Final Results

RNS Number : 7272R

Parallel Media Group PLC

30 June 2015

 

30 June 2015

PARALLEL MEDIA GROUP PLC

("PMG", the "Company" or the "Group")

ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

Parallel Media Group Plc (AIM:PAA), a leading sports marketing, media and digital agency, announces its end of year results for the period ended 31 December 2014.

Overview

·      Consolidation of the golf events business by moving the Ballantine Championship in Korea to Singapore, thereby securing the tour date for the future;

·      Launch of a new music Festival in Korea, the AIA Real Life: Now Festival;

·      Write down of certain assets and further considerable reductions in overheads.

Post Balance Sheet Events

·      The agreement entered into with Parallel Contemporary Music ("PCM")  has been amended extending the Company's right to receive the benefit of the joint venture whilst the associated costs will now be met by PCM rather than by PMG;

·      Two commercial agreements for new sponsorship and event opportunities in Asia have already been signed under the PCM joint venture during the first six months of 2015.

Chairman's Statement

I have pleasure in presenting the Company's Annual Report, Strategic Report and Financial Statements for the year ended 31 December 2014.  Over the past year PMG has successfully restructured and has strengthened its music business to focus on the Company's extensive sponsorship knowledge of the Asian marketplace. This, combined with the consolidation of its core golf events business, reviewing its asset base and reducing its annual overheads, means that the Company will have a diversified and balanced base upon which to continue to build, and we look forward to capitalising on this improved position for shareholders.  

During the period under review PMG has:

-       Consolidated its golf events business by moving the Ballantine's Championship in Korea to Singapore, where it was renamed the Championship Singapore. The event took place very successfully in January 2014 at Laguna Golf Club, and as a result secured the event in the European Tour calendar for the future.  A new subsidiary company has been created, Championship (Singapore) Pte Ltd, to administer the event and has already attracted outside investment.  Additionally, the Prudential Causeway Trophy took place in June 2014 which saw Singapore take home the trophy in an exciting finish against a strong team of Malaysia's leading golfers. 

-       Negotiated AIA's sponsorship of Taylor Swift's tour of Malaysia, as well as creating a new festival in Korea, the AIA Real Life: NOW Festival, featuring headline artists Lady Gaga and The YG Family, which includes global K-Pop sensation Psy alongside 2NE1, Big Bang and Winner. 

-       Continued to review its asset base and is working towards further reducing annual overheads. As part of the Company's review, the smart media application which sits on the Company's balance sheet as an intangible asset was subject to an impairment review at the end of the year.  As the asset has generated no revenues and the technology is now obsolete, it was deemed prudent to write down the value of the asset at this time. A review of the carrying value of other balance sheet assets was also conducted and certain loans to related companies and joint ventures were also deemed to be irrecoverable.  

Post balance sheet events/Related party transaction

As set out in the Company circular to Shareholders dated 3 December 2013, the Company entered into a service agreement between the Company, PCM, Luna Trading Limited ("Luna"), and David Ciclitira (the "PCM Agreement").

Pursuant to the PCM Agreement, the Company provides the services of David Ciclitira and certain other services to PCM (the "Services") in consideration for the payment by PCM to the Company of most of the revenue which PCM will receive (whether by way of dividends or otherwise) as a result of PCM being a 45% shareholder in a joint venture company. PCM has entered into a joint venture agreement with a major US media conglomerate, pursuant to which the parties formed a Hong Kong incorporated company to provide live music based marketing solutions for international and local brands across Asia. The effect of this arrangement with PCM is that the Company receives PCM's economic benefit of the joint venture arrangement. PCM does not own any assets other than its shareholding in the joint venture company. The Company agreed post year end to alter the PCM Agreement, which has been retrospectively applied such that it has effect from 1 January 2015. The amendments comprise, inter alia:

1.     that the Company is no longer responsible for the provision of the Services and that the Services and the cost of providing them shall be borne by PCM directly;

2.     that PCM will pay 50% of David Ciclitira's consultancy fees, in accordance with the service agreement between the Company and Luna. For the year ended December 2015 David Ciclitira has waived his consultancy fees for this financial year, as have fellow board directors Tim Sturm and Serenella Ciclitira;

3.     that the consideration received by the Company (the "Net Revenue") will be all of the revenue which PCM will receive (whether by way of dividends or otherwise) as a result of PCM being a 45% shareholder in a joint venture company after deduction of certain approved operating costs and any VAT.

The effect of these amendments is that the Company continues to receive the economic benefit of PCM's joint venture, while the costs associated with the joint venture arrangement will now be met by PCM rather than PMG. PMG's operating costs will be significantly reduced as a result as the bulk, and potentially all, of its music-related activities will be carried out by PCM. The Company will have the right to nominate a person to serve as a director of PCM and to approve PCM's annual budget and the costs to be included in the Net Revenue calculation. The remainder of the PCM Agreement is unchanged.

Due to the fact that Luna is the sole shareholder of PCM and David Ciclitira is the ultimate beneficial owner of Luna, and that each are a substantial shareholder under the AIM Rules, the amendment to the PCM Agreement constitutes a related party transaction as defined by the AIM Rules. The Independent Directors, being Ranjit Murugason and Tim Sturm, having consulted with Sanlam Securities UK Limited, the Company's nominated adviser, consider that the terms of the amendment to the PCM Agreement are fair and reasonable insofar as the Company's shareholders are concerned.

Outlook

With a much cleaner balance sheet, and a reduced cost base in lieu of a new net revenue arrangement with PCM, PMG can now look clearly to the future to focus on its two primary sources of revenue - the golf division and the music business.  The board feels positive about the growth potential of the Company and, wishing to further demonstrate support of PMG, David Ciclitira has decided to waive his consultancy fees in 2015 to allow the Company the chance to return to profit, as have his fellow directors Tim Sturm and Serenella Ciclitira.

I would like to take this opportunity to thank my fellow board members, as well as all of our hard working staff around the world.

David Ciclitira

Chairman

30th June 2015

Parallel Media Group plc (London)
David Ciclitira	Tel: [phone]
Sanlam Securities UK Limited (Nominated Adviser and Broker)
Virginia Bull	Tel: [phone]

Strategic Report

The Directors of the Company and its subsidiary undertakings, which together comprise Parallel Media Group, present their Strategic Report for the year ended 31 December 2014.

The Strategic Report is a new statutory requirement under the Companies Act 2006 and is intended to provide fair and balanced information that enables the Directors to be satisfied that they have complied with s172 of the Companies Act 2006, which sets out the Directors' duty to promote the success of the Company.

Principal Activities

The principal activities of the Group during the year ended 31 December 2014 continued to be the promotion of sport and music events and associated media activities. 

Organisation Review

PMG is a leading Communications Agency and has expertise in guiding some of the world's leading brands in the Asian markets. Founded in 1987 by Chairman, David Ciclitira and listed on the London Stock Exchange's AIM since August 2001 the operations of PMG are run from three main offices in London, Singapore and Seoul.

The Board of Directors comprises the Chairman and three non-executive directors. Their profiles can be found on the Company's website www.parallelmediagroup.com 

Strategy and Business Plan

PMG focuses on two distinct business areas, Sport and Entertainment, and retains an interest in developing opportunities in its Media business.

In Sport it specialises in golf and has been responsible for promoting tournaments such as the Championship (formerly the Ballantine's Championship), the 2013 event having taken place in Korea and the 2014 event having been held in Singapore at Laguna National in January 2014, and the Prudential Causeway Trophy in June 2014, a Ryder Cup style competition between professional golfers from Singapore and Malaysia.

In entertainment PMG specialises in connecting international brands with music solutions in the Asian markets. Recent projects include the promoting of a Justin Bieber concert in Korea, a Taylor Swift concert in Malaysia, both for AIA, the "Real Life Company" which is the largest independent publicly listed pan-Asian life insurance group with operations in 17 markets in the Asia-Pacific region. In addition PMG has created the AIA Real Life: NOW Festival in Korea, a global event where the music and culture of the East and West will come together. The first such event took place in August 2014 with Lady Gaga as the headline act.

PMG's Media activities were conducted through its 50:50 joint venture with Pico Global services to form Pico TV. However the joint venture has now been dissolved with no financial impact on the group.  The media business is currently under review by the Company's management.

Financial and Performance Review

During the year the PMG board of Directors revalued the loans with related and joint venture companies on the Company's balance sheet. This resulted in a number of one-off write downs that will ultimately clean the Company's balance sheet.  The carrying value of the intangible assets was subject to an end of year impairment review. The review was triggered by the fact that no revenue had been derived from the Pico TV smart media application, as expected, and that the Company did not have the resources to enable opportunities to be fully explored, and resulted in intangible asset and goodwill value being reduced to zero.

The consolidated income statement is set out below. The Company has generated revenue of £0.7m against £7.8m for 2013. This reduction was due to a number of factors. The Singapore Championship, formerly the Ballantine's Championship, was moved from Korea to Singapore at a very late stage which resulted in no title sponsor and a considerable reduction in secondary sponsorship. There was also a change in revenue recognition arrangements whereby iin 2013 the event's prize fund of £1.9 million was included as both a revenue and cost of sales item, while in 2014 the prize fund money was not included as a revenue or cost item due to the fact that the European Tour were responsible for paying the prize fund in totality directly. Other events that were not staged in 2014 included Premier League Golf as well as the forecasted AIA sponsored concerts. .

The reduced revenue corresponded with a reduction in Cost of Sales, as events were either reduced in scope or not held. This had a positive impact as Cost of Sales reduced from £5.7m (2013) to £0.44m (2014). The net result was a Gross Profit of £0.25m against a Gross Profit in 2013 of £2.16m.

The Company continues its cost cutting exercise which has yielded significant savings.  Administration costs for 2014 were £0.98m compared with £1.99m in 2013.

The statement of financial position of the Group is set out below and shows the impact of the impairment write-offs, with net liabilities falling to £1.65 million against net assets of £2.87 million in 2013 (adjusted in 2014). PMG is in current discussions with creditors concerning non-current debts of approximately £2.0m that are no longer deemed payable which should allow for a considerable balance sheet improvement in the future.

Operating Review

During 2014 PMG has made progress and successfully promoted a series of events.

Sport

-       Staged the Championship, the renamed golf tournament which will be held annually in Singapore.

-       The Prudential Causeway Trophy had its second outing of a successful Ryder cup style event between professional golfers from Malaysia and Singapore.

Entertainment

-       August 15 & 16 saw the inaugural AIA Real Life: NOW festival held at the Jamsil Sports Complex Main Stadium, Seoul. Sponsored by AIA, the Festival was the largest music event undertaken by the Company since the inception of its music division. Promoted by the world's leading live entertainment company, Live Nation, in association with Korea's top artist management firm, YG Entertainment, the festival featured some of the world's biggest selling artists, including headline acts, Lady Gaga, Psy and the YG Family.

Media

-       Under review by the management of the Company.

Risk and Uncertainties

Revenue risk:

PMG derives the majority of revenues from events and business in Asia, with both events promotion and sponsorship sales in the region. Sponsorship sales rely on international brands seeking to expand their presence in the Asian markets. A downturn in Asian sponsorship could negatively impact PMG results. PMG is working to mitigate this risk through the development of long-term sponsorship contracts.

Cost risk:

A considerable portion of PMG's cost of sales is derived from business in Asia for the delivery of events in the region. Increases in local supplier costs may negatively impact PMG results. PMG works to mitigate this risk by working with internationally recognised suppliers and renegotiates supply contracts on an event by event basis.

Event cancellation risk:

A large proportion of PMG revenues and costs are derived from the staging of international golf events in the Asia region. To mitigate the impact of event cancellation, PMG insures against this risk.

New product risks:

PMG carries out market research on new products and expects all new products to generate revenues.

Financial Instruments

Although PMG is headquartered in the UK, a considerable portion of revenue and costs are denominated in US dollars, Euros and Korean Won. As a result, the Group's consolidated financial statements (presented in Sterling) can be affected by adverse currency movements. The Group's financial risk management objective is to minimise the exposure to such foreign currency risks. PMG's policy is to match US dollar, Euro and Korean Won revenue and costs as closely as is practicable.

The Group is exposed to interest rate risk from movements in the bank base rate. The Company's £0.4 million debt facility with Lloyds is charged interest at 4% above base.

The Group is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages this through credit control procedures. The Group's customers are predominantly comprised of large multi-national luxury brands. The sponsorship & consulting revenues are secured by contracts for the provision of services. Title sponsors pay contracted stage payments in regular intervals throughout the year. Secondary sponsors pay contracted sponsorship fees usually 60 days prior to the event. The Group aims to ensure that the majority of sponsorship is paid prior to the provision of the service or event.

The Group and Company's surplus liquid resources were maintained on short-term interest bearing deposits.  The Group plans to continue to meet operating and other commitments as they fall due. Liquidity risk is managed through cash flow forecasts and regular planning.

Internal Controls and Risk Management

The directors are responsible for the Group's system of internal financial control. Although no system of internal financial control can provide absolute assurance against material misstatement or loss, the Group's system is designed to bring reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

The Board reviews capital investment, additional borrowing facilities, guarantees and insurance arrangements.

Forward Looking Statement

PMG will continue to focus on its golf and expanding music businesses over the forthcoming 12 months. 

Having secured a strong long term host venue agreement with Laguna Golf and Country Club, PMG is in active discussion with various potential title sponsors of the Singapore Championship, which is scheduled to take place during Q1 of 2016. After a year of absence from the European Tour, the Company aims to announce a new title sponsor for the Singapore Championship during Q4 of 2015 and we look forward to once again promoting a first class event on the European Tour. 

As announced on 15 May 2015, PMG is currently negotiating the opportunity for the Causeway Trophy to be held during the same week as The Singapore Championship and to be moved to Malaysia, having previously been held in Singapore.  These developments would mark an exciting step forward for the event.

Having launched the AIA Real Life Music Now Festival in 2014, PMG has had a strong start in 2015 for its on-going music business.

The joint venture arrangement, entered into through PCM, gives the Group the economic benefit on a net revenue basis of a joint venture agreement with a major US media conglomerate. Through the PCM Agreement the parties have formed a Hong Kong incorporated company to provide live music based marketing solutions for international and local brands across Asia. The joint venture has gained significant traction since the period end, having advised on the securing of 'Presenting Sponsor' arrangement for a US chart topping indie rock band with an international insurance company, and a licensing and booking agreement for a dance music event in Japan. The fees and commission associated with these arrangements are payable to the joint venture, however, pursuant to the terms of the PCM Agreement all quarterly revenues less approved costs are payable to the Group. The Board expects that the aggregate financial impact of these arrangements on the Group will be revenue in the region of £100,000 for 2015.

In addition the joint venture is negotiating multiple other agreements which, if concluded, will have a significant impact on PMG with announcements will be made in due course. Accordingly, the Board feel very positive about the growth and potential success of the music business over the forthcoming 12 months.

The Company remains committed to continuing and expanding the reduction in its overheads, which in the first six months of 2015 have been successfully reduced by 70% compared to the same period in 2014.

Corporate Governance

Companies whose shares are traded on AIM are not required to make annual statements to shareholders regarding compliance with the UK Corporate Governance Code. However the company is committed to high standards of corporate governance. The non-executive director Timothy Sturm heads the Audit Committee, while Ranjit Murugason continues his role as a non-executive director and member of the Audit Committee.

Role of the Board

The Board's role is to agree PMG's long-term direction and strategy and monitor achievement of its objectives. The board aims to meet six times a year for these purposes and hold additional meetings where necessary. The Board receives reports on all significant strategic and operational matters.

Shareholders

The Board seeks to protect shareholders' interests by following where appropriate the guidelines in the UK Corporate Governance Code. The annual general meeting provides the Board with an opportunity to informally meet and communicate with investors.

Suppliers and Contractors

It is Group policy that appropriate terms and conditions for its transactions be agreed with its suppliers and that payment should be made in accordance with those terms and conditions, provided that the supplier has also complied with them.  The Group does not follow any code or standard on payment practice.

This strategic report was approved by the Board of Directors on 29/06/2015 and signed on its behalf.

David Ciclitira

Chairman

30th June 2015

CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2014

		2014	2013
	Note	£'000	£'000
Continuing operations
Revenue	1	692	7,817
Cost of sales	2	(442)	(5,660)
Gross profit		250	2,157
Administration expenses
Foreign exchange		(106)	96
Depreciation and amortisation of non financial assets		(187)	(181)
Other administrative expenses		(984)	(1,989)
Total admin expenses		(1,277)	(2,074)
Operating (loss)/profit	3	(1,027)	83
Exceptional items	4	(3,648)	-
Operating (loss)/profit after exceptional Items		(4,675)	83
Finance costs	6	(65)	(188)
Share of post acquisition profit/(loss) of Joint Venture		129	(81)
Loss before tax	3	(4,611)	(186)
Tax expense	8	-	-
Loss for the year		(4,611)	(186)
Attributable to:
Non-controlling interests		-	-
Equity holders of the parent		(4,611)	(186)
		(4,611)	(186)

Earnings loss per share
-basic	9	(153.2p)	(6.2p)
-diluted	9	(153.2p)	(6.2p)

The accompanying accounting policies and notes form an integral part of the financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2014

	2014	2013
	£'000	£'000
Loss for the year	(4,611)	(186)
Items that will be subsequently reclassified to profit and loss
Exchange difference on translation of foreign operations	(69)	60
Total comprehensive income (expense) for the year	(4,680)	(126)
Total comprehensive income (expense) attributable to:
Equity holders of the parent	(4,680)	(126)
Non - controlling interest	-	-
	(4,680)	(126)

STATEMENTS OF FINANCIAL POSITION as at 31 December 2014

		Group
		2014		Restated 2013
		£'000		£'000
Non current assets
Property, plant and equipment	10	6		3
Intangible assets - Tournament rights	11	1,594		1,730
Intangible assets - Development costs		-		2,923
Investment in Joint Venture		-		-
Goodwill	12	-		200
Investments		-		2
Total non current assets		1,600		4,858
Current assets
Inventory		-		8
Trade and other receivables	13	72		2,329
Cash and cash equivalents	14	3		24
Total current assets		75		2,361
Current liabilities
Financial liabilities - Borrowings	15	85		162
Trade and other payables	16	2,927		3,097
Total current liabilities		3,012		3,259
Net current liabilities		(2,937)		(898)
Non current liabilities
Financial liabilities - Borrowings	15	317		379
Deferred tax	18	-		708
		317		1,087
Net assets/(liabilities)		(1,654)		2,873
Equity
Share capital	19	4,612		4,612
Share premium		8,741		8,741
Other reserves		503		503
Capital redemption reserve		5,034		5,034
Foreign exchange reserve		(116)		13
Retained earnings		(20,581)		(16,030)
Equity attributable to equity holders of the parent		(1,807)		2,873
Non-controlling interests		153		-
		(1,654)		2,873

The financial statements were approved and authorised for issue by the Board of directors on 30/06/2015 and were signed on its behalf by:

David Ciclitira

Chairman

STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2014

	Ordinary Share Capital	Share Premium	Other Reserves	Capital Redemption	*Forex Reserve	Retained Earnings	Subtotal	Non controlling Interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Group
As at 31 December 2013	4,612	8,741	503	5,034	13	(16,030)	2,873	-	2,873
Loss for the year	-	-	-	-	-	(4,611)	(4,611)	-	(4,611)
Foreign exchange	-	-	-	-	(129)	60	(69)	-	(69)
Total comprehensive income	-	-	-	-	-	(20,581)	(1,807)	-	(1,807)
Issued share capital	-	-	-	-	-	-	-	153	153
At 31 December 2014	4,612	8,741	503	5,034	(116)	(20,581)	(1,807)	153	(1,654)

	Ordinary Share Capital	Share Premium	Other Reserves Restated	Capital Redemption	Forex Reserve	Retained Earnings	Subtotal	Non controlling Interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Group
As at 31 December 2012	3,527	7,288	557	5,034	13	(15,844)	575	-	575
Loss for the year	-	-	-	-	-	(186)	(186)	-	(246)
Total comprehensive income	-	-	-	-	-	(186)	(186)	-	(186)
Issued share capital	1,085	1,779	-	-	-	-	2,864	-	2,864
Prior year adjustment			(54)				(54)		(54)
Share issue costs	-	(326)	-	-	-	-	(326)	-	(326)
At 31 December 2013	4,612	8,741	503	5,034	13	(16,030)	2,873	-	2,873

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. A reclassification amounting to £60k has been made in 2014 to correct a prior year balance.

STATEMENTS OF CASH FLOWS for the year ended 31 December 2014

	Group
	2014	Restated 2013
	£'000	£'000
Cash flows from operating activity
Operating (loss)/profit	(4,675)	83
(Decrease)/Increase in translation reserve	(69)	-
Depreciation	6	4
Amortisation of intangibles-Tournament rights	136	136
Amortisation of intangibles-Development costs	45	41
Share based payments	-	325
Loss on disposal of Intangible asset	2,370	-
Loss on disposal of Investments	2	-
Decrease/(increase) in inventory	8	5
Decrease/(increase) in receivables	2,386	137
(Decrease)/increase in payables	(170)	(2,558)
Cash generated from/(used in) operations	39	(1,827)
Cash flow from investing activities
Acquisition of development costs	-	(4)
Acquisition of property, plant and equipment	(9)	-
Investments in subsidiaries	-	-
Investments in joint ventures	-	(28)
Payment to NCI to increase shareholding	-	(54)
Net cash (used in) investing activities	(9)	(86)
Cash flow from financing activities
Shares issued to non-controlling interests	153	-
Cash proceeds from issue of new shares	-	2,538
Loans repaid	(139)	(445)
Interest paid	(65)	(188)
Net cash (used in)/generated from financing activities	(51)	1,905
Cash and cash equivalents at beginning of the year	24	32
Net (decrease)/(decrease) in cash and cash equivalents	(21)	(8)
Cash and cash equivalents at end of the year	3	(24)

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2014

The financial information set out above does not comprise the Company's statutory accounts.  The Annual Report and Financial Statements for the year ended 31 December 2013 have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Annual Report and Financial Statement for the year ended 31 December 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The Independent Auditors' Report on the Annual Report and Financial Statement for the year ended 31 December 2014 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.  These will be delivered to the Registrar of Companies following the annual general meeting.

The Group's full statutory financial statements for 31 December 2014 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as endorsed by the European Union ("endorsed IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under endorsed IFRS.

Going concern

The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2015. 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. 

In addition, the Directors have received confirmation that financial support will be provided to the PMG Group of companies sufficient to enable the group to continue to trade and meet its financial obligations as they fall due or the foreseeable future from the date that the Parallel Media Group plc financial statements for the year ended 31 December 2014 are approved and signed

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.           Segment reporting

Segment results for the year

Operating segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2014	2013	2014	2013	2014	2013	2014	2013
Revenue	531	6,487	161	1,210	-	120	692	7,817
Joint ventures	(15)	7	29	(28)	115	(60)	129	(81)
Segment result	202	1,893	63	123	115	60	380	2,076
Unallocated corporate expenses							(1,277)	(2,074)
Operating profit/(loss)							(898)	2
Exceptional Items							(3,648)	-
Finance costs							(65)	(188)
Loss  for the year							(4,611)	(186)

Revenue by major customer

Operating Segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2014	2013	2014	2013	2014	2013	2014	2013
Client 1	-	4,131	-	-	-	-	-	4,131
Other Clients	531	2,356	161	1,210	-	120	692	3,686
Total by client and segment	531	6,487	161	1,210	-	120	692	7,817

Geographical analysis

Operating segments	Revenues		Non-current Assets
	£'000		£'000
	2014	2013	2014	2013
South Korea	161	5,245	292	3,437
Hong Kong	12	758	1,120	1,220
Singapore	537	1,053	60	57
Europe	(40)	282	-	-
UK	22	27	182	198
Malaysia	-	452	-	-
Total by geography	692	7,817	1,654	4,912

Segment assets and liabilities

Operating segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2014	2013	2014	2013	2014	2013	2014	2013
Segment assets*	1,661	2,892	-	253	-	3,269	1,661	6,414
Unallocated corporate assets							14	805
Consolidated total assets							1,675	7,219
Segment liabilities	(1,570)	(1,890)	(78)	-	(5)	(793)	(1,653)	(2,683)
Unallocated corporate liabilities							(1,676)	(1,663)
Consolidated total liabilities							(3,329)	(4,346)
Net (liabilities)/assets							(1,654)	2,873

Other segment information for the year

Operating segments	Sports		Entertainment		Media		Consolidated
	£'000		£'000		£'000		£'000
	2014	2013	2014	2013	2014	2013	2014	2013
Depreciation of tangible assets	(6)	(3)	-	-	-	-	(6)	(4)
Capital expenditure	9	-	-	-	-	4	9	4
Amortisation of intangible assets	(141)	(136)	-	-	(40)	(41)	(181)	(177)

2.           Cost of sales

The Group's cost of sales comprises:

	2014	2013
	£'000	£'000
Prize purse and sanction fees*	-	1,913
Commissions payable	35	80
Direct delivery costs	407	3,667
Other	-	-
Cost of Sales	442	5,660

*The prize fund in 2014 was the responsibility of and paid for by the European Tour, therefore it does not pass through PMG's books.

3.             Operating loss on ordinary activities before tax

	2014	2013
	£'000	£'000
This is stated after charging:
Depreciation	6	4
Amortisation	181	177
Exceptional items	3,648	-
Operating lease rentals - land & buildings	25	25
Loss/(gain) on foreign exchange	175	(96)
Share-based payment transactions	-	325

4.           Exceptional Items

The exceptional items within the 2014 Income Statement relate to the revaluation and treatment of intercompany loans and related party balances, the write down of goodwill is in relation to the intangible asset.

Intercompany/related party write offs                                                                                                                  £'000

Parallel Media Korea                                                                                                                                              785

Parallel Smart Media Alpha Entertainment                                                                                                       253

Parallel Media Italia                                                                                                                                              240

Intangible impairment

Development costs                                                                                                                                              2,878

Parallel Smart Media - Goodwill (see note 12)                                                                                                 200

Parallel Smart Media - Deferred tax write back                                                                                              (708)

Exceptional items total                                                                                                                                           3,648

5.             Employees

		2014	2013
Group
The average number of employees (including directors) during the year was:		(No.)	(No.)
Administration		8	16

		2014	2013
		£'000	£'000
The aggregate payroll costs including directors were:
Wages, salaries and fees		428	837
Social security costs		22	28
		450	865

6.           Finance costs

		2014	2013
	2003                                                                            2003	£'000	£'000
On bank loans		37	43
On loan guarantee from related parties		28	45
On conversion of debt to equity		-	100
Finance costs		65	188

7.           Remuneration of directors

The Directors are the key management personnel of the Group. Directors' remuneration, including non executive directors, during the year was as follows:

	2014	2013
Group & Company	£'000	£'000
David Ciclitira (Chairman)	221	221
Leonard Fine (Non - Executive) to July 2013	-	25
Serenella Ciclitira (Non - Executive)	15	25
Ranjit Murugason (Non - Executive)	15	100
Tim Sturm (Non - Executive)	15	4
Total Emoluments	266	375

There are no other benefits for Directors other than Emoluments.

8.             Tax         

	Year ended 31 December 2014	Year ended 31 December 2013
	£'000	£'000
UK Corporation tax in respect of current year:	-	-
Current taxation	-	-
Total tax charge for the year	-	-

Loss on ordinary activities before tax	(4,611)	(186)
Loss on ordinary activities at the standard rate of corporation tax of 2014 21% (2013 - 23.25%)	-	-
Effect of:
Revenue expenditure capitalised	9	4
Tax losses carried forward - deferred tax not recognised	(9)	(4)
Total tax charge for the year	-	-

9.             Earnings per share

The basic earnings per share is calculated by dividing the profit attributable to equity 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.

	2014	2013
(i) Basic
Loss for the financial year after tax (£'000)	(4,611)	(186)
Weighted average number of shares in issue	3,009,233	3,009,233
Loss per share	(153.2p)	(6.2p)

Weighted average number of shares in issue

3,009,233

3,009,233

Fully diluted loss per share*

(153.2p)

(6.2p)

*The fully diluted loss per share is the same as the basic loss per share as the effects of potential shares are anti-dilutive.

10.           Property, plant & equipment

The useful lives of each class of property, plant and equipment are reviewed annually to assess impairment.  Where the asset is found to be impaired an appropriate charge is taken to the Income Statement.

	Group
	Office Equipment 2014 £'000	Office Equipment 2013 £'000
Cost
Cost at start of year	255	255
Additions for year	9	-
Cost at end of year	264	255
Depreciation
Cumulative depreciation at start of year	252	248
Charge for year	6	4
Cumulative depreciation at end of year	258	252
Net book value at end of year	6	3
Net book value at start of year	3	7

11.           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.

	2014	2013
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	983	847
Amortisation for the year	136	136
Cumulative amortisation at end of year	1,119	983
Net book value at start of year	1,730	1,866
Net book value at end of year	1,594	1,730

The next tournament is expected in the first half of 2016 therefore after reviewing the value of the tournament rights, they have not been impaired.

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 when indicators of impairment occur. As no revenue was derived from the asset as expected in 2014 this triggered an impairment review. 

As a result of the impairment review it was deemed that the asset had no commercial value at this stage and a charge to the 2014 income statement was recognised.

	Group 2014 £'000	Group 2013 £'000
Cost
Cost at start of year	3,222	3,218
Additions for year	-	4
Cost at end of year	3,222	3,222
Depreciation
Cumulative depreciation at start of year	299	258
Charge for year Impairment review	45 2,878	41 -
Cumulative charges at end of year	3,222	299
Net book value at end of year	-	2,923
Net book value at start of year	2,923	2,960

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

12.           Goodwill

	Group
	£'000
Opening cost at 1 January 2014 Impairment review write off in 2014	200 (200)
Closing cost at 31 December 2014	-

After revaluation at year end the recoverable amount of the goodwill became £Nil. This amount has been written off to the income statement in 2014. This was as a result of the impairment review as detailed in Financial and performance review.

13.          Trade and other receivables

	Group
	2014	2013
	£'000	£'000
Trade receivables	38	120
Amounts owed by subsidiaries	-	-
Amounts owed by joint ventures	-	493
Other receivables	32	1,538
Prepayments and accrued income	2	178
	72	2,329

At 31 December 2014 all amounts included under trade receivables are due within one year. Company trade receivables include £nil respectively due from related parties (2013: £0.26m). An offset between Parallel Media Korea and Luna Trading for monies owed to Parallel Media Group Plc by Parallel Media Korea had the effect of reducing the Financial Liabilities of PMG by reducing the amount owed to Luna Trading by £226k. 

14.           Cash and cash equivalents

	Group
	2014	2013
	£'000	£'000
Sterling bank accounts	-	19
Euro bank accounts	-	-
Dollar bank accounts	-	-
Singapore dollar bank accounts	4	5
Cash at bank	4 (1)	24 -
Bank overdrafts
Total cash and cash equivalents	3	24

15.           Current financial liabilities - Borrowings

	Group
	2014	2013
	£'000	£'000
Bank facility	85	162
	85	162

The bank facility at 31 December 2014 totalling £0.4 million is secured by a personal guarantee provided by David Ciclitira at a monthly cost in 2014 of £2,326 (2013 £3,750).

16.           Trade and other payables and deferred income

	Group
	2014	2013*
	£'000	£'000
Trade payables	2,186	2,446*
Amounts owed to subsidiary entities	-	-
Other payables	258	221*
Other tax and social security	311	372
Accruals	172	58*
Trade and other payables	2,927	3,097

*The group and company allocation of payables for 2013 has been amended to remain consistent for comparability. The amounts in Other Payables and Accruals have been reclassified. The total figure for Trade and Other Payables remains the same.

	Group
	2014	2013
Deferred income	-	-

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. 

17.           Non-current liabilities 

Financial borrowings

	Group
	2014	2013
	£'000	£'000
Bank facility	317	379
	317	379

At the 31 December 2014, amounts payable to Lloyds Bank totalled £402k (of which £85k is included in current liabilities and £317k is included in non-current liabilities above). The loan was restructured in August 2013 and is now repayable in 48 consecutive monthly instalments representing principal and interest. The loan carries interest payable at 4% over base rate. The loan may be repaid early at the discretion of the Group. The loan is secured by a personal guarantee provided by David Ciclitira. 

18.         Deferred taxation

The actual and potential liability to deferred tax is £Nil.  Due to the availability of UK tax losses, subject to agreement with the HM Revenue and Customs, there is an estimated deferred tax asset of £5,297k (2013: £5,964k)

There were no deductible temporary differences or unused tax credits at either 31 December 2013 or 31 December 2014. There were no amounts of deferred tax recognised in the income statement for either the year ended 31 December 2014 or for the year ended 31 December 2013.

			Group
			2014	2013
			£'000	£'000
Balance brought forward from investment in joint venture Less write off of tax asset due to Investment impairment			(708) 708	(708) -
			-	(708)

19.         Called up share capital

The authorised share capital is set out in the table below:

	2014	2013
	£'000	£'000
Authorised share capital
3,009,233 ordinary shares of £0.528p	1,589	1,589
199,831,545 deferred shares of £0.005p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	4,612	4,612

The issued Share capital is set out in the table below:

                                                               

	2014	2013
	£'000	£'000
Issued and fully paid
3,009,233 ordinary shares of £0.528p	1,589	1,589
199,831,545 deferred ordinary shares of £0.005p each	999	999
103,260 deferred B shares of £19.60	2,024	2,024
	4,612	4,612

Reconciliation of the number of shares outstanding is:
	2014	2013
	(number)	(number)
Ordinary shares
Ordinary shares of 2.2p	-	22,912,346
Ordinary shares of 2.2p each issued during the period	-	26,228,223
Ordinary shares of 2.2p at 30th December 2013	-	49,140,569
Consolidation of ordinary shares 24 to 1	-	2,047,523
Ordinary shares of 52.8p each issued during the period	-	961,710
Ordinary shares of 52.8p each in issue at end of year	3,009,233	3,009,233
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

20.           Related parties

At 31 December 2014 director Serenella Ciclitira was owed £35,953 (£23,556 2013), Ranjit Murugason £15,000 (£Nil 2013), Tim Sturm £15,000 (£Nil 2013) in unpaid director fees. These will be settled in 2016.

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 2014 were as follows:

	2014
	£'000
At 31 December 2012 - Total loan amounts outstanding to Luna Trading	416
Less 2012 Intercompany offset of the PCA balance owed to PMG	(274)
Expenses incurred	426
Payments made	(191)
Loan guarantee interest paid	45
Short term facility agreed at August 2013 fundraise	103
Less new loan converted for equity in August 2013 fundraise	(281)
Less debt converted to equity in 2nd submission for short term facility	(47)
At 31 December 2013 - Total loan amounts outstanding to Luna Trading	197
Expenses incurred	62
Payments made	(125)
Loan guarantee interest paid	28
D Ciclitira consultancy and business services	221
Less 2014 intercompany offset of the remaining PMK balance owed to PMG	(226)
Total Owed to Luna Trading at 31 December 2014	157

The Parallel Media Korea offset is against amounts owed to DC/Luna and reduces the amount of monies owed by PMG to Luna Trading. Luna Trading Ltd is the company through which PMG contracts with D Ciclitira for consulting and business services. During the year ended 31 December 2014, Luna Trading Ltd charged PMG for Consultancy fees of £221,000 these fees remain unpaid. (2013 - £221,000), remote office costs of £29,250 (2013 - £39,027) and Medical Insurance and life cover of £Nil (2013 £45,000).These will be repaid in 2016. The balance at year end for D Ciclitira is £162k (2013 £179k)

Parallel Media Korea Limited:

The shareholding for Parallel Media Korea Limited is held by D Ciclitira. During 2014 the re classification of amounts owed to PMG were written back to the income statement. The balance owed to Parallel Media Group Plc at year end is £16k (PMGA) (2013 £810k)

Parallel Contemporary Art 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 Ciclitira. Amounts owed by PMG to PCA at 31 December 2014 are £298k (2013 £29k) 

Parallel Smart Media Limited:

The company owns 75% of PSM at year end. PSM was charged £Nil by PMG in 2014 (2013 £Nil) for the licence fee PSM owed Nil at year end (2013 £312k)

Parallel Smart Media Asia Alpha Entertainments Private Limited:

During the year 2012 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 2014 Nil (2013 £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 amounting to £Nil at 31 December 2014 £Nil was outstanding (2013 £240k).

21.         Availability of Report and Accounts

Copies of the Report and Accounts of the Company will be posted to shareholders shortly and will be available to view online on the Company's website http://www.parallelmediagroup.com.

 

END

 

 

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