Final Results

RNS Number:3226Q
Galleon Holdings PLC
30 September 2003


                             GALLEON HOLDINGS PLC:
              
              Preliminary Results for the year ended 31 March 2003


Galleon Holdings plc, the AIM listed cross-media company, announces its
Preliminary Results for the year ended 31 March 2003.


Chairman's Statement


Introduction

I am pleased to present Galleon's financial results for the year to 31st March
2003. The operating loss of #862,000 prior to impairment and amortisation of
goodwill, was somewhat greater than the Board had been anticipating at the time
the interim results were published, and was attributable to two principal
factors discussed below, neither of which do I anticipate will be recurrent
features of any future financial announcement.


The first factor which adversely affected the results was simply the greater
than expected time it has taken to conclude a satisfactory production agreement
on the Astro Knights property, into which the Company had already invested
substantial financial resources. I am pleased to report that this is no longer
an issue, as described below.


The second factor centred around A4 Publications, which had been trading in line
with the directors' expectations during the early part of last year. Here again,
the issues which arose during the second half, and which are discussed below,
have been addressed and necessary changes to the management of that business
introduced.


A4 Publications

It became apparent in the final quarter that the performance of A4 had
deteriorated, resulting in the necessity for certain management changes. Joseph
Matesavec, whose appointment I announced in my last Interim Statement, continues
to restructure A4's business in the USA. He has agreed with the Reed Midem
organization to produce a magazine for distribution at MIP Junior and MIPCOM TV
festivals next month, in Cannes. The editorial team has been strengthened, and
the process of recruiting sales personnel for the European and US markets is
underway.


Probe Media

Probe, the database management and cross-marketing division, has been
streamlined during the second half, and I am able to record that, despite
trading conditions remaining difficult during the period, Probe made a positive
contribution.


Astro Knights

I announced on 19th August, that we had successfully reached agreement with
Jaguar Media Productions SA and had signed a contract for the production of a
full-length feature movie for theatrical release and for 260 X 11 minute
episodes for television. These productions, in 3D, computer-generated imagery,
will be fully funded by Jaguar who will commence production in October 2003 for
release in 2005. Galleon will continue to have some creative and marketing
input, and will retain the exploitation rights in the UK. Music publishing for
the movie and television series has been contracted to Astro Knights Limited,
the Galleon/Sanctuary Group joint venture.

Oggies

Previously known as The Cornish Riviera Pasties, Oggies has continued to attract
attention across a number of sectors internationally. The characters in the
series are unique sporting heroes who encourage children to get fitter whilst
having fun. A number of significant agreements have been signed with companies
in the food, plush, giftware and fashion sectors. Two agreements have been
concluded with major surfing bodies in the UK and Australia.

The British Surfing Association has launched an initiative to teach children to
surf safely. Known as Unleashed, The Fistral Freddie Surf Academy will be rolled
out to the British Surfing Association's 52 surf schools in the UK and abroad
during 2004 / 2005. Fistral Freddie, the Oggies Surfing UK hero, has also
attracted attention in Australia.

Surfing Australia, the 40 year old governing body of the sport in Australia, has
licensed Oggies Super Hero, Bondi Bruce and will launch Unleashed, The Bondi
Bruce Surf Academy, for children between the ages five to ten years, during
2004.

In Australia, Galleon has appointed Gaffney Associates, the largest licensing
agency in that region, to represent its rights for a three-year period.

PC Pepper/Pepper's Patrol

We have entered into a joint venture agreement with a newly-formed media
company, Coolebah Ltd. Coolebah has been established by William Harris, whose
profile in the children's' TV entertainment industry is high. William was
responsible for the development and international growth of Gullane Plc
(recently acquired by Hit Entertainment Plc), the company behind one of this
country's most successful children's character series, Thomas The Tank Engine.
The combination of William Harris (Thomas The Tank Engine), Rob Lee, creator of
P C Pepper, of the BBC's Fireman Sam, and the designer of The Shoe People, a
series I created in the 1980s, gives the new joint venture a powerful team, with
a wealth of experience and success in the creation and exploitation of IPR.


Metropolitan Police

Galleon is working on three initiatives, which will use characters to deliver
awareness messages to parents and children on "stranger danger", Internet danger
and the dangers of drug abuse.


I am pleased to be able to announce that we have secured the services of Kevin
Sturge, who will be working with the Metropolitan Police and other agencies to
develop these and other, future, awareness programmes. Kevin co-founded
Technical & Computer Services Ltd., an international consultancy specialising in
fraud prevention and police intelligence systems, and has worked with police
forces both in the UK and internationally.


The first of these three initiatives will be announced over the remainder of
this calendar year.

Current Trading

Like the second half of the last financial year, the first quarter of the
current year was not easy, and was made worse by surrounding market conditions.
The second quarter, however, has seen Galleon conclude a number of major
contracts, which will result in revenue flowing through during 2004/ 2005.


Outlook

My colleagues and I, and many of those with whom we deal, detect some revival of
confidence in the market, and the Company is well positioned to make the most of
the upturn. Galleon is now becoming recognised as an IPR incubator, and it is
attracting increasing numbers of approaches from rights' owners, who perceive
the Company as the preferred partner to develop and exploit their properties. We
shall continue to be selective, and only take on projects meeting our strategic
criteria.

This is further evidence of the growing interest in the Galleon portfolio, which
has further established and grown its IPR from quite diverse areas over the
second half of last year and during the year to date. From a strong base of IPR
assets, and a sound business model, which we continue to pursue, I look forward
to the balance of financial 2003/4 and the early part of 2004/5 with renewed
optimism.


Post Balance Sheet Events

The Company issued 30 million new ordinary shares at par, at the end of July, to
raise approximately #292,000 after expenses. These shares were issued under the
Company's existing share issuance powers, and were placed with institutional
investors and one, significant, incoming shareholder.


Other Matters

It gives me real pleasure to welcome Richard Thompson as a shareholder of
Galleon. Since the end of the financial year, he has acquired a 15.9 percent
interest in the share capital of the Company. Richard has great experience in
the media sector, and interest in media IPR. I have worked successfully together
with Richard during the 1990s, and his support for Galleon's IPR strategy sends
a strong signal to our peers in the sector.


In conclusion, I should like to thank shareholders for their continued support,
and I look forward to communicating further positive developments over the
balance of 2003 and beyond.


James C. Driscoll, MBE,

Chairman of the Board

30 September 2003




CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT

For year ended 31 March 2003

                    Note      2003           2003          2002         2002
                             #             #             #            #

Turnover                                   1,207,194                  276,886

Cost of sales                               (883,237)                (186,834)

Gross profit                                 323,957                   90,052

Other administrative        (1,185,755)                  (495,838)
expenses
Impairment and              (7,822,834                   (420,378)
amortisation of
goodwill
Administrative                            (9,008,589)                (916,216)
expenses

Operating loss pre            (861,798)                  (405,786)
impairment and
amortisation of
goodwill
Impairment and              (7,822,834)                  (420,378)
amortisation of
goodwill
Operating loss                            (8,684,632)                (826,164)

Share of operating
(loss)/profit of:
Joint venture                                    (45)                       -
Associate                                    (64,173)                   2,161
Amortisation of                              (69,615)                       -
purchased goodwill
in associate

Net interest                                 (14,507)                  11,506

Loss on ordinary
activities before
taxation                                  (8,832,972)                (812,497)

Tax on loss on         2                           -                        -
ordinary
activities

Loss on ordinary                          (8,832,972)                (812,497)
activities after
taxation and loss
for the financial
year

Basic loss per         4                    (1.08) p                 (0.26) p
ordinary share



There were no recognised gains or losses other than the loss for the financial
year.





CONSOLIDATED SUMMARISED BALANCE SHEET AT 31 MARCH 2003

                           2003         2003         2002          2002
                           #            #            #             #
Fixed assets
Intangible assets
Goodwill                    4,750,000                 12,572,834
Other                           1,879                      5,752
                                         4,751,879                  12,578,586

Tangible assets                             70,608                     100,784
Investments
Joint venture
Share of gross assets         736,041                    735,942
Share of gross               (736,085)                  (735,941)
liabilities
                                  (44)                         1
Associates                     70,000                    203,788
Other investments              25,859                     68,143
                                            95,815                     271,932
                                         4,918,302                  12,951,302
Current assets
Stocks and work in             17,968                     17,106
progress
Debtors                       778,858                    912,813
Cash at bank and in hand        4,255                    477,155
                              801,081                  1,407,074

Creditors: amounts falling   (807,221)                  (478,211)
due within one year

Net current (liabilities)/                  (6,140)                    928,863
assets
Total assets less current                4,912,162                  13,880,165
liabilities

Creditors: amounts falling
due after more
than one year                               (5,236)                    (28,267)

Provisions for liabilities                 (97,513)                   (209,513)
and charges

                                         4,809,413                  13,642,385

Capital and reserves
Called up share capital                  8,149,953                   8,149,953
Share premium account                    1,341,731                   1,341,731
Other reserves                           6,338,110                   6,338,110
Profit and loss account                 (11,020,381)                (2,187,409)

Shareholders' funds                      4,809,413                  13,642,385





CONSOLIDATED SUMMARISED CASH FLOW STATEMENT

For the year ended 31 March 2003

                                                  Note   2003        2002
                                                         #           #

Net cash outflow from operating activities           5    (694,629)   (740,836)

Returns on investments and servicing of finance
Interest received                                            3,887      18,955
Interest paid                                              (14,329)     (5,473)
Hire purchase interest                                      (4,065)     (1,976)

Net cash (outflow)/inflow from returns on
investments
and servicing of finance                                   (14,507)     11,506

Capital expenditure
Purchase of tangible fixed assets                          (16,068)     (9,880)
Purchase of intangible fixed assets                           (887)     (1,200)
Payments to acquire fixed asset investments                (30,000)          -
Proceeds from sale of fixed asset investments                2,165           -
Net cash outflow from capital expenditure                  (44,790)    (11,080)

Acquisitions
Purchase of subsidiary undertaking                               -    (358,240)
Net cash acquired with subsidiary                                -     103,592
Net cash outflow from acquisitions                               -    (254,648)

Net cash outflow before financing                         (753,926)   (995,058)

Financing
Issue of shares                                                  -     882,322
Expenses paid in connection with share issues                    -    (144,610)
Capital element of finance leases                          (39,712)    (12,346)
Net cash (outflow)/inflow from financing                   (39,712)    725,366

Decrease in cash                                     6    (793,638)   (269,692)




NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2003



1. BASIS OF PREPARATION

The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historical cost convention.

The principal accounting policies of the group are set out in the group's 2003
annual report and financial statements.


2.  TAXATION ON LOSS ON ORDINARY ACTIVITIES

No tax charge arises on the loss for the year.

The tax assessed for the year differs from the standard rate of Corporation Tax
in the UK as explained below:

                                                              2003        2002
                                                                 #           #
Loss on ordinary activities before tax                  (8,832,972)   (812,497)

Loss on ordinary activities multiplied by standard
rate of Corporation Tax in the UK of 30% (2002: 30%)
                                                        (2,649,892)   (243,749)
Effect of:
Expenses not deductible for tax purposes                 2,356,822      25,400
Capital allowances for year in excess of                      (280)      3,600
depreciation
Unrecognised deferred tax assets                           292,790     214,749
Current tax credit for year                                      -           -


Unrelieved tax losses of approximately #2,500,000 (2002: #1,600,000) remain
available to offset against future taxable trading profits.



3.    DIVIDENDS

The directors do not recommend the payment of a dividend for the year ended 31
March 2003 (2002 : Nil)

4.    LOSS PER SHARE

The calculation of the basic loss per share is based on the loss for the year
attributable to ordinary shareholders of #8,832,972 (2002: #812,497) divided by
the weighted average number of shares in issue during the year of 814,995,441
(2002: 314,670,485). The effect of the share options is anti-dilutive.



5.    NET CASH OUTFLOW FROM OPERATING ACTIVITIES 
                                                   2003            2002
                                                   #               #
Operating loss                                        (8,684,632)     (826,164)
Loss on disposal of tangible fixed assets                  1,816         1,451
Loss on disposal of fixed asset investments                  335             -
Depreciation of tangible fixed assets                     44,428        20,284
Amortisation of other intangible fixed assets              4,760         4,000
Provision against investments                             69,784        24,822
Reversal of provisions                                  (112,000)            -
Amortisation and impairment of goodwill                7,822,834       413,834
Increase in stocks and work in progress                     (862)      (16,571)
Decrease in debtors                                      133,955       248,568
Increase/(decrease) in creditors                          24,953      (611,060)
Net cash outflow from operating activities              (694,629)     (740,836)



6.    RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
                                                         2003        2002
                                                         #           #
Decrease in cash in the year                              (793,638)   (269,692)
Capital element of hire purchase and finance lease          39,712      12,346
rentals
Change in net debt resulting from cash flows              (753,926)   (257,346)
Finance leases acquired with subsidiary undertaking              -     (80,325)
Movement in net funds in the year                         (753,926)   (337,671)
Net funds at 1 April 2002                                  330,051     667,722
Net (debt)/ funds at 31 March 2003                        (423,875)    330,051



7.     PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.

The summarised balance sheet at 31 March 2003, and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Group's 2003 statutory financial
statements upon which the auditor's opinion is unqualified and does not include
any statement under s237 of the Companies Act 1985.

ENDS

For further information please contact:


James Driscoll, Chairman, Galleon Group Plc
T: 01384 350 212
M: 07785 977 969


Sam Allen / Peter Binns,
Binns & Co. PR Ltd
T: 020 7786 9600








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