Interim Results
Yoomedia PLC
26 September 2005
26 September 2005
YooMedia plc
Interim report
For the six months to 30 June 2005
YooMedia plc ('YooMedia' or 'the Group'), the AIM traded interactive media and
games group, announces its results for the six months to 30 June 2005.
Overview
• Increasing participation/opportunities in the expanding interactive
digital marketplace
• Increased turnover to £48.5 million (2004: £4.0 million)
• EBITDA loss of £1.1 million for the period (pre operating exceptional
costs)
• Pre-tax loss of £4.6 million (2004: loss of £3.8 million)
• Growth in the games and gambling division forecast to improve in 2006
• Revenue-sharing partnerships in place with major broadcasters and content
providers
• Pioneer in new interactive media technologies - continued investment in
both technology and personnel
• Extensive marketing strategy implemented
• Initiatives in place to increase audience participation and to expand
customer base to generate sales
• Building relationships with public sector organisations including the
delivery of the NHS Direct Interactive TV service for the Department of
Health
Chairman's Review
YooMedia continues to be one of the fastest growing interactive entertainment
companies in the UK. We have four main divisions - Gambling & Gaming, Dating,
Enhanced Solutions and Public Services. All these divisions continue to
generate increased revenues and will play a key role in achieving our objective
of becoming a market-leading, cross-platform technology and interactive media
group.
Over the last year we have grown both organically and through acquisition. Our
experienced management team, along with blue chip partners and leading edge
technology, has now created a solid platform from which to develop the business.
The advances in technology mean that the market for the delivery of premium
content and transactional services across multiple platforms is expanding
rapidly. YooMedia is ideally positioned to take advantage of this and to build
on its growing reputation in its chosen markets.
As YooMedia improves its market penetration in our expanding sectors, the
complexity of the Group increases. This continued enhancement of the business
makes it increasingly difficult for investors to fully understand the business
and its potential. Consequently, I have taken this opportunity to provide
shareholders with a clear explanation of our business and why the Board believes
that YooMedia is correctly positioned to build on its initial successes and
reward our shareholders over the next few years.
What is YooMedia?
YooMedia develops and delivers premium interactive content and services to
households and individuals via TV, the web, telephony and mobile phones. It has
four main divisions:
YooMedia Dating - manages dating brands including Dateline and Avenues from over
20 locations throughout the UK. In addition to its presence in traditional
media, the Dateline business operates across digital TV, internet and mobile
phones.
YooMedia Gambling & Games - this division is on the leading-edge of interactive
fixed odds, play for fun casino and poker related games services for digital TV,
the web and mobile phones. Its brands include Avago and Channel 425 (in
partnership with William Hill). It also manages YooPlay, the only interactive
games channel found on all four Digital TV platforms in the UK.
YooMedia Enhanced Solutions (YES) - works with brand owners, agencies, content
owners and broadcasters to deliver interactive content that enhances consumer
and audience experiences. YES customers include the BBC, Nestle, Celador,
William Hill, Channel 4, ZipTV, The Cartoon Network and HR Owen.
YooMedia Public Sector - provides a variety of digital solutions/media services
to leading public sector organisations including the NHS Direct Interactive TV
service for the Department of Health (via our subsidiary DITG), the Learning and
Skills Council TV Kickstart service and a range of local authority TV services.
Revenues
Across our core consumer businesses we have in excess of two million registered
customers plus an increasing number of people using services on an ad hoc basis.
Revenues are generated in three ways:
• Transactional revenue streams - subscription services, betting and
pay-to-play games which users pay for via unified payment and e-wallet
systems.
• Premium rate telephony which includes premium rate SMS messaging and
premium rate voice telephony in connection with a wide range of programmes
that enable viewers to participate from home, in popular shows such as the '
Who Wants to Be a Millionaire' TV series and 'Test the Nation'. By
providing an exciting medium for users to interact with the show, we enable
our partners to generate participation and resulting revenue. In return for
this provision of content and interactivity, we receive a share of the
income generated primarily from calls and text messages billed at premium
rates.
• Participation/Response income - generated from multi-platform marketing
campaigns, which enable direct response to advertising through interactive
TV or mobile phones.
Business to business revenues are derived form a combination of transaction
revenue shares, contract and service fees and licensing.
Expansion
YooMedia's revenues flow directly from its customer base and audience
participation activities. The Group's long term success is directly linked to
building our customer base and maximising the average lifetime value of
customers. This requires expanding marketing activity for our businesses, using
customer retention techniques such as regular text updates or emails, in
addition to providing as many opportunities as possible for customers to
transact across our different services.
Currently, YooMedia is the market leading company in offering consumers premium
transactional service delivery across all mass-market digital TV. This is
achieved mainly by using interactive TV set top box technologies and mobile
networks technologies that utilise delivery through SMS, Java and streaming 3G
video. YooMedia also enables interaction and participation through the web and
via voice telephony.
YooMedia services work across the media spectrum. We enable our users to move
freely between TV, mobile phones and the web, accessing gambling, gaming, dating
content and other 3rd party services. In short, our users can access YooMedia
products at home, at work or on the move, using a single user account and
electronic wallet.
Our proprietary CRM/marketing, multiplayer games and gambling plus integrated
commerce platforms provide unified support for our existing traffic of over 5.5
million financial transactions per month via interactive TV, mobile phones and
the internet.
The Group operates a broadcast grade, high availability hosting infrastructure
for online services from two data centres in the UK. These systems incorporate
advanced security provisions, failover management and dedicated Storage Area
Network facilities, all designed to enable 24/7 delivery of mass-market mobile,
web and interactive TV services.
The Group's broadcast infrastructure includes six studios, state of the art
all-digital production, post-production and play-out systems, which host 15
digital TV channels.
From the outset, the Group's asset base has been designed to support the mass
market, providing a scalable basis for future growth of our customer base and a
means of rapidly and cost-effectively integrating new consumer technologies as
they emerge.
Marketing
YooMedia has built and acquired recognised brands including the gaming brand
Avago and Dateline, the UK's longest established dating service.
Through the YooMedia Enhanced Solutions division, the Group creates
revenue-sharing partnerships, building its customer base through affiliations
with major broadcasters and content providers. We provide these organisations
with market-leading cross-platform reach and capability on a commercial joint
venture type basis. These partnerships present our services to new audiences,
using our brands, co-branded services or white-label user propositions. There
are many examples, including:
• YooPlay TV - partnership with Channel 5 and Endemol
• 'Who Wants to be a Millionaire' - partnership with Celador and ITV
• Channel 425 - partnership with William Hill, the UK's largest bookmaker
• 'Test the Nation' - partnership with the BBC
• 'Great Sporting Legends' - partnership with Sky
• Interactive gambling services on Poker Zone TV and The Poker Channel
YooMedia games and gambling services are accessible from over 10 third party
television channels in the UK through similar arrangements.
Results
Results for the six months to 30 June 2005 show turnover up to £48.5 million (6
months to June 2004: £4 million) following the consolidation of the new Group
post the acquisition of DITG and TGC.
The turnover includes customer winnings from our gambling activities. Group
revenue, net of winnings payable to fixed odds betting customers for the period
was £11.5 million (6 months to June 2004: £1 million).
Gross profit for the period was £5.1 million (6 months to June 2004: loss of
0.7million).
EBITDA, pre operating exceptional costs, for the period was a loss of £1.1
million and pre tax losses for the period were £4.6 million (6 months to June
2004: loss of £3.8 million).
Our direct consumer facing businesses, YooMedia Dating & YooMedia Gambling &
Games, accounted for £5.7 million of net revenue and £1 million of gross profit.
This was a strong period for our 'business to business' divisions of YooMedia
Enhanced Solutions (YES) & YooMedia Public Sector, which accounted for £5.8
million of net revenue and £4.1 million of gross profit.
On 16 June we issued a trading statement that indicated that our Gambling &
Games division would achieve lower than expected profit growth for the year
(2005). Key developments expected on Channel 425, the digital channel operated
in partnership with William Hill, were delayed in implementation. The statement
indicated that the business performance of Channel 425 would not meet earlier
projections. We are confident, however, that developments on the channel will
come back on track in the coming months. The outlook for the channel and our
partnership with William Hill is very positive.
The Board
In June this year, David Docherty stepped down as chief executive to pursue
other business opportunities. David played a central role in helping to develop
YooMedia into the business it is today and the Board wish him well for the
future.
At the same time Neil MacDonald was promoted to Group Managing Director and was
subsequently appointed to the Board on 25th September. Neil has an in-depth
appreciation of the interactive media industry and is a highly experienced
manager with a career spanning 11 years in multimedia and interactive sectors
plus a further 19 years in the retail industry. I am delighted to welcome him
to the Board.
We have appointed Robin Robbins to the Board as Group Finance Director. Robin
has extensive experience in both the public and private sectors, and, in
particular, in the gambling and gaming industry. Jonathan Apps will continue as
Chief Financial Officer but will step down from the Board.
Management
In addition to the experienced senior management team of YooMedia, I am pleased
to announce the appointment of Josie Adams as Chief Executive of YooMedia
Dating. Josie has extensive experience of media and interactive businesses and
was responsible for the dating and personals business of Yahoo! Europe.
Together with Jim Weir, founder of the Avenues business and who now becomes
Chairman of YooMedia Dating, Josie will lead one of the most experienced
management teams in the dating industry.
The future
The media sector is changing rapidly with traditional media, including broadcast
and print, increasingly adopting new technology. Importantly for us, consumer
demand continues to drive rapid innovation and investment by telecommunications
companies, network operators and consumer equipment manufacturers.
Recent examples which illustrate the pace of development are:
• 2005 - cable TV in the UK commenced rolling out Video on Demand
• 2006 - Sky will launch the first UK High Definition TV services
• Digital Terrestrial Television ('DTT') is now delivered to over 25 million
European households
• Internet Protocol Television ('IPTV'), the provision of TV services across
broadband internet connectivity, is expected to grow from 1.6 million users
in 2004 to 32 million by 2009, with over eight million in the UK and half of
the total in Asia (In Stat)
• There are over three million 3G mobile phone users in the UK and 3G
mobile handsets are expected to account for over 240 million European
subscribers by 2009, including seven out of 10 European users (Analysys
Research)
Your management team is focused on enhancing our unique cross-platform
technology and intellectual property base so that we are able to capitalise on
the resulting opportunities for expansion in the UK and abroad. Our approach is
to identify and develop proprietary solutions to enhance the capabilities of
existing media to deliver premium interactive content and services to customers
which promote interaction and transactions. Through innovation, we seek to
enable this interactive process and participate in the value created by the
resulting transactions. Some examples of this include:
• YooMedia's Real Time Messaging System ('RTMS'), which enables the consumer
to use a mobile phone in a way which is synchronised with a programme on TV.
Sophisticated premium interactive and participation services can be made
available for consumers in and around standard TV services and content.
• The technology offered by YooMedia's joint venture with ICTV (called
Broadband TV Group) provides a simple, cost-effective means of upgrading the
services available from existing digital cable and IPTV set top boxes to
enable the delivery of rich interactive programming to the viewer.
Broadband content can be delivered as televisual content on existing set top
boxes with added interactive capability. We are announcing today that the
Broadband TV trial underway with NTL will soon enter a live field trial in
selected NTL digital cable households. Our content partners in this trial
include ITN, MTV Networks, EMAP, Turner Broadcasting, Sesame Workshop,
LoveFilm and UKTV.
• YooMedia's new datacasting service for the fast-growing Freeview platform
will deliver sophisticated interactive capability for our partners'
services. This will operate in conjunction with next-generation set top
boxes that are currently under development by some of the world's largest
consumer electronics manufacturers.
Conclusion
The Group has grown its four core businesses in recent months, forming new
partnerships with leading blue-chip companies and developing new innovative
products, which will ensure our position as a market pioneer. The Board
believes that as traditional media, broadcast and telecommunications converge
over the next five years, the Group is well-placed to deliver high quality and
sustainable financial growth. Your Board remains optimistic about the future
prospects for all of our core businesses of YooMedia.
Michael Sinclair
Chairman
26th September 2005
Contacts:
Neil MacDonald YooMedia PLC Tel: 020 7462 0870
Isabel Crossley St Brides Media & Finance Ltd Tel: 020 7242 4477
Profit and loss account for the six months to 30 June 2005
Unaudited Unaudited Unaudited Unaudited Audited
Six months Six months Six months Six months Year ended 31
ended 30 June ended 30 June ended 30 June ended 30 June December
2005 2005 2005 2004 2004
Notes Continuing Acquisitions Total £
£ £ £ £
Turnover 2 48,164,708 362,708 48,527,416 4,001,660 21,267,478
Cost of sales (43,429,793) (41,793) (43,471,586) (4,684,864) (21,519,797)
Gross profit/(loss) 4,734,915 320,915 5,055,830 (683,204) (252,319)
Administrative expenses before (8,171,207) (274,295) (8,445,502) (3,178,617) (9,247,621)
exceptional items and impairment of
goodwill
Exceptional items 3 (1,073,787) - (1,073,787) - (5,860,431)
Impairment of goodwill - - - - (8,684,348)
Administrative expenses (9,244,994) (274,295) (9,519,289) (3,178,617) (23,792,400)
Operating loss (4,510,079) 46,620 (4,463,459) (3,861,821) (24,044,719)
Earnings before interest, tax, 4 (1,106,757) (3,462,696) (7,199,201)
depreciation, amortisation and
exceptional items
Net interest receivable 51,081 47,136 108,665
Net interest payable and similar (221,440) - (81,232)
charges
Loss on ordinary activities before (4,633,818) (3,814,685) (24,107,286)
taxation
Tax on loss on ordinary activities - - 27,264
Loss on ordinary activities after (4,633,818) (3,814,685) (23,990,022)
taxation
Equity minority interest 77,237 34,303 198,957
Loss for the financial period (4,556,581) (3,780,382) (23,791,065)
Loss per ordinary share
- basic and diluted 5 (0.99p) (2.84p) (15.14p)
There is no difference between the loss on ordinary activities before taxation
and the loss for the periods stated above, and their historical cost
equivalents.
Statement of total recognised gains and losses
Notes Unaudited Unaudited Audited
Six months Six months Year ended 31
ended 30 June ended 30 June December
2005 2004 2004
£ £ £
Total
Loss for the period (4,556,581) (3,780,382) (23,791,065)
Gain on deemed disposal of share in - 507,267 507,268
subsidiary undertaking
Total losses recognised since last report (4,556,581) (3,273,115) (23,283,797)
Balance sheet as at 30 June 2005
Unaudited Unaudited Audited
Six months Six months Year ended 31
ended 30 June ended 30 June December
Notes 2005 2004 2004
£ £ £
Fixed assets
Intangible assets 47,008,450 12,518,809 46,036,348
Tangible assets 3,235,639 844,215 3,044,029
50,244,089 13,363,024 49,080,377
Current assets
Debtors 6,561,823 2,297,288 6,015,898
Cash at bank and in hand 497,594 6,129,617 7,770,287
7,059,417 8,426,905 13,786,185
Creditors - Amounts falling due within one year (11,969,631) (4,841,209) (15,828,608)
Net current (liabilities)/assets (4,910,214) 3,585,696 (2,042,423)
Total assets less current liabilities 45,333,875 16,948,720 47,037,954
Creditors - Amounts falling due after more than one 7 (3,000,000) - (1,421,126)
year
Provisions for liabilities and charges 8 (1,057,677) (51,270) (2,025,123)
Equity minority interest (302,740) (544,629) (379,976)
Net assets 40,973,458 16,352,821 43,211,729
Capital and reserves
Called -up share capital 11,620,494 8,484,024 11,418,970
Share premium account 73,029,396 25,705,535 69,011,512
Shares to be issued 280,500 2,997,500 3,047,000
Capital redemption reserve 455,331 455,331 455,331
Profit and loss account (44,412,263) (21,289,569) (40,721,084)
Equity shareholders' funds 79 40,973,458 16,352,821 43,211,729
Cash flow statement for six months to 30 June 2005
Unaudited Unaudited Audited
Six months Six months Year ended 31
ended 30 June ended 30 June December
2005 2004 2004
Notes £ £ £
Continuing activities
Operating loss (4,463,459) (3,861,821) (24,044,719)
Depreciation charge 990,661 145,618 567,918
Amortisation and impairment of goodwill 1,117,216 253,507 9,920,922
Amortisation and impairment of deferred development costs 175,038 - 496,247
UITF 25 provision for National Insurance on share options (71,131) (103,276) (62,461)
UITF 17 charge on grant of share options 865,402 - 579,167
Movement in restructuring provision (903,461) - 1,755,538
Movement in dilapidations provision 7,146 - 65,000
Loss on disposal of fixed assets - - 1,290
Increase in debtors (501,842) (824,343) (1,492,536)
(Decrease)/Increase in creditors (4,168,549) 1,735,171 1,311,458
Net cash outflow from operating activities (6,952,979) (2,655,144) (10,902,176)
Returns on investments and servicing of finance
Interest received 51,081 32,697 108,665
Interest paid (160,724) - (63,542)
Interest element of finance lease rental payments (60,716) (17,689)
Net cash (outflow)/inflow from returns on investments and (170,359) 32,697 27,434
servicing of finance
Taxation 27,264 - -
Capital expenditure and financial investment
Payments to acquire intangible assets (572,208) (791,901)
Payments to acquire tangible fixed assets (733,238) (431,900) (383,764)
Acquisitions
Purchase of subsidiary undertakings (13,494) (824,845) (6,656,431)
Purchase of trade and assets of a business - - (627,118)
Net cash received with subsidiary undertaking 23,109 1,677,735 641,124
Net cash (outflow)/inflow from capital expenditure and (1,295,831) 420,990 (7,818,090)
financial investment
Net cash outflow before management of liquid resources and (8,391,905) (2,201,457) (18,692,832)
financing
Management of liquid resources
Increase in short term deposits with banks - (3,482,838) (4,896,404)
Financing
Issue of ordinary share capital 50,409 6,610,725 32,027,461
Costs associated with issue of share capital - - (1,682,564)
Increase in debt finance 1,000,000
Repayment of loans - (6,920,766)
Repayment of capital element of finance leases and hire (158,653) (59,663)
purchase contracts
Net cash inflow from financing 891,756 6,610,725 23,364,468
(Decrease)/Increase in net cash (7,500,149) 926,430 (224,768)
Cash flow statement for the six months to 30 June 2005 (continued)
Unaudited Unaudited Audited
Six months Six months Year ended 31
ended 30 June ended 30 June December
Notes 2005 2004 2004
Reconciliation to net funds £ £ £
Decrease)/Increase in net cash (7,500,149) 926,430 (224,768)
Increase in short-term deposits with banks - 3,482,838 4,896,404
Loans and finance leases acquired with subsidiary (650,000) - (8,327,582)
undertakings
Repayment of capital elements on finance leases 158,653 - 59,663
Repayment of loans - - 6,920,766
Movement in net (debt)/funds for the period (7,991,496) 4,409,268 3,324,483
Net funds at commencement of period 5,044,832 1,720,349 1,720,349
Net (debt)/funds at end of period (2,946,664) 6,129,617 5,044,832
Notes to the financial information for the six months to 30 June 2005
1. Basis of preparation
Unless stated otherwise, the interim financial information has been prepared on
the basis of the accounting policies set out in the Group's financial statements
for the year ended 31 December 2004.
The financial information contained in this interim report is unaudited. It does
not constitute statutory accounts as defined in section 240 of the Companies Act
1985. Statutory accounts for the year to 31 December 2004 have been filed with
the Registrar of Companies.
Further copies of this report are available from our registered office:
Northumberland House, 155-157 Great Portland Street, London, W1W 6QP.
Going Concern
In the light of existing facilities available to the Group, the Directors
consider there will be sufficient resources available to enable the Group to
achieve the profitability and positive cash flow necessary for the Group to
continue as a going concern. Consequently, the directors consider that it is
appropriate to prepare the accounts on the going concern basis. However, in
common with similar businesses at this stage of their development, the Directors
recognise that there will remain a fundamental uncertainty over the Group's
ability to realise future profitability and positive cash flows until the Group
has established a track record of profitable trading, cash generation and
meeting its working capital projections.
The financial statements do not reflect any adjustments that would be required
if the Group were unable to achieve profitability and positive cash flow with
its current resources, or if further available sources of finance were
insufficient to fund the Group through to profitability and positive cash flow,
such that the going concern basis of preparation ceased to be appropriate.
2. Turnover
Turnover, which excludes value added tax, comprises revenue from interactive
media services and dating services and is recognised as these services are
provided. Gaming revenues, where the Group holds a gaming licence, are
recognised on a gross basis and winnings are recognised as a cost of sale. All
turnover is generated in the United Kingdom.
3. Exceptional items
Exceptional items, within administrative expenses, are detailed below:
Unaudited six Unaudited six Year ended 31
months ended 30 months ended 30 December 2004
June 2005 June 2004
£ £ £
Recognised in arriving at operating loss:
Redundancy costs(1) 362,225 - 1,242,798
Provision for losses on onerous contracts - - 1,638,373
Write-down of assets related to onerous contracts - - 713,000
Exceptional bonus payments(2) (153,840) - 1,096,873
Exceptional professional fees - - 253,935
UITF 17 charge(3) 865,402 - 579,167
Write-off of deferred development costs - - 336,285
1,073,787 - 5,860,431
1 - Including all relevant taxes and other related costs of redundancy.
2 - Including all relevant taxes.
3 - Under Urgent Issue Task Force abstract 17 (UITF 17), the Company is required
to recognise as a charge in the profit and loss account, the amount by which the
fair market value of any share options issued to employees exceeds their
respective exercise prices at the date of grant. The charge is notional in that
there is no underlying cash flow or other financial liability associated with
the charge, nor does it give rise to a reduction in net assets or shareholders'
funds. In addition there is no impact on distributable profits. This charge
relates to the share options granted on the acquisition of DITG which were fully
vested by 23rd June 2005.
4. Earnings before interest, tax, depreciation, amortisation and exceptional
items
Unaudited Unaudited
Six months Six months Audited Year
ended 30 ended 30 ended 31
June 2005 June 2004 December 2004
£ £ £
Operating loss (4,463,459) (3,861,821) (24,044,719)
Depreciation 990,661 145,618 567,918
Amortisation and impairment of goodwill 1,117,216 253,507 9,920,922
Amortisation and impairment of deferred development costs 175,038 - 496,247
Exceptional items 1,073,787 - 5,860,431
Earnings before interest, tax, depreciation, amortisation and (1,106,757) (3,462,696) (7,199,201)
exceptional items
5. Loss per share
The basic loss per share has been calculated by dividing the net loss of
£4,556,581 for the period (six months ended 30 June 2004 - £3,780,382; 31
December 2004 - £23,791,065) by the weighted average number of 460,511,906
shares in issue during the period (six months ended 30 June 2004 - 132,907,003;
year ended 31 December 2004 - 157,173,278). The Company has potentially dilutive
ordinary shares being share options issued to staff and shares contracted to be
issued.
The diluted loss per share has been calculated in accordance with Financial
Reporting Standard 14: Earnings per share, using 471,283,331 shares in issue
during the period (six months ended 30 June 2004 - 132.907,003; year ended 31
December 2004 - 170,947,901). As per Financial Reporting Standard 14: Earnings
per share, the diluted loss per share calculation is without reference to
adjustments in respect of certain share options that are considered to be
anti-dilutive.
The deferred shares are not included in the earnings per share or diluted
earnings per share. These shares have no voting rights and are non-convertible
and therefore do not form part of the ordinary share capital used for the loss
per share calculation in accordance with Financial Reporting Standard 14:
Earnings per share.
6. Acquisitions
On 4 April 2005 the Group acquired 100% of the share capital of ViaVision
Limited for a total consideration of £1,402,500. This was satisfied by the issue
of 6,800,000 1p ordinary shares of YooMedia plc and a deferred consideration of
1p ordinary shares all at 16.5p.
7. Creditors - Amounts falling due after more than one year
Unaudited Unaudited
Six months Six months Audited Year
ended 30 June ended 30 June ended 31
2005 2004 December 2004
£ £ £
Loans 2,650,000 - 1,000,000
Obligations under finance leases and hire purchase contracts - - 71,126
Other creditors 350,000 - 350,000
3,000,000 - 1,421,126
The loan principally relates to a revolving credit facility granted to the Group
by Lloyds TSB plc. This attracts interest at a rate of interest of 5% above
base.
8. Provisions for liabilities and charges
Employers'
National Insurance Provision for
on share options restructuring
£ £ Total £
At 1 January 2005 92,085 1,933,038 2,025,123
Arising during the period - 362,225 362,225
Utilised (71,131) (1,104,700) (1,175,831)
Unused amounts reversed in the - (153,840) (153,840)
period
At 31 December 2004 20,954 1,036,723 1,057,677
Employers' National Insurance on share options
On exercise of share options issued after 5 April 1999, under an unapproved
executive option scheme, the Company is required to pay National Insurance on
the difference between the exercise price and the market value at the exercise
date of the shares issued. The Company will become unconditionally liable to pay
the National Insurance upon exercise of the options, which are exercisable over
a period of 10 years from date of grant. The Company therefore makes a provision
following the grant of options as opposed to on vesting or on exercise. The
amount of National Insurance payable will depend on the number of employees who
remain with the Company and exercise their options, the market price of the
Company's ordinary shares at the time of exercise, and the prevailing National
Insurance rate at that time.
Provision for restructuring costs
The provision relates to certain items such as redundancy costs and losses on
onerous contracts that were incurred or expected to be incurred as part of the
Group's restructuring arising mainly upon the acquisition of the Digital
Interactive Television Group on 20 December 2004. These are fully detailed in
the statutory accounts for the year ended 31 December 2004. The charge taken in
the period relates to further restructuring.
9. Reconciliation of movement in shareholders' funds
Unaudited Unaudited
Six months Six months Audited Year
ended 30 June ended 30 June ended 31
2005 2004 December 2004
£ £ £
Loss for the period (4,556,581) (3,780,382) (23,791,065)
Gain on deemed disposal of share in subsidiary undertaking - 507,268 507,268
New shares issued 1,172,408 14,713,850 60,954,774
Shares to be issued 280,500 2,997,500 3,047,000
UITF 17 credit 865,402 - 579,167
Net (reduction in)/addition to shareholders' funds (2,238,271) 14,438,236 41,297,144
Opening shareholders' funds 43,211,729 1,914,585 1,914,585
Closing shareholders' funds 40,973,458 16,352,821 43,211,729
10. Post balance sheet events
There were no material events after the balance sheet that require disclosure.
INDEPENDENT REVIEW REPORT TO YOOMEDIA PLC
Introduction
We have been instructed by the Group to review the financial information which
comprises a profit and loss account, statement of total recognised gains and
losses, balance sheet as at 30 June 2005, cash flow statement and associated
notes. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Going concern
In arriving at our review conclusion, we have considered the adequacy of the
disclosures made in note 1 to the financial statements concerning the
fundamental uncertainty over the ability of the Group to continue as a going
concern. The interim report has been prepared on a going concern basis, the
validity of which depends upon the realisation of projected revenues from
existing and planned interactive media services and, if required, other
available sources of finance. The interim report does not include any
adjustments which would result if the cash generated from the projected revenues
was insufficient, and the Group was unable to access additional finance to
enable it to continue as a going concern. In view of the significance of this
matter, we consider that it should be drawn to your attention, but our review
conclusion is not qualified in this respect.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2005.
Deloitte and Touche LLP
London
26 September 2005
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