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Parallel Media Group PLC (PAA)

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Tuesday 29 May, 2007

Parallel Media Group PLC

Final Results

                           Parallel Media Group plc                            

               Preliminary Results - Year Ended 31 December 2006               

Results Summary

  * Turnover £4.56m (2005: £2.58m)
  * Pre tax profit of £0.36 million (2005: loss £1.09 million)
  * Diluted earnings per share 0.30p (2005: loss of 4.86p)
Operating Highlights

  * Appointed exclusive commercial partner for the World Cup of Golf at the
    Mission Hills Golf Club, China
  * PMG announces Omega as long-term Title Sponsor of the Mission Hills World
    Cup for 12 years
  * Agreement signed with Oriental City Group plc to become Media Co-Sponsor at
    the 2007 TCL Classic golf tournament and Partner Sponsor to the UBS Hong
    Kong Open
  * Agreed terms for new sponsorship contracts for the UBS Hong Kong Open with
    Emirates, Rolex and BMW
  * The company successfully promoted the TCL Classic in Hainan Island, Sanya,
    China. The March 2007 event results exceeded expectations.
Activities during 2007 and outlook

Commenting today David Ciclitira, Chairman, said: "2006 was a year of
redevelopment and rebuilding for Parallel Media Group and I am delighted with
the strong progress the Company has made since last year. PMG started 2007 with
a string of significant contracts signed with Mission Hills Golf Club in China,
the largest golf complex in the world, including a 12 year Title Sponsorship by
Omega for the Mission Hills World Cup. PMG has also renewed sponsorship
contracts for the UBS Hong Kong Open with BMW, Rolex and Emirates. The
Company's progress has resulted in a maiden profit and has laid the foundations
for PMG to continue to attract business from global brands in the executive
sports market. "


For more information please contact

Frances Quigley/ Richard Graham

Parallel Media Group

+44 20 7225 2000

[email protected]

[email protected]

Jos Simson / Leesa Peters

Conduit PR Ltd

+44 (0) 207 429 6603

+44 (0)7899 870 450

[email protected]

Chairman's Statement

Parallel Media Group plc ("PMG"or the "Company") enjoyed a strong end to a
challenging 2006, and I am pleased to report the Company is in excellent shape
for the year ahead. The Company's performance has resulted in a 76% increase in
revenue on 2005 and maiden profit which lays the foundations for a sustained
period of growth from 2007 onwards.

The restructuring which took place in September 2006 resulted in PMG selling
its 49.975% share holding in Parallel Media Asia (2003) Ltd and PMG acquiring
100% ownership of the UBS Hong Kong Open and the TCL Classic. In addition, PMG
regained the crucial ability to independently pursue new business ventures
throughout Asia without the obligation to conduct any new Asian business
through Parallel Media Asia (2003) Ltd.

Other highlights of the year include PMG's return to the World Cup of Golf with
the appointment by Mission Hills Golf Club as its exclusive commercial partner
for the World Cup of Golf for a 12 year period commencing in 2007. In January
2007, PMG successfully concluded the contract for Omega to become Title Sponsor
of the Omega Mission Hills World Cup until 2018.

Outside Asia, PMG has continued to operate its existing contracts as exclusive
commercial representative to the Ladies European Tour, the Tour de Las Americas
and as promoter of the Kazakhstan Open.

The Company has continued to broaden its executive sports portfolio deriving
revenues from its relationship with the Italian Rugby Federation and as a
consultant to Chivas in the world of sailing. As part of this initiative, PMG
negotiated Chivas's sponsorship of Team China in the America's Cup 2007.

The increasing demand for PMG's role as a commercial advisor has seen Omega
recently appoint PMG to act as its consultant on its world wide golf portfolio.

Since the first quarter of 2007, PMG has reinforced its position in Asia and
its position as the strongest golf promoter in China, recruiting new key staff
both in Asia and Europe. PMG has also taken the opportunity to raise a further
£875,000 in equity and medium term debt.

The first quarter's profits have exceeded budget, early indications are that
the Company will be successful in converting new business during 2007 which
will leave PMG with significant long term profit visibility from 2007 onwards.

It has been an incredible and challenging but rewarding 12 months. I would like
to personally thank my fellow directors, management and staff for their
outstanding contribution.

Financial report

Overview to 31 December 2006

In September 2006 the Company completed a restructuring of its Asian operations
and raised monies in order to finance this restructuring and to provide working
capital for the group. Details on these are as follows:

- Restructure of Asian operations

In previous years the Company's Asian golf activities were operated through its
49.975% associated company, Parallel Media Asia (2003) Ltd ("PMA"). Under this
previous arrangement the Company earned a 9% commission on the gross
sponsorship sales made by PMA's five men's golf events, the Singapore Masters,
the Maybank Malaysian Open, the Indonesian Open, the TCL Classic and the UBS
Hong Kong Open. The Company would also be entitled to 49.975% of PMA's profits.
During the course of 2006 this arrangement was deemed to be unsatisfactory by
the board due to three major factors:

  * due to PMA being historically loss making PMA were not paying the
    commissions due to the Company on a timely basis and as at June 2006 the
    Company was owed substantial amounts of money from PMA;
  * the Company did not have control over the management and operations of PMA;
  * under the terms of the PMA shareholders agreement any new business the
    Company sourced in Asia had to be offered to PMA first.
In order to resolve the above issues on 29 September 2006 the Company entered
into an agreement with PMA and its majority shareholders to restructure the
Company's Asian operations. The main elements of this restructuring were as

  * the Company sold its 49.975% shareholding in PMA to the majority
  * the Company cancelled its commission arrangement with PMA;
  * the Company acquired two golf events from PMA, the UBS Hong Kong Open and
    the TCL Classic;
  * the shareholders' agreement was cancelled allowing the Company to freely
    enter into new business in Asia;
  * PMA repaid the inter company balances it owed to the Company which included
    PMA assuming the legal responsibility for the US$2,000,000 loan which the
    Company had with Bumiputra Commerce Bank; and
  * the Company agreed to repay the loans which the majority share holders in
    PMA had made to the Company.
Post the restructuring of the the major areas of the Company's business
activities now comprise:

  * the promotion of two PGA European Tour men's golf events, the UBS Hong Kong
    Open and the TCL Classic which is held in China;
  * the Company is the commercial partner for the Mission Hills resort in
    respect of the World Cup of Golf which is to be staged at Missions Hills
    from 2007;
  * the Company is the commercial representative to the Ladies European Tour
    and the Tour de las Americas and has the right to sell the television
    rights on their behalf;
  * the Company is the promoter of the Kazakhstan Open;
  * the Company is the commercial partner for the Italian Rugby Federation; and
  * the Company supplies consultancy services for key brands in relation to
    their commercial activities in sport.
- Fund raising

To enable the Company to fund the Asian restructuring and to repay the loans
owed to PMA's majority shareholders the Company entered into agreements to
raise monies via the issue of new ordinary shares and the issue of convertible
loan notes. During the year a total of £1.3 million was received in respect of
convertible loan notes issued and £1.3 million was received in respect of the
placing of new ordinary shares. Under the terms of three of the funding
commitments a total of £0.95 million was due to be paid post 31 December 2006,
£250,000 in relation to a placing of ordinary shares which took place in
January 2007 and £600,000 in relation to instalments which were due on 2
convertible loan agreements. £600,000 of this amount has been received post
year end with a further £350,000 due under the convertible loan agreements.
Further information on the shares and convertible loan notes issued during the
year are in notes 16 and 18.

In addition to the above, since the year end the Company has raised a further £
525,000 via a placing of new ordinary shares and has entered into a medium term
financing arrangement for Euro500,000. These monies are to be used to help fund
the Company's proposed expansion in North Asia, develop future golf events, to
strengthen the Company's sales team and to repay the residual element of the
loan owed to the majority shareholders in PMA.

Turnover and cost of sales

The turnover for the year was £4,561,000 compared to a turnover of £2,582,000
in the previous year. The major reason for the increase in the turnover is that
the Company promoted the UBS Hong Kong Open in November 2006, whereas in
previous years the event had been owned and run by PMA. The TCL Classic was
staged in March 2007 which will lead to a further increase in the turnover for
the Company in the current financial year. The increase in the cost of sales is
due to the staging costs incurred in relation to the UBS Hong Kong Open.

Operating profit

The Company made an operating profit for the period of £520,000, compared to an
operating loss of £308,000 in the previous year. The restructuring of the
Company's Asian operations has been a major factor behind this increase, since
the restructuring the Company promoted the UBS Hong Kong Open and the profits
generated by this event have been recognised in the Company's profit and loss
account whereas in previous years the Company only earned sales commission on
the event. The restructuring has also allowed the Company to enter new business
ventures in Asia without the obligation to conduct the new business through
Parallel Media Asia (2003) Ltd, which has also led to an improvement in the
operating profit.

Share of operating loss in associate

The loss shown of £329,000 relates to the Company's 49.975% of the losses
recorded by PMA for the period up to the end of September 2006. PMA has now
been disposed of and therefore there will be no equivalent losses recorded for
future years.

Exceptional items

The one off exceptional items recorded in the year comprise of a profit on the
disposal of PMA of £770,000 and a loss of £399,000 which was incurred in
relation to the exceptional costs of the restructuring of the Company's Asian
operations and the refinancing costs incurred in the September 2006 fund

Net liabilities

The net liability position of the Group has improved from £5,108,000 at the end
of 2005 to £1,572,000. Post the year end this position has been further
improved through the £775,000 raised from issue of new equity. At the year end
the Company had convertible loans outstanding of £2.4 million, conversion of
these loans would return the Company to a net asset position.

Consolidated profit and loss account for the year ended 31 December 2006

                                                   Year ended          Restated
                                             31 December 2006        Year ended
                                                               31 December 2005
                                                        £'000             £'000
Turnover                                                4,561             2,582
Cost of Sales                                         (2,738)           (1,593)
Gross Profit                                            1,823               989
Administrative Expenses                               (1,302)           (1,297)
Operating profit/(loss)                                   521             (308)
Share of operating loss in                              (329)             (389)
Exceptional items - profit on sale of                     770               156
associated undertakings                                                        
Exceptional items - loss on disposal of                     -             (157)
Exceptional items -                                     (399)                 -
Profit/(loss) on ordinary activities before               563             (698)
interest and tax                                                               
Interest payable                                        (204)             (392)
Profit/(loss) on ordinary                                 359           (1,090)
activities before tax                                                          
Tax on profit/(loss) on                                     -                 -
ordinary activities                                                            
Profit/(loss) on ordinary                                 359           (1,090)
activities after tax                                                           
Minority interests                                          1                11
Profit/(loss) for the                                     360           (1,079)
financial year                                                                 
Earnings/(loss) per share                                                      
- basic                                                 0.43p           (4.86p)
- diluted                                               0.30p           (4.86p)

Balance sheets at 31 December 2006

                                        Group                Company       
                                             Restated              Restated
                                        31         31         31         31
                                  December   December   December   December
                                      2006       2005       2006       2005
                                     £'000      £'000      £'000      £'000
Fixed assets                                                               
Tangible assets                         23         17         21         14
Intangible assets                    2,681          -      2,681          -
Investments                            243        619      1,257      3,408
                                     2,947        636      3,959      3,422
Current assets                                                             
Debtors - Due within one               406      1,264        514      2,012
        - Due after one                  -        805          -        802
                                       406      2,069        514      2,814
Cash                                   305        107        305        105
                                       711      2,176        819      2,919
Creditors: amounts falling                                                 
within one year                    (2,422)    (1,906)    (2,302)    (1,633)
Net current (liabilities)/         (1,711)        270    (1,483)      1,286
Total assets less current            1,236        906      2,476      4,708
Creditors: amounts falling                                                 
after one year:                    (2,808)    (6,014)    (2,808)    (6,014)
Net (liabilities)/assets           (1,572)    (5,108)      (332)    (1,306)
Capital and reserves                                                       
Called up share capital              2,481      1,110      2,481      1,110
Share premium account                1,560          -      1,560          -
Other reserves                       5,679      5,765      5,679      5,765
Profit and loss account           (11,183)   (11,860)   (10,052)    (8,181)
Shareholders' funds                (1,463)    (4,985)      (332)    (1,306)
Minority interest                    (109)      (123)          -          -
                                   (1,572)    (5,108)      (332)    (1,306)

Consolidated cash flow statement for the year ended 31 December 2006

                                         31        31         31         31
                                   December  December   December   December
                                       2006      2006       2005       2005
                                      £'000     £'000      £'000      £'000
Net cash inflow/(outflow)                         945                  (59)
from operating activities                                                  
Returns on investments and                                                 
servicing of finance                                                       
Interest paid                          (62)                (187)           
Interest received                         -                    -           
Net cash outflow from                            (62)                 (187)
returns on investments and                                                 
servicing of finance                                                       
Capital expenditure                                                        
Payments to acquire                    (11)                  (9)           
tangible fixed assets                                                      
Net cash outflow from                            (11)                   (9)
capital expenditure and                                                    
financial investment                                                       
Acquisitions and disposals                                                 
Net (cash)/overdrafts sold                -                  (1)           
with subsidiary                                                            
Sale of associated company            1,605                                
Costs incurred on sale of             (252)                    -           
associated company                                                         
Sale of other investments                15                                
Purchase of golf events             (2,065)                    -           
                                                (697)                   (1)
Net cash outflow before                           175                 (256)
management of liquid                                                       
resources & financing                                                      
Bank facility repaid                (1,058)                (568)           
New bank facility                       300                    -           
Cash received from                    1,276                  890           
convertible loans                                                          
Convertible loans repaid            (2,186)                    -           
Issue of shares                       1,235                    -           
Loan from director                      456                    -           
                                                   23                   322
Increase in cash                                  198                    66

Notes forming part of the financial statements for the year ended 31 December 

1. Earnings/(loss) 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.

                                                       Year ended     Restated
                                                                    Year ended
                                                      31 December  31 December
                                                             2006         2005
(i) Basic                                                   £'000        £'000
Profit/(loss) for the financial year                          360      (1,079)
Weighted average number of shares in issue             82,769,941   22,203,505
Earnings/(loss) per share                                   0.43p      (4.86p)
(ii) Diluted                                                                  
Profit for the financial year                                 360             
Add back interest charged on convertible                       60             
loans where the impact of these loans is                                      
Revised profit                                                420             
Weighted average number of shares in issue             82,769,941             
Weighted average of potential dilutive effect                                 
of ordinary shares issuable under:                                            
- Convertible loan agreements                          57,972,730             
- Employee share schemes                                        -             
- Warrants                                                      -             
Earnings/(loss) per share                                   0.30p             

For the year ended 31 December 2005 the diluted loss and earnings per share is
calculated on the same basis as basic loss and earnings per share because the
effect of the potential ordinary shares reduces the net loss per share and is
therefore anti-dilutive.

2. Called up share capital

                                                                 31         31
                                                           December   December
                                                               2006       2005
                                                              £'000      £'000
1,799,533,475 ordinary shares of 0.5p each                    8,998      8,998
199,831,545 deferred shares of 0.5p each                        999        999
                                                              9,997      9,997
Issued and fully paid                                                         
296,429,269 ordinary shares of 0.5p each (31 December         1,482        111
2005: 22,203,505 ordinary shares of 0.5p each)                                
199,831,545 deferred shares of 0.5p each                        999        999
                                                              2,481      1,110

Ordinary shares

During the year the following share issues were made:

  * On 12 September 2006 a total of 41,400,000 new ordinary shares were issued.
    £492,500 was raised in cash through the issue of 39,400,000 ordinary shares
    and creditors totalling £25,000 were settled via the issue of 2,000,000
    ordinary shares.
  * On 4 October 2006 a total of 155,572,369 new ordinary shares were issued.
    6,000,000 ordinary shares were issued to raise £75,000 in cash, 81,338,879
    ordinary shares were issued from the conversion of existing convertible
    loans totalling £1,017,000, and 66,233,492 ordinary shares were issued to
    settle creditor balances and fees totalling £1,389,000.
  * On 17 October 2006 27,870,680 new ordinary shares were issued for cash of £
  * On 3 November 2006 25,641,025 new ordinary shares were issued for cash of £
  * On 19 December 2006 23,741,690 new ordinary shares were issued for cash of
The financial information set out above does not constitute the Company's
statutory accounts for the year to 31 December 2006 but is derived from those

Copies of the Report and Accounts for the period ended 31 December 2006 are
being sent to shareholders. Further copies will be available from the Company's
registered office, which is 3-12 Harbour Yard, Chelsea Harbour, London, SW10


a d v e r t i s e m e n t