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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Conexion | LSE:CXM | London | Ordinary Share | GB0031352775 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.325 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMCXM
RNS Number : 3697J
Conexion Media Group PLC
29 June 2011
CONEXION MEDIA GROUP PLC
Results for the Year Ended 31 December 2010
Chairman's Statement
This is my first statement as Chairman and I would like to start by thanking my predecessor Brian Scholfield for his years of service as Chairman and as a founding director of the Company.
2010 was a year of good progress as we significantly developed our non-music related administration business. This business has seen a growth in demand as prospective clients seek a cost-effective fixed rate means to manage their secondary and ancillary rights. Notable contract wins included US based media giant Comcast, Proctor & Gamble and French animation studio Alphanim. However, by the close of 2010 these new agreements had yet to produce significant revenue. This delay in revenue was anticipated and is a result of the registration process and the fact that most of the collection societies operate a year or more in arrears. We are confident that these clients together with the others signed in 2010 will produce significant levels of revenue in future.
In March we purchased the music assets of Kid Gloves Music based in Los Angeles and in conjunction with its president Nathalie Du Bois, rebranded the business as Conexion Entertainment Group LLC ("CEG"). CEG retains preferred vendor status agreements with the major film studios in L.A. for the supply of licensed music. In accordance with our clients' wishes, we commenced the building of our digital platform for the delivery of licensed music directly from a managed server. By the close of 2010, 20,000 tracks and the associated metadata were ready for uploading. We anticipate the service being available to our clients in the second half of 2011.
In October we announced the production of our first animated television series "Everybody Loves a Moose" in conjunction with Italian national broadcaster RAI Uno. Conexion Media owns all the music and secondary rights and retain a 4% equity in the 52 episode series including all merchandising.
Revenue of GBP3.1m. being down 8% against 2009 was mainly due to the industry-wide reduction in revenues from mechanical royalties derived from CD sales. Another factor has been that many of the deals signed in 2010 have yet to produce income because of the registration process. Gross profit was reduced by 12.5% to GBP1.6m (2009: GBP1.8m) by virtue of the different mix of business in the year. However, judicious cost-cutting has reduced our operating costs to GBP1.6m. Substantial savings have been made in our New York office (Diamond Time) in light of the reduction in the third party music clearance business. These savings have enabled us to provide more resources for our newly acquired Los Angeles operation where we see more opportunities in the film and television market.
Operating loss before amortisation and depreciation is GBP37k, compared with GBP89k in 2009.
The total loss for the year after amortisation, depreciation and finance costs was GBP610k, compared with a loss of GBP630k in 2009.
Guy Fletcher
Chairman
29(th) June 2011
The annual report and accounts will be sent to shareholders.
For further information please contact:
Conexion Media
Justin Sherry, CEO 020 8987 4150
justin@conexion-media.com
FinnCap
Corporate Finance
Matthew Robinson/Rose Herbert 020 7600 1658
Corporate Broking
Stephen Norcross 020 7600 1658
CONEXION MEDIA GROUP PLC
Report of the Directors
For the year ended 31st December 2010
The Directors have the pleasure of presenting their report and consolidated financial statements of the Group for the year ended 31(st) December 2010.
Principal Activities and Business Review
The principal activity of the Group throughout the year continued to be the administration of music copyright, film and television related rights.
Review of the Business and Future Developments
This has been covered by the Chairman's Statement on page 3.
Results and Dividends
The Group loss for the year after taxation was GBP610,259 (2009: GBP630,002).
The Board of Directors are unable to recommend a dividend in respect of this year.
Policy on payments to Creditors
The Group does not have a standard code for dealing specifically with payment of creditors. The Group negotiates payment terms with its suppliers on an individual basis and settles its accounts in accordance with those terms. On average, trade creditors at the year end represented 72 days purchases (2009: 108 days).
Risk Management
The main risk to the Group is the decline in the sales of recorded music. However, music publishers are shielded from this, more than record companies, as the majority of their income is derived from performance royalties. In addition, Conexion Media specialises in the administration of film and TV related music rights. This is a sector which is increasing in value with the proliferation of satellite TV channels and digital outlets.
The Group, in common with most businesses, is at risk from the downturn in the global economy, as less advertising means less music used, and film and television production is reduced. However Conexion Media is moving into the growing market of collecting income streams from additional broadcast rights and non-music related sources, such as cable re-transmission and private copying levies, alongside its continued music publishing business. It is anticipated that this income stream will form an increasingly important part of Conexion's business.
Another potential risk to the Group is the loss of clients. This can happen when an agreement has reached the end of its term and is not renewed. This risk is mitigated as the Group signs agreements with new clients each year. The Group's operating costs are stable and the Directors do not foresee a significant rise in costs, unless it is related to an increase in income.
The Group is also potentially at risk from fluctuating exchange rates, as the Group receives income in foreign currencies as well as sterling. However if the income is reduced because of the exchange rate, the related liability is also reduced. In addition the Group maintains bank accounts in foreign currencies and pays liabilities in foreign currencies where possible.
Directors
The following Directors have held office since 1(st) January 2010:
Brian Scholfield (resigned 25(th) February 2011)
Justin Sherry
Guy Fletcher OBE
Directors and their interests
The Directors who served the Company during the year together with their interests in the shares and debentures of the Company and other Group undertakings, at the beginning and end of the year, were as follows:
Directors' shareholdings
Hot Features
Premium
Ordinary shares of 1p each
in
Conexion Media Group plc
31(st) December 1(st) January
2010 2010
Brian Scholfield 5,166,333 5,166,333
Guy Fletcher 1,104,500 1,104,500
Justin Sherry 140,000 92,000
The following table shows details of the options for ordinary shares of 1p each in Conexion Media Group Plc:
Lapsed
At 1(st) during Granted At 31(st) Date from
January the in the December Exercise Date which Expiry
Director 2010 year year 2010 Price of grant exercisable date
Brian
Scholfield 60,000 - - 60,000 GBP0.44 18/02/2002 18/02/2005 17/02/2012
250,000 - - 250,000 GBP0.12 06/12/2005 06/12/2008 05/12/2015
800,000 - - 800,000 GBP0.18 14/12/2006 14/12/2009 13/12/2016
1,110,000 - - 1,110,000
Justin
Sherry 150,000 - - 150,000 GBP0.18 14/12/2006 14/12/2009 13/12/2016
2,000,000 - - 2,000,000 GBP0.03 08/01/2009 08/01/2012 07/01/2019
2,150,000 - - 2,150,000
Guy
Fletcher 40,000 - - 40,000 GBP0.44 18/02/2002 18/02/2005 17/02/2012
800,000 - - 800,000 GBP0.18 14/12/2006 14/12/2009 13/12/2016
840,000 - - 840,000
Substantial Shareholdings
As at 29(th) June 2011, there are 78,392,551 ordinary 1 penny shares in issue. The Company has been advised of the following substantial share interests exceeding 3% in the issued ordinary share capital:
Polymer Holdings Ltd 22,566,078 28.79% Bleachers Investments Ltd 15,047,675 19.20% Brian Scholfield 5,166,333 6.59% Artemis Investment Management 4,330,000 5.52%
Share Issues
There were no issues of shares in the year.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit information of which the Group's auditors are unaware. The Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group's auditors are aware of that information.
Auditors
Kingston Smith LLP has indicated their willingness to continue in office and in accordance with the provisions of the Companies Act it is proposed that they be re-appointed auditors for the ensuing year.
Corporate Governance
The Company has developed appropriate measures to ensure that it complies, as far as practicable, with the Combined Code on Corporate Governance having regard to the size of the Company.
The Group has adopted and operates a share dealing code for Directors on the same terms as the Model Code for companies whose share have been admitted to the Alternative Investment Market (AIM) of the London Stock Exchange.
Going Concern
The Directors have considered and confirm that it is appropriate to adopt the financial statements on the basis that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Therefore the Group and Company continue to adopt the going concern basis in preparing the financial statements.
Employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes and abilities of the applicant concerned.
The Company places considerable value on the involvement of its employees and has continued its previous practice of keeping them informed on matters affecting them as employees and on various factors affecting the performance of the Company. Employees are consulted regularly on a wide range of matters affecting their current and future interests.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit and loss of the company for that period. In preparing those financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
CONEXION MEDIA GROUP PLC On behalf of the board
10 Heathfield Terrace
London
W4 4JE
Justin Sherry
29(th) June 2011 Director
CONEXION MEDIA GROUP PLC
Report of the Independent Auditors
Independent Auditors' Report to the Shareholders of Conexion Media Group Plc
We have audited the financial statements of Conexion Media Group Plc for the year ended 31 December 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the Company's members those matters which we are required to include in an auditors' report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the Company and Company's members as a body, for our work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 6 the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
Opinion on the financial statements
In our opinion the Group financial statements:
-- give a true and fair view of the state of the Group's affairs and of the parent company's affairs as at 31 December 2010 and of its loss for the
year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006;
-- the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as
applied with the provisions of the Companies Act 2006.
Emphasis of Matter - Going Concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 1(c) of the financial statements concerning the ability of the Group to continue as a going concern and to meet its working capital requirements. The Group incurred a loss for the year of GBP610,259 and had net current liabilities of GBP5,465,979. The Directors have prepared cash flow forecasts to 30 June 2012 and believe that the Group will be able to meet its working capital requirements. These conditions, as further explained in note 1(c) to the financial statements, indicate the existence of a material uncertainty which may cast doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
-- the parent company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Cliff Ireton (Senior Statutory Auditor)
for and on behalf of Kingston Smith LLP, Statutory Auditor
141 Wardour Street
London, W1F 0UT
29(th) June 2011
CONEXION MEDIA GROUP PLC
Consolidated Income Statement
For the year ended 31(st) December 2010
Note 2010 2009
GBP GBP
Revenue 2 3,090,182 3,351,731
Direct costs (1,523,005) (1,560,763)
------------ ------------
Gross Profit 1,567,177 1,790,968
Operating costs (1,604,036) (1,879,536)
------------ ------------
Operating loss before amortisation and
depreciation (36,859) (88,568)
Amortisation and depreciation (497,073) (475,241)
Operating loss 3 (533,932) (563,809)
Finance income 176 7,785
Finance costs 6 (76,503) (73,978)
------------ ------------
Loss before taxation 2 (610,259) (630,002)
Taxation 7 - -
------------ ------------
Loss for the year (610,259) (630,002)
============ ============
Attributable to:
Non-controlling interests (26,133) 30,220
Owners of the parent company 10 (584,126) (660,222)
Earnings/(loss) per share - continuing
operations 8
Basic earnings per share (pence) (0.75) (1.09)
Diluted earnings per share (pence) (0.75) (1.09)
CONEXION MEDIA GROUP PLC
Consolidated Statement of Comprehensive Income
For the year ended 31(st) December 2010
2009
2010 restated
GBP GBP
Loss for the financial year (610,259) (630,002)
Currency translation differences (95,675) 236,376
Total Comprehensive Income (705,934) (393,626)
========== ==========
Attributable to:
Non-controlling interests (26,133) 30,220
Owners of the parent company (679,801) (423,846)
---------- ----------
Total Comprehensive Income (705,934) (393,626)
========== ==========
Consolidated Statement of Changes in Equity
For the year ended 31(st) December 2010
Called Other
up Share Shares Compre Total Non
Share Premium to be Other Retained -hensive Owners Controlling
Capital Account Issued Reserves Earnings Income Interest Interest Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1st
January 2010 783,926 8,356,254 611,609 2,654 (9,238,251) (339,121) 177,071 (21) 177,050
Share Options
granted - - 19,149 - - - 19,149 - 19,149
Share Options
lapsed - - (135,366) - 135,366 - - - -
Non-controlling
interest
acquired in the
year - - - - - - - 331,576 331,576
Loss for the
year - - - - (584,126) - (584,126) (26,133) (610,259)
Foreign exchange
difference
taken to
retained
earnings - - - - - (95,675) (95,675) - (95,675)
Balance at
31(st) December
2010 783,926 8,356,254 495,392 2,654 (9,687,011) (434,796) (483,581) 305,422 (178,159)
================= ======== ========== ========== ========= ============ ========== ========== ============ ==========
The Group comparative figures are set out in note 10(d).
The Company Statement of Changes in Equity is set out in note 10(c).
CONEXION MEDIA GROUP PLC
Consolidated Statement of Financial Position
As at 31(st) December 2010
Note 2010 2009
restated
GBP GBP
Non-current assets
Intangible assets
Goodwill 11 1,370,520 1,370,520
Other 11 3,879,350 3,231,306
Property, plant and equipment 12 14,249 75,616
Trade and other receivables 23,701 29,150
------------- ------------
5,287,820 4,706,592
------------- ------------
Current assets
Trade and other receivables 14 1,218,061 1,458,732
Cash and short term deposits 464,871 551,196
------------- ------------
1,682,932 2,009,928
------------- ------------
Current liabilities
Trade and other payables 15 (5,958,302) (5,366,595)
Bank overdraft and loans 15 (161,734) -
Amounts due to related parties 15,17 (1,028,875) (1,119,000)
------------- ------------
(7,148,911) (6,485,595)
Net current liabilities (5,465,979) (4,475,667)
------------- ------------
Total assets less current liabilities (178,159) 230,925
Non-current liabilities
Amounts due to related parties 17 - (53,875)
Net assets/(liabilities) (178,159) 177,050
============= ============
Equity
Called up share capital 10 783,926 783,926
Share premium account 10 8,356,254 8,356,254
Other reserves 10 2,654 2,654
Shares to be issued 10 495,392 611,609
Retained earnings 10 (10,121,807) (9,577,372)
------------- ------------
Equity share owners' funds (483,581) 177,071
Non-controlling interest 305,422 (21)
------------- ------------
Total equity (178,159) 177,050
============= ============
Approved by the board for issue on 29(th) June 2011.
Justin Sherry
Director
CONEXION MEDIA GROUP PLC
Company Statement of Financial Position
As at 31(st) December 2010
Note 2010 2009
restated
GBP GBP
Non-current assets
Intangible assets
Goodwill 11 170,622 170,622
Other 11 1,102,615 1,473,121
Investments 13 639,529 25,004
Property, plant and equipment 12 14,249 72,194
Trade and other receivables 22,089 21,000
------------ ------------
1,949,104 1,761,941
------------ ------------
Current assets
Trade and other receivables 14 104,635 81,518
Cash and short term deposits 255,243 14,751
------------ ------------
359,878 96,269
------------ ------------
Current liabilities
Trade and other payables 15 (1,134,189) (861,517)
Amounts due to related parties 15,17 (1,028,875) (1,119,000)
------------ ------------
(2,163,064) (1,980,517)
Net current liabilities (1,803,186) (1,884,248)
------------ ------------
Total assets less current liabilities 145,918 (122,307)
Non-current liabilities
Amounts due to related parties 17 - (53,875)
Net assets/(liabilities) 145,918 (176,182)
============ ============
Equity
Called up share capital 10 783,926 783,926
Share premium account 10 8,356,254 8,356,254
Shares to be issued 10 495,392 611,609
Retained earnings 10 (9,489,654) (9,927,971)
------------ ------------
Equity share owners' funds 145,918 (176,182)
============ ============
Approved by the board for issue on 29(th) June 2011.
Justin Sherry
Director
Company registration number: 4125263
CONEXION MEDIA GROUP PLC
Consolidated Statement of Cash Flows
For the year ended 31(st) December 2010
Note 2010 2009
restated
GBP GBP
Operating cash (out)/inflow 1 158,746 (306,626)
Net finance costs (76,327) (66,193)
---------- ----------
Net cash(out)/inflow from operating activities 82,419 (372,819)
---------- ----------
Investing activities
Purchase of subsidiary undertakings (see
note 13) (150,603) (21,406)
Purchase of property, plant and equipment (3,216) (14,618)
Purchase of intangible assets (16,139) -
---------- ----------
Net cash (out)/inflow from investing
activities (633,880) (36,024)
---------- ----------
Financing activities
Increase in bank loan and overdraft 161,734 -
Repayment of loans (144,000) (212,590)
Increase in other loans - 500,000
---------- ----------
Net cash inflow from financing 17,734 287,410
---------- ----------
Foreign exchange differences (16,520) 81,912
(Decrease)/Increase in cash and cash
equivalents (86,325) (39,521)
========== ==========
Cash and cash equivalents at start of
period 551,196 590,717
Cash and cash equivalents at end of period 464,871 551,196
========== ==========
Notes to the Consolidated Statement of Cash Flows
For the year ended 31(st) December 2010
Reconciliation of profit before finance costs
income and taxation
1. to operating cash flow 2010 2009
GBP GBP
Loss before finance costs and taxation (533,932) (563,809)
Goodwill write back (159,152) -
Depreciation 63,221 70,871
Loss on disposal of fixed assets - 8,516
Amortisation of intangible assets 433,852 404,370
Decrease in trade and other receivables -
non-current 5,449 816
Decrease in trade and other receivables -
current 240,671 561,910
Increase/(decrease) in trade and other payables 127,786 (1,087,613)
Share options charge 19,149 139,516
Exchange difference (38,298) 158,797
---------- ------------
Operating cash outflow 158,746 (306,626)
========== ============
Reconciliation of net cash flow to movement 2009
2. in net debt 2010 restated
GBP GBP
Increase/(decrease) in cash in the period (86,325) (39,521)
Cash(inflow)/outflow from (increase)/decrease
in debt (17,734) (12,410)
---------- ----------
Movement in net debt in the period (104,059) (51,931)
Net debt at 1(st) January 2010 (621,679) (569,748)
---------- ----------
Net debt at 31(st) December 2010 (725,738) (621,679)
========== ==========
Analysis of
changes in
3. net debt
At 1(st) At 31(st)
Jan Dec
2010 Cash flow 2010
restated
GBP GBP GBP
Cash at bank and in
hand 551,196 (86,325) 464,871
Bank loan and
overdrafts - (161,734) (161,734)
Other loans (1,172,875) 144,000 (1,028,8775)
-------------- --------------- ---------------
Total (621,679) (104,059) (725,738)
============== =============== ===============
CONEXION MEDIA GROUP PLC
Company Statement of Cash Flows
For the year ended 31(st) December 2010
Note 2010 2009
restated
GBP GBP
Operating cash (out)/inflow 1 597,796 (186,201)
Net finance costs (61,487) (65,812)
---------- ----------
Net cash(out)/inflow from operating activities 536,309 (252,013)
---------- ----------
Investing activities
Purchase of subsidiary undertakings (see
note 13) (150,603) (21,406)
Purchase of property, plant and equipment (1,214) (14,618)
Net cash (out)/inflow from investing
activities (151,817) (36,024)
---------- ----------
Financing activities
Repayment of loans (144,000) (212,590)
Increase in other loans - 500,000
---------- ----------
Net cash inflow from financing (144,000) 287,410
---------- ----------
(Decrease)/Increase in cash and cash
equivalents 240,492 (627)
========== ==========
Cash and cash equivalents at start of
period 14,751 15,378
Cash and cash equivalents at end of period 255,243 14,751
========== ==========
Notes to the Company Statement of Cash Flows
For the year ended 31(st) December 2010
Reconciliation of profit before finance costs
income and taxation
1. to operating cash flow 2010 2009
GBP GBP
Profit/(Loss) before finance costs and taxation 364,438 (4,496,959)
Depreciation 59,159 60,435
Impairment of investment - 21,906
Amortisation of intangible assets 370,506 370,506
Provision against intercompany balances (671,421) 4,082,250
Decrease in trade and other receivables -
non-current (1,089) -
Decrease in trade and other receivables -
current 686,602 (583,223)
Increase/(decrease) in trade and other payables (191,250) 60,571
Share options charge 19,149 139,516
Exchange differences (38,298) 158,797
---------- ------------
Operating cash outflow 1,061,718 (186,201)
========== ============
Reconciliation of net cash flow to movement 2009
2. in net debt 2010 restated
GBP GBP
Increase/(decrease) in cash in the period 240,492 (627)
Cash(inflow)/outflow from (increase)/decrease
in debt 144,000 (12,410)
------------ ------------
Movement in net debt in the period 384,492 (13,037)
Net debt at 1(st) January 2010 (1,158,124) (1,145,087)
------------ ------------
Net debt at 31(st) December 2010 (773,632) (1,158,124)
============ ============
Analysis of
changes in
3. net debt
At 1(st) At 31(st)
Jan Dec
2010 Cash flow 2010
restated
GBP GBP GBP
Cash at bank and in
hand 14,751 240,492 255,243
Other loans (1,172,875) 144,000 (1,028,875)
-------------- --------------- ---------------
Total (1,158,124) 384,492 (773,632)
============== =============== ===============
CONEXION MEDIA GROUP PLC
Notes to the Financial Statements
For the year ended 31(st) December 2010
1. Accounting Policies
(a) Accounting basis and standards
The consolidated financial statements of Conexion Media Group Plc (the Group) have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31(st) December 2010. The Group's financial statements are also consistent with IFRS as issued by the International Accounting Standards Board. The financial statements have been prepared under the historical cost convention, and in accordance with applicable accounting standards. The accounting policies are unchanged from the previous year.
(b) Basis of consolidation
The Group Income statement and balance sheet consist of the financial statements of the parent company and its subsidiary undertakings. The results of subsidiaries sold or acquired are included in the income statement up to or from the date control passes. Intra-Group sales and profits are eliminated fully on consolidation.
The comparative figures have been restated because the Polymer Holdings loans are repayable on demand (90 days notice) and therefore the directors consider any attributable equity element to be not material.
(c) Going concern
The Directors have prepared cash flow forecasts to 30(th) June 2012 and believe that the Group will be able to meet its working capital requirements. Music Publishing companies have regular sources of income, as collection societies distribute revenues on the same dates each year. There are monthly and quarterly distributions. In addition, the Group has overseas partners known as sub-publishers, from whom the
Group receives royalties quarterly and semi-annually depending on the contract. Music publishing companies only incur a cost of sales after the royalties have been received. The Group accounts for royalty income on an accruals basis, and therefore provides for the related royalty payable. The total royalties payable in note 15 includes a significant amount relating to the royalty payable on the royalty income which has not been received at the balance sheet date, and the royalty due will therefore not be payable until some time after the balance sheet date.
Income has been forecast on the basis of prior year income adjusted for trading developments. Costs have been forecast on the basis of the current operating costs.
The Directors consider that it is appropriate to prepare the financial statements on a going concern basis.
(d) Intangible fixed assets
Purchased music catalogues are capitalised at cost as intangible fixed assets. Music catalogues are amortised by equal annual amounts over their expected useful life as follows:
Owned catalogues 70 years
Administered catalogues 10 years
Goodwill arising on acquisitions is capitalised in accordance with the requirements of IFRS 3. Goodwill impairment is assessed by comparing the carrying value of goodwill to the net present value of future cash flows derived from the operating performance underpinned by each cash generating unit's three-year forecast. The forecast is based on previous performance adjusted for trading developments where necessary. After this period, growth rates equivalent to nominal GDP are generally assumed. In accordance with IFRS 3 the carrying value of goodwill will continue to be reviewed for impairment on the basis stipulated and adjusted should this be required. Impairment is recognised in the income statement and is not subsequently reversed. The individual circumstances of each future acquisition will be assessed to determine the appropriate treatment of any related goodwill.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts at the date of transition subject to being tested for impairment at that date.
Intangible fixed assets are reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. The intangible assets have a useful life of 70 years and are reviewed for impairment on an annual basis.
In standard music publishing administration agreements, the administrator of the music copyrights is granted a specific term during which it can administer and collect royalty payments. This can vary from one year to "life of copyright" agreements. The term of copyright ownership for original literary and music works under UK legislation is 70 years after the death of the creator, or in the case of joint authorship, for 70 years after the death of the surviving joint author. Despite this variation in terms, it is normal practice for administration periods to be set at three to five year periods, the intention being that the agreement is renewed under similar terms unless there is a major dispute between the parties. In many cases, the agreements themselves are not renewed but the administration of the royalties continues in the same manner. This is very often the case in the independent sector.
(e) Depreciation of fixed assets
Fixed assets are stated at historical cost.
Depreciation on fixed assets is provided at rates estimated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life as follows:
Office equipment 33.33% per annum
(f) Investments
Fixed asset investments are stated at historical cost less any provision for diminution in value.
(g) Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
(h) Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities in foreign currencies are translated into sterling at rates of exchange ruling at the end of the financial year. Exchange differences arising from the translation of foreign investments, subsidiaries or associates are taken directly to reserves. All other exchange differences are dealt with in the Income Statement.
(i) Revenue, royalties and advances
Revenue relates to royalty income and is accounted for on an accruals basis. Royalties payable are then matched to royalties receivable.
Accrued income received during the period between the year end and the completion of the financial statements is included on an actual basis. The remaining accrued income is estimated based on prior year income and adjusted for current trading developments.
Advances received and receivable are recognised as revenue in the period to which the royalty income relates. Provision is therefore made for royalties payable on advances received only to the extent that the advances have been recouped. Advances paid are provided for unless it is considered that they will be recouped from future earnings.
Royalties receivable in respect of administered catalogues are, like those from owned catalogues, shown within revenue and those payable are shown within cost of sales.
Royalties due are only removed from the balance sheet when paid.
(j) Leasing and hire purchase commitments
Assets held under finance leases and hire purchase contracts are capitalised as non-current assets in the balance sheet and are depreciated over the shorter of the lease term and their useful lives.
Obligations under such arrangements are included in creditors net of finance lease charges allocated to future periods. The finance element of the rental payment is charged to the Income Statement so as to produce a constant periodic rate of charge on the net obligations outstanding.
Rentals paid under operating leases are charged to income on a straight-line basis over the lease term.
(k) Share based payments
Certain employees and Directors of the Group receive equity settled remuneration in the form of Company share options. The cost is charged to the Income Statement on a straight line basis over the vesting period and a corresponding amount is reflected in the retained earnings in shareholders' equity adjusted at each balance sheet date to take into account actual and expected level of vesting. The charge is calculated as being the fair value of the shares or the right to the shares at the date of grant, reduced by any consideration payable by the employee. Fair value is measured using a modified Black-Scholes option pricing model and is based on a reasonable expectation of the extent to which performance criteria will be met.
(l) Financial Instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. Issue costs are offset against the proceeds of such instruments.
(m) Convertible loan notes
Convertible loan notes are regarded as a compound instrument, consisting of a liability and an equity element. 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.
(n) Liabilities and Equity
Financial Liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences the residual interest in the assets of the Group after deducting all of its liabilities. The Group has only one class of share in existence.
(o) Accounting Estimates and Judgements
The Group makes estimates and judgements concerning the future and the resulting estimates may, by definition, vary from the actual results. The Directors considered the critical accounting estimates and judgements used in the financial statements and concluded that the main areas of judgement are:
- Revenue recognition policies in respect of accrued royalties receivable;
- Recognition and quantification of share based payments; and
- Valuation of intangible assets.
These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances.
(p) IFRS in issue but not applied in the current Financial Statements
The following IFRSs and IFRIC interpretations have been issued but have not been applied by the Group in preparing these financial statements as they are not as yet effective. The Group intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.
- IAS24 (revised) Related Party Disclosures - effective for accounting periods beginning on or after 1 January 2011;
- IFRS 9 Financial Instruments - effective for accounting periods beginning on or after 1 January 2013;
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments - effective for accounting periods beginning on or after 1 July 2010;
- IFRIC 14 (amended) Prepayments of a Minimum Funding Requirement - effective for accounting periods beginning on or after 1 January 2011;
- Improvements to IFRSs (May 2010);
- IRFS 10 Consolidated Financial Statements - includes a revised definition of control, which forms the centre of a new consolidation model. The revised definition states that control exists when an investor has the right to variable returns and has the ability to affect those rights through its power over the investee;
- IFRS 11 Joint Arrangements - effective for accounting periods beginning on or after 1 January 2013;
- IFRS 12 Disclosures of Interests with Other Entities - effective for accounting periods beginning on or after 1 January 2013;
- IAS 27 (2011) Separate Financial Statements - effective for accounting periods beginning on or after 1 January 2013;
- IAS 28 (2011) Investments in Associated and Joint Ventures - effective for accounting periods beginning on or after 1 January 2013;
- IFRS 13 Fair Value Measurement - effective for accounting periods beginning on or after 1 January 2013;
- IAS 19 (revised) Employee Benefits - effective for accounting periods beginning on or after 1 January 2013;
A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant to the Group's activities and which have not therefore been adopted in preparing these financial statements.
2 Revenue
2010 2009
GBP GBP
Geographical analysis:
United Kingdom 2,141,158 1,694,058
United States of America 943,320 1,637,400
Asia 5,704 20,273
3,090,182 3,351,731
========== ==========
2010 2009
GBP GBP
The Revenue categories are as follows:
Royalties 2,936,114 2,864,843
Copyright Services 106,240 440,392
Rental income 47,828 46,496
3,090,182 3,351,731
========== ==========
2010 2009
GBP GBP
The geographical analysis of the loss before
taxes is as follows:
United Kingdom (335,662) (1,034,885)
United States of America (267,800) 299,556
Asia (2,050) 106,133
Europe (4,747) (806)
---------- ------------
(610,259) (630,002)
========== ============
2010 2009
GBP GBP
The geographical analysis of the net assets
is as follows:
United Kingdom 1,241,624 2,275,492
United States of America (978,994) (1,675,666)
Asia (446,405) (433,641)
Europe 5,616 10,865
---------- ------------
(178,159) 177,050
========== ============
3 Operating loss
2010 2009
GBP GBP
The operating loss is stated after charging:
Auditors' remuneration for audit fees 61,303 46,783
Auditors' remuneration for non-audit services 1,000 3,588
Depreciation:
Owned tangible fixed assets 63,221 70,871
Assets held under finance leases and hire
purchased contracts - -
Amortisation of intangible fixed assets 433,852 404,370
Exchange rate differences (38,298) 158,797
Operating lease rentals:
Property 159,792 140,753
========= ========
4 Employee information
The average number of persons employed by the Company (including Directors) during the year was:
2010 2009
Office and management 18 20
======== ==========
Their total remuneration was: GBP GBP
Wages and salaries 815,738 860,997
Share option costs 19,149 139,516
Social security costs 66,784 78,818
-------- ----------
901,671 1,079,331
======== ==========
5 Directors' Emoluments
2010 2009
GBP GBP
(i) Emoluments 142,012 157,700
(ii) Highest paid Director 102,882 102,121
======== ========
Included in the total emoluments are short term benefits of GBP6,012 (2009: GBP5,150).
Details of share options awarded to Directors are included in the Report of the Directors on page 5.
6 Finance costs
2010 2009
GBP GBP
Bank overdraft 4 25
Other loans 76,499 73,953
------- -------
76,503 73,978
======= =======
7 Taxation
(a) Analysis of charge for the year
There is no corporation tax charge on the result of either period. The Group has losses of approximately GBP10.60m (2009: GBP10.30m), which, subject to the agreement of the Inland Revenue, are available to be carried forward against future profits of the same trade.
No deferred tax asset has been recognised in respect of these tax losses due to the uncertainty over their future use. At the 31(st) December 2010, the deferred tax asset not provided for is estimated at GBP2.75m (2009: GBP2.88m).
(b) Factors affecting the tax charge for the year.
The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 28%.
The differences are explained below:
2010 2009
GBP GBP
Losses on ordinary activities before tax (610,259) (630,002)
========== ==========
Loss on ordinary activities multiplied by standard
rate of corporation tax in the UK of 28% (170,872) (176,401)
Effects of:
Expenses not deductible for tax purposes (27,988) 1,771
Depreciation in excess of capital allowances
for year 11,030 9,348
Utilisation of brought forward losses - (61,524)
Tax losses carried forward to a future period 187,830 226,806
Current tax charge for the year (note 7(a)) - -
========== ==========
8 Loss per share
2010 2009
Pence Pence
Basic loss per share (0.75) (1.09)
Diluted loss per share (0.75) (1.09)
======= =======
The basic loss per share has been calculated by dividing the loss for the year of GBP584,126 (2009: GBP660,222) by the weighted average number of shares of 78,392,551 (2009: 60,812,643) in issue during the year.
The diluted loss per share has been calculated by dividing the loss for the year of GBP584,126 (2009: GBP660,222) by the diluted average number of shares of 78,392,551 (2009: 60,812,643) in issue during the year.
However, since the Group is loss making, there is no dilution.
9 Loss for the Financial Year
As permitted by section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. The parent company's retained profit for the year was GBP302,951 (2009: GBP4,562,771 loss).
The retained loss for the year is stated after crediting a management charge of GBP1,176,871 (2009: GBP1,342,974). The Directors consider that since the UK subsidiaries of the Group have now established themselves as profitable organisations, a recharge should be made to reflect the overhead costs incurred by Conexion Media Group Plc on behalf of these subsidiaries. This recharge has been calculated on a fully commercial basis.
10 Shareholders' Funds
(a) Company share capital
2010 2009
GBP GBP
The authorised share capital comprises:
Authorised:
100,000,000,Ordinary shares of 1p each 1,000,000 1,000,000
========== ==========
Called up, allotted and fully paid:
78,392,551 Ordinary shares of 1p each 783,926 783,926
========== ==========
(2009: 78,392,551 Ordinary shares of 1p each)
(b) Share-based payments
Options
In 2002, the Company established an EMI share Option Scheme and an unapproved Share Option Scheme. These have no performance related vesting criteria and are on similar terms as described in the Directors' Report.
The Company has the following options in issue:
At start of Granted in Exercised Forfeited Cancelled At end of year year in year in year in year year 6,615,000 - - 1,045,000 - 5,570,000
The range of exercise prices is:
Number of shares Exercise price Date of expiry
190,000 GBP0.44 07/02/2012
80,000 GBP0.24 14/04/2014
250,000 GBP0.12 05/12/2015
3,050,000 GBP0.18 13/12/2016
2,000,000 GBP0.03 07/01/2019
Fair value on grant date is measured by use of a Black Scholes model. The valuation methodology is applied at each year end and the valuation revised to take account of any changes in estimate of the likely number of shares expected to vest. The key inputs are:
2010 2009
Risk free rate 2.4% 2.4%
Dividend yield 0% 0%
Volatility rate based on published information 212% 212%
The Group recognised an expense of GBP19,149 in 2010 (2009: GBP139,516).
(c) Movements of capital and reserves - COMPANY
Called Share Shares
up Share Premium to be Retained
Capital Account Issued Earnings Total
GBP GBP GBP GBP GBP
Balance at
1(st)
January
2010 783,926 8,356,254 611,609 (9,927,971) (176,182)
Share
Options
granted - - 19,149 - 19,149
Share
Options
lapsed - - (135,366) 135,366 -
Transfer
from income
statement - - - 302,951 302,951
------------- ---------- ------------- ---------- ------------ ----------
Balance at
31(st)
December
2010 783,926 8,356,254 495,392 (9,489,654) 145,918
============= ========== ============= ========== ============ ==========
The movements on capital and reserves in the previous year were:
Called Share Shares
up Share Premium to be Retained
Capital Account Issued Earnings Total
GBP GBP GBP GBP GBP
Balance at
1(st)
January
2010 600,593 8,264,587 552,899 (5,466,005) 3,972,074
Share issue 183,333 - - - 183,333
Premium on
allotment
during the
year - 91,667 - - 91,667
Share
Options
granted - - 139,516 - 139,516
Share
Options
lapsed - - (80,806) 80,806 -
Transfer
from income
statement - - - (4,562,772) (4,562,772)
------------- ---------- ------------ --------- ------------ ------------
Balance at
31(st)
December
2009 783,926 8,356,254 611,609 (9,927,971) (176,182)
============= ========== ============ ========= ============ ============
(d) Movements of capital and reserves - GROUP
Called Other
up Share Shares Compre Total Non
Share Premium to be Other Retained -hensive Owners Controlling
Capital Account Issued Reserves Earnings Income Interest Interest Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1st
January 2010 783,926 8,356,254 611,609 2,654 (9,238,251) (339,121) 177,071 (21) 177,050
Share Options
granted - - 19,149 - - - 19,149 - 19,149
Share Options
lapsed - - (135,366) - 135,366 - - - -
Acquisition of
non-controlling
interest - - - - - - - 331,576 331,576
Loss for the
year - - - - (584,126) - (584,126) (26,133) (610,259)
Foreign exchange
difference
taken to
retained
earnings - - - - - (95,675) (95,675) - (95,675)
Balance at
31(st) December
2010 783,926 8,356,254 495,392 2,654 (9,687,011) (434,796) (483,581) 305,422 (178,159)
================= ======== ========== ========== ========= ============ ========== ========== ============ ==========
The movements on reserves in the previous year were:
Called Other
up Share Shares Other Compre Total Non
Share Premium to be Reserves Retained -hensive Owners Controlling
Capital Account Issued restated Earnings Income Interest Interest Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1st
January 2010 600,593 8,264,587 552,899 2,654 (8,533,636) (575,497) 311,600 (134,035) 177,565
Share issue 183,333 - - - - - 183,333 - 183,333
Premium on
allotment
during the
year - 91,667 - - - - 91,667 - 91,667
Share Options
granted - - 139,516 - - - 139,516 - 139,516
Share Options
lapsed - - (80,806) - 80,806 - - - -
Acquisition of
non-controlling
interest - - - - (125,199) - (125,199) 103,794 (21,405)
Loss for the
year - - - - (660,222) - (660,222) 30,220 (630,002)
Foreign exchange
difference
taken to
retained
earnings - - - - - 236,376 236,376 - 236,376
Balance at
31(st) December
2009 783,926 8,356,254 611,609 2,654 (9,238,251) (339,121) 177,071 (21) 177,050
================= ======== ========== ========= ========= ============ ========== ========== ============ ==========
The Shares to be Issued Reserve represents charges to the income statement required by IFRS 2 to reflect the cost of the options issued to the Directors and employees.
11 Intangible Assets
GROUP
Goodwill Investment in Music Rights
Administered Purchased Total
GBP GBP GBP GBP
Cost or Valuation
At 1(st) January 2009 1,518,753 3,727,988 2,491,047 6,219,035
Additions - - - -
Exchange difference - (1,546) - (1,546)
---------- ------------- ---------- ----------
At 1(st) January 2010 1,518,753 3,726,442 2,491,047 6,217,489
Additions - - 1,121,393 1,121,393
Exchange difference - 380 (39,925) (39,545)
---------- ------------- ---------- ----------
At 31(st) December 2010 1,518,753 3,726,822 3,572,515 7,299,337
---------- ------------- ---------- ----------
Amortisation
At 1(st) January 2009 - 2,060,509 277,348 2,337,857
Charge for the year - 370,021 34,349 404,370
Exchange difference - (337) - (337)
---------- ------------- ---------- ----------
At 1(st) January 2010 - 2,430,193 311,697 2,741,890
Charge for the year - 370,021 63,811 433,852
Exchange difference - 105 (153) (48)
---------- ------------- ---------- ----------
At 31(st) December 2010 - 2,800,339 375,355 3,175,694
---------- ------------- ---------- ----------
Impairment
At 1(st) January 2009 148,233 13,254 231,039 244,293
Charge for the year - - - -
---------- ------------- ---------- ----------
At 1(st) January 2010 148,233 13,254 231,039 244,293
Charge for the year - - - -
---------- ------------- ---------- ----------
At 31(st) December 2010 148,233 13,254 231,039 244,293
---------- ------------- ---------- ----------
Net Book Value
At 31(st) December 2010 1,370,520 913,229 2,966,121 3,879,350
========== ============= ========== ==========
At 31(st) December 2009 1,370,520 1,282,995 1,948,311 3,231,306
========== ============= ========== ==========
During the year, the Group purchased 2 catalogues of music publishing rights, the cost of which totalled GBP16,139.
In addition, Conexion Media Group acquired 70% of the assets in Kid Gloves Music Group ("KGM") totalling GBP1,105,254 as detailed in note 13.
11 Intangible Assets
COMPANY
Goodwill Investment in Music Rights
Administered Purchased Total
GBP GBP GBP GBP
Cost or Valuation
At 1(st) January 2009 170,622 3,670,936 238,836 3,909,772
Additions - - - -
At 1(st) January 2010 170,622 3,670,936 238,836 3,909,772
Additions - - - -
--------- ------------- ---------- ----------
At 31(st) December 2010 170,622 3,670,936 238,836 3,909,772
--------- ------------- ---------- ----------
Amortisation
At 1(st) January 2009 - 2,035,702 30,443 2,066,145
Charge for the year - 367,094 3,412 370,506
At 1(st) January 2010 - 2,402,796 33,855 2,436,651
Charge for the year - 367,094 3,412 370,506
--------- ------------- ---------- ----------
At 31(st) December 2010 - 2,769,890 37,267 2,807,157
--------- ------------- ---------- ----------
Net Book Value
At 31(st) December 2010 170,622 901,046 201,569 1,102,615
========= ============= ========== ==========
At 31(st) December 2009 170,622 1,268,140 204,981 1,473,121
========= ============= ========== ==========
Goodwill is comprised of the following substantial components:
COMPONENTS GROUP COMPANY
GBP GBP
Classic Songs Plc 45,166 43,749
MCS Italia Ltd 21,956 21,874
MCS Italia S.R.L 94,553 104,999
Conexion Music Ltd 1,201,686 -
Diamond Time 7,159 -
Total 1,370,520 170,622
========== ========
The carrying value of goodwill for each cash generating unit is reviewed annually for impairment and adjusted to the recoverable amount if appropriate. The key assumption in measuring the carrying value of goodwill is projected revenue. The cash flow projections prepared for the next 3 years, are based on the average income of the prior 3 years. This is adjusted if management know of specific reasons as to why the income may fall. No growth factor has been applied in the projections. The discount rate applied for valuation purposed in the 2010 Financial Statements is 1.92%
12 Tangible Assets
GROUP COMPANY
Office Office
Equipment Equipment
GBP GBP
Cost or Valuation
At 1(st) January 2009 429,597 306,124
Additions 14,618 14,618
Disposals (17,719) -
Exchange rate (11,203) -
---------- ----------
At 1(st) January 2010 415,293 320,742
---------- ----------
Additions 3,216 1,214
Disposals (174,222) (133,125)
Exchange rate (337) -
---------- ----------
At 31(st) December 2010 243,950 188,831
---------- ----------
Depreciation
At 1(st) January 2009 286,089 188,113
Charge for the year 70,871 60,435
Disposals (9,352) -
Exchange rate (7,930) -
---------- ----------
At 1(st) January 2010 339,678 248,548
---------- ----------
Charge for the year 63,221 59,159
Disposals (174,222) (133,125)
Exchange rate 1,024 -
---------- ----------
At 31(st) December 2010 229,701 174,582
---------- ----------
Net Book Value
At 31(st) December 2010 14,249 14,249
========== ==========
At 31(st) December 2009 75,616 72,194
========== ==========
13 Fixed Asset Investments
COMPANY COMPANY
Shares in Unlisted
Group undertakings Investments
GBP GBP
Cost
At 1(st) January 2009 1,189,879 76,142
Additions 21,406 -
-------------------- -------------
At 1(st) January 2010 1,211,285 76,142
Additions 614,525 -
-------------------- -------------
At 31(st) December 2010 1,825,810 76,142
-------------------- -------------
Provision for diminution in value
At 1(st) January 2009 1,164,375 76,142
Provision made in year 21,906 -
-------------------- -------------
At 1(st) January 2010 1,186,281 76,142
Provision made in year - -
-------------------- -------------
At 31(st) December 2010 1,186,281 76,142
-------------------- -------------
Net Book Value
At 31(st) December 2010 639,529 -
==================== =============
At 31(st) December 2009 25,004 -
==================== =============
On the 3(rd) March 2010, Conexion Media Group acquired 70% of the assets in Kid Gloves Music Group ("KGM") from Kid Gloves Productions Inc., Kid Gloves Inc., and Crossroads Music LLC. The assets comprised music publishing rights, master recording rights and third party contracts.
The value of the consideration given for the acquisition was GBP614,525 satisfied by an initial payment of GBP150,603. In addition, Conexion Media Group Plc assumed liabilities of KGM totalling GBP463,922. The fair value of the assets acquired was 70% of GBP1,105,254, resulting in negative goodwill of GBP159,152. The negative goodwill arising has been included within operating expenses on the Consolidated Income Statement.
The Company holds more than 20% of the share capital of the following companies:
Subsidiary Class Proportion Nature of Country of
Undertaking of holding of shares business Incorporation
held
Screen Music Ordinary 100% Dormant UK
Services Ltd
Conexion Media Ordinary 100% Rights UK
Ltd Collection
Conexion Music Ordinary 100% Music UK
Ltd Publishing and
Copyright
Services
Conexion Media Ordinary 100% Dormant USA
Entertainment
Inc
Conexion Ordinary 70% Music USA
Entertainment Publishing and
LLC Copyright
Services
Diamond Time Ordinary 100% Copyright USA
(US) Ltd Services
Conexion Media Ordinary 100% Music USA
Group Inc Publishing and
Copyright
Services
MCS Italia Ordinary 100% Music Italy
S.R.L Publishing
Classic Songs Ordinary 100% Dormant UK
Plc
MCS Italia Ltd Ordinary 100% Dormant UK
MCS Music (Hong Ordinary 100% Music Hong Kong
Kong) Ltd Publishing
MCS Asia Ltd Ordinary 100% Dormant Cayman Islands
Participating Class Proportion Nature of Country of
Interests of holding of shares business Incorporation
held
R'N-D Ordinary 50% Dormant UK
Productions
Ltd
Conexion Entertainment Group LLC is not a direct subsidiary of Conexion Media Group Plc. It is owned 70% by Conexion Media Entertainment Inc, which in turn is owned 100% by Conexion Media Group Plc.
Diamond Time (US) is not a direct subsidiary of Conexion Media Group Plc. It is owned by Conexion Music Limited who are in turn owned by the parent company.
MCS Music (Hong Kong) Ltd is not a direct subsidiary of Conexion Media Group Plc. It is owned by MCS Asia Ltd who are in turn owned by the parent company. Previously MCS Asia Ltd was 70% owned by Conexion Media Group Plc, the remaining 30% interest was acquired by the Group in December 2009.
All Group companies have the same reporting date of 31(st) December.
14 Trade and other receivables
GROUP COMPANY
2010 2009 2010 2009
GBP GBP GBP GBP
Trade receivables 17,750 48,559 5,570 3,659
Amounts due from Group
undertakings - - 47,133 -
Royalty advances 67,256 99,408 - -
Other receivables 1,655 3,180 390 1,739
Other taxes 8,743 8,257 7,703 7,816
Prepayments and accrued income 1,122,657 1,299,328 43,839 68,304
---------- ---------- -------- -------
1,218,061 1,458,732 104,635 81,518
========== ========== ======== =======
15 Current liabilities
GROUP COMPANY
2010 2009 2010 2009
restated restated
GBP GBP GBP GBP
Bank loans and overdrafts 161,734 - - -
Trade payables 198,468 174,583 128,160 134,454
Amounts due to subsidiary
undertakings - - 607,891 419,230
Royalties due 5,072,511 4,709,584 - -
Other payables 335,140 132,832 120,193 49,381
Other tax and social security 136,613 167,895 62,375 90,805
Accruals and deferred income 215,570 181,701 215,570 167,647
Amounts due to related
parties 1,028,875 1,119,000 1,028,875 1,119,000
---------- ---------- ---------- ----------
7,148,911 6,485,595 2,163,064 1,980,517
========== ========== ========== ==========
16 Future Financial Commitments
Operating leases
Operating leases relate to leases of office premises with lease terms between one and eight years with a break clause (both parties) on the UK lease after two years. In the event that the break clause is not invoked, then the contract contains clauses for a market rental review. The Group does not have an option to purchase the properties at the expiry of the lease periods.
At 31(st) December, the Group had the following commitments under operating leases.
GROUP COMPANY
2010 2009 2010 2009
restated restated
GBP GBP GBP GBP
not later than one year; 122,823 108,681 90,000 90,000
later than one year and not
later than five years; 98,029 186,164 96,164 186,164
later than five years - - - -
220,852 294,845 186,164 276,164
======== ========= ======== =========
At 31(st) December, the Group had the following sublease payments expected to be received under operating leases.
GROUP COMPANY
2010 2009 2010 2009
GBP GBP GBP GBP
not later than one year; 44,005 14,000 42,999 14,000
later than one year and not
later than five years; 52,948 31,312 52,948 31,312
later than five years - - - -
96,953 45,312 95,947 45,312
======= ======= ======= =======
Lease payments recognised as an expense
GROUP COMPANY
2010 2009 2010 2009
GBP GBP GBP GBP
minimum lease payments 159,792 140,753 86,700 86,700
sub-lease payments received (47,828) (46,496) (45,040) (46,176)
111,964 94,257 41,660 40,524
========= ========= ========= =========
17 Transactions with Related Parties
In the year, a total repayment of GBP120,000 was made against an unsecured loan of GBP325,000 received in 2008 from Brian Scholfield, a former director, who is a shareholder of the Group. At 31(st) December 2010 the balance of the loan was GBP50,875 (2009: GBP170,875). Monthly repayments of GBP10,000 have continued and as at the 19(th) May 2011, the final balance payment of GBP10,875 was made. Interest of GBP7,066 (2009: GBP22,648) was charged on the reducing balance during the year and reflects the rate of interest charged by his lender.
In the year, a total repayment of GBP24,000 was made to TW Indus Limited, a shareholder of the Group. At 31(st) December 2010 the balance of the loan was GBP3,000 (2009: GBP27,000). As at 1(st) March 2011, the loan was fully repaid.
As at the 31(st) December 2010, the balance of the loan from Polymer Holdings Limited ("PHL"), a shareholder of the Group, was GBP975,000. A Warrant Deed remains in place. Part of the loan is convertible into ordinary shares at the option of PHL as follows:-
Amount Number of ordinary shares Exercisable by Price per share GBP500,000 4,166,667 21 December 2011 12.0p
The interest rate on the remaining two facilities is the greater of 5% and 2.5% above LIBOR. Interest of GBP53,052 (2009: GBP44,160) was charged in the year.
The facilities are secured by a debenture over all of the assets, property and business of the Group.
In the event that the loan is not converted into shares, it shall be repayable on 22(nd) December 2011 or on written demand of the Lender, being a period of not less than 90 business days.
Amounts due to related parties as separated into loan and interest are as follows:
Lender Loan Interest Total
Brian Scholfield 50,875 - 50,875
TW Indus Limited 3,000 - 3,000
Polymer Holdings 975,000 97,212 1,072,212
---------- --------- ----------
Total 1,028,875 97,212 1,126,087
========== ========= ==========
During the year, the wife of Justin Sherry received remuneration of GBP9,462 in return for employment services.
Remuneration of Key Management Personnel
The key management personnel are considered to be the Directors. Further information relating to the remuneration of the Directors is provided in note 5 to the financial statements.
In addition to the information provided in note 5, employers' National Insurance contributions paid on behalf of Directors totalled GBP12,068 (2009: GBP9,518).
Type of Gross Total Total
Director Director Salary/Fees Benefits Pension 2010 2009
GBP GBP GBP GBP GBP
Justin
Sherry Executive 100,000 2,882 - 102,882 102,121
Brian Non
Scholfield Executive 18,000 3,130 - 21,130 21,079
Guy Non
Fletcher Executive 18,000 - - 18,000 18,000
Non
Tom Bradley Executive - - - - 16,500
Total 136,000 6,012 - 142,012 157,700
========================= ============ ========= ======== ======== ========
18 Derivatives and Other financial instruments
Financial Instruments
The Group's financial instruments comprise items such as trade receivables and trade payables that arise directly from its operations. Financial instruments such as investments in and advances to subsidiary undertakings and short-term debtors and creditors are excluded from the disclosure below, it is, and has been throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group's financial instruments are interest rate risk and liquidity risk. The policies for managing these risks are summarised below and have been applied throughout the year.
Interest Rate/Liquidity Risk
Cash balances are placed so as to maximise interest earned while maintaining the liquidity requirements of the business. When seeking borrowings the Directors consider the commercial terms available and, in consultation with their advisors, consider whether such terms should be fixed or variable and are appropriate to the business.
The values shown in the financial statements approximate the fair values of the monetary liabilities.
Foreign Currency Risk
The Group has a significant overseas operation, namely companies whose revenues and expenses are denominated in US dollars. As a result, the Group's sterling balance sheet may be affected by movements in the Sterling/US dollar exchange rate.
The Group has a limited currency exposure generating gains or losses within the Income Statement.
Credit risk
Credit risk is managed on a group basis. Credit risk arises principally from cash and cash equivalents and deposits with banks.
The group reviews its banking arrangements carefully to minimise such risks. The nature of our business does not expose us to credit risk from customers.
19 Capital Management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. We need to continue to invest in our business and to finance appropriate acquisitions when they arise. The Company's financial instruments comprise loans, cash, and working capital arising from our trading operations. The loans from related parties and are detailed in note 17 to the financial statements. The Company does not have any externally imposed capital requirements.
20 Controlling Party
There is no one controlling party.
21 Post Balance Sheet Events
There are no significant post balance sheet events to report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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