TIDMVMG
RNS Number : 7329U
Vision Media Group (Intl) PLC
30 June 2009
?
+--------------------------------------+--------------------------------+
| Press Release | 30 June 2009 |
+--------------------------------------+--------------------------------+
Vision Media Group (International) plc
("VMG", "the Group" or "the Company")
Preliminary Results
Vision Media Group (International) plc (AIM:VMG), the outdoor media contractor,
announces its Preliminary Results for the year ended 31 December 2008.
Highlights
+-----+--------------------------------------------------------------------------+
|* | Losses from continuing operations remains stable at GBP4.6 million |
| | (2007: GBP4.6 million) |
+-----+--------------------------------------------------------------------------+
|* | Losses after tax of GBP6.2 million (2007: 5.0 million) |
+-----+--------------------------------------------------------------------------+
|* | Revenue of GBP1.4 million (2007: GBP1.6 million) |
+-----+--------------------------------------------------------------------------+
|* | 46 new Iconic Pod digital panels installed and well received by the |
| | media industry and advertisers |
+-----+--------------------------------------------------------------------------+
|* | Ground breaking contract with Clear Channel established and ready for |
| | deployment in 2009 |
+-----+--------------------------------------------------------------------------+
|* | Local sales outsourced |
+-----+--------------------------------------------------------------------------+
|* | Significant operating cost reductions achieved on a monthly basis |
+-----+--------------------------------------------------------------------------+
Post Year End Highlights
+-----+-------------------------------------------------------------------+
|* | Disposal of 49.9% of TrainFX for GBP920,000 |
+-----+-------------------------------------------------------------------+
|* | Royalty licence agreement put in place with VMG Global Limited |
+-----+-------------------------------------------------------------------+
Commenting on the results, Mike Cottman, Executive Chairman, said: "The Company
is disappointed with the impact that the economic downturn has had on VMG's
business. The necessary finance to continue our growth strategy has been
extremely scarce but we remain hopeful that the relationships we have in place
will provide a platform for the emergence of VMG as a profitable business."
- Ends -
For further information:
+------------------------------------+------------------------------------+
| Vision Media Group (International) | |
| plc | |
+------------------------------------+------------------------------------+
| Mike Cottman, Executive Chairman | Tel: +44 (0) 161 428 5544 |
+------------------------------------+------------------------------------+
| mikec@visionmediagroupplc.com | www.visionmediagroupplc.com |
+------------------------------------+------------------------------------+
+----------------------------------------------+-------------------------+
| Seymour Pierce Limited | |
+----------------------------------------------+-------------------------+
| John Depasquale, Corporate Finance | Tel: +44 (0) 20 7107 |
| | 8000 |
+----------------------------------------------+-------------------------+
| jdp@seymourpierce.com | www.seymourpierce.com |
+----------------------------------------------+-------------------------+
Media enquiries:
+----------------------------------------------+-------------------------+
| Abchurch Communications | |
+----------------------------------------------+-------------------------+
| Henry Harrison-Topham / Jack Ballantyne | Tel: +44 (0) 20 7398 |
| | 7714 |
+----------------------------------------------+-------------------------+
| gareth.mead@abchurch-group.com | www.abchurch-group.com |
+----------------------------------------------+-------------------------+
CHAIRMAN'S STATEMENT
2008 was yet another difficult and challenging year for our Company. Our hopes
for a year which crystallised our "turn round" plans and allowed us to finish
the year in operational profitability were dashed by the arrival of the worst
economic conditions that the world has seen for decades. The global credit
crisis and the worsening UK financial conditions made it impossible for our
Company to raise essential capital in the financial markets and this in turn led
to a stagnation of our plans for the continued roll out of our shopping mall
programme. Despite this, there is clear evidence now of the green shoots of
recovery emerging from the gloom as our partnership with Clear Channel begins to
gather momentum.
In view of my role as Executive Chairman, I plan to cover the key elements of
the Chief Executive Officer's review within this statement.
Financial Results
On the back of losing GBP5.5 million in 2007, the Company had hoped for a
positive year in which it would manage to take the business into operating
profitability by the year end. Despite numerous fund raising initiatives the
Company could still not raise sufficient capital to ensure that its working
capital needs were satisfied whilst allowing it sufficient funds to provide the
additional capex and infrastructure build costs required to develop its core
shopping mall business model. The Company achieved revenues of GBP1.4 million
(2007: GBP1.6 million) and made a net loss of GBP7.2 million in 2008.
The Group's new business model involved the design and installation of the new
ground breaking Iconic Pod which we launched to the industry during the year.
This unit - a double sided advertising display unit with two digital panels and
two touch screen facilities - is now widely recognised by the media
buying industry and digital advertising market place as arguably the best
product of its type in the market.Regrettably, cost constraints throughout the
year, combined with high finance charges, hindered the Company's ability to get
sufficient digital panels installed into our mall network and this, in turn,
resulted in our internal forecast revenue and income plans being dashed beyond
all recognition.
During the year the Group outsourced its national and local sales. With respect
to national sales, the first screens to which this relates were installed in the
last two months of the year, and whilst very successful, it does not impact
revenues in 2008. Similarly because the outsourced local sales contract was not
effected until the third quarter, and revenue is recognised over the lifetime of
the contract (typically one or two years) the impact of this contract has been
minimal in 2008. Furthermore, the economic climate has depressed local
advertising revenue.
Business Risks
Strategy
The Directors believe that the new strategy introduced by the Company at the
beginning of the year would be capable of bearing fruit provided the Company had
the necessary finance to deliver on its roll-out plans. Further details of this
will be covered later in the strategic review.
Financial security
The Directors and their professional advisors have been constantly reviewing the
working capital position within the Company throughout the year and this review
process has confirmed that there would be insufficient working capital within
the business in 2008 without additional funding. In view of this, a process of
continued fund raising has been a constant feature of the Company through out
the year, with new funds being raised via a combination of fresh equity placing
and additional debt instruments from a variety of sources including the
extension of my own loan facilities with the Company.
Minimum Rental Guarantees
Despite having successfully re-negotiated and removed the vast majority of the
Company's historic minimal rental guarantee agreements, there still remain a
number of old commitments which will only fall away when payments associated
with commitments have been fulfilled. Whilst the Company has payment plans in
place to deal with these agreements, the risk to the Company associated with
these historic payments remains in place.
Key Performance Indicators (KPIs)
Once again this year the Directors took the view that the Company's very
survival was its only true measure and as such, elected not to set any other
KPIs to be measured against the new business model. The critical indicators
which were and continue to be measured on a weekly basis have been the
Company's reported sales volumes and available cash levels as set out in the
Directors' Report. Despite the intentions to commence a programme of measurement
against KPIs during 2008 the pressing needs of the business in cash survival
terms effectively made such a process redundant during 2008. Once again,
however, in anticipation of the successful implementation of the Company's roll
out plans during 2009, the Directors propose to set KPIs for performance
measurement at the appropriate time in the second half of 2009.
Strategy
The Company's new business strategy, as announced in the 2007 / 8 re-structuring
plan, continued to be implemented with the acquisition of Screen Media Networks
Limited and the consequent appointment of a new executive team, led by our CEO,
Dominic Brookman. Furthermore, the new ten year contract for advertising sales
with Clear Channel was signed, cementing the new business strategy of moving
the Company away from being a provider of Out Of Home digital TV format
advertising to one of being a digital panel advertiser in the Out Of Home
advertising market.
The Company had planned to execute a roll out of its new Iconic Pod - a
combination of two back-to-back digital display panels and two touch screen
consumer interactive screens - into a significant number of the existing
shopping malls where it has digital advertising rights and into new malls where
it had reached heads of agreement or fresh contracts for the provision of
digital advertising. Regrettably, in view of the extreme financial circumstances
which prevailed throughout the year, the company was unable to secure sufficient
finance to commission the production of these panels until towards the end of
the year. Consequently, the proposed deadline for deployment of a large number
of panels in time for the peak pre Christmas advertising period was missed,
resulting in a significant shortfall in the planned income for the year. Despite
this, a small number of Iconic pods were deployed in November and the initial
trial period of deploying adverts remotely, sourced and scheduled via our Clear
Channel partner, was successfully undertaken in a seamless manner. This process
in and of itself has vindicated the business strategy of using Clear Channel to
act as our sales force to gain advertising on our new portrait digital panels.
The financial impact of this shortfall in revenue was extreme and placed even
more pressure on our working capital requirements. At the beginning of 2008, the
Company had projected to have been able to place in excess of 200 new digital
display panels by the end of the year. In view of the circumstances outlined
above the Company was only able to successfully deploy 46 panels by the end of
the year, but we remain committed to continuing this roll out programme in order
to meet our obligations under the Clear Channel contract.
During the first half of the year the Company took the strategic decision to
outsource its local sales initiative to the UK's leading and largest local media
sales business, WRT Group. This decision was implemented in the second half of
the year resulting in a further downsizing of the Company's central overhead and
cost base whilst providing the Company with a continued flow of income from both
existing and forecast new local media sales. Whilst the flow of new media sales
income has been slower than planned for the second half of the year, the current
indications are that the sales process is now gathering momentum and should make
a valuable contribution to group income during 2009.
At the same time as the company was experiencing delays in revenue flow
resulting from the late deployment of digital panels into our mall estate, the
previously announced proposed disposal of our TrainFX business was also delayed
due to the extreme financial conditions in the market in the second half of 2008
at a time when the acquirer of the Train FX business was hoping to raise the
funds to complete this acquisition. Here again, without the incoming flow of
funds expected from the disposal, the Company's working capital position was put
under even more extreme pressure. This resulted in the Company positively
re-negotiating the terms of the disposal and agreeing a number of new interim
financing measures including a Commercial Loan for GBP200,000. This loan has
subsequently been extinguished as agreed with the acquirer in April 2009 and
negotiations concluded with RAM Investment Group plc for the injection of
GBP920,000 in return for new equity in Train FX, giving RAM 49.99% of that
company and an option over the remaining 50.01% (the exercise of which remains
subject to shareholder consent).
Outlook
After the hiatus in our digital panel deployment plans in 2008, caused by the
lack of sufficient finance to execute the installation programme, during the
first part of 2009 the Company has continued to experience major working capital
constraints and extreme financial hardship. Our prime focus is still to manage
our acute debt burden and the day to day cash flow challenges as we continue to
fight to bring a combination of national sales income from Clear Channel and
local sales income from WRT Group up to the required level to allow us to break
even on a profit and loss basis. The Company has a combination of debt, creditor
and other liabilities amounting to GBP10.1m as of the time of this statement and
our total focus is upon survival to a point of operational profitability and
beyond. The senior management team continues to find and negotiate with
potential sources of new finance, both debt and equity, in order to set the
Group on a sound footing to enable it to take advantage of the growth
opportunities which are now open to us.
Commercially, our outsourced business model is one which stands the test of
scrutiny. Our Clear Channel partner is delivering revenues in line with our
internal forecast and we have successfully downsized our overhead and cost base
dramatically over the past year as we have implemented the changes to
the business. There is no doubt that the global financial crisis that we are in
has dramatically impacted upon our business and its ability to survive and
prosper and I believe our turnaround plans have been set back by approximately
one year.
This has arguably been the most challenging year the Company has experienced in
its history - a year in which investors, creditors, commercial partners,
suppliers, employees and all the stakeholders in our Company have felt varying
degrees of financial pain. Thank you to all those who have stuck with us and
I hope we can deliver the end result that we are all seeking.
+------------------------------------+------------------------------------+
| Mike Cottman | |
+------------------------------------+------------------------------------+
| Executive Chairman | |
+------------------------------------+------------------------------------+
| 30 June 2009 | |
+------------------------------------+------------------------------------+
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
+----------------------------+-------+-------+-------+------+-------------+-------------+
| | 2008 | 2007 |
+-----------------------------------------------------------+-------------+-------------+
| | Notes | GBP | GBP |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| REVENUE from continuing operations | 1 | 1,413,682 | 1,563,275 |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| Cost of sales in respect of continuing | | (1,416,658) | (2,273,868) |
| operations | | | |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| Gross loss from continuing operations | | (2,976) | (710,593) |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| Administrative expenses in respect of | | (4,619,144) | (3,900,406) |
| continuing operations | | | |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| LOSS FROM CONTINUING OPERATIONS | 3 | (4,622,120) | (4,610,999) |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| Finance costs in respect of continuing | 6 | (2,041,781) | (401,395) |
| operations | | | |
+--------------------------------------------+--------------+-------------+-------------+
| Finance income in respect of continuing | | 7,743 | 29,661 |
| operations | | | |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| | | | |
+--------------------------------------------+--------------+-------------+-------------+
| LOSS BEFORE TAXATION before result for discontinued | (6,656,158) | (4,982,733) |
| operations | | |
+-----------------------------------------------------------+-------------+-------------+
| | | |
+-----------------------------------------------------------+-------------+-------------+
| Taxation | | 7 | - | - |
+----------------------------+-----------------------+------+-------------+-------------+
| | | | | |
+----------------------------+-----------------------+------+-------------+-------------+
| | | | |
+----------------------------------------------------+------+-------------+-------------+
| LOSS AFTER TAXATION before result for discontinued | | (6,656,158) | (4,982,733) |
| operations | | | |
+----------------------------------------------------+------+-------------+-------------+
| | | | |
+----------------------------------------------------+------+-------------+-------------+
| Loss after taxation from discontinued operations | 2 | (504,857) | (561,611) |
+----------------------------------------------------+------+-------------+-------------+
| | | | |
+----------------------------------------------------+------+-------------+-------------+
| LOSS FOR THE FINANCIAL YEAR ATTRIBUTABLE TO EQUITY | | (7,161,015) | (5,544,344) |
| HOLDERS OF THE PARENT COMPANY | | | |
+----------------------------------------------------+------+-------------+-------------+
| | | | |
+----------------------------------------------------+------+-------------+-------------+
| Loss per ordinary share - basic | | 23 | (10.22)p | (24.52)p |
| and diluted | | | | |
+----------------------------+-------+-------+-------+------+-------------+-------------+
All income and expenditure has been recognised in the income statement in both
the current and prior years.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2008
+--------------------------------------------------+-------+---------------+--------------+
| | 2008 | 2007 |
+----------------------------------------------------------+---------------+--------------+
| |Notes | GBP | GBP |
+--------------------------------------------------+-------+---------------+--------------+
| | | | |
+--------------------------------------------------+-------+---------------+--------------+
| ASSETS | | | |
+--------------------------------------------------+-------+---------------+--------------+
| Non-current assets | | | |
+--------------------------------------------------+-------+---------------+--------------+
| Property plant and equipment | 9 | 2,746,684 | 1,538,214 |
+--------------------------------------------------+-------+---------------+--------------+
| Goodwill | 10 | 4,676,982 | 1,049,042 |
+--------------------------------------------------+-------+---------------+--------------+
| Intangibles | 10 | 103,059 | 151,046 |
+--------------------------------------------------+-------+---------------+--------------+
| | 7,526,725 | 2,738,302 |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Current assets | | |
+----------------------------------------------------------+---------------+--------------+
| Trade and other receivables | 12 | 756,901 | 1,910,845 |
+--------------------------------------------------+-------+---------------+--------------+
| Cash and cash equivalents | 14 | 492 | 36 |
+--------------------------------------------------+-------+---------------+--------------+
| | 757,393 | 1,910,881 |
+----------------------------------------------------------+---------------+--------------+
| | | | |
+--------------------------------------------------+-------+---------------+--------------+
| Assets in respect of the disposal group | 13 | 716,814 | 573,877 |
+--------------------------------------------------+-------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total assets | 9,000,932 | 5,223,060 |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| EQUITY AND LIABILITIES | | |
+----------------------------------------------------------+---------------+--------------+
| Equity attributable to equity holders of the company | | |
+----------------------------------------------------------+---------------+--------------+
| Share capital | 21 | 11,677,980 | 6,967,611 |
+--------------------------------------------------+-------+---------------+--------------+
| Share premium | 12,495,192 | 11,372,328 |
+----------------------------------------------------------+---------------+--------------+
| Retained earnings | (25,717,676) | (18,556,661) |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total equity | (1,544,504) | (216,722) |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Non-current liabilities | | |
+----------------------------------------------------------+---------------+--------------+
| Financial liabilities | 17 | 876,859 | 95,286 |
+--------------------------------------------------+-------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total non-current liabilities | 876,859 | 95,286 |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Current liabilities | | |
+----------------------------------------------------------+---------------+--------------+
| Trade and other payables | 15 | 3,549,630 | 3,249,644 |
+--------------------------------------------------+-------+---------------+--------------+
| Provisions for reorganisation costs | 16 | 380,000 | - |
+--------------------------------------------------+-------+---------------+--------------+
| Financial liabilities | 17 | 5,333,537 | 1,868,187 |
+--------------------------------------------------+-------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total current liabilities | 9,263,167 | 5,117,831 |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Trade and other payables in respect of the | 13 | 405,372 | 161,570 |
| disposal group | | | |
+--------------------------------------------------+-------+---------------+--------------+
| Financial liabilities in respect of the disposal | 13 | 38 | 65,095 |
| group | | | |
+--------------------------------------------------+-------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total liabilities | 10,545,436 | 5,439,782 |
+----------------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------------+---------------+--------------+
| Total equity and liabilities | 9,000,932 | 5,223,060 |
+--------------------------------------------------+-------+---------------+--------------+
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2008
+--------------------------------------+------------+-------------+---------------+--------------+
| | Share | Share | Retained | Total |
| | Capital | Premium | Losses | |
| | | Account | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| | GBP | GBP | GBP | GBP |
+--------------------------------------+------------+-------------+---------------+--------------+
| Group | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 1 January 2007 | 6,610,748 | 10,112,144 | (13,012,317) | 3,710,575 |
+--------------------------------------+------------+-------------+---------------+--------------+
| Proceeds of issue of shares (net of | 356,863 | 1,260,184 | - | 1,617,047 |
| costs) | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| Retained loss for the year | - | - | (5,544,344) | (5,544,344) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 1 January 2008 | 6,967,611 | 11,372,328 | (18,556,661) | (216,722) |
+--------------------------------------+------------+-------------+---------------+--------------+
| Proceeds of issue of shares (net of | 4,710,369 | 1,122,864 | - | 5,833,233 |
| costs) | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| Retained loss for the year | - | - | (7,161,015) | (7,161,015) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 31 December 2008 | 11,677,980 | 12,495,192 | (25,717,676) | (1,544,504) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
+--------------------------------------+------------+-------------+---------------+--------------+
| | Share | Share | Retained | Total |
| | Capital | Premium | Losses | |
| | | Account | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| | GBP | GBP | GBP | GBP |
+--------------------------------------+------------+-------------+---------------+--------------+
| Company | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 1 January 2007 | 6,610,748 | 10,112,144 | (12,965,525) | 3,757,367 |
+--------------------------------------+------------+-------------+---------------+--------------+
| Proceeds of issue of shares (net of | 356,863 | 1,260,184 | - | 1,617,047 |
| costs) | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| Retained loss for the year | - | - | (5,207,481) | (5,207,481) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 1 January 2008 | 6,967,611 | 11,372,328 | (18,173,006) | 166,933 |
+--------------------------------------+------------+-------------+---------------+--------------+
| Proceeds of issue of shares (net of | 4,710,369 | 1,122,864 | - | 5,833,233 |
| costs) | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| Retained loss for the year | - | - | (3,301,269) | (3,301,269) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
| At 31 December 2008 | 11,677,980 | 12,495,192 | (21,474,275) | (2,698,897) |
+--------------------------------------+------------+-------------+---------------+--------------+
| | | | | |
+--------------------------------------+------------+-------------+---------------+--------------+
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
+-----------------------------------------------------+---+--------------+-------------+
| | 2008 | 2007 |
+---------------------------------------------------------+--------------+-------------+
| | | GBP | GBP |
+-----------------------------------------------------+---+--------------+-------------+
| CASH FLOW FROM OPERATING ACTIVITIES | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Loss before tax | | (6,656,159) | (4,982,733) |
+-----------------------------------------------------+---+--------------+-------------+
| Depreciation | | 833,096 | 787,832 |
+-----------------------------------------------------+---+--------------+-------------+
| Amortisation of intangible assets | | 47,987 | 94,412 |
+-----------------------------------------------------+---+--------------+-------------+
| Goodwill impairment | | 93,802 | 73,679 |
+-----------------------------------------------------+---+--------------+-------------+
| Los on disposal of fixed assets | | 19,525 | - |
+-----------------------------------------------------+---+--------------+-------------+
| Finance costs | | 2,041,781 | 401,395 |
+-----------------------------------------------------+---+--------------+-------------+
| Finance income | | (7,743) | (29,661) |
+-----------------------------------------------------+---+--------------+-------------+
| Decrease / (Increase) in trade and other | | 1,048,266 | (493,537) |
| receivables | | | |
+-----------------------------------------------------+---+--------------+-------------+
| (Decrease) / Increase in trade and other payables | | (70,618) | 11,213 |
+-----------------------------------------------------+---+--------------+-------------+
| Increase in provisions | | 380,000 | - |
+-----------------------------------------------------+---+--------------+-------------+
| CASH USED IN CONTINUING OPERATIONS | | (2,270,063) | (4,137,400) |
+-----------------------------------------------------+---+--------------+-------------+
| Finance costs | | (305,721) | (401,395) |
+-----------------------------------------------------+---+--------------+-------------+
| Finance income | | 7,743 | 29,661 |
+-----------------------------------------------------+---+--------------+-------------+
| Taxation | | - | - |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| NET CASH USED IN CONTINUING OPERATING ACTIVITIES | | (2,568,041) | (4,509,134) |
+-----------------------------------------------------+---+--------------+-------------+
| Net cash used in discontinued operating activities | | (119,371) | (538,608) |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| TOTAL CASH USED IN OPERATING ACTIVITIES | | (2,687,412) | (5,047,742) |
+-----------------------------------------------------+---+--------------+-------------+
| CASH FLOWS FROM CONTINUING INVESTING ACTIVITIES | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Payments to acquire property, plant and equipment | | (506,612) | (156,473) |
+-----------------------------------------------------+---+--------------+-------------+
| Payments to acquire intangible assets | | - | (22,505) |
+-----------------------------------------------------+---+--------------+-------------+
| Payment to acquire subsidiary | | (80,156) | (6,613) |
+-----------------------------------------------------+---+--------------+-------------+
| Cash at bank acquired with subsidiary | | 23,035 | - |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| NET CASH USED IN INVESTING ACTIVITIES | | (563,733) | (185,591) |
+-----------------------------------------------------+---+--------------+-------------+
| Net cash used in discontinued investing activities | | (168,860) | (79,698) |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| TOTAL CASH USED IN INVESTING ACTIVITIES | | (732,593) | (265,289) |
+-----------------------------------------------------+---+--------------+-------------+
| CASH FLOWS FROM CONTINUING FINANCING ACTIVITIES | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Proceeds on issue of ordinary shares | | 2,066,067 | 1,609,047 |
+-----------------------------------------------------+---+--------------+-------------+
| Issue costs | | (87,810) | 8,000 |
+-----------------------------------------------------+---+--------------+-------------+
| Proceeds of new borrowings | | 2,912,524 | 1,125,000 |
+-----------------------------------------------------+---+--------------+-------------+
| Repayment of borrowings | | (1,023,284) | (250,000) |
+-----------------------------------------------------+---+--------------+-------------+
| Repayment of bank borrowings | | - | (15,000) |
+-----------------------------------------------------+---+--------------+-------------+
| Invoice discounting | | - | (126,497) |
+-----------------------------------------------------+---+--------------+-------------+
| Capital element of finance leases repaid | | (368,520) | (595,198) |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| NET CASH INFLOW FROM CONTINUING FINANCING | | 3,498,977 | 1,755,352 |
| ACTIVITIES | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Net cash inflow / (outflow) from discontinued | | 1,253 | (68,851) |
| financing activities | | | |
+-----------------------------------------------------+---+--------------+-------------+
| | | | |
+-----------------------------------------------------+---+--------------+-------------+
| TOTAL CASH INFLOW FROM FINANCING ACTIVITIES | | 3,500,230 | 1,686,501 |
+-----------------------------------------------------+---+--------------+-------------+
| Net increase / (decrease) in cash and cash | | 80,225 | (3,626,530) |
| equivalents | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Cash and cash equivalents at the beginning of the | | (233,161) | 3,393,369 |
| financial year | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Cash and cash equivalents at the end of the | | (152,936) | (233,161) |
| financial year | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Represented by: | | | |
+-----------------------------------------------------+---+--------------+-------------+
| Bank overdrafts - continuing activities | | (153,390) | (169,355) |
+-----------------------------------------------------+---+--------------+-------------+
| Bank overdrafts - discontinued activities | | (38) | (63,842) |
+-----------------------------------------------------+---+--------------+-------------+
| Petty cash | | 492 | 36 |
+-----------------------------------------------------+---+--------------+-------------+
| | | (152,936) | (233,161) |
+-----------------------------------------------------+---+--------------+-------------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
GENERAL INFORMATION
BASIS OF PREPARATION
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the European Union (EU)
and in accordance with those parts of the Companies Act 1985 applicable to
companies reporting under IFRSs for the first time.
Vision Media Group (International) plc is incorporated and domiciled in the
United Kingdom.
The financial statements have been prepared on the historical cost basis and are
presented in pounds sterling because it is the currency of the prime economic
environment in which the group operates. The principal accounting policies
adopted are set out below.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the financial information in conformity with IFRS requires
management to make judgement, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results which form the basis of making
the judgements about carrying values of assets and liabilities that are both
readily apparent from other sources. Actual results may differ from these
estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current
and future periods.
The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are addressed below.
Estimated impairment of goodwill
The Group tests annually whether good will has suffered any impairment, in
accordance with the accounting policy. The recoverable amounts of
cash-generating units ("CGU") have been determined based on value-in-use
calculations. These calculations require the use of estimates which have
been disclosed in note 10.
An impairment charge of GBP93,802 arose on the Group's Banners network during
the course of the 2008 year, resulting in the carrying amount of the CGU being
written down to its recoverable amount. Within limits considered reasonable by
the directors, sensitivity analysis on other elements of goodwill does
not result in any impairment.
Provision for bad debts
The Group makes provision for bad debts and frustrated contracts in line with
historical experience. A
general provision is made for bad debts based on the age of the invoice.
The cost of this during 2008 was GBP316,580 (2007: GBP58,417)
Valuation of embedded derivative
The valuation of the embedded foreign currency option relating to the Trafalgar
loan requires a degree of estimation into the Garman - Kohlhagen model. The
assumptions used surround volatility of the Euro, timing of payments, and the
risk free rate. The following assumptions were used:
- Euro volatility10%
- Risk free rate4.55%
- Timing of payments August 2010
Provision for reorganisation
Provisions are held to the extent that directors feel it is probable an outflow
of economic benefits will be required to settle a legal or constructive
obligation as a result of a past event, which requires management to make an
assumption on the probability and timing of the outflow.
A provision of GBP380,000 has been created for reorganisation costs resulting
from a change to the business model which has required the screens on which
advertisements are run to be replaced. An estimate has been made in respect of
the cost of reorientation of screens and the number of screens to be
reorientated.
Going concern
These accounts are prepared on a going concern basis, which assumes the Group
will continue in operational existence for the foreseeable future. The Group's
ability to meet its future working capital requirements and therefore continue
as a going concern is dependent upon being able to generate significant free
cash flow from both trading and financing activities. Management is
continuing negotiations with providers of both equity and debt finance. These
negotiations, which are at an advanced stage, involve a number of parties and
are complex. As a result, and because of the current economic climate, these
negotiations are taking longer to conclude than might normally be expected.
Should these negotiations not be successfully concluded in the short term, the
Group is unlikely to have sufficient cash resources available to it to enable it
to continue trading. Whilst the directors would continue their efforts to raise
new finance from other sources, they may be unable to do so in the time
available to them. They take comfort, however, from the very successful track
record of being able to raise such finance which they can demonstrate.
At the time of approving these financial statements the directors remain
confident of a successful outcome to their negotiations for new finance which
would enable the Group to continue trading for at least the next 12 months and,
accordingly, they continue to adopt the going concern basis in the preparation
of these financial statements.
INTERPRETATIONS AND STANDARDS WHICH BECAME EFFECTIVE DURING THE YEAR
(a) Interpretations effective in 2008
IFRIC 11, 'IFRS 2 - Group and treasury share transactions', provides guidance on
whether share based transactions involving treasury shares or involving group
entities (for example, options over a parent's shares) should be accounted for
as equity-settled or cash-settled share based payment transactions in the
stand-alone accounts of the parent and group companies. This interpretation does
not have an impact on the group's financial statements. The company's accounting
policy for share based compensation arrangements is already in compliance with
the interpretation.
(b) Interpretations effective in 2008 but not relevant
The following interpretation to published standards is mandatory for accounting
periods beginning on or after 1 January 2008 but is not relevant to the group's
operations:
IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding
requirements and their interaction', provides guidance on assessing the limit in
IAS 19 on the amount of the surplus that can be recognised as an asset. It also
explains how the pension asset or liability may be affected by a statutory or
contractual minimum funding requirement. The interpretation does not have an
impact on the group's financial statements as it does not operate a defined
benefit pension schemes.
IFRIC 12 'Service concession arrangements' provides guidance on the accounting
treatment relating to service arrangements over public infrastructures and is
effective for periods beginning on or after 1
January 2008.
IFRIC 13 'Customer loyalty programmes' provides guidance on the accounting
treatment of rewards awarded as part of a customer loyalty programme and is
effective for periods beginning on or after 1 July 2008.
The implementation of the interpretations has had no material effect on the
financial statements.
(c) Standards, amendments and interpretations to existing standards that are not
yet effective and have not been early adopted by the group.
At the date of the authorisation of the financial information, the following
standards and interpretations,
which have not been applied in the financial information, were in issue but not
yet effective:
- IFRS 1 Revised IFRS 1 First time adoption of IFRS (endorsed)
- IFRS 2 Share
based Payment - Amendments relating to vesting conditions and
cancellations (endorsed)
- IFRS 3 Business Combinations - Amendments
- IFRS 7 Financial Instruments:
Disclosures - Consequential amendments arising from amendments to IAS 32
- IFRS 8 Operating Segments (endorsed)
- IAS 1 Presentation of Financial Statements - Revised (endorsed)
- IAS 1
Presentation of Financial Statements - Amendments relating to Puttable
Financial Instruments and
obligations arising on liquidation (endorsed)
- IAS 23 Borrowing Costs - Amendment (endorsed)
- IAS 27 Consolidated and
separate Financial Statements - Consequential amendments arising
from Amendments from IFRS 3
- IAS 27 Consolidated and Separate Financial
Statements - Amendments cost of an investment in
a subsidiary, jointly
controlled entity or associate (endorsed)
- IAS 28 Investments in Associates - Consequential amendments arising from IFRS
3
- IAS 31 Investments in Joint Ventures - Consequential amendments arising
from IFRS 3 IAS 32
- IAS 32 Financial Instruments Presentation - Amendments
relating to Puttable Financial Instruments and
obligations arising on
liquidation (endorsed)
- IAS 39 Financial Instruments: Recognition and
Measurement - Consequential amendments arising from
amendments to IAS 32
- IAS 39 Financial Instruments: Recognition and measurement - Amendment;
Eligible hedged items
- IAS 39 Financial Instruments: Recognition and
measurement - Amendment; Reassessment of embedded
derivatives.
- IFRIC 12 Service Concession Arrangements (endorsed)
- IFRIC 13 Customer Loyalty Programmes (endorsed)
- IFRIC 14 IAS19 - The Limit
on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
(endorsed)
- IFRIC 15 Agreements for the Construction of Real Estate Assets
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation
- IFRIC 17 Distributions of Non-cash Assets to Owners
- IFRIC 18 Transfers of Assets from Customers
- IFRIC 9 Reassessment of Embedded Derivatives - Amendment; Embedded Derivatives
The directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
information when the relevant standards and interpretations come into effect.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of Vision Media Group
(International) plc and all of its subsidiary undertakings for the year.
Subsidiaries acquired are consolidated using the acquisition/purchase method.
Their results are incorporated from the date that control passes. Control is
achieved where the company has the power to govern the financial and operating
policies of an entity in which it invests, so as to obtain benefits from its
activities. The results of subsidiaries acquired or sold are consolidated for
the periods from or to the date on which control passed. All intra group
transactions, balances, income and expenses are eliminated on consolidation. The
fair value of the shares issued to acquire the trading subsidiaries was assessed
as market value. The acquired identifiable assets, liabilities and contingent
liabilities that meet the for recognition under IFRS3 are recognised at their
fair value at the acquisition date, except for non-current assets that are
classified as held for resale in accordance with IFRS5 Non-Current Assets Held
for Sale and Discontinued Operations, which are recognised and measured at the
lower of cost and fair value less cost to sell.
All financial statements are made up to 31 December.
GOODWILL
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition. Goodwill is initially recognised as an asset at cost
and is subsequently measured at cost less any impairment losses.
For the purposes of impairment testing, goodwill is allocated to each of the
group's cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash-generating
unit is less than the carrying value of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period. At each balance sheet date, the
group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if
any). Where the asset does not generate cash flows that are independent from
other assets, the group estimates the recoverable amount of the cash generating
unit to which the asset belongs. An intangible asset with an indefinite useful
life is tested for impairment annually and whenever there is an indication that
the asset may be impaired a write down is made. Impairment charges are
recognised in the income statement.
REVENUE
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for services provided in the normal
course of business, net of discounts and other sales related taxes.
Revenue and cost of sales are recorded according to the contracted value of each
transaction in a given period. The typical length of a contract for local
advertising revenues is twelve or twenty four months and revenues and profits
are recognised monthly over the life of the contract. National advertising
revenues and banner revenues are contracted over much shorter campaign periods
and are accounted for at the end of each period of broadcast or, in the case of
banners, display.
COST OF SALES
Cost of Sales, including sales agent commissions which are recognised at the
time of the sale, are all accounted for against specific Revenue contracts.
SEGMENTAL REPORTING
An operating segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other operating segments.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation
and any recognised impairment loss. Cost comprises purchase price and other
directly attributable costs. Depreciation is charged so as to write off the cost
or valuation of assets to their residual values over their estimated useful
lives, using the straight-line method, on the following bases:
Leasehold improvements 20% on cost
Ipods and plasma screens 20% on cost
Computer equipment 33% on cost
Fixtures, fittings and office equipment15% on cost
The gain or loss arising on the disposal or retirement of an asset is determined
as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in the income statement.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
INTANGIBLE ASSETS
Software and Development Costs
Costs associated with maintaining computer software programmes are recognised as
an expense as incurred. Development costs that are directly attributable to the
design and testing of identifiable and unique software products controlled by
the group are recognised as intangible assets when the following criteria are
met:
- it is technically feasible to complete the software product so that it will be
available for use;
- management intends to complete the software product and use or sell it;
- there is an ability to use or sell the software product;
- it can be demonstrated how the software product will generate probable future
economic benefits;
- adequate technical, financial and other resources to
complete the development and to use or sell
the software product are
available; and
- the expenditure attributable to the software product during its development
can be reliably measured.
Directly attributable costs that are capitalised as part of the software product
include the software development employee costs and an appropriate portion of
relevant overheads. Other development expenditures that do not meet these
criteria are recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over
their estimated useful lives, which does not exceed three years.
Concession Rights
Concession rights are recognised at cost at the acquisition date. The concession
rights have a finite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method over the
expected life of the customer relationship.
IMPAIRMENT
At each balance sheet date, the Group reviews the carrying amounts of its
property, plant and equipment to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Each section of the company's business
which has a separate identifiable cash flow stream is assessed separately. Where
the asset does not generate cash flows that are independent from other assets,
the company estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately.
FINANCIAL ASSET - INVESTMENTS
Investments consist of the Group's subsidiary undertakings. Investments are
initially recorded at cost, being the fair value of the consideration given and
including acquisition expenses associated with the investment. Subsequently they
are reviewed for impairment if events or changes in circumstances indicate the
carrying value may not be recoverable.
RESEARCH AND DEVELOPMENT POLICY
The Group has undertaken significant activity in researching and developing its
products, particularly with respect to the development of software solutions.
Expenditure on research activities is recognised as an expense in the period in
which it is incurred.
An internally-generated intangible asset arising from the Group's business
development is recognised only if all of the following conditions are met:
* an asset is created that can be identified (such as software and new processes);
* it is probable that the asset created will generate future economic benefits;
* the development cost of the asset can be measured reliably;
* the product or process is technically and commercially feasible; and
* sufficient resources are available to complete the development and to either
sell or use the asset.
Where no internally-generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the balance sheet
when the company has become a party to the contractual provisions of the
instrument.
Recognition
Regular purchases and sales of financial assets are recognised on the trade-date
- the date on which the group commits to purchase or sell the asset. Investments
are initially recognised at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss. Financial
assets classified at fair value through profit or loss are initially recognised
at fair value, and transaction costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the group has transferred
substantially all risks and rewards of ownership. Financial assets at fair value
through profit or loss are subsequently carried at fair value. Loans and
receivables are carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the 'financial assets
at fair value through profit or loss' category are presented in the income
statement within 'other (losses)/gains - net' in the period in which they arise.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using effective interest method, less
provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the company will not be able
to collect all amounts due according to the original terms of receivables. The
amount of provision is the difference between the asset's carrying amount and
the present value of estimated future cash flows, discounted at the effective
interest rate.
Financial liabilities
Financial liabilities consist of bank borrowings and other loans. Financial
liabilities are classified according to the substance of the contractual
arrangements entered into. An instrument will be classified as a financial
liability when there is a contractual obligation to deliver cash or another
financial asset to another enterprise.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, deposits held at
call with banks. Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet.
Borrowings
Borrowings comprise of interest bearing bank loans and overdrafts.
Interest-bearing bank loans and overdrafts are initially recorded at fair value,
which represents the fair value of the consideration received, net of any issue
costs associated with other borrowings. Borrowings are subsequently stated at
amortised cost.
Finance charges, including premiums payable on settlement or redemption, are
accounted for on an accrual basis and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they
arise.
Borrowings are classified as current liabilities unless the company has an
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Embedded options
Derivatives embedded in debt instruments which have characteristics not closely
related to the debt instrument are separated and treated as separate financial
instruments. These derivatives are measured at fair value with gains and losses
being recognised in profit and loss.
Derecognition of financial instruments
The derecognition of financial instruments takes place when the company no
longer controls the contractual rights that comprise the financial instrument,
which is normally the case when the instrument is sold, or all of the cash flows
attributable to the instrument are passed through to an independent third party.
Convertible loans
Convertible loans are regarded as compound instruments, consisting of a
liability component and an equity component only when the instrument will or may
be settled through the issue of a pre-determined quantity of equity instruments.
At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for similar non-convertible debt. The
difference between the proceeds of issue of the convertible loan notes and the
fair value assigned to the liability component, representing the embedded option
to convert the liability into equity of the company, is included in equity.
Issue costs are apportioned between the liability and equity components of the
convertible loan notes based on their relative carrying amounts at the date of
issue. The portion relating to the equity component is charged directly against
equity.
The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
instrument. The difference between this amount and the interest paid is added to
the carrying value of the convertible loan.
LEASING COMMITMENTS
Finance leases, which transfer to the group substantially all the risks and
benefits incidental to ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased item or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability.
Capitalised leased assets are depreciated over the shorter of the estimated
useful life of the asset or the lease term.
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease.
TAXATION
Current tax is the expected corporation tax payable or receivable in respect of
the taxable profit/loss for the financial year using tax rates enacted or
substantively enacted at the balance sheet date, less any adjustments to tax
payable or receivable in respect of previous periods.
Deferred tax is recognised in respect of all temporary differences between the
carrying amounts of assets and liabilities included in the financial statements
and the amounts used for tax purposes that will result in an obligation to pay
more, or a right to pay less or to receive more tax, with the following
exceptions:
No provision is made relating to the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than those
acquired as part of a business combination, or on the initial recognition of
goodwill.
Provision is made for deferred tax that would arise on all taxable temporary
differences associated with investments in subsidiaries and interests in joint
ventures, except where the Company can control the reversal of the temporary
differences.
Deferred tax assets are recognised only to the extent that the directors
consider that it is probable that there will be suitable taxable profits from
which the future reversal of the underlying temporary differences and unused tax
losses and credits can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which the asset is realised or liability is
settled, based on tax rates and laws enacted or substantively enacted at the
balance sheet date.
PROVISIONS
Provisions are recognised when the Company has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
DEFINED CONTRIBUTION PLANS
Obligations for contributions to defined contribution retirement benefit plans
are charged as an expense as they fall due.
SHARE-BASED PAYMENTS
The company has applied the requirements of IFRS 2 'Share-based payment'.
The Company issues equity-settled share-based payments to certain employees. The
Company also issues warrants which will be settled with equity as part of its
financing arrangements with certain funders. Equity-settled share-based payments
are measured at fair value at the date of grant. The fair value determined at
the grant date of equity-settled share-based payments is expensed on a straight
line basis over the vesting period, based on the Company's estimate of share
options or warrants that will eventually vest and a corresponding amount
credited to retained earnings.
Fair value is measured by use of the Black-Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effect of non-transferability, exercise restrictions and behavioural
considerations.
A liability equal to the portion of the deemed value received is recognised at
the current fair value determined at each balance sheet date for cash-settled
share based payments.
1.SEGMENTAL INFORMATION
The Group's income and loss before taxation were all derived from its principal
activity, undertaken wholly in the United Kingdom. During the year the group
arranged the sale of part of its digital business run through TrainFX Limited
which is shown below as discontinued (see also note 20).
1a. Sales originated from the following networks:
+---------------------------------------------------+-----------+-------------+-------------+
| | | Digital | 2008 |
+---------------------------------------------------+-----------+-------------+-------------+
| | Banners | network | Total |
+---------------------------------------------------+-----------+-------------+-------------+
| | GBP | GBP | GBP |
+---------------------------------------------------+-----------+-------------+-------------+
| Revenue from continuing operations | 57,680 | 1,356,002 | 1,413,682 |
+---------------------------------------------------+-----------+-------------+-------------+
| Cost of sales in respect of continuing operations | (51,908) | (1,364,750) | (1,416,658) |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Gross profit / (loss) from continuing operations | 5,772 | (8,748) | (2,976) |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Administrative expenses in respect of continuing | (110,423) | (4,508,721) | (4,619,144) |
| operations | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Loss from continuing operations | (104,651) | (4,517,469) | (4,622,120) |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Finance cost in respect of continuing operations | (15,845) | (2,025,936) | (2,041,781) |
+---------------------------------------------------+-----------+-------------+-------------+
| Finance income in respect of continuing | 13 | 7,730 | 7,743 |
| operations | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Loss before taxation for continuing operations | (120,483) | (6,535,675) | (6,656,158) |
+---------------------------------------------------+-----------+-------------+-------------+
| Taxation | - | - | - |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Loss after taxation before result for | (120,483) | (6,535,675) | (6,656,158) |
| discontinued operations | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Loss after tax from discontinued operations (note | | | (504,857) |
| 2) | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| | | | |
+---------------------------------------------------+-----------+-------------+-------------+
| Loss for the financial year | | | (7,161,015) |
+---------------------------------------------------+-----------+-------------+-------------+
Segments are reported in a manner consistent with the internal reporting
provided to the board of directors, which have been devised based on the method
of delivery of media.
There was no income or expense during the year with respect to healthcare and
media.
+----------------------------+-----------+---------------+-------------+---------------+
| | Banners | Digital | Other, | 2007 |
| | | network | including | Total |
| | | | healthcare | |
| | | | and media | |
+----------------------------+-----------+---------------+-------------+---------------+
| | GBP | GBP | GBP | GBP |
+----------------------------+-----------+---------------+-------------+---------------+
| Revenue from continuing | 124,880 | 1,357,176 | 81,219 | 1,563,275 |
| operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Cost of sales in respect | (217,167) | (2,016,163) | (40,538) | (2,273,868) |
| of continuing operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Gross (loss)/profit from | (92,287) | (658,987) | 40,681 | (710,593) |
| continuing operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Administrative expenses in | (100,246) | (3,776,853) | (23,307) | (3,900,406) |
| respect of continuing | | | | |
| operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| (Loss)/profit from | (192,533) | (4,435,840) | 17,374 | (4,610,999) |
| continuing operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Finance costs in respect | (9,060) | (392,335) | - | (401,395) |
| of continuing operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Finance income in respect | 143 | 29,518 | - | 29,661 |
| of continuing operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| (Loss)/profit before | (201,450) | (4,798,657) | 17,374 | (4,982,733) |
| taxation for continuing | | | | |
| operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Taxation | - | - | - | - |
+----------------------------+-----------+---------------+-------------+---------------+
| | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| (Loss)/profit after | (201,450) | (4,798,657) | 17,374 | (4,982,733) |
| taxation before result for | | | | |
| discontinued operations | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Loss after tax from | | | | (561,611) |
| discontinued operations | | | | |
| (note 2) | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
| Loss for the financial | | | | (5,544,344) |
| year | | | | |
+----------------------------+-----------+---------------+-------------+---------------+
Balance Sheet items by segment
+--------------------------------------+----------+------------+--+-----------+
| Gross operating assets | | 2008 | | 2007 |
| | | GBP | | GBP |
+--------------------------------------+----------+------------+--+-----------+
| Banners | | 29 | | 97,632 |
+--------------------------------------+----------+------------+--+-----------+
| Digital Networks | | 8,284,089 | | 4,551,551 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| | | 8,284,118 | | 4,649,183 |
+--------------------------------------+----------+------------+--+-----------+
| Discontinued activities | Note 13 | 716,814 | | 573,877 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Gross operating assets | | 9,000,932 | | 5,223,060 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Gross liabilities | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Banners | | 129,456 | | 561,254 |
+--------------------------------------+----------+------------+--+-----------+
| Digital Networks | | 10,010,570 | | 4,651,863 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| | | 10,140,026 | | 5,213,117 |
+--------------------------------------+----------+------------+--+-----------+
| Discontinued activities | Note 13 | 405,410 | | 226,665 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Gross liabilities | | 10,545,436 | | 5,439,782 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Capital expenditure to acquire | | | | |
| property, plant and equipment | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Banners | | - | | 23,750 |
+--------------------------------------+----------+------------+--+-----------+
| Digital networks | | 1,971,201 | | 132,723 |
+--------------------------------------+----------+------------+--+-----------+
| Digital networks - Acquired with | Note 11 | 89,890 | | - |
| subsidiary | | | | |
+--------------------------------------+----------+------------+--+-----------+
| | | 2,061,091 | | 156,473 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Discontinued activities | | 168,860 | | 79,698 |
+--------------------------------------+----------+------------+--+-----------+
| | | | | |
+--------------------------------------+----------+------------+--+-----------+
| Total capital expenditure to acquire | | 2,229,951 | | 236,171 |
| property, plant and equipment and | | | | |
| intangible assets | | | | |
+--------------------------------------+----------+------------+--+-----------+
Segmental analysis of Non-Cash Flows
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | 2008 | | | 2007 |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | Digital | | | Digital | |
| | Banners | Networks | Total | Banners | Networks | Total |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Depreciation | 4,496 | 828,600 | 833,096 | 2,909 | 784,923 | 787,832 |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Amortisation | - | 47,987 | 47,987 | - | 94,412 | 94,412 |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Goodwill | | | | | | |
| Impairment | 93,802 | - | 93,802 | - | 73,679 | 73,679 |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Loss on | | | | | | |
| disposal of | | | | | | |
| fixed assets | 19,525 | - | 19,525 | - | - | - |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Finance | | | | | | |
| costs | 15,845 | 1,720,206 | 1,736,051 | 9,060 | 392,335 | 401,395 |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Finance | | | | | | |
| Income | (13) | (7,730) | (7,743) | (143) | (29,518) | (29,661) |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
Impairment losses against goodwill have been recognised in the income statement
amounting to GBP93,802 in respect of the Group's banners segment (GBP2007: nil).
No impairment has been made in respect of the Group's digital network (2007:
GBP73,679).
2. LOSS AFTER TAXATION FROM DISCONTINUED ACTIVITIES
+---------------------------------------------------+-----------+-----------+
| | 2008 | 2007 |
+---------------------------------------------------+-----------+-----------+
| | GBP | GBP |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| REVENUE | 23,775 | 34,169 |
+---------------------------------------------------+-----------+-----------+
| Cost of sales | (48,067) | (46,022) |
+---------------------------------------------------+-----------+-----------+
| Gross loss | (24,292) | (11,853) |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| Administrative expenses | (480,485) | (549,922) |
+---------------------------------------------------+-----------+-----------+
| LOSS FROM OPERATIONS | (504,777) | (561,775) |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| Finance costs | (120) | (13) |
+---------------------------------------------------+-----------+-----------+
| Finance income | 40 | 177 |
+---------------------------------------------------+-----------+-----------+
| LOSS BEFORE TAXATION | (504,857) | (561,611) |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| Taxation | - | - |
+---------------------------------------------------+-----------+-----------+
| LOSS AFTER TAXATION | (504,857) | (561,611) |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| 3 OPERATING LOSS FROM CONTINUING OPERATIONS | | |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| Loss from operations is stated after charging: | | |
+---------------------------------------------------+-----------+-----------+
| | 2008 | 2007 |
+---------------------------------------------------+-----------+-----------+
| | GBP | GBP |
+---------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------+-----------+-----------+
| Goodwill impairment | 93,802 | 73,679 |
+---------------------------------------------------+-----------+-----------+
| Amortisation of concession rights and software | 47,987 | 94,412 |
+---------------------------------------------------+-----------+-----------+
| Depreciation of owned property, plant and | 396,707 | 478,103 |
| equipment | | |
+---------------------------------------------------+-----------+-----------+
| Depreciation of leased assets | 436,389 | 407,870 |
+---------------------------------------------------+-----------+-----------+
| Auditor's remuneration | 45,750 | 42,500 |
+---------------------------------------------------+-----------+-----------+
| Provision for reorganisation | 380,000 | - |
+---------------------------------------------------+-----------+-----------+
| R&D expenditure | 332,000 | 438,570 |
+---------------------------------------------------+-----------+-----------+
| Operating lease costs: | | |
+---------------------------------------------------+-----------+-----------+
| - Operating leases | 35,327 | 31,303 |
+---------------------------------------------------+-----------+-----------+
| - Leasehold property rentals | 183,307 | 246,354 |
+---------------------------------------------------+-----------+-----------+
| Loss on disposal of fixed assets | 19,925 | - |
+---------------------------------------------------+-----------+-----------+
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of
both audit and non-audit services:
+------------------------------------------+---------+---------+---------+---------+
| | 2008 | | 2007 | |
+------------------------------------------+---------+---------+---------+---------+
| | GBP | % | GBP | % |
+------------------------------------------+---------+---------+---------+---------+
| | | | | |
+------------------------------------------+---------+---------+---------+---------+
| Audit Services | | | | |
+------------------------------------------+---------+---------+---------+---------+
| - Statutory audit of the parent company | 20,500 | 29.1% | 16,500 | 18.0% |
+------------------------------------------+---------+---------+---------+---------+
| - Statutory audit of the company's | 25,250 | 35.8% | 26,000 | 28.3% |
| subsidiaries | | | | |
+------------------------------------------+---------+---------+---------+---------+
| Tax and Other Services | | | | |
+------------------------------------------+---------+---------+---------+---------+
| - Other services supplied pursuant to | 10,350 | 14.7% | 18,990 | 20.7% |
| such legislation | | | | |
+------------------------------------------+---------+---------+---------+---------+
| - Tax service | 14,370 | 20.4% | 25,452 | 27.7% |
+------------------------------------------+---------+---------+---------+---------+
| - Services relating to corporate | - | 0.0% | 4,880 | 5.3% |
| finance | | | | |
+------------------------------------------+---------+---------+---------+---------+
| | 70,470 | | 91,822 | |
+------------------------------------------+---------+---------+---------+---------+
4 PARTICULARS OF EMPLOYEES
The average monthly number of staff (including Executive Directors) employed by
the Group during the financial year amounted to:
+--------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+--------------------------------------------------+-----------+--+-----------+
| | No | | No |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Number of sales and marketing staff | 12 | | 21 |
+--------------------------------------------------+-----------+--+-----------+
| Number of product and network development staff | 16 | | 16 |
+--------------------------------------------------+-----------+--+-----------+
| Number of other staff | 7 | | 6 |
+--------------------------------------------------+-----------+--+-----------+
| | 35 | | 43 |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| The aggregate payroll of the costs of the above | | | |
| were: | | | |
+--------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+--------------------------------------------------+-----------+--+-----------+
| | GBP | | GBP |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Wages and salaries | 1,404,951 | | 1,627,223 |
+--------------------------------------------------+-----------+--+-----------+
| Social security costs | 126,566 | | 186,852 |
+--------------------------------------------------+-----------+--+-----------+
| Other pension costs | 21,702 | | 29,950 |
+--------------------------------------------------+-----------+--+-----------+
| | 1,553,219 | | 1,844,025 |
+--------------------------------------------------+-----------+--+-----------+
5 DIRECTORS' REMUNERATION
The directors' aggregate emoluments in respect of qualifying services were:
+-------------------------------------------------+------+----------+----------+
| | | 2008 | 2007 |
+-------------------------------------------------+------+----------+----------+
| | | GBP | GBP |
+-------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------+------+----------+----------+
| Emoluments receivable | | 240,426 | 428,419 |
+-------------------------------------------------+------+----------+----------+
| Amounts paid to money purchase pension schemes | | - | 23,192 |
+-------------------------------------------------+------+----------+----------+
| | | 240,426 | 451,611 |
+-------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------+------+----------+----------+
| Emoluments of highest paid director: | | | |
+-------------------------------------------------+------+----------+----------+
| | | 2008 | 2007 |
+-------------------------------------------------+------+----------+----------+
| | | GBP | GBP |
+-------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------+------+----------+----------+
| Total emoluments (excluding pension | | 100,000 | 147,212 |
| contributions) | | | |
+-------------------------------------------------+------+----------+----------+
| Compensation for loss of office | | - | 106,666 |
+-------------------------------------------------+------+----------+----------+
| Amount paid to money purchase pension schemes | | - | 17,730 |
+-------------------------------------------------+------+----------+----------+
| | | 100,000 | 271,608 |
+-------------------------------------------------+------+----------+----------+
No directors accrued benefits under money purchase pension schemes (2007: two).
No directors exercised share options during the year.
6 FINANCE COSTS
+--------------------------------------------------+------+-----------+--+----------+
| | | 2008 | | 2007 |
+--------------------------------------------------+------+-----------+--+----------+
| Finance costs on borrowings | | GBP | | GBP |
+--------------------------------------------------+------+-----------+--+----------+
| Bank loans and overdrafts - interest payable | | 14,632 | | 11,154 |
+--------------------------------------------------+------+-----------+--+----------+
| Finance lease interest payable | | 59,625 | | 157,266 |
+--------------------------------------------------+------+-----------+--+----------+
| Interest payable on other borrowings | | 1,474,927 | | 232,975 |
+--------------------------------------------------+------+-----------+--+----------+
| | | 1,549,184 | | 401,395 |
+--------------------------------------------------+------+-----------+--+----------+
| Finance costs on financial liabilities held at | | | | |
| fair value through profit and loss | | | | |
+--------------------------------------------------+------+-----------+--+----------+
| Embedded option classified as held for trading | | 492,597 | | - |
+--------------------------------------------------+------+-----------+--+----------+
| | | 2,041,781 | | 401,395 |
+--------------------------------------------------+------+-----------+--+----------+
7 TAXATION ON ORDINARY ACTIVITIES
+--------------------------------------------------+------------+----------+
| | 2008 | 2007 |
| | GBP | GBP |
+--------------------------------------------------+------------+----------+
| Current tax: | | |
+--------------------------------------------------+------------+----------+
| Corporation tax at 28% (2007: 30%) | - | - |
+--------------------------------------------------+------------+----------+
| Adjustment in respect of prior periods | - | - |
+--------------------------------------------------+------------+----------+
| | | |
+--------------------------------------------------+------------+----------+
| Total current tax | - | - |
+--------------------------------------------------+------------+----------+
| Deferred tax: | - | - |
+--------------------------------------------------+------------+----------+
| Tax losses | - | - |
+--------------------------------------------------+------------+----------+
| Adjustment in respect of prior periods | - | - |
+--------------------------------------------------+------------+----------+
| | - | - |
+--------------------------------------------------+------------+----------+
| Income tax expense | - | - |
+--------------------------------------------------+------------+----------+
The charge for the year can be reconciled to the loss per the Income Statement
as follows:
+--------------------------------------------------+--------------+--------------+
| | 2008 | 2007 |
| | GBP | GBP |
+--------------------------------------------------+--------------+--------------+
| Loss for the year | (7,161,015) | (5,544,344) |
+--------------------------------------------------+--------------+--------------+
| Total income tax expense | - | - |
+--------------------------------------------------+--------------+--------------+
| Loss on ordinary activities before tax | (7,161,015) | (5,544,344) |
+--------------------------------------------------+--------------+--------------+
| | | |
+--------------------------------------------------+--------------+--------------+
| Tax at the UK corporation tax rate of 28% (2007: | (2,005,084) | (1,663,303) |
| 30%) | | |
+--------------------------------------------------+--------------+--------------+
| Expenses not deductible for tax purposes | 209,069 | 79,685 |
+--------------------------------------------------+--------------+--------------+
| Unrelieved tax losses | 1,796,015 | 1,583,618 |
+--------------------------------------------------+--------------+--------------+
| Total tax expense for the year | - | - |
+--------------------------------------------------+--------------+--------------+
The Group has losses available to carry forward for offset against future
profits of in excess of GBP16m. The deferred tax asset is unprovided at present
due to the uncertainty of the timing of future profits against which the asset
will be utilised.
8 RETAINED LOSS FOR THE YEAR
As permitted by s230 Companies Act 1985, the company has not presented its own
Income Statement. Of the retained loss for the year, a loss of GBP3,301,269
(2007: GBP5,207,481) is dealt with in the accounts of the parent company.
9 PROPERTY, PLANT AND EQUIPMENT
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | IPods | | | | Fixtures | | |
| | and | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | Plasma | | Computer | | Fittings | | |
| | | | | | and | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | Screens | | Equipment | | Equipment | | Total |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | GBP | | GBP | | GBP | | GBP |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Cost - 2008 | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 1 January 2008 | 2,712,846 | | 1,226,586 | | 222,511 | | 4,161,943 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Additions | 1,725,758 | | 245,189 | | 254 | | 1,971,201 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Acquired with subsidiary | - | | 89,890 | | - | | 89,890 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Disposals | - | | - | | (69,043) | | (69,043) |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2008 | 4,438,604 | | 1,561,665 | | 153,722 | | 6,153,991 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Depreciation - 2008 | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 1 January 2008 | 1,469,014 | | 1,032,855 | | 121,860 | | 2,623,729 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Charge for the year | 568,004 | | 239,892 | | 25,200 | | 833,096 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Disposals | - | | - | | (49,518) | | (49,518) |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2008 | 2,037,018 | | 1,272,747 | | 97,542 | | 3,407,307 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Net book value | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2008 | 2,401,586 | | 288,918 | | 56,180 | | 2,746,684 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | IPods | | | | Fixtures | | |
| | and | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | Plasma | | Computer | | Fittings | | |
| | | | | | and | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | Screens | | Equipment | | Equipment | | Total |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | GBP | | GBP | | GBP | | GBP |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Cost - 2007 | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 1 January 2008 | 2,654,070 | | 1,167,059 | | 427,875 | | 4,249,004 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Additions | 58,776 | | 73,118 | | 104,277 | | 236,171 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Transfer assets for sale | - | | (13,591) | | (303,641) | | (323,232) |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2007 | 2,712,846 | | 1,226,586 | | 222,511 | | 4,161,943 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Depreciation - 2007 | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 1 January 2007 | 926,082 | | 767,333 | | 103,490 | | 1,796,905 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Charge for the year | 542,932 | | 276,018 | | 67,023 | | 885,973 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Transfer assets for sale | - | | (10,496) | | (48,653) | | (59,149) |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2007 | 1,469,014 | | 1,032,855 | | 121,860 | | 2,623,729 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Net book value | | | | | | | |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| At 31 December 2007 | 1,243,832 | | 193,731 | | 100,651 | | 1,538,214 |
+-------------------------------+-----------+--+-----------+--+-----------+--+-----------+
The gross carrying amount of fully depreciated fixed assets still in use at 31
December 2008 is GBP1,071,369.Depreciation on assets is charged in the income
statement within administrative expenses.
Finance Lease Agreements
Included within the net book value of GBP56,180 (2007: GBP100,651) in respect of
fixtures and fittings is GBP23,035 (2007: GBP28,647) relating to assets held
under finance leases. Included in the net book value of GBP2,401,586 (2007:
GBP1,243,832) in respect of Ipods and plasma screens is GBP2,062,051 (2007:
GBP1,028,239) relating to assets held under finance leases. The depreciation
charged in the year in relation to these assets is GBP5,612 (2007: GBP5,612) and
GBP430,777 (2007: GBP402,258) respectively.
Finance Lease Agreements
Reconciliation of future minimum lease payments and their present value
+---------------------------+--------------------+------------------------+------------------------+
| | Minimum | Deferred | Present |
| | Lease | Interest | Value |
| | Payment | | |
+---------------------------+--------------------+------------------------+------------------------+
| Within 1 Year | 931,874 | 113,154 | 818,720 |
+---------------------------+--------------------+------------------------+------------------------+
| Between 1 and 5 years | 924,937 | 107,938 | 816,999 |
+---------------------------+--------------------+------------------------+------------------------+
| Total | 1,856,811 | 221,092 | 1,635,719 |
+---------------------------+--------------------+------------------------+------------------------+
Of the above finance lease agreements, title transfers once the minimum lease
payments are paid for GBP1,839,344 of the leases. The remaining GBP17,467 of
finance leases remains under title of the lessor, after a three year primary
lease period, peppercorn annual rentals are payable.
10 INTANGIBLE ASSETS
+------------------------------------------+-----------+--+--------------+--+-----------+
| | | | Concession | | |
| | | | rights | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| | | | Software & | | 2008 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| | Goodwill | | development | | Total |
| | | | costs | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| | GBP | | GBP | | GBP |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Cost - 2008 | | | | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| At 1 January 2008 | 1,832,312 | | 239,930 | | 2,072,242 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Additions | 3,721,742 | | - | | 3,721,742 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| At 31 December 2008 | 5,554,054 | | 239,930 | | 5,793,984 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| | | | | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Amortisation - 2008 | | | | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| At 1 January 2008 | 783,270 | | 88,884 | | 872,154 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Amortisation | - | | 47,987 | | 47,987 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Impairment charge | 93,802 | | - | | 93,802 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| At 31 December 2008 | 877,072 | | 136,871 | | 1,013,943 |
+------------------------------------------+-----------+--+--------------+--+-----------+
| | | | | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| Net book value | | | | | |
+------------------------------------------+-----------+--+--------------+--+-----------+
| At 31 December 2008 | 4,676,982 | | 103,059 | | 4,780,041 |
+------------------------------------------+-----------+--+--------------+--+-----------+
+------------------------------------------+-----------+--+--------------+--+------------+
| | | | Concession | | |
| | | | rights | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| | | | Software & | | 2008 |
+------------------------------------------+-----------+--+--------------+--+------------+
| | Goodwill | | development | | Total |
| | | | costs | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| | GBP | | GBP | | GBP |
+------------------------------------------+-----------+--+--------------+--+------------+
| Cost - 2007 | | | | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| At 1 January 2008 | 1,758,633 | | 542,425 | | 2,301,058 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Additions | 73,679 | | 22,505 | | 96,184 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Transfer assets held for sale | - | | (325,000) | | (325,000) |
+------------------------------------------+-----------+--+--------------+--+------------+
| At 31 December 2007 | 1,832,312 | | 239,930 | | 2,072,242 |
+------------------------------------------+-----------+--+--------------+--+------------+
| | | | | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| Amortisation - 2007 | | | | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| At 1 January 2007 | 709,591 | | 61,847 | | 771,438 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Amortisation | - | | 94,412 | | 94,412 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Impairment charge | 73,679 | | - | | 73,679 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Transfer assets held for sale | - | | (67,375) | | (67,375) |
+------------------------------------------+-----------+--+--------------+--+------------+
| At 31 December 2007 | 783,270 | | 88,884 | | 872,154 |
+------------------------------------------+-----------+--+--------------+--+------------+
| Net book value | | | | | |
+------------------------------------------+-----------+--+--------------+--+------------+
| At 31 December 2008 | 1,049,042 | | 151,046 | | 1,200,088 |
+------------------------------------------+-----------+--+--------------+--+------------+
Goodwill is carried at cost less any impairment. Impairment testing has been
carried out by comparing goodwill plus associated operating assets with the
value in use, calculated as the net present value of discounted anticipated
future cash flows as forecast by the directors. The carrying amount of goodwill
in respect of Big FX Limited has been reduced by GBP93,802 due to impairment.The
impairment charge is recognised within administrative expenses in the income
statement. The impairment charge arose in the Banners CGU following a review of
that business unit and its potential. No other class of asset other than
goodwill was impaired.
Key assumptions used in goodwill impairment reviews are based on previous
experience and are:
- Cash flow forecasts for up to eight years have been used for the cash
generating unit which comprises the
acquired businesses.
- Growth in turnover assumptions amount to achievement of plans for the Clear
Channel contract and
expectations based on previous experience and
business developments for other sales. These include
assumptions on the
rate at which new screens are installed in malls and advertising revenues
achieved on
those screens. Detailed projections, which have been approved
by the Board, support these assumptions.
After the initial two year
period of detailed projections monthly cash flows are extrapolated at a
constant
rate using the following assumptions:
o For SMN goodwill and associated assets, monthly revenue per screen has
been projected by the Board
based on assumptions of market rates for a
period of 25 months. Following this detailed projected
period, nil growth
is assumed. Cash outflows for capital expenditure are included within the 8
year
period.
o Cash flows attributed to the HPUK goodwill and associated assets are
extrapolated at a constant rate
after the initial detailed projected
period, allowing for a 9% increase in operating cashflows. Capital
expenditure is incorporated into the extrapolated period.
- The rate used to discount the forecast cash flows is 10 per cent. The discount
rate used is pre-tax
and reflects the risks of each business segment,
together with a reasonable estimate of the cost of capital
to the
business over the forecast period, based on rates currently payable on a
significant portion of
the Group's borrowings.
+-----------------------------------+----------------------------------------+
| | GBP |
+-----------------------------------+----------------------------------------+
| High Profile Limited | 955,240 |
+-----------------------------------+----------------------------------------+
| Screen Media Networks Limited | 3,721,742 |
+-----------------------------------+----------------------------------------+
| At 31 December 2008 | 4,676,982 |
+-----------------------------------+----------------------------------------+
Sensitivity to changes in assumptions
With regard to the assessment of value in use of the goodwill allocated to the
above CGUs, management consider the only key assumption which could cause the
carrying value of the unit to exceed its recoverable amount is the discount rate
used.
Management has considered the effects of any change in the discount rate, which
may arise due to factors outside the group's control, and has undertaken
sensitivity analyses to determine the likelihood of any impact to the value in
use of goodwill. For the value in use to equal to the carrying amount of
the goodwill allocated to High Profile UK Limited, the discount rate would have
to increase almost threefold. The value in use of goodwill allocated to Screen
Media Networks Limited is more sensitive to a change in discount rate, and,
would have to still increase by 20% in order for the value in use to equal to
carrying amount.
Development costs have been capitalised under IFRS, in accordance with IAS 38
"Intangible assets" under the assumption they will generate probable future
economic benefits to the company.
Included within the net book value of GBP103,059 (2007: GBP151,046) in respect
of Concession rights, Software & development costs is GBP85,515 (2007:
GBP126,922) of internally generated assets. The amortisation charged in the year
in relation to these assets is GBP47,987 (2007: GBP94,412). The
remaining amortisation period of the development costs is 2 years (2007: 3
years).
11 FINANCIAL ASSET INVESTMENTS
+--------+--------+--------+--------+--------------+
| | | | | |
+--------+--------+--------+--------+--------------+
| | | | | Shares |
| | | | | in |
| | | | | subsidiary |
| | | | | undertakings |
| | | | | |
| | | | | GBP |
+--------+--------+--------+--------+--------------+
+--------------------------------------------------+---------------------+
| COMPANY | |
+--------------------------------------------------+---------------------+
| As at 1 January 2008 | 699,996 |
+--------------------------------------------------+---------------------+
| Investment in Screen Media Networks Limited | 3,092,695 |
+--------------------------------------------------+---------------------+
| Provision for impairment | (63,636) |
+--------------------------------------------------+---------------------+
| | |
+--------------------------------------------------+---------------------+
| Closing balance at 31 December 2008 | 3,729,055 |
+--------------------------------------------------+---------------------+
The company holds 100% of the equity of the following undertakings:
+----+--------------------+---------------+----------+------------+---------------------+
| | Subsidiary | Country of | Class | Proportion | Nature of business |
| | undertakings: | Incorporation | of | Directly | |
| | | | holding | held | |
+----+--------------------+---------------+----------+------------+---------------------+
| | High Profile UK | England | Ordinary | 100% | Digital screen |
| | Limited | | Shares | | advertising |
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | Big FX Limited | England | Ordinary | 100% | Large format banner |
| | | | Shares | | advertising |
+----+--------------------+---------------+----------+------------+---------------------+
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | Train FX Limited | England | Ordinary | 100% | Digital screen |
| | | | Shares | | advertising - |
| | | | | | transport sector |
+----+--------------------+---------------+----------+------------+---------------------+
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | ScreenFX Services | England | Ordinary | 100% | Dormant |
| | Limited | | Shares | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | Train TV Limited | England | Ordinary | 100% | Dormant |
| | | | Shares | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | Point of Purchase | England | Ordinary | 100% | Digital screen |
| | TV Ltd | | Shares | | advertising |
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
| | Screen Media | England | Ordinary | 100% | Digital screen |
| | Networks Limited | | Shares | | advertising |
| | | | | | |
+----+--------------------+---------------+----------+------------+---------------------+
The proportion of voting rights represented by the shareholdings is 100% and all
subsidiaries are included in the consolidated Financial Statements of the Group.
Outdoor FX Limited, a dormant company, was dissolved on 12 May 2009.
ACQUISITION OF SCREEN MEDIA NETWORKS LIMITED
On 23 January 2008 the Group acquired 100% of the issued share capital of Screen
Media Network Limited for a total consideration settled by the issue of
29,600,392 ordinary shares of 10p each, issued at market values. Costs
associated with the transaction were incurred for GBP132,656 of which
GBP80,156 was settled by cash and GBP52,500 by the issue of 525,000 ordinary
shares of 10p each.
+----------------------------------------+---------------+--+------------+
| Net assets acquired: | Fair value on | | Acquiree's |
| | acquisition | | carrying |
| | GBP | | amount at |
| | | | 13 March |
| | | | 2008 |
| | | | GBP |
| | | | |
+----------------------------------------+---------------+--+------------+
| Property, plant and equipment | 89,890 | | 336,245 |
+----------------------------------------+---------------+--+------------+
| Trade receivables | 11,337 | | 11,336 |
+----------------------------------------+---------------+--+------------+
| Bank and cash | 23,035 | | 23,035 |
+----------------------------------------+---------------+--+------------+
| Trade payables | (192,119) | | (192,119) |
+----------------------------------------+---------------+--+------------+
| Loans | (561,189) | | (561,189) |
+----------------------------------------+---------------+--+------------+
| Goodwill | 3,721,742 | | - |
+----------------------------------------+---------------+--+------------+
| | | | |
+----------------------------------------+---------------+--+------------+
| Total consideration including direct | 3,092,696 | | (382,691) |
| costs | | | |
+----------------------------------------+---------------+--+------------+
| | | | |
+----------------------------------------+---------------+--+------------+
| Satisfied by: | | | |
+----------------------------------------+---------------+--+------------+
| Shares | 3,012,539 | | |
+----------------------------------------+---------------+--+------------+
| Cash | 80,156 | | |
+----------------------------------------+---------------+--+------------+
| | 3,092,695 | | |
+----------------------------------------+---------------+--+------------+
The fair value of the shares issued at the time of the acquisition has been
taken as 10 pence per share.This is higher than the mid-market price on the date
of the acquisition. The mid-market price as at the date of acquisition of 23
January 2008 was 6.815p. The aggregate difference for the purchase of Screen
Media Networks Limited is GBP959,494. The directors consider that the value
adopted more fairly reflects the value of the equities given in exchange for
Screen Media Networks Limited, given the relative illiquidity of the Company's
shares at the time, and further supported by the valuation subsequently obtained
for the Group's Train FX business.
Screen Media Networks Limited was consolidated in the Group accounts for the
full year on the basis of that the Group was effectively operating SMN Limited
from 1 January 2008. SMN Limited contributed GBP81,300 of revenue and a
GBP382,226 net loss for the period between the date of acquisition and the
balance sheet date.
12 TRADE AND OTHER RECEIVABLES
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | Group | | | | Company | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | GBP | | GBP | | GBP | | GBP |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Trade receivables | 346,979 | | 430,335 | | - | | - |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Less provisions | (254,436) | | (129,928) | | - | | - |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | 92,543 | | 300,407 | | - | | - |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Amounts due from | - | | - | | 23,187,733 | | 19,224,364 |
| subsidiary undertakings | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Less provisions | - | | - | | (19,103,547) | | (18,214,364) |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | - | | - | | 4,084,186 | | 1,010,000 |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Other receivables | 108,288 | | 248,685 | | 24,945 | | 200,000 |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Other taxation and social | 159,077 | | 70,170 | | 436 | | 13,778 |
| security | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| Prepayments and accrued | 396,993 | | 1,291,583 | | 2,042 | | 4,597 |
| income | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | 664,358 | | 1,610,438 | | 27,423 | | 218,375 |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | | | | | | | |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
| | 756,901 | | 1,910,845 | | 4,111,609 | | 1,228,375 |
+----------------------------+-----------+----+-----------+---+--------------+----+--------------+
The Directors consider that the carrying amount of trade and other receivables
approximates their fair value. Partial provision has been made against balances
due from the company's subsidiary undertakings reflecting the prospect of
repayment of these amounts. The charge in these financial statements in respect
of this was GBP889,183 (2007 - GBP5,399,905).
The Group's maximum exposure to credit risk relating to its financial assets is
equivalent to their carrying value as disclosed in the balance sheet and notes
to the financial statements. All financial assets have a fair value which is
equal to their carrying value.
The Group's credit risk is monitored regularly and is primarily attributable to
trade receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. The Group has no significant concentration
of credit risk, with exposure spread over a number of counterparties and
customers.
As at 31 December 2008, after write off of trade receivable account balances of
GBP192,072 net of vat bad debt relief (2007: GBPnil), GBP254,436 (2007:
GBP129,928) of trade receivables remained impaired in relation to customers who
are known to be in financial difficulties and from whom payment was overdue by
more than three months. The Group holds no collateral against these receivables
at the balance sheet date. The Group only has an allowance account for trade
receivables.
Provision for bad and doubtful debts
+---------------------------------------------------+--+-----------+--+----------+
| | | 2008 | | 2007 |
+---------------------------------------------------+--+-----------+--+----------+
| | | GBP | | GBP |
+---------------------------------------------------+--+-----------+--+----------+
| Opening balance at 1 January | | 129,928 | | 75,111 |
+---------------------------------------------------+--+-----------+--+----------+
| Additional provision for the year | | 333,800 | | 56,241 |
+---------------------------------------------------+--+-----------+--+----------+
| | | 463,728 | | 131,352 |
+---------------------------------------------------+--+-----------+--+----------+
| Unused amounts reversed | | (17,220) | | (1,424) |
+---------------------------------------------------+--+-----------+--+----------+
| | | 446,508 | | 129,928 |
+---------------------------------------------------+--+-----------+--+----------+
| Receivables written off (net of vat bad debt | | (192,072) | | - |
| relief) | | | | |
+---------------------------------------------------+--+-----------+--+----------+
| Closing balance at 31 December | | 254,436 | | 129,928 |
+---------------------------------------------------+--+-----------+--+----------+
13 ASSETS AND LIABILITIES HELD FOR SALE - GROUP
The assets held for sale relate to the TrainFX business unit.
+-----------------------------+----------+------+------+------+--+-----------+------+------+
| | | | | |
+-----------------------------+----------+-------------+----------------------------+------+
| | 2008 | | 2007 |
+-----------------------------------------------+-------------+--+-----------+
| | GBP | | GBP |
+-----------------------------------------------+-------------+--+-----------+
| Property, plant & equipment and intangibles | | | |
+-----------------------------------------------+-------------+--+-----------+
| - cost | 817,092 | | 648,232 |
+-----------------------------------------------+-------------+--+-----------+
| - accumulated depreciation | (126,524) | | (126,524) |
+-----------------------------------------------+-------------+--+-----------+
| At 31 December | 690,568 | | 521,708 |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Trade and other receivables | | | |
+-----------------------------------------------+-------------+--+-----------+
| Trade receivables | - | | 12,349 |
+-----------------------------------------------+-------------+--+-----------+
| Other receivables | 59 | | 803 |
+-----------------------------------------------+-------------+--+-----------+
| Other taxation and social security | 70 | | 6,540 |
+-----------------------------------------------+-------------+--+-----------+
| Prepayment and accrued income | 26,117 | | 32,477 |
+-----------------------------------------------+-------------+--+-----------+
| At 31 December | 26,246 | | 52,169 |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Total assets for sale | 716,814 | | 573,877 |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Liabilities in respect of the Train FX | | | |
| business unit are: | | | |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Trade payable | 213,020 | | 38,805 |
+-----------------------------------------------+-------------+--+-----------+
| Other taxation and social security | 63,380 | | 17,624 |
+-----------------------------------------------+-------------+--+-----------+
| Accrued and deferred income | 128,972 | | 105,141 |
+-----------------------------------------------+-------------+--+-----------+
| At 31 December | 405,372 | | 161,570 |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Finance leases | - | | 1,253 |
+-----------------------------------------------+-------------+--+-----------+
| Bank borrowing | 38 | | 63,842 |
+-----------------------------------------------+-------------+--+-----------+
| At 31 December | 38 | | 65,095 |
+-----------------------------------------------+-------------+--+-----------+
| | | | |
+-----------------------------------------------+-------------+--+-----------+
| Total liabilities - discontinued activities | 405,410 | | 226,665 |
+-----------------------------+----------+------+------+------+--+-----------+------+------+
14CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Group and bank overdraft for
cashflow purposes. The carrying amount of the asset approximates the fair value.
All balances are held in sterling and are maintained at reputable financial
institutions.
15 TRADE AND OTHER PAYABLES
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| | Group | | | | Company | | |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| | GBP | | GBP | | GBP | | GBP |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| | | | | | | | |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| Trade payables | 1,063,151 | | 860,030 | | 174,992 | | 126,930 |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| Other creditors | 432,911 | | 10,699 | | 347,500 | | - |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| Other taxation and social | 277,237 | | 117,763 | | - | | - |
| security | | | | | | | |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| Accruals and deferred | 1,776,331 | | 2,261,152 | | 251,852 | | 400,864 |
| income | | | | | | | |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
| | 3,549,630 | | 3,249,644 | | 774,344 | | 527,794 |
+---------------------------+-------------+--+-----------+--+----------+--+----------+
16 PROVISIONS FOR REORGINISATION COSTS
+----------------------------------+--------------+---+---------------+---+-----------+
| | Property | | Screen | | Total |
| | Closure | | Reorientation | | |
| | and | | & Other | | |
| | Dilapidation | | | | |
+----------------------------------+--------------+---+---------------+---+-----------+
| | GBP | | GBP | | GBP |
+----------------------------------+--------------+---+---------------+---+-----------+
| At 1 January 2008 | - | | - | | - |
+----------------------------------+--------------+---+---------------+---+-----------+
| Additional provision in year | 165,000 | | 380,000 | | 545,000 |
+----------------------------------+--------------+---+---------------+---+-----------+
| Released in year | (165,000) | | - | | (165,000) |
+----------------------------------+--------------+---+---------------+---+-----------+
| At 31 December 2008 | - | | 380,000 | | 380,000 |
+----------------------------------+--------------+---+---------------+---+-----------+
The screen reorientation and other provision relates to a contractual
requirement to provide screens which are portrait orientated, rather than
landscape orientated, across the Group's estate. The provision is based on
management's best estimate, using knowledge of costs incurred on screens which
have been adjusted to date, of the likely costs of completing this exercise. The
expected outflow within the next 12 months is GBP380,000.
17 FINANCIAL LIABILITIES
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | Group | | | | Company | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | GBP | | GBP | | GBP | | GBP |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Current liabilities: | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Other Liabilities | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Finance leases | 818,721 | | 505,608 | | - | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Bank borrowing | 185,057 | | 120,513 | | 39,110 | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Other loans | 1,891,664 | | 425,000 | | 1,890,218 | | 425,000 |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Amounts due to related | 1,880,000 | | 817,066 | | 1,880,000 | | 817,066 |
| parties (note 20) | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | 4,775,442 | | 1,868,187 | | 3,809,328 | | 1,242,066 |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Liabilities held at fair | | | | | | | |
| value through profit and | | | | | | | |
| loss | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Embedded options | 558,095 | | - | | 558,095 | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | 5,333,537 | | 1,868,187 | | 4,367,423 | | 1,242,066 |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | Group | | | | Company | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | GBP | | GBP | | GBP | | GBP |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Non current liabilities | | | | | | | |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Finance leases | 816,998 | | 31,536 | | - | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| Bank borrowing | 59,861 | | 63,750 | | - | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
| | 876,859 | | 95,286 | | - | | - |
+---------------------------+--------------+--+--------------+--+-----------+--+-----------+
The Group's activities expose the Group to a number of risks including market
risk (foreign currency risk and interest rate risk), credit risk and liquidity
risk. The Group manages these risks through an effective risk management program
and appropriate use of derivatives. The Board provides written objectives,
policies and procedures with regards to managing currency and interest rate
exposure, liquidity and credit risk including guidance on the use of certain
derivative and non-derivative financial instruments.
Exposures to financial risks are monitored by Group Treasury and Financial
Operations management and they are required to produce a monthly risk report
comprising of an assessment of the risks and an indication of their impact on
the business.
The risk reports are provided to the Board of Directors in advance of the
monthly board meetings and are discussed by the Board to ensure that the risk
mitigation procedures are compliant with the Group policy and that any new risks
are appropriately managed.
Liquidity risk
The Group closely monitors its access to bank and other credit facilities in
comparison to its
outstanding commitments on a regular basis to ensure that it has sufficient
funds to meet the
obligations of the group as they fall due.
The Board receives regular debt management forecasts which estimate the cash
inflows and outflows so that management can ensure that sufficient financing is
in place as it is required.
Maturity Analysis
The table below analyses the Group's, and Company's, financial liabilities on a
contractual gross undiscounted cashflow basis into maturity groupings based on
period outstanding at the balance sheet date up to the contractual maturity
date.
+---------------------------+-----------+---------+---------+----------+-----------+
| CONSOLIDATED | Less | Between | Between | Over 5 | Total |
| 31 December 2008 | than 6 | 6 | 1 to 5 | years | |
| | months | months | years | | |
| | or | and 1 | | | |
| | repayable | year | | | |
| | on demand | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | GBP | GBP | GBP | GBP | GBP |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other financial | | | | | |
| liabilities | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Finance leases | 404,818 | 413,903 | 816,998 | - | 1,635,719 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Bank borrowing | 169,224 | 15,833 | 59,861 | - | 244,918 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other loans | 1,891,664 | - | - | - | 1,891,664 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Amounts due to related | 1,880,000 | - | - | - | 1,880,000 |
| parties | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | 4,345,708 | 429,736 | 876,859 | - | 5,652,301 |
+---------------------------+-----------+---------+---------+----------+-----------+
+---------------------------+-----------+---------+---------+----------+----------+
| CONSOLIDATED | Less | Between | Between | Over 5 | Total |
| 31 December 2008 | than 6 | 6 | 1 to 5 | years | |
| | months | months | years | | |
| | or | and 1 | | | |
| | repayable | year | | | |
| | on demand | | | | |
+---------------------------+-----------+---------+---------+----------+----------+
| | GBP | GBP | GBP | GBP | GBP |
+---------------------------+-----------+---------+---------+----------+----------+
| Embedded options | 558,095 | - | - | - | 558,095 |
+---------------------------+-----------+---------+---------+----------+----------+
| TOTAL | 558,095 | - | - | - | 558,095 |
+---------------------------+-----------+---------+---------+----------+----------+
+---------------------------+-----------+---------+---------+----------+-----------+
| COMPANY | Less | Between | Between | Over 5 | Total |
| 31 December 2008 | than 6 | 6 | 1 to 5 | years | |
| | months | months | years | | |
| | or | and 1 | | | |
| | repayable | year | | | |
| | on demand | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | GBP | GBP | GBP | GBP | GBP |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other financial | | | | | |
| liabilities | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Bank borrowing | 39,110 | - | - | - | 39,110 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other loans | 1,890,218 | - | - | - | 1,890,218 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Amounts due to related | 1,880,000 | - | - | - | 1,880,000 |
| parties | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | 3,809,328 | - | - | - | 3,809,328 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Liabilities held at fair | | | | | |
| value through profit and | | | | | |
| loss | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Embedded options | 558,095 | - | - | - | 558,095 |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | 558,095 | - | - | - | 558,095 |
+---------------------------+-----------+---------+---------+----------+-----------+
+---------------------------+-----------+---------+---------+----------+-----------+
| CONSOLIDATED | Less | Between | Between | Over 5 | Total |
| 31 December 2007 | than 6 | 6 | 1 to 5 | years | |
| | months | months | years | | |
| | or | and 1 | | | |
| | repayable | year | | | |
| | on demand | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | GBP | GBP | GBP | GBP | GBP |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other financial | | | | | |
| liabilities | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Finance Leases | 284,187 | 221,421 | 31,536 | - | 537,144 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Bank borrowing | 113,013 | 7,500 | 63,750 | - | 184,263 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other loans | 425,000 | - | - | - | 425,000 |
+---------------------------+-----------+---------+---------+----------+-----------+
| | 817,000 | | | | 817,066 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Amounts due to related | | | | - | |
| parties | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | 1,639,266 | 228,921 | 95,286 | - | 1,963,473 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Liabilities held at fair | - | - | - | - | - |
| value through profit and | | | | | |
| loss | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | - | - | - | - | - |
+---------------------------+-----------+---------+---------+----------+-----------+
+---------------------------+-----------+---------+---------+----------+-----------+
| COMPANY | Less | Between | Between | Over 5 | Total |
| 31 December 2007 | than 6 | 6 | 1 to 5 | years | |
| | months | months | years | | |
| | or | and 1 | | | |
| | repayable | year | | | |
| | on demand | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | GBP | GBP | GBP | GBP | GBP |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other financial | | | | | |
| liabilities | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Bank borrowing | | | | - | |
+---------------------------+-----------+---------+---------+----------+-----------+
| Other loans | 425,000 | - | - | - | 425,000 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Amounts due to related | 817,066 | - | - | - | 817,066 |
| parties | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | 1,242,066 | - | - | - | 1,242,066 |
+---------------------------+-----------+---------+---------+----------+-----------+
| Liabilities held at fair | - | - | - | - | - |
| value through profit and | | | | | |
| loss | | | | | |
+---------------------------+-----------+---------+---------+----------+-----------+
| TOTAL | - | - | - | - | - |
+---------------------------+-----------+---------+---------+----------+-----------+
The Group had no undrawn borrowings at 31 December 2008 (2007: GBPnil).
Finance lease arrangements are secured on the assets to which the loans relate
and bear interest at variable rates.
Within bank borrowings are overdrafts totalling GBP150,304 against which Mr
Brookman has provided a personal guarantee for a fee totalling GBP60,000, plus
further overdrawn balances of GBP3,087. The balance of bank borrowing is a loan
which is secured by a fixed and floating charge over the Group's assets, bears
interest at 2.5% over base rate, and is repayable over 51 months.
Other loans include the issue of convertible loan stock that bears interest at
10% plus a redemption premium of 13%. The balance outstanding at 31 December
2008 includes unpaid capital advanced by Trafalgar Capital Specialised
Investment Fund, and accrued amounts and is secured by a guarantee and
debenture.
The Directors have not accounted for the option to convert the Trafalgar loan on
the grounds of immateriality of the value of the option.
The loan also contains an embedded derivative in relation to adjustments made to
payments by the Group determined by movements in the Euro - Sterling exchange
rate since the renegotiation of the loan on 18 August 2008. A liability in
relation to this derivative was initially recognised in the accounts at
GBP161,629. At the balance sheet date the fair value of this instrument has been
valued at GBP558,095 resulting in a charge of GBP492,597 being recognised in
profit and loss in the year.
Other loans also include GBP25,000 plus accrued interest, of non-convertible
loan stock that bears interest at 3% above base rate plus a redemption premium
of 20%.
Amounts due to related parties include GBP1,880,000 of secured loans advanced by
Mr Cottman and Mr Anstee and secured by a debenture dated 28 August 2007 (which
was subsequently sub-ordinated to Trafalgar Capital Specialised Investment
Fund).
On 12 November 2008, the Group breached the loan covenant clause of the loan
from Trafalgar Capital Specialised Investment Fund. No formal resolution to this
breach was in place at the year end and as such the liability outstanding has
been classified as being repayable on demand.
On 30 November 2008, the Group breached its overdraft limits with National
Westminster Bank plc. This breach was addressed by the directors and formally
rectified on 5 May 2009.
The company's treasury policy and management of financial instruments, which
form part of these financial statements, are set out in the financial review.
Currency exposures
The Group has no dealings in foreign currency and, consequently, does not face
any foreign exchange risk from trading activities. However during the year the
Group took out loans denominated in sterling but where repayments are adjusted
for movements in the euro/sterling exchange rate. In view of the state of the
currency markets at the time the loans were taken out it was considered
unnecessary to take out hedging against currency fluctuations.
The sensitivity arising from potential movements in exchange rate has been
considered and
determined to be immaterial.
Interest rate risk
The group's interest rate exposure arises mainly from its interest bearing
borrowings. Contractual agreements entered into at floating rates expose the
entity to cash flow risk whilst the fixed rate borrowings expose the entity to
fair value risk.
The interest rate profile of the financial liabilities of the Group as at 31
December 2008 is as follows:
+-----------------------------------+-------------+-------------+-------------+-----------+
| | Liabilities | Fixed | Floating | Total |
| | on which no | rate | rate | |
| | interest is | financial | financial | |
| | paid | liabilities | liabilities | |
+-----------------------------------+-------------+-------------+-------------+-----------+
| | GBP | GBP | GBP | GBP |
+-----------------------------------+-------------+-------------+-------------+-----------+
| 2008 | | | | |
+-----------------------------------+-------------+-------------+-------------+-----------+
| Sterling | - | 6,057,006 | 153,428 | 6,210,434 |
+-----------------------------------+-------------+-------------+-------------+-----------+
| 2007 | | | | |
+-----------------------------------+-------------+-------------+-------------+-----------+
| Sterling | 142,066 | 1,487,144 | 334,263 | 1,963,473 |
+-----------------------------------+-------------+-------------+-------------+-----------+
The weighted average interest rate on fixed rate financial liabilities at 31
December 2008 was 10% (2007: 12.5%). The weighted average period to maturity of
fixed rate financial liabilities at 31 December 2008 was 10 months (2007: 5
months).
The floating rate financial liabilities relates to GBPnil of the other loans
(2007: GBP25,000), GBPnil of loans from related parties (2007: GBP125,000) and
the overdraft element of the bank borrowings. The fixed rate financial
liabilities include GBP1,891,664 of other loans (2007: GBP400,000), GBP1,880,000
of loans from related parties (2007: GBP550,000) and finance leases.
The following is the maturity profile of the Group's floating rate financial
liabilities as at 31 December:
+---------------------------------------------------+----------+----------+
| | 2008 | 2007 |
+---------------------------------------------------+----------+----------+
| | GBP | GBP |
+---------------------------------------------------+----------+----------+
| Maturity profile of floating rate financial | | |
| liabilities | | |
+---------------------------------------------------+----------+----------+
| | | |
+---------------------------------------------------+----------+----------+
| On demand or within 1 year | 153,428 | 270,513 |
+---------------------------------------------------+----------+----------+
| Within 2 - 5 years | - | 63,750 |
+---------------------------------------------------+----------+----------+
| | 153,428 | 334,263 |
+---------------------------------------------------+----------+----------+
The liquidity risk is routinely monitored by the cash flow reporting within the
group companies and managed accordingly.
The following is the maturity profile of the Group's fixed rate financial
liabilities as at 31 December:
+---------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+---------------------------------------------------+------------+------------+
| | GBP | GBP |
+---------------------------------------------------+------------+------------+
| Maturity profile of fixed rate financial | | |
| liabilities | | |
+---------------------------------------------------+------------+------------+
| | | |
+---------------------------------------------------+------------+------------+
| On demand or within 1 year | 5,180,147 | 1,455,608 |
+---------------------------------------------------+------------+------------+
| Within 2-5 years | 876,859 | 31,536 |
+---------------------------------------------------+------------+------------+
| | 6,057,006 | 1,487,144 |
+---------------------------------------------------+------------+------------+
Interest rate risk is managed as described in the Directors Report, and no
hedging instruments have been entered into during the year.
The sensitivity arising from movements in base rate has been considered and, as
the group's only floating rate liability is in relation to their bank
overdrafts, this is deemed to be insignificant.
Fair values of financial liabilities and financial assets
The fair values based upon the market value or discounted cash flows of
financial liabilities and financial assets, held in the Group was not materially
different from their book values.
18 DEFERRED TAXATION
The unprovided potential deferred tax asset is as follows:
+---------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+---------------------------------------------------+------------+-----------+
| Unprovided asset | GBP | GBP |
+---------------------------------------------------+------------+-----------+
| Group | | |
+---------------------------------------------------+------------+-----------+
| Accelerated capital allowances and other | (75,619) | (117,338) |
| temporary differences | | |
+---------------------------------------------------+------------+-----------+
| Tax losses available against future profits | 7,107,615 | 5,461,121 |
+---------------------------------------------------+------------+-----------+
| Changes in effective rate of tax from 30% to 20% | (105,574) | - |
+---------------------------------------------------+------------+-----------+
| | 6,926,422 | 5,343,783 |
+---------------------------------------------------+------------+-----------+
Unutilised trading losses are available to carry forward against future profits
for an indefinite period.
19 COMMITMENTS UNDER OPERATING LEASES
At the year end the company had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows:
+----------------------------+------------+--+------------+--+----------+--+----------+
| | Leasehold property | | Other | | |
| | rentals | | | | |
+----------------------------+----------------------------+--+----------+--+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+----------------------------+------------+--+------------+--+----------+--+----------+
| | GBP | | GBP | | GBP | | GBP |
+----------------------------+------------+--+------------+--+----------+--+----------+
| Within 1 year | 101,492 | | 158,922 | | 4,644 | | 7,915 |
+----------------------------+------------+--+------------+--+----------+--+----------+
| Between 1 and 5 years | 267,000 | | 370,800 | | 5,805 | | 12,276 |
+----------------------------+------------+--+------------+--+----------+--+----------+
| Total | 368,492 | | 529,722 | | 10,449 | | 20,191 |
+----------------------------+------------+--+------------+--+----------+--+----------+
The operating lease charge for the year amounted to GBP218,634 (2007:
GBP277,657).
20 RELATED PARTY TRANSACTIONS
Transactions with key management are disclosed below:
Fees and expenses in respect of the services of Eric Anstee as Non Executive
director have been accrued to Anstee Associates, Chartered Accountants a
business in which Eric Anstee is the Managing Partner. During the year fees and
expenses of GBP40,426 were paid, of which GBP18,000 related to his services as a
director, and GBP810 was outstanding as at 31 December 2008.
Other transactions with key management are disclosed in note 5.
Directors' Loans
During the course of the year Michael Cottman and Eric Anstee have extended
loans to the company as follows:
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| | | | M | | Deferred | | E Anstee |
| | | | Cottman | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| | Notes | | Loans | | Consideration | | Loans |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| | | | GBP | | GBP | | GBP |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Balance at 1 January 2007 | | | - | | - | | - |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Unsecured loans | | | 500,000 | | - | | 50,000 |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Secured loans | (b) | | 62,500 | | - | | 62,500 |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Accrued interest | | | 166,621 | | - | | - |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Deferred consideration | (c) | | - | | 142,066 | | - |
| arising on the acquisition | | | | | | | |
| of Point of Purchase TV | | | | | | | |
| Limited | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Balance 1 January 2008 | | | 729,121 | | 142,066 | | 112,500 |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Unsecured loans advanced | (a) | | 542,477 | | - | | 15,000 |
| in the year | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Unsecured loans converted | | | (577,662) | | - | | (112,500) |
| to ordinary shares in the | | | | | | | |
| year | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Unsecured loans repaid in | | | (5,022) | | - | | - |
| the year | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Interest and premium | | | 1,161,086 | | | | 15,000 |
| accrued | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Deferred consideration | | | - | | (142,066) | | - |
| paid in the year | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| | | | | | | | |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
| Balance 31 December 2008 | | | 1,850,000 | | - | | 30,000 |
+----------------------------+--------+--+-----------+--+---------------+--+-----------+
Notes
(a) The loans have been extended to enable the Group to meet its
working capital commitments.
Interest accrued at a fixed rate
of 15% per annum and the loans have redemption premiums of
between 20% and 100%.
(b)Interest accrued at 4% over base rate during
2008 and the loans are secured by a fixed and floating
charge
over all assets of the business.
(c) The deferred consideration
arose from the 2006 acquisition of Point of Purchase TV Limited, a
company previously controlled by M Cottman.
By way of recompense for his loan facility and in return for Mr Cottman agreeing
to reduce his indebtedness by GBP100,000, the independent Directors agreed in
May 2008 to grant Mr. Cottman a licence to the rights to the company's non UK
business opportunities. In return for this licensing arrangement, the company
retains an ongoing royalty payment from the international operations to be
derived from the international business in future years, whilst continuing to
provide existing management and support for the international business. During
the year costs of GBP80,000 were incurred by the Company under this arrangement
to develop international activities. No amounts were received by the company
during 2008 under the licence.
Included within bank borrowings is overdraft of GBP153,309 against which Mr
Brookman has provided a personal guarantee in return for a fee of GBP60,000.
The amount provided for in the accounts in respect of Mr. Cottman's loan
account, including all capital sums invested, assorted premia and accumulated
interest, totalled GBP1,850,000 at 31 December 2008. Payment of these amounts
will start at such time as the Company can afford to commence payments.
Transaction between Group companies
The company provides funds to its subsidiary undertakings to meet investment and
working capital requirements as they arise, as shown below. No interest has been
charged by the company to its subsidiary undertakings. The company also provides
management services to its subsidiary undertakings for which a management fee is
charged, as follows:
+------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+------------------------------------------------+-----------+--+-----------+
| Company | GBP | | GBP |
+------------------------------------------------+-----------+--+-----------+
| | | | |
+------------------------------------------------+-----------+--+-----------+
| Management charges to subsidiary undertakings | 750,000 | | 1,010,000 |
+------------------------------------------------+-----------+--+-----------+
| | | | |
+------------------------------------------------+-----------+--+-----------+
| Amounts advanced in the year | | | |
+------------------------------------------------+-----------+--+-----------+
| High Profile (UK) Limited | 1,855,138 | | 3,829,035 |
+------------------------------------------------+-----------+--+-----------+
| Train FX Limited | 469,049 | | 909,579 |
+------------------------------------------------+-----------+--+-----------+
| Big FX Limited | 101,709 | | 232,109 |
+------------------------------------------------+-----------+--+-----------+
| POP TV Limited | - | | 484,181 |
+------------------------------------------------+-----------+--+-----------+
| Screen Media Networks Limited | 787,473 | | - |
+------------------------------------------------+-----------+--+-----------+
| | 3,213,369 | | 5,454,904 |
+------------------------------------------------+-----------+--+-----------+
+------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+------------------------------------------------+-----------+--+-----------+
| | GBP | | GBP |
+------------------------------------------------+-----------+--+-----------+
| Amounts outstanding at 31 December | | | |
+------------------------------------------------+-----------+--+-----------+
| High Profile (UK) Limited | 3,477,421 | | 890,000 |
+------------------------------------------------+-----------+--+-----------+
| Train FX Limited | 601,765 | | 100,000 |
+------------------------------------------------+-----------+--+-----------+
| Big FX Limited | 20,000 | | 20,000 |
+------------------------------------------------+-----------+--+-----------+
| POP TV Limited | (15,000) | | - |
+------------------------------------------------+-----------+--+-----------+
| Screen Media Networks Limited | - | | - |
+------------------------------------------------+-----------+--+-----------+
| | 4,084,186 | | 1,010,000 |
+------------------------------------------------+-----------+--+-----------+
The balances above are stated net of a provision of GBP19,103,546 (2007:
GBP18,214,364) to write down to recoverable value. During the year to 31
December 2008, an impairment charge of GBP889,183 (2007: GBP5,399,905) was
recognised in the books of the parent company in respect of amounts due
from subsidiaries.
Prior to it becoming part of the Group, the Company made loan advances to Screen
Media Networks Limited (SMN) totalling GBP346,400 in order to fund that
company's working capital requirements and to repay outstanding lease
obligations. The loan was repayable on demand from SMN and carried similar
coupon rates to that on group borrowings in the event that the purchase of SMN
was not completed. In the event SMN was subsequently acquired by the company on
23 January 2008 (see note 21).
21SHARE CAPITAL
+----------------------------+-----------+-----------+--------------+--------------+
| | 2008 | 2007 |
+----------------------------+-----------------------+-----------------------------+
| | No. | GBP | No | GBP |
+----------------------------+-----------+-----------+--------------+--------------+
Authorised share capital:
+----------------------------+---------------+------------+--------------+--------------+
| Ordinary shares of 1p each | 1,931,376,981 | 19,313,769 | 57,410,000 | 5,741,000 |
| (2007: ordinary shares of | | | | |
| 10p each) | | | | |
+----------------------------+---------------+------------+--------------+--------------+
| Deferred ordinary shares | 1,068,623,148 | 10,686,231 | 58,590,000 | 5,859,000 |
| of 1p each (2007: deferred | | | | |
| ordinary shares of 10p | | | | |
| each) | | | | |
+----------------------------+---------------+------------+--------------+--------------+
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| Issued share | | 2008 | | | | 2007 | | |
| capital | | | | | | | | |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| | | Shares of | | | | Shares of | | |
| | | 1p | | | | 10p | | |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| | | each | | 2008 | | each | | 2007 |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| | | No. | | GBP | | No. | | GBP |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| | | | | | | | | |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| Ordinary shares | | 99,174,792 | | 991,748 | | 24,604,142 | | 2,460,414 |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| Deferred shares | | 1,068,623,148 | | 10,686,232 | | 45,071,517 | | 4,507,197 |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
| | | | | 11,677,980 | | | | 6,967,611 |
+--------------------+---+---------------+--+------------+--+------------+--+-----------+
The deferred shares have no rights to participate either in voting or other
rights for distribution.
SUBDIVISION OF SHARE CAPITAL
Following the granting of the necessary approval at the meeting held on 2 June
2008, the share capital of the company was consolidated. Each deferred share of
10p was subdivided into ten deferred shares of 1p each. Each ordinary share of
10p was subdivided and reclassified into 1 ordinary share of 1p and nine
deferred shares of 1p each.
SHARE DISCLOSURES
+---------------------------+---------------+----------+---------------+----------+----------+
| | Ordinary shares | Deferred Shares | Total |
+---------------------------+--------------------------+--------------------------+----------+
| | Number | GBP000's | Number | GBP000's | GBP000's |
+---------------------------+---------------+----------+---------------+----------+----------+
| | | | | | |
+---------------------------+---------------+----------+---------------+----------+----------+
| Balance 31 December | 24,604,142 | 2,461 | 45,071,517 | 4,507 | 6,968 |
| 2007; shares of 10p each | | | | | |
+---------------------------+---------------+----------+---------------+----------+----------+
| Acquisition of Screen | 30,125,392 | 3,013 | - | - | 3,013 |
| Media Networks Limited | | | | | |
| (a) | | | | | |
+---------------------------+---------------+----------+---------------+----------+----------+
| Shares issued for fees | 262,986 | 26 | - | - | 26 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 4,250,952 | 425 | - | - | 425 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 9,412,970 | 941 | - | - | 941 |
+---------------------------+---------------+----------+---------------+----------+----------+
| | 68,656,442 | 6,866 | 45,071,517 | 4,507 | 11,373 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share split | 617,907,978 | - | 405,643,653 | - | - |
+---------------------------+---------------+----------+---------------+----------+----------+
| Transfer between classes | (617,907,978) | (6,179) | 617,907,978 | 6,179 | - |
+---------------------------+---------------+----------+---------------+----------+----------+
| | 68,656,442 | 687 | 1,068,623,148 | 10,686 | 11,373 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 5,741,901 | 57 | - | - | 57 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Shares issued for fees | 5,765,362 | 58 | - | - | 58 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 105, 212 | 1 | - | - | 1 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 2,985,966 | 30 | - | - | 30 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 12,300,000 | 123 | - | - | 123 |
+---------------------------+---------------+----------+---------------+----------+----------+
| Share issue - placing | 3,619,909 | 36 | - | - | 36 |
+---------------------------+---------------+----------+---------------+----------+----------+
| | | | | | |
+---------------------------+---------------+----------+---------------+----------+----------+
| Balance 31 December 2008; | 99,174,792 | 992 | 1,068,623,148 | 10,686 | 11,678 |
| shares of 1p each | | | | | |
+---------------------------+---------------+----------+---------------+----------+----------+
The total issue costs deducted from equity amounted to GBP80,156.
Capital management
The Group's main objective when managing capital is to protect returns to
shareholders by ensuring the Group will continue to trade in the foreseeable
future. The Group also aims to maximise its capital structure of debt and equity
so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the business
and the sector within which it operates by monitoring is gearing ration on a
regular basis.
The Group considers its capital to include share capital, share premium,
retained earnings and net debt as noted below.
Share capital represents the nominal value of ordinary shares issued and fully
paid.
Share premium represents the excess of funds raised from equity share placings
over the nominal value of the shares after deducting directly attributable
placing costs.
Retained earnings represent accumulated profit and loss.
Net debt includes short and long-term borrowings (including overdrafts and lease
obligations) net of cash and cash equivalents.
The debt to capital ratio is not shown as the Group has net liabilities.
The Group does not have any externally imposed capital requirements.
SHARE WARRANTS
During the course of the year the company has issued a number of warrants for
ordinary shares to certain providers of loans as follows:
+----------------+------------------+---------+---------------+---------------+
| Date granted | Granted during | Price | Date from | Expiry date |
| | the year | | which | |
| | | | exercisable | |
+----------------+------------------+---------+---------------+---------------+
| | | | | |
+----------------+------------------+---------+---------------+---------------+
| 30 October | 120,000 | 25p | 30 October | 30 October |
| 2007 | | | 2007 | 2012 |
+----------------+------------------+---------+---------------+---------------+
| 30 October | 250,000 | 25p | 30 October | 30 October |
| 2007 | | | 2007 | 2012 |
+----------------+------------------+---------+---------------+---------------+
| 12 November | 250,000 | 25p | 30 October | 30 October |
| 2007 | | | 2007 | 2012 |
+----------------+------------------+---------+---------------+---------------+
| 17 December | 775,000 | 10p | 17 December | 17 December |
| 2007 | | | 2007 | 2012 |
+----------------+------------------+---------+---------------+---------------+
| 4 March 2008 | 220,770 | 25p | 4 March 2008 | 4 March 2011 |
+----------------+------------------+---------+---------------+---------------+
SHARE OPTIONS
At 31 December 2008 the company had 75,364 ordinary shares under option of 5p
each (2007: 75,364) under the company's share option schemes, details of which
are included below:
+----------------+-----------------+-----------------+-----------------+
| Grant Date | Subscription | Periods over | Number of new |
| | price per share | which options | ordinary shares |
| | | are exercisable | for which |
| | | | rights are |
| | | | exercisable |
+----------------+-----------------+-----------------+-----------------+
| EMI share options |
+----------------------------------------------------------------------+
| 3 March 2004 | GBP1.00 | 10 years | 5,800 |
+----------------+-----------------+-----------------+-----------------+
| 27 May 2004 | GBP1.00 | 10 years | 100 |
+----------------+-----------------+-----------------+-----------------+
| 16 November | GBP0.475 | 10 years | 15,000 |
| 2005 | | | |
+----------------+-----------------+-----------------+-----------------+
| 5 June 2007 | GBP0.1175 | 10 years | 6,464 |
+----------------+-----------------+-----------------+-----------------+
| | | | 27,364 |
+----------------+-----------------+-----------------+-----------------+
| Unapproved share options: |
+----------------------------------------------------------------------+
| 5 April 2004 | GBP10.00 | 10 years | 48,000 |
+----------------+-----------------+-----------------+-----------------+
| Total share options under issue | | 75,364 |
+----------------+-----------------+-----------------+-----------------+
On 8 April 2008, the Company issued 6,200,000 share options, of ordinary share
options of 10p each. Of these share options, 3,100,000 were dependent on certain
performance criteria being met by 31 December 2008; this performance criteria
was not met and the options lapsed.
The Company has granted options, which remain exercisable, to subscribe for new
ordinary shares of 10p each, as follows:
+------------------------+--------------+--+--------------+--+--------------+
| Grant Date | | | | | |
+------------------------+--------------+--+--------------+--+--------------+
| | Subscription | | Periods over | | Number of |
| | price per | | which | | new ordinary |
| | share | | options are | | shares for |
| | | | exercisable | | which rights |
| | | | | | are |
| | | | | | exercisable |
+------------------------+--------------+--+--------------+--+--------------+
| Unapproved share | GBP0.10 | | 7 years | | 3,100,000 |
| options: | | | | | |
| 8 April 2008 | | | | | |
+------------------------+--------------+--+--------------+--+--------------+
| | | | | | |
+------------------------+--------------+--+--------------+--+--------------+
| Total share options | | | | | 3,100,000 |
| under issue | | | | | |
+------------------------+--------------+--+--------------+--+--------------+
The weighted average fair value of options granted during the period determined
using the Black-Scholes valuation model was GBP0.07 per option (2007: GBP0.12).
The significant inputs into the model were weighted average share price of
GBP0.25 (2007: GBP6.55) at the grant date, exercise price shown
above, volatility of 75.8% (2007: 66.2%), dividend yield of 0% (2007: 0%), an
expected option life of three years, and an annual risk-free interest rate of
5.67% (2007: 5.86%). The volatility measured at the standard deviation of
continuously compounded share returns is based on statistical analysis of daily
share prices over the last three years.
The number of share options exercised during the year was nil (2007-nil). The
options outstanding at 31 December 2008 had an exercise price between GBP6.55
and GBP0.10, and a weighted average remaining contractual life of 6.26 years
(2007: 6.85 years).
The inputs into the model are as follows:
+---------------------------------------------------+----------+----------+
| | 2008 | 2007 |
+---------------------------------------------------+----------+----------+
| Weighted average share price | GBP0.07 | GBP0.12 |
+---------------------------------------------------+----------+----------+
| Weighted average exercise price | GBP0.25 | GBP6.55 |
+---------------------------------------------------+----------+----------+
| Expected volatility | 75.8% | 66.2% |
+---------------------------------------------------+----------+----------+
| Expected life | 6.26 | 6.85 |
| | years | years |
+---------------------------------------------------+----------+----------+
| Risk free rate | 5.67% | 5.86% |
+---------------------------------------------------+----------+----------+
| Expected dividends | 0% | 0% |
+---------------------------------------------------+----------+----------+
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous three years. The expected life used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
A reconciliation of option movements over the year to 31 December 2008 is shown
below:
+------------------------+-----------+--+----------+--+------------+--+----------+
| | 2008 | | 2007 |
+------------------------+-------------------------+--+--------------------------+
| | Number | | Weighted | | Number | | Weighted |
| | | | average | | | | average |
| | | | exercise | | | | exercise |
| | | | price | | | | price |
+------------------------+-----------+--+----------+--+------------+--+----------+
| | | | | | | | |
+------------------------+-----------+--+----------+--+------------+--+----------+
| Outstanding at 1 | 75,364 | | 655p | | 75,364 | | 655p |
| January | | | | | | | |
+------------------------+-----------+--+----------+--+------------+--+----------+
| Granted | 3,100,000 | | 10p | | - | | - |
+------------------------+-----------+--+----------+--+------------+--+----------+
| Outstanding at 31 | 3,175,364 | | 25p | | 75,364 | | 655p |
| December | | | | | | | |
+------------------------+-----------+--+----------+--+------------+--+----------+
The Group recognises total expenses of GBPnil (2007: GBPnil) relating to
equity-settled share-based payment transactions, on the grounds that the charge
would be immaterial to the Group's 2008 results (GBP50,567)
Warrants outstanding at 31 December were as follows:
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Grant date | 30 Oct | | 30 Oct | | 17 | | 12 Nov | | 14 |
| | 2007 | | 2007 | | Dec | | 2007 | | Mar |
| | | | | | 2007 | | | | 2008 |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| | Warrant | | Warrant | | Warrant | | Warrant | | Warrant |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Share price at grant | 18p | | 14p | | 6p | | 9p | | 6.75p |
| date | | | | | | | | | |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Exercise price | 25p | | 25p | | 10p | | 25p | | 25p |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Warrant granted | 120,000 | | 250,000 | | 775,000 | | 250,000 | | 220,700 |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Vesting period | - | | - | | - | | - | | - |
| (years) | | | | | | | | | |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Expected volatility | 56% | | 56% | | 56% | | 66.2% | | 75.8% |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Warrant life (years) | 5 | | 5 | | 3 | | 5 | | 3 |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Expected life | 5 | | 5 | | 3 | | 5 | | 3 |
| (years) | | | | | | | | | |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Risk free rate | 5.86% | | 5.86% | | 5.86% | | 5.86% | | 5.67% |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
| Fair value per | 5p | | 4p | | 2p | | 2p | | 1p |
| warrant | | | | | | | | | |
+----------------------+---------+--+---------+--+---------+--+---------+--+---------+
The weighted average fair value of warrants granted during the period determined
using the Black-Scholes valuation model was GBP0.01 per option (2007: GBP0.026).
The significant inputs into the model were the warrant excise price of GBP0.25
(2007: GBP0.167) at the grant date, exercise price shown above, volatility of
75.8% (2007: 66.2%), dividend yield of 0% (2007: 0%), an expected option life of
three years, and an annual risk-free interest rate of 5.67% (2007: 5.86%). The
volatility measured at the standard deviation of continuously compounded share
returns is based on statistical analysis of daily share prices over the last
three years. No charge has been recognised in the 2008 income statement on the
grounds of immateriality to the Group's results (GBP3,079).
22 POST BALANCE SHEET EVENTS
The Company has been in negotiations for the sale of TrainFX Limited during
2008, and had signed heads of terms on 17 March 2008 for the sale with New
Planet Investments Limited ("NPI"), a company in which Mr Cottman had a 25%
interest.
NPI was not able to secure finance in accordance with those heads of terms, but
did instead provide GBP347,500 in stages during the year as deposits.
On 13 March 2009 NPI signed a new heads of terms which provided NPI with an
option to acquire 100 per cent. (previously 75 per cent.) of the Train FX
business at an overall enterprise value of between GBP2.1 million and GBP2.6
million. NPI was to be supported in this transaction by AIM-listed RAM
Investment Group Plc ("RAM") who would have an option to acquire NPI at the same
time that NPI acquired TrainFX Limited.
On 7 May 2009 a further heads of agreement was signed whereby RAM acquired
directly 49.99% of TrainFX Limited for GBP920,000. This investment included the
settlement, by way of the transfer of 200,000 shares in TrainFX Limited, of a
GBP200,000 loan made to the company by RAM and the issue of a further 720,000
shares by TrainFX Limited for cash payments of GBP720,000.
The company has also granted RAM an option to acquire, by 31 August 2009, the
remaining 50.01% of TrainFX Limited for GBP1,240,000, consisting of cash of
GBP785,000, RAM shares with a value of GBP425,000 and up to GBP30,000 of loan
notes to be issued by RAM. This option is subject to the approval of the
company's shareholders.
As at 1 June 2009, Mr Cottman owned 3.89% of RAM.
23 EARNINGS PER SHARE
The calculation of basic loss per ordinary share is based on the following:
+---------------------+-----------+------------+-------+---+-----------+------------+-------+
| | 2008 | | 2007 |
+---------------------+--------------------------------+---+--------------------------------+
| | Loss | Weighted | Loss | | Loss | Weighted | Loss |
| | for the | average | per | | for the | average | per |
| | year | number | share | | year | number | share |
| | GBP | of | (p) | | GBP | of | (p) |
| | | shares | | | | shares | |
+---------------------+-----------+------------+-------+---+-----------+------------+-------+
| Loss per ordinary | 7,161,015 | 70,095,606 | 10.22 | | 5,544,344 | 22,612,378 | 24.52 |
| share - basic and | | | | | | | |
| diluted | | | | | | | |
+---------------------+-----------+------------+-------+---+-----------+------------+-------+
| Loss per ordinary | 6,656,158 | 70,095,606 | 9.50 | | 4,982,733 | 22,612,378 | 22.04 |
| share continuing | | | | | | | |
| activities - basic | | | | | | | |
| and diluted | | | | | | | |
+---------------------+-----------+------------+-------+---+-----------+------------+-------+
| Loss per ordinary | 504,857 | 70,095,606 | 0.72 | | 561,611 | 22,612,378 | 2.48 |
| share discontinued | | | | | | | |
| activities - basic | | | | | | | |
| and diluted | | | | | | | |
+---------------------+-----------+------------+-------+---+-----------+------------+-------+
The loss for the year and the weighted average number of ordinary shares for
calculating the diluted loss per share for the year ended 31 December 2007 are
identical to those used for the basic loss per share, because the outstanding
share options and warrants would have the effect of reducing the loss per
ordinary share and would therefore not be dilutive under the terms of IAS 33.
24 CONTROL
In the opinion of the directors is there is no single controlling party.
25 PENSION COMMITMENTS
The Group makes contributions to individual defined contribution pension schemes
on behalf of employees. The pension cost charge represents contributions payable
by the company to the schemes and amounted to GBP21,702 (2007: GBP29,950).
26BASIS OF THE ANNOUNCEMENT
The unaudited financial statements for the year ended 31 December 2008 were
approved by the Board of Directors on 29 June 2009. The financial information
set out above does not constitute the Company's Statutory accounts for the
financial year ended 31 December 2008 or the financial year ended 31 December
2007 but is derived from those accounts. Statutory accounts for the financial
year ended 31 December 2007 have been filed with the Registrar of Companies. The
auditors have reported on those accounts; their report contained an emphasis of
matter in relation to uncertainty surrounding going concern and did not contain
statements under section 237(2) or (3) of the Companies act 1985. The statutory
accounts for the year ended 31 December 2008 will be delivered to the Registrar
of Companies following the Company's Annual General Meeting.
27 REPORT AND FINANCIAL INFORMATION
Copies of the financial statements for the Group for the year ended 31 December
2008 will be available from the Company's registered office and will be posted
to shareholders and on the Company's website in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KGGZVRLNGLZM
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