Current Trading and Prospects

PMG has recently announced the formation of PicoTV, a joint venture between PMG and Pico, the event and total brand activation company, one of the leading event companies in Asia with 37 offices globally and over 5,000 staff. I am delighted to have reached this agreement with Pico and believe that in due course PicoTV will become a strong contributor to PMG's bottom line.

In the first 6 months of this year the company has already run six events with an estimated contribution of £1.7m compared with the one event run last year, which made a gross contribution of £0.8m. Those interested in the current activities of the group can download the company's digital brochure from our website at www.parallelmediagroup.com . During the second 6 months of the year PMG will stage 2 new events including the promotion of the new Vietnam Masters, as well as the existing Kazakhstan Open.

I would like to take this opportunity to thank my fellow board members, and all of our hard working staff around the world, without whose work and dedication, none of this transformation would have been possible. I am personally excited at the future and look forward to the rest of 2013 with confidence.

David Ciclitira

 (Chairman)

25th June 2013

CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2012

		2012	2011
	Note	£'000	£'000
Continuing operations
Revenue	4	6,264	6,417
Cost of sales	5	(4,847)	(4,420)
Gross profit		1,417	1,997
Administrative expenses		(1,800)	(1,920)
Foreign exchange		(28)	31
(Loss)/ Profit before interest, tax and depreciation,		(411)	108
Amortisation and exceptional items
Depreciation of fixed assets		(3)	(5)
Amortisation of intangibles		(220)	(220)
Operating Loss before exceptional Items	6	(634)	(117)
Exceptional items	6a	-	(101)
Operating Loss after exceptional Items		(634)	(218)
Finance costs	10	(84)	(111)
Share of post acquisition loss of Joint Venture		(114)	(46)
Loss on ordinary activities before tax	4	(832)	(375)
Taxation	12	-	-
Loss for the year		(832)	(375)
Attributable to:
Non-controlling interests		(198)	-
Equity holders of the parent		(634)	(375)
Loss for the financial year		(832)	(375)
Loss per share
Basic	13	(2.8p)	(2.2p)
Diluted	13	(2.8p)	(2.2p)

STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2012

				Group
				2012	2011
				£'000	£'000
Loss for the year				(832)	(375)
Other comprehensive income
Exchange difference on translation of foreign operations				-	29
Total comprehensive income (expense) for the year				(832)	(346)
Total comprehensive income (expense) attributable to:
Equity holders of the parent				(634)	(350)
Non - controlling interest				(198)	4
				(832)	(346)

STATEMENTS OF FINANCIAL POSITION for the year ended 31 December 2012

	Note	Group			Company
		2012	2011		2012	2011
		£'000	£'000		£'000	£'000
Non current assets
Property, plant and equipment	14	7	1		1	1
Intangible assets - Tournament rights	15	1,866	2,002		1,866	2,002
Intangible assets - Development costs	15	2,960	219		177	219
Investment in Joint Venture	16	-	1,319		4	-
Goodwill	17	200	-		-	-
Investments	16	2	12		2,311	2,111
Total non current assets		5,035	3,553		4,359	4,333
Current Assets Inventory		13	-		13	-
Trade and other receivables	18	2,519	1,917		2,770	1,231
Cash and cash equivalents	19	68	22		58	19
Total current assets		2,600	1,939		2,841	1,250
Current liabilities
Financial liabilities - Borrowings	20	406	250		406	250
Deferred income	21	2,281	1,299		758	-
Trade and other payables	21	3,049	2,546		5,965	4,339
Total current liabilities		5,736	4,095		7,129	4,589
Net current liabilities		(3,136)	(2,156)		(4,288)	(3,339)
Non current liabilities
Financial liabilities - Borrowings	22	616	667		616	667
Deferred tax	24	708	354		-	-
		1,324	1,021		616	667
Net assets / (liabilities)		575	376		(543)	327
Equity
Share capital	25	3,527	3,463		3,527	3,463
Share premium		7,288	6,653		7,288	6,653
Other reserves		557	557		557	557
Capital redemption reserve		5,034	5,034		5,034	5,034
Foreign exchange reserve		13	13		-	-
Retained earnings		(15,844)	(15,210)		(16,949)	(15,380)
Equity attributable to equity holders of the parent		575	510		(543)	327
Non-controlling interests		-	(134)		-	-
		575	376		(543)	327

The financial statements were approved and authorised for issue by the Board of directors on 20th June and were signed on its behalf by

David Ciclitira

Chairman

Company No: 630968

STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2011

	Ord. Share Capital £'000	Share Premium £'000	Other Reserves £'000	Capital Redemption £'000	Forex Reserve £'000	Retained Earnings                 £'000	Subtotal £'000	Non controlling Interests £'000	Total £'000
Group
At 31 December 2011	3,463	6,653	557	5,034	13	(15,210)	510	(134)	376
Loss for the year	-	-	-	-	-	(634)	(634)	(198)	(832)
Foreign exchange	-	-	-	-	-	-	-	-	-
Total comprehensive income	-	-	-	-	-	(634)	(634)	(198)	(832)
Issued share capital	64	769	-	-	-	-	833	--	833
Shares issues to non-controlling interest on incorporation of subsidiary	-	-	-	-	-	-	-	10	10
NCI in PSM arising on acquisition	-	-	-	-	-	-	-	322	322
Share issue costs	-	(134)	-	-	-	-	(134)	-	(134)
At 31 December 2012	3,527	7,288	557	5,034	13	(15,844)	575	-	575
Company
At 31 December 2011	3,463	6,653	557	5,034	-	(15,380)	327	-	327
Loss for the year	-	-	-	-	-	(1,569)	(1,569)	-	(1,569)
Issued share capital	64	769	-	-	-	-	833	-	833
Share issue costs	-	(134)	-	-	-	-	(134)	-	(134)
At 31 December 2012	3,527	7,288	557	5,034	-	(16,949)	(543)	-	(543)
	Ord. Share Capital £'000	Share Premium £'000	Other Reserves £'000	Capital Redemption £'000	Forex Reserve £'000	Retained Earnings £'000	Subtotal £'000	Non controlling Interest £'000	Total £'000
Group
At 31 December 2010	3,362	5,429	557	5,034	(12)	(4,835)	(465)	(138)	(603)
Loss for the year	-	-	-	-	-	(375)	(375)	-	(375)
Foreign exchange		-	-	-	25	-	25	4	29
Total comprehensive income	-	-	-	-	25	(375)	(350)	4	(346)
Issued share capital	101	1,504	-	-	-	-	1,605	-	1,605
Share issue costs	-	(280)	-	-	-	-	(280)	-	(280)
At 31 December 2011	3,463	6,653	557	5,034	13	(15,210)	510	(134)	376
Company
At 31 December 2010	3,362	5,429	557	5,034	-	(13,561)	821	-	821
Loss for the year	-	-	-	-	-	(1,819)	(1,819)	-	(1,819)
Issued share capital	101	1,504	-	-	-	-	1,605	-	1,605
Share issue costs	-	(280)	-	-	-	-	(280)	-	(280)
At 31 December 2011	3,463	6,653	557	5,034	-	(15,380)	327	-	327

The Foreign Exchange translation reserve comprises foreign exchange differences arising from the translation of the financial statements of subsidiaries that do not have a sterling functional currency. The Capital Redemption reserve comprises amounts transferred from share capital on redemption of issued shares.

STATEMENTS OF CASH FLOWS for the year ended 31 December 2012

	Group			Company
	2012	2011		2012	2011
	£'000	£'000		£'000	£'000
Cash flows from operating activity
Operating loss	(634)	(218)		(1,486)	(1,704)
Depreciation	3	5		-	5
Amortisation of intangibles-Tournament rights	136	136		136	136
Amortisation of intangibles-Development costs	84	87		84	87
Share based payments	81	-		81	-
Loss on disposal of investment	10	-		-	-
Increase in inventory	(13)	-		(13)	-
Increase in receivables	(907)	(936)		(1740)	(593)
Increase in payables	867	289		2,506	1,465
Foreign exchange on operating activities	-	29		-	(4)
Cash generated/ (used in) from operations	(373)	(608)		(432)	(608)
Cash flow from investing activities
Acquisition of development costs	(95)	-		(42)	-
Acquisition of equipment	(9)	-		-	-
Investments in joint ventures	(4)	-		(4)	-
Net cash used in investing activities	(108)	-		(46)	-
Cash flow from financing activities
Convertible loans repaid	-	(39)		-	(39)
Shares issued to non-controlling interests	10	-		-	-
Cash proceeds from issue of new shares	496	721		496	721
Loans received	281	-		281	-
Loans repaid	(212)	(83)		(212)	(83)
Interest paid	(84)	(111)		(84)	(111)
Net cash generated from /used in financing activities	491	488		481	488
Cash and cash equivalents at beginning of the year	22	142		19	139
Net Increase/(decrease) in cash and cash equivalents	10	(120)		3	(120)
Cash and cash equivalents at end of the year	32	22		22	19

NOTES FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 31 December 2012

1. Basis of preparation

These financial statements have been prepared on the historical cost basis or the fair value basis where required and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements which are disclosed in note 3.

The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2014. The forecasts incorporate trading assumptions, including increased sponsorship from existing tournaments, new sponsorship revenues, and revenues from new products. The forecasts show that the group has sufficient cash to meet liabilities as they fall due. 

The directors believe these forecasts to be realistic, and consequently have prepared the financial statements on the going concern basis, which assumes that the group will continue in operational existence for the foreseeable future.

1.1. Adoption of standards effective in 2012

a) New and amended standards adopted by the group.

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2012 that have had a material impact on the group.

b) There are no new standards, interpretations or amendments issued but not yet effective that are expected to have a material impact on the group.

2. Accounting policies

2.1 Consolidation and investments

The consolidated financial statements incorporate the results of the Company and all of its subsidiary undertakings as at 31 December 2012 using the purchase method of accounting. Under the purchase 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.  Inter-company balances, transactions, and unrealised gains/losses are eliminated on consolidation.

2.2 Intangible Assets - Tournament rights

The rights to promote European Tour golf events were acquired in September 2006 and included in the statement of financial position as intangible assets in the audited financial statements for the year ended 31 December 2006. These assets are amortised over their expected life of 20 years. Intangible assets acquired are held at cost less amortisation and are reviewed for impairment in line with section 2.5 when there are any indications of impairment.

2.2.1 Intangible Assets - Development costs

Development costs are included in the statement of financial position at cost less any impairment provision. Development costs are only recognised where it can be demonstrated that the project is technically feasible; where there is a clear intention to complete the project; that there is ability to use or sell the asset; that there is a high probability of future economic benefits and expenditure can be measured reliably.

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of the intangible asset unless such lives are indefinite, in which case the asset is reviewed annually for impairment in line with 2.5.  These charges are included in administrative expenses per the income statement.

2.3 Investment in joint ventures

A joint venture is an entity over which the group has joint control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The investment in a joint venture is initially recognised at cost and adjusted for the group's share of the changes in the net assets of the joint venture after the date of acquisition, and for any impairment in value. If the group's share of losses of a joint venture exceeds its interest in the joint venture, the group discontinues recognising its share of further losses.

2.4 Property, Plant & Equipment

All property, plant and equipment assets are stated at cost less accumulated depreciation.

Depreciation is provided on office equipment and fixtures & fittings at 20% on a straight line basis.

Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

2.5 Impairment of assets

The carrying amounts of the Group's assets, other than inventories, are reviewed at each statement of financial position date to determine whether there is any indication of impairment.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's

carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised. An impairment review is carried out at least annually for goodwill, intangible assets with an indefinite life and intangible assets not yet ready for use.

2.6 Financial instruments

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are recognised on trade date when the group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transactions costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments are derecognised on trade date when the group is no longer a party to the contractual provisions of the instrument.

2.6.1 Available-for-sale financial assets

Available-for-sale financial assets comprise equity investments. Subsequent to initial recognition available-for-sale financial assets are stated at fair value. Movements in fair values are taken to other comprehensive income, with the exception of impairment losses which are recognised in profit or loss. Fair values are based on prices quoted in an active market if such a market is available. If an active market is not available, the group establishes the fair value of financial instruments by using a valuation technique, usually discounted cash flow analysis. When an investment is disposed of, any cumulative gains and losses previously recognised in other comprehensive income are recognised in profit or loss. Dividends are recognised in profit or loss when the right to receive payments is established.

2.7 Trade receivables

Trade receivables are stated at their amortised cost. Trade receivables are reduced by appropriate allowances for estimated irrecoverable amounts.

2.8 Cash and cash equivalents

Cash equivalents comprise short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2.9 Trade payables

Trade payables are stated at their amortised cost.

2.10 Interest-bearing borrowings (other than compound financial instruments)

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

2.11 Share based payments

Options are measured at fair value at grant date using the Black-Scholes model. The fair value is expensed on a straight line basis over the vesting period, based on an estimate of the number of options that will eventually vest. Cash settled share based payment transactions results in the recognition of a liability at its current fair value.

2.12 Revenue recognition

Revenue includes sponsorship, management fees, sales & consulting fees, and income from sales of broadcasting rights. Revenue is recognised when the Group has earned the right to receive consideration for its performance, measured on the following basis:

(i)   Management fees and other fees earned - on rendering of services to third parties.

(ii)  Income from sale of sponsorship and commercial rights - on a straight line basis in accordance   

      with the terms of the agreement.

(iii) Income from sale of broadcasting rights - on delivery of the programmes to broadcasters in  

     accordance with the terms of the agreement.

2.13 Barter transactions

When services are rendered in exchange for dissimilar goods or services, the revenue generated for the services rendered is measured at the fair value of the goods or services received, adjusted for the amount of any cash or cash equivalents transferred.

2.14 Leases

Rentals under operating leases are charged to the Income Statement on a straight line basis over the lease term.

2.15 Deferred taxation

Deferred tax is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the statement of financial position.

The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the statement of financial position date.

The group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with investments in subsidiaries, as it is not considered probable that the temporary differences will reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amounts of the deferred tax assets are reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered.

2.16 Segmental reporting

Segments are distinguishable components of the Group that are engaged either in Sports, Media or Entertainment, which are subject to risks and rewards that are different from one another. Disclosure of segment results is provided in note 4 of the financial statements.

2.17 Foreign currencies

Monetary assets and liabilities expressed in foreign currencies are translated at the rates of exchange ruling at the statement of financial position date.  Transactions in foreign currencies are translated at the rate ruling at the date of the transaction.  Differences on exchange arising on translation of subsidiaries are charged directly to other comprehensive income. All other

exchange differences have been charged to the Income Statement.

2.18 Business Combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method.  The cost of an acquisition is measured as an aggregate of the consideration transferred including previously held equity interests, measured at the acquisition date fair-value and the amount of any non-controlling interest in the acquiree.  For each business combination, the Group measures the non-controlling interest in the acquiree at the proportionate share of the acquiree's identifiable net assets.  Subsequent changes in the proportion of the non-controlling interests, which do not result in de recognition of the subsidiary, are accounted for in equity.  Costs incurred in connection with the acquisition are recognised in profit or loss as incurred.

When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.  If the business combination is achieved in stages, the acquisition date fair-value of the Group's previously held equity interest in the acquiree is re-measured to fair-value as at the acquisition date through the profit and loss.

Goodwill is initially measured at cost being the excess of the consideration transferred over the Group's share of net identifiable assets acquired and liabilities assumed.  If this consideration is lower than the fair-value of nets assets of the subsidiary acquired, the difference is recognised in profit and loss.

After initial recognition, goodwill is measured at cost less any recognised impairment losses. 

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to either the acquired business or to each of the Group's cash generating units that are expected to benefit from the combination irrespective of whether other assets or liabilities of the acquire are assigned to those units.

 Where goodwill forms a part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.  Goodwill disposed of in these circumstances is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Goodwill arising from business combinations is assessed for impairment annually.

The results of the acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained.

2.19 The company's own profit and loss account

The company has taken advantage of the exemption permitted under Section 408 of the Companies Act and has excluded its own inx--ome statement from the Financial Statements.

3. Accounting estimates and judgements

The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

3.1 Intangible Assets: Tournament rights are the rights to promote European Tour golf events acquired in a market transaction in September 2006. These assets are carried at cost less amortisation. Amortisation is calculated to write-off the assets over their expected useful life of 20 years. Management use a combination of discounted cash flow and valuation multiples to assess the value of the assets at each reporting date. If the assets are deemed to be impaired, the amount of this impairment is taken directly to the income statement.

3.2 Development Costs: Development costs are incurred in the creation of new media assets and propositions, the benefits of which are expected to be derived in future years. Development costs are written-off over the expected useful life of the asset. 

The development assets are assessed for impairment annually.

3.3 Assets and Liabilities acquired in business combinations: The Group makes estimates to the fair value of assets and liabilities acquired in business combinations at the date of acquisition. The primary asset acquired relates to the previous joint venture Parallel Smart Media.

4. Segment Reporting

Changes in Operating Segments

The group has changed the way it is organised. The group now operates under three new segments, Sports, Entertainment and Media. The previous segments which are no longer in use were Event Promotion, Sales & Consultancy and Smart Media. The segment results for 2011 have been restated in line with the revised basis of segmentation.

Parallel Sports

Parallel Sports operates professional golf tournaments around the world sanctioned by The European Tour, The Asian Tour and The Korean LPGA with a focus in Asia. 

Parallel Media

The media segment has a strong focus on smart media using the technology developed by PSM (recently developed apps include the Hong Kong Eye ipad and iphone app, available through the appstore) allowing event organisers to provide an additional viewing dimension to users.

Parallel Entertainment

The entertainment division has been developed throughout 2012 and currently has 2 main focuses. The Blue and White Festival held in PyeongChang (the home of the 2018 Winter Olympics) and building on the K-Pop phenomenon with blue chip brands such as AIA through the sponsorship of k-pop concerts across Asia.

Segment Reporting

Segment results for the year

Operating Segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2012	2011	2012	2011	2012     2011		2012	2011
Revenue	5,902	6,044	232	373	130            -		6,264	6,417
Joint Venture	-	-	(115)	-	-                -		(115)	-
Segment result	1,120	1,647	33	304	130            -		1,283	1,951
Exceptional item	-	(101)	-	-	-               -		-	(101)
Segment result-after exceptional item	1,120	1546	33	304	130            -		1,283	1,850
Unallocated corporate expenses							(2,031)	(2,114)
Unallocated corporate expenses	-	-_	-	-	-	-	-	(101)
Operating Loss	-	-	-	-	-	-	(748)	(264)
Finance costs	-	-	-	-	-              -		(84)	(111)
Loss  for the year							(832)	(375)

Revenue by major customers Operating Segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2012	2011	2012	2011	2012	2011	2012	2011
Client 1	4,324	4,197	-	-	-	-	4,324	4,197
Other Clients	1,578	1,847	232	373	130	-	1,940	2,220
Total by client and segment	5,902	6,044	232	373	130	-	6,264	6,417

Geographic analysis Operating Segments		Revenues				Non-current Assets
		£'000				£'000
		2012		2011		2012		2011
South Korea		5,749		6,044		3,361		1,800
Hong Kong		-		-		1,320		1,446
Singapore		232		-		6		-
Europe		120		-		-		-
UK		163		373		348		307
Total by geography		6,264		6,417		5,035		3,553
Geographic analysis Operating Segments	Revenues				Non-current Assets
	£'000				£'000
	2012		2011		2012		2011
South Korea	5,749		6,044		3,361		1,800
Hong Kong	-		-		1,320		1,446
Singapore	232		-		6		-
Europe	120		-		-		-
UK	163		373		348		307
Total by geography	6,264		6,417		5,035		3,553

Segment assets and liabilities

Operating Segments	Sports			Entertainment				Media				Consolidated
	£'000				£'000				£'000				£'000
	2012		2011		2012		2011		2012		2011		2012		2011
Segment assets	3,178		2,588		933		332		3,145		1,800		7,256		4,720
Unallocated   corporate assets	-		-		-		-		-		-		379		772
Consolidated total assets	-		-		-		-		-		-		7,635		5,492
Segment liabilities	(3,093)		(2,092)		(859)		(321)		(746)		(354)		(4,698)		(2,767)
Unallocated corporate liabilities	-	-		-		-		-		-		(2,362)				(2,349)
Consolidated total liabilities	-	-		-		-		-		-		(7,060)				(5,116)
Net assets	-	-		-		-		-		-		575		376

Other Segment Information for the year

Operating Segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2012	2011	2012	2011	2012	2011	2012	2011
Depreciation of tangible assets	(3)	-	-	(5)	-	-	(3)	(5)
Capital expenditure on intangible assets	-	-	-	(3)	(95)	-	(95)	(3)
Amortisation of intangible assets	(136)	(136)	(84)	(84)	-	-	(220)	(220)

5. Cost of sales

The Group's Cost of Sales comprises: 

	2012	2011
	£'000	£'000
Prize purse and sanction fees	2,071	2,057
Commissions payable	51	53
Direct delivery costs	2,660	2,310
Other	65	-
Cost of Sales	4,847	4,420

6. Operating loss on ordinary activities before tax

	2012	2011
	£'000	£'000
This is stated after charging:
Depreciation	3	5
Amortisation	220	220
Operating lease rentals - land & buildings	27	49
Loss/(gain) on foreign exchange	28	(31)
Share-based payment transactions	173	-

6a. Exceptional Item

The 2011 exceptional item is in respect of a payment related to the Ballantine's Championships of 2009 and 2010.  This payment represents the settlement following a review in which the company's contractual obligations were re-negotiated and agreed.

10. Finance Costs

		2012	2011
	2003                                                            2003	£'000	£'000
On convertible loans		-	30
On bank loans		34	30
On bank overdrafts		-	1
On loan guarantee from related parties		50	50
Finance costs		84	111

12. Tax

	Year ended 2012	Year ended 2011
	£'000	£'000
UK Corporation tax in respect of current year:	-	-
Current taxation	-	-
Total tax charge for the year	-	-

(Loss) on ordinary activities before tax	(832)	(375)
The tax assessed for the year is lower than the standard         UK corporation tax rate of 24.5% (2011 - 26.5%) due   to the following factors:
(Loss) on ordinary activities at the standard rate of   corporation tax of 24.5% (2011 - 26.5%)	(204)	(99)
Effect of:
Revenue expenditure capitalised	23	-
Expenses not deductible for tax purposes	39	5
Tax Losses utilised in year - not recognised through   deferred	-	(5)
Tax losses carried forward - deferred tax not recognised	142	99
Total tax charge for the year	-	-

13. Loss per share

The basic earnings per share is calculated by dividing the loss for the year attributable to shareholders by the weighted average number of shares in issue during the year. In calculating the diluted earnings per share, outstanding share options, warrants and convertible loans are taken into account where the impact of these is dilutive.

	2012	2011
(i) Basic
(Loss) for the financial year (£'000)	(634)	(375)
Weighted average number of shares in issue	22,301,518	17,339,456
Loss per share	(2.8p)	(2.2p)
(ii) Diluted
Loss for the financial year (£'000)	(634)	(375)
Add back interest charged on convertible loans where the impact of these loans is dilutive (£'000)	-	30
Diluted Loss  (£'000)	(634)	(345)

15. Intangible Assets

Tournament rights

Tournament rights are the rights to promote European Tour golf events acquired in a market transaction in September 2006. These assets are carried at cost less amortisation. Amortisation is calculated to write-off the assets over their expected useful life of 20 years.

	2012	2011
Group and Company	£'000	£'000
Cost
Cost at start of year	2,713	2,713
Additions in the year	-	-
Cost at end of year	2,713	2,713
Amortisation
Cumulative amortisation at start of year	711	575
Amortisation for the year	136	136
Cumulative amortisation at end of year	847	711
Net book value at start of year	2,002	2,138
Net book value at end of year	1,866	2,002

Development Costs

Development costs are incurred in the creation of new media assets and propositions, the benefits of which are expected to be derived in future years. Development costs are written-off over the expected useful life of the asset. The development assets are assessed for impairment annually.

	Group		Company
	2012 £'000	2011 £'000	2012 £'000	2011 £'000
Cost
Cost at start of year	393	396	393	396
Additions for year	95	(3)	42	(3)
Arising on acquisition in year for PSM software	2,730	-	-	-
Cost at end of year	3,218	393	435	393
Depreciation
Cumulative amortisation at start of year	174	90	174	90
Charge for year	84	84	84	84
Cumulative amortisation at end of year	258	174	258	174
Net book value at end of year	2,960	219	177	219
Net book value at start of year	219	306	219	306

All research costs are expensed as incurred. Similarly, sales and marketing costs of exploiting assets are expensed through the Income statement as incurred.

16. Investments

	Group			Company
	2012	2011	2012		2011
	£'000	£'000	£'000		£'000
Investment in subsidiaries	-	-	2,311		2,111
Investment in joint venture	-	1,319	4		-
Other investments-available for sale	2	12	-		-
	2	1,331	2,315		2,111

16a. Investment in Joint Venture.

					Group
				2012		2011
				£'000		£'000
Balance brought forward				1,319		1,319
Share of losses in joint venture*				(4)		-
Transfer to subsidiaries upon acquisition				(1,319)		-
Investment in PMI				4		-
				-		1,319

Parallel Media Group had a 50% investment in Parallel Smart Media in 2011. During 2012, Parallel Media Group Asia acquired a 50% interest in Parallel Smart Media Asia Alpha Entertainments Private Limited, a company incorporated in Singapore. Parallel Media Group also has a joint venture with Parallel Media Italia s.r.l.

				2012				2011
				£'000			£'000
Turnover			678		94
Loss before tax			(317)		(227)
Taxation			-		-
Loss after tax			(317)		(227)
Fixed assets			-		-
Current assets			12		523
Liabilities due within one year			(168)		(740)
Liabilities due after one year			(281)		-

Other Investments

	Group	Company
Other investments available for sale	£'000	£'000
At 1 January 2012	12	-
Disposals in year	(10)	-
At 31 December 2012	2	-

18. Trade and other receivables

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Trade receivables	779	514	439	52
Amounts owed by subsidiaries	-	-	739	44
Amounts owed by joint ventures	394	599	420	537
Other receivables	601	543	625	500
Prepayments and accrued income	745	261	547	98
	2,519	1,917	2,770	1,231

At 31 December 2012 all amounts included under trade receivables are due within one year.

19. Cash and cash equivalents

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Sterling Bank Accounts	3	(6)	3	(6)
Euro Bank Accounts	-	15	-	15
Dollar Bank Accounts	59	13	55	10
Singapore Dollar Bank Accounts	6	-	-	-
Cash at Bank	68	22	58	19
Bank Overdrafts	(36)	-	(36)	-
Total Cash and Cash Equivalents	32	22	22	19

20. Financial Liabilities - Borrowings

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Bank facility Overdraft	250 36	250         -	250 36	250 -
Other loan	120	-	120	-
	406	250	406	250

The bank facility at 31 December 2012 totalling £0.7 million is secured by a personal guarantee provided by David Ciclitira at a monthly cost of £4,167.

21. Trade and other payables and deferred income

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Trade payables	1,801	1,799	816	775
Amounts owed to subsidiary entities	-	-	4,285	2,961
Other payables	538	271	281	260
Other tax and social security	440	150	440	147
Accruals	270	326	143	196
Trade and other payables	3,049	2,546	5,965	4,339

Deferred income is income received in advance as at 31 December which will be recognised as revenue in the following year when services are rendered.

22. Non-Current Liabilities

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Bank facility	455	667	455	667
Other loans	161	-	161	-
	616	667	616	667

At the 31 December 2012, amounts payable to Lloyds Bank totalled £705k (of which £250k is included in current liabilities and £455k is included in non-current liabilities above). The loan is repayable in 48 consecutive monthly instalments representing principal and interest commencing on the date which is 12 months after the date the loan was borrowed (i.e. an effective term of five years with a one year repayment holiday). The loan carries interest payable at 3% over base rate. The loan may be repaid early at the discretion of the company. The loan is secured by a personal guarantee provided by David Ciclitira.  The other loan totalled £281k (see note 29) from David Ciclitira with £120k including in current liabilities.

24. Deferred taxation

The actual and potential liability to deferred tax is £708k.  Due to the availability of UK tax losses, subject to agreement with the HM Revenue and Customs, there are estimated tax losses of £16,225k (2011 £14,331k.) which have not been recognised as a deferred tax asset as there is no certainty as to the timing of their realisation.

There were no deductible temporary differences or unused tax credits at either 31 December 2011 or 31 December 2012. There were no amounts of deferred tax recognised in the income statement for either the year ended 31 December 2012 or for the year ended 31 December 2011.

	Group
	2012	2011
	£'000	£'000
Balance brought forward	(354)	(354)
Released on acquisition of PSM	354	-
Arising on fair value of intangible assets	(708)	-
	(708)	(354)

25. Called up share capital

The Authorised Share Capital is set out in the table below:

	2012	2011
Authorised Share Capital	£'000	£'000
316,989,608 ordinary shares of 2.2p	6,974	6,974
199,831,545 deferred shares of 0.5p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	9,997	9,997

	2012	2011
	£'000	£'000
Issued and fully paid as at 31 December 2012
22,912,346 ordinary shares of 2.2p	504	440
199,831,545 deferred ordinary shares of 0.5p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	3,527	3,463

Reconciliation of the number of shares outstanding is:
	2012	2011
	(number)	(number)
Ordinary shares
Ordinary shares of 2.2p	20,019,751	15,437,437
Ordinary shares of 2.2p each issued during the period	2,892,595	4,582,314
Ordinary shares of 2.2p each in issue at end of year	22,912,346	20,019,751
Issued and fully paid deferred shares	(number)	(number)
Deferred shares of 0.5p each in issue	199,831,545	199,831,545
Deferred B shares of £19.60	103,260	103,260

(i)

Ordinary shares: during the year ordinary shares were issued as follows:

	2012
Ordinary shares of 2.2p each issued during the year	(number)
February 2012 at 35p per share	342,938
February 2012 at 24p per share	458,334
February 2012 at 17p per share	175,609
February 2012 at 15p per share	485,714
May 2012 at 35p per share	1,430,000
Total shares of 2.2p each issued during the year	2,892,595

(ii) 

Ordinary shares: during the year ordinary shares were issued as follows:

(ii) 

February share issues - Being a total value of £337k, with settlement of amounts owed to creditors £122k, management bonus of £30k and payment of services £51k with £134k going to the share premium account.

 May share issues at 35p - Being SGD1m new issue for cash. Currency translation of £4k was put to the share premium account.

(iii) Deferred shares

The deferred shares do not entitle their holders to receive any dividend or other distribution, they do not entitle their holders to receive notice of or to attend, speak or vote at any General Meeting of the Company, and they do not entitle their holders on a return of assets on a winding-up of the Company or otherwise only to the repayment of the capital paid up on such Deferred Shares and only after repayment of the capital paid up on each Ordinary Share in the capital of the Company and the payment of a further £100,000 on each such Ordinary Share (£1,000,000 in the case of each deferred B share).

28. Related parties

Key management personnel compensation

During the year ended 31 December 2012, directors David Ciclitira and Leonard Fine received share based payments of £15k, the issue price was 0.15p representing 100,000 shares each. Share based payments of £100k were made to Urban Strategic Pte Ltd, for the services of Ranjit Murugason representing shares at a price of 24p.

At 31 December 2012 directors Leonard Fine and Serenella Ciclitira were owed £18,000 and £20,830 respectively in unpaid director fees. These will be settled in 2013 by a mixture of ordinary shares and cash.

Luna Trading

Loan balances and conversions:

Luna Trading Ltd is a company under the control of David Ciclitira. The movements in the payable balances due by PMG in 2012 were as follows:

	£'000
Amount of loan outstanding as at 31 December 2010	114
Loan Guarantee interest paid	50
Expenses Incurred	(146)
Payments Made	139
At 31 December 2011 - Total loan amounts outstanding to Luna Trading Limited	157
Movement in PMG/Luna Balances due to offset of 2010 PCA Balance owed	(71)
Loan Guarantee Interest Paid	50
Expenses Incurred	(151)
Payments Made	150
Total Owed to Luna Trading	135
Loan amounts outstanding to Luna due within one year	135
Amounts owed to Luna payable after one year	-
Total amounts outstanding to Luna at 31 December 2012	135

Luna Trading Ltd is the company through which PMG contracts with D Ciclitira for consulting and business services. During the year ended 31 December 2012, Luna Trading Ltd charged PMG (and PMG paid) for Consultancy fees of £221,000 (2011 - £221,000), remote office costs of £39,000 (2011 - £41,000) and Medical Insurance and life cover of £45,000 (2011 £45,000).

During the year ended 31 December 2010, David Ciclitira agreed to provide a personal guarantee of £1 million to Lloyds bank to support medium term PMG loans. As consideration for providing a personal guarantee, Luna Trading charges interest at 5% per annum of the guarantee amount for the period of the guarantee.

In addition David Ciclitira has been granted a fixed and floating charge over the company's assets for the period of the guarantee and has been granted an option to acquire, at fair market value, Parallel Media (Championships) Limited (a wholly owned subsidiary of PMG which holds rights to the company's major sporting events). On 21st June 2013, David Ciclitira waived his right to the call option to acquire Parallel Media (Championship) Limited.

In December 2012, David Ciclitira provided an additional loan of £310k to PMG. (See note7). In consideration of providing the Loan, the Company has agreed an initial facility fee of £38,483 (the 'Facility Fee'). The Facility Fee is payable by the Company by 30 June 2013 and may be satisfied by the issue of new ordinary shares at the Company's option prior to this date, based on the weighted average share price over the 5 business days following the publication of the 2012 report and accounts.

For as long as the Loan or part thereof is outstanding, it will be subject to a renewal fee (the "Renewal Fee") payable on 30 June 2014 and 30 June 2015. The Renewal Fee will be £38,483 payable in cash (or shares at the option of the Company calculated by reference to the above weighted average share price).

The Loan is deemed to be a related party transaction under the AIM Rules for Companies. The independent directors, being Leonard Fine and Ranjit Murugason, consider, having consulted with the Company's Nominated Adviser, that the terms of the Loan are fair and reasonable so far as the Company's shareholders are concerned. The loan at 31 December 2012 was £281k due to David Ciclitira, with £161k repayable after one year.

Parallel Media Korea Limited:

The company shareholding for Parallel Media Korea Limited is held on trust by David Ciclitira. During 2013 the shares will be transferred to Parallel Media Group Plc. The inter company balance owed to Parallel Media Group Plc at year end is £212,254.

Parallel Contemporary Arts Limited:

During the year PMG incurred costs in the staging and management of art projects owned by Parallel Contemporary Arts Limited, a company under the control of David Cicilitira. Recoverable debtor amounts outstanding as at 31 December 2012 are £120,997 (2011 - £133k and 2010 £71k offset against amounts owed to Luna). PCA was also reimbursed £24k for Parallel Media Italia office costs and £16k for asset purchases.

Parallel Smart Media Limited:

The company holds 75% of PSM at the end of the year. PSM was charged £94,500 by PMG during the year for the licence fees. At the end of the year PSM owed £311,787 to PMG.

Parallel Smart Media Asia Alpha Entertainments Private Limited:

During the year PMG provided funding of £329k to PSMA Alpha Entertainments Private Limited. PSMA Alpha Entertainments Private Limited is a Joint Venture between Parallel Media Group Asia Limited and HW Alpha Private Limited and is incorporated in Singapore.  At 31 December 2012 £274k was due to Parallel Media Group. 

Parallel Media Italia s.r.l

During the year, Parallel Media Group provided services to Parallel Media Italia s.r.l. amounting to £120k.  At 31 December 2012, the £120k was still outstanding.

 

END

 

 

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