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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Apace Media | LSE:APA | London | Ordinary Share | GB00B0PCZJ47 | 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% | 0.875 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMAPA
RNS Number : 9141S
Apace Media PLC
28 May 2009
Apace Media plc ("Apace" or the "Company")
Final Results
The Company is pleased to announce its final results for the year ended 31
December 2008. These are also available on the Company's website at
www.apacegroup.co.uk
For further information please contact:
Apace Media Plc:
Martin Johnston/ Didier Stoessel +44 207 471 9393
Seymour Pierce:
John Depasquale +44 207 107 8000
OVERVIEW
2008 was a challenging year for all media companies and the Group was affected
in varying degrees by the economic downturn in both its Content and Broadcasting
segments. A small Group profit of GBP171,000 before exceptional charges (2007:
loss of GBP 1,949,000 ) is in line with guidance from our Interim Statement, but
the Group reports a loss for the year of GBP3,015,000 (2007: loss of
GBP3,787,000) due to significant charges for goodwill impairment relating to the
UK Content subsidiaries.
OPERATIONAL REVIEW
UK Content Creation
Our content creation businesses generated substantial revenue growth of 43% to
GBP11,518,000 (2007: GBP8,059,000) in spite of the significant insolvencies in
the music distribution and retail sectors in the fourth quarter.
Steadfast Television Limited and its international distribution arm Steadfast
International Limited boosted revenues by an impressive 70% to GBP7,077,000
(2007: GBP4,142,000) by winning a significant increase in programme commissions
from a diversifying base and selling our growing library successfully across all
international territories. Steadfast has moved quickly into the top-tier of UK
factual producers in only 3 years, and would rank 5th in the production league
table (Broadcast, March 2009) with 45 hours in 2008.
Steadfast completed 8 major primetime series during the period for an expanding
number and range of commissioning broadcasters: BBC One, ITV1, ITV2, Sky One,
Virgin Media, Five, National Geographic US, National Geographic International,
and Discovery Canada. Ratings series winners during the past year include Sky
Cops (BBC One), Send in the Dogs (ITV1), Brit Cops (Bravo), Cars, Cops, and
Criminals (BBC One), and Salvage Code Red (National Geographic
International/Discovery Canada) which premiered to critical and audience success
early in 2009. Steadfast continues to win re-commissions of its popular series.
Steadfast International boosted sales by 60% in 2008 as the international market
signalled its strong commercial acceptance of Steadfast's quality output. The
sales arm has active relationships with over 200 networks and content buyers
worldwide and Steadfast programmes are broadcast in over 160 countries. Major
clients include Australian networks Nine, Seven, Sky and Foxtel, Sweden's TV4,
SVT, and Kanal 5, TV2 Denmark, Rai (Italy), A&E Latin America, and RTL
Netherlands. This performance vindicates the Company's establishment of its own
sales and distribution department and provides an excellent platform for
continued growth.
In the course of the year Steadfast wrote down approximately GBP670,000 in total
for deficit financing of certain programmes, production cost overruns, and
one-off redundancy payments for the elimination of unnecessary overheads which
negatively affected the margin contribution of Steadfast.
Pro-Active Projects Limited had another healthy year, maintaining the previous
year's level of improved turnover at around GBP1.8m - a solid achievement
itself, in a worsening sports TV marketplace, but, more significantly, at an
improved level of profitablity.
All standing client relationships were
retained and developed, especially in the area of IRB rugby, watersports, and
motorsports. Magazine programme supply contracts , such as the rolling 2 year
deals for ESPN Star and Foxsports International were renewed at increased income
levels.
New "seed" clients were introduced, such as the ARCH Cricket
Trophy that looks set to become the sport's equivalent of the Dubai Rugby 7s now
being sponsored by Emirates, another Pro-Active Client, thanks to the
distribution performance delivered by the company's in-house team.
The
company also began a co-venture to provide the well-respected Virtual Eye 3D
Graphics service, as developed for the America's Cup sailing, to current and new
clients on a trial exclusivity arrangement. We believe the potential of the
system is undersold by its New Zealand creators and has great earnings potential
if managed on a more international basis.
Apace Music Limited was performing very well in 2008 when major insolvencies to
some of our most important distributors and retailers forced Apace Music into a
Company Voluntary Arrangement in order to continue to trade with the support of
its creditors. As a consequence the Company has taken a significant impairment
loss to the carrying value of the goodwill attributable to Apace Music. The
directors are reviewing the Group's music strategy in light of the major
structural changes to the industry.
Eastern European Broadcasting
The Company's cable television investment in Balkan Media Group (BMGL) performed
strongly in 2008 based on a successful programming strategy, higher audience
share, and the professional operating synergies with our partner, Swedish-based
Modern Times Group (MTG). Our 50% share of BMGL delivered profits of GBP588,000
this year (2007: loss of GBP760,000) in spite of the decline in advertising
revenues in the 4th Quarter due to macroeconomic conditions. The success of this
Bulgarian investment strategy has brought about the subsequent event of the
merger of BMGL with MTG's Nova Televizia, Bulgaria's second-ranked terrestrial
broadcaster. We expect this merger to be completed by mid-summer, 2009 after
various regulatory hurdles are overcome.
Current trading and future prospects
The turbulence in international financial markets has had a major impact on all
of our businesses and visibility for 2009 is poor. Having said that, the UK
Television production businesses have had an encouraging start to the year and
are performing better than internal targets. Apace Music is working within the
restrictions of the Company Voluntary Arrangement while it reviews its business
model going forward.
For our Balkan interests, investors should review the results and commentary of
the emerging parent company Nova Televizia on MTG's website (www.mtg.se).
In the past year directors have taken steps to stabilize the liquidity position
of Apace Media plc with sensible cost reductions in production, a successful
private placement, and the merger of our Bulgarian interests into a powerful
multi-channel broadcaster and media house. Management continue to seek a
stronger strategic position for the UK television businesses through a
combination with other content owners. The music business remains uncertain and
the directors are reviewing its future.
We believe in the long term value of our assets in both Content and Broadcasting
in spite of the current market environment.
Roby Burke
Chairman
28 May 2008.
Results and dividends
The results of the Group for the year are set out in the financial statements
and show a loss for the year of GBP3,015,000 (2007: loss of GBP3,787,000). The
directors do not recommend the payment of a dividend (2007 - GBPnil).
Consolidated income statement
For the year ended 31 December 2008
+---------------------------------------------------------+--------+------------+------------+
| | Notes | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+---------------------------------------------------------+--------+------------+------------+
| Continuing operations | | |
+---------------------------------------------------------+--------+-------------------------+
| Revenue | 1 | 11,518 | 8,059 |
+---------------------------------------------------------+--------+------------+------------+
| Cost of sales | | (8,360) | (5,288) |
+---------------------------------------------------------+--------+------------+------------+
| Gross profit | | 3,158 | 2,771 |
+---------------------------------------------------------+--------+------------+------------+
| | | | |
+---------------------------------------------------------+--------+------------+------------+
| Other income | 2 | - | 20 |
+---------------------------------------------------------+--------+------------+------------+
| Administrative expenses | | | |
+---------------------------------------------------------+--------+------------+------------+
| Exceptional | 5 | (3,226) | (3,283) |
+---------------------------------------------------------+--------+------------+------------+
| Normal | | (3,613) | (4,068) |
+---------------------------------------------------------+--------+------------+------------+
| Operating loss and loss on ordinary activities before | | (3,681) | (4,560) |
| interest | | | |
+---------------------------------------------------------+--------+------------+------------+
| Finance costs | 3 | (21) | (30) |
+---------------------------------------------------------+--------+------------+------------+
| Finance income | 3 | 59 | 118 |
+---------------------------------------------------------+--------+------------+------------+
| Share of profit / (loss) of associate | 15 | 588 | (760) |
+---------------------------------------------------------+--------+------------+------------+
| Loss on ordinary activities before income tax | 4 | (3,055) | (5,232) |
+---------------------------------------------------------+--------+------------+------------+
| Income tax credit / (expense) on loss on ordinary | 9 | 40 | (16) |
| activities | | | |
+---------------------------------------------------------+--------+------------+------------+
| Loss on ordinary activities after income tax from | | (3,015) | (5,248) |
| continuing operations | | | |
+---------------------------------------------------------+--------+------------+------------+
| | | | |
+---------------------------------------------------------+--------+------------+------------+
| Discontinued operations | | | |
+---------------------------------------------------------+--------+------------+------------+
| Net profit from discontinued operations | 10 | - | 1,461 |
+---------------------------------------------------------+--------+------------+------------+
| Loss for the year | | (3,015) | (3,787) |
+---------------------------------------------------------+--------+------------+------------+
| | | | |
+---------------------------------------------------------+--------+------------+------------+
| Attributable to: | | | |
+---------------------------------------------------------+--------+------------+------------+
| Equity shareholders | 24 | (2,858) | (3,575) |
+---------------------------------------------------------+--------+------------+------------+
| Minority interests | | (157) | (212) |
+---------------------------------------------------------+--------+------------+------------+
| | | (3,015) | (3,787) |
+---------------------------------------------------------+--------+------------+------------+
| | | | |
+---------------------------------------------------------+--------+------------+------------+
| Earnings per share | | | |
+---------------------------------------------------------+--------+------------+------------+
| From continuing operations | | | |
+---------------------------------------------------------+--------+------------+------------+
| Basic and diluted (pence) | 8 | (3.04) | (5.86) |
+---------------------------------------------------------+--------+------------+------------+
| From continuing and discontinued operations | | | |
+---------------------------------------------------------+--------+------------+------------+
| Basic and diluted (pence) | 8 | (3.04) | (4.01) |
+---------------------------------------------------------+--------+------------+------------+
All recognised gains and losses are included in the income statement.
Balance sheet
31 December 2008
+----------------------------------+-------+-----------+-----------+-------------+------------+
| | | Group | Company |
+----------------------------------+-------+-----------------------+--------------------------+
| | | 31 | 31 |31 December | 31 |
| | | December | December | 2008 | December |
| | | 2008 | 2007 | | 2007 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| |Notes | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Assets | | | | | |
| Non-current assets | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Property, plant and equipment | 11 | 475 | 479 | 50 | 81 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Intangible fixed assets | 12 | 864 | 940 | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Goodwill | 13 | - | 2,633 | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Investments in subsidiary | 14 | - | - | 1,741 | 4,363 |
| undertakings | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Investment in associate | 15 | 5,198 | 4,585 | 5,198 | 4,585 |
| undertaking | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Available for sale financial | 16 | 169 | 481 | 169 | 481 |
| assets | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Investments - acquisition | 17 | 73 | 520 | 73 | 520 |
| projects | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| | | 6,779 | 9,638 | 7,231 | 10,030 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Current assets | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Inventories | 18 | 644 | 1,069 | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Trade and other current | 19 | 4,269 | 3,122 | 1,619 | 3,489 |
| receivables | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Cash and cash equivalents | | 256 | 555 | 1,159 | 834 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Total current assets | | 5,169 | 4,746 | 2,778 | 4,323 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Total assets | | 11,948 | 14,384 | 10,009 | 14,353 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Liabilities | | | | | |
| Non-current liabilities | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Trade and other payables | 20 | - | - | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Deferred tax liabilities | 21 | 24 | 65 | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Total non-current liabilities | | 24 | 65 | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Current liabilities | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Trade and other current payables | 20 | 3,096 | 3,090 | 539 | 1,213 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Total current liabilities | | 3,096 | 3,090 | 539 | 1,213 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Total liabilities | | 3,120 | 3,155 | 539 | 1,213 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Net assets | | 8,828 | 11,229 | 9,470 | 13,140 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Capital and reserves | | | | | |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Called up share capital | 22 | 8,136 | 7,797 | 8,136 | 7,797 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Share premium | 24 | 6,908 | 6,840 | 6,908 | 6,840 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Other reserve | 24 | 1,375 | 1,375 | 1,375 | 1,375 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Translation reserve | 24 | (183) | - | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Shares to be issued | 23 | 60 | 49 | 60 | 49 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Retained earnings | 24 | (7,519) | (4,652) | (7,009) | (2,921) |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Equity shareholders' funds | | 8,777 | 11,409 | 9,470 | 13,140 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Minority interests | | 51 | (180) | - | - |
+----------------------------------+-------+-----------+-----------+-------------+------------+
| Capital employed | | 8,828 | 11,229 | 9,470 | 13,140 |
+----------------------------------+-------+-----------+-----------+-------------+------------+
Consolidated cash flow statement
For the year ended 31 December 2008
+-------------------------------------------+---+-------+------------+------------+------------+---+
| | | |Year ended | Year ended |
+-----------------------------------------------+-------+------------+------------+----------------+
| | | | 31 | 31 December |
| | | | December | |
+-----------------------------------------------+-------+------------+------------+----------------+
| | | | 2008 | 2007 |
+-----------------------------------------------+-------+------------+------------+----------------+
| |Notes | | GBP'000 | GBP'000 |
+-----------------------------------------------+-------+------------+------------+----------------+
| Cash flows from operating activities | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Cash generated from operations | 25 | | (847) | 838 |
+-------------------------------------------+-----------+------------+------------+------------+
| Interest paid | 3 | | (21) | (30) |
+-------------------------------------------+-----------+------------+------------+------------+
| Net cash generated from operating | | | (868) | 808 |
| activities | | | | |
+-------------------------------------------+-----------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Purchase of subsidiary undertakings | | | - | (93) |
+-----------------------------------------------+-------+------------+------------+------------+
| Proceeds from disposal of subsidiary | | | - | 5,498 |
| undertaking | | | | |
+-------------------------------------------+-----------+------------+------------+------------+
| Costs relating to the disposal of subsidiary | | | - | (529) |
| undertaking | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Investment in associate | | | (312) | (2,157) |
+-----------------------------------------------+-------+------------+------------+------------+
| Cash acquired with acquisition of subsidiary | | | - | - |
| undertakings | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Cash disposed of with disposal of subsidiary | | | - | (348) |
| undertakings | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Proceeds from termination of investment | | | 888 | |
| project | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Purchase of tangible fixed assets | 11 | | (148) | (185) |
+-----------------------------------------------+-------+------------+------------+------------+
| Disposal of tangible fixed assets | | | - | - |
+-----------------------------------------------+-------+------------+------------+------------+
| Purchase of intangible fixed assets | 12 | | (136) | (223) |
+-----------------------------------------------+-------+------------+------------+------------+
| Purchase of investment property | | | (82) | (324) |
+-----------------------------------------------+-------+------------+------------+------------+
| Disposal of investment property | | | 221 | - |
+-----------------------------------------------+-------+------------+------------+------------+
| Purchase of available for sale financial | | | - | (602) |
| assets | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Proceeds from disposal of available for sale | | | - | 345 |
| financial assets | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Investment in TV Arberia (Albania) | | | - | (753) |
+-----------------------------------------------+-------+------------+------------+------------+
| Investment project work in progress | | | (88) | (716) |
+-----------------------------------------------+-------+------------+------------+------------+
| Interest received | 3 | | 59 | 75 |
+-------------------------------------------+-----------+------------+------------+------------+
| Net cash used in investing activities | | | 402 | (12) |
+-------------------------------------------+-----------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Proceeds from issue of ordinary shares | | | 406 | - |
+-----------------------------------------------+-------+------------+------------+------------+
| Related expenses | | | - | - |
+-----------------------------------------------+-------+------------+------------+------------+
| Loan to TV Arberia (Albania) | | | - | (1,763) |
+-----------------------------------------------+-------+------------+------------+------------+
| Net loan (made to) / repaid by associate | | | (163) | 386 |
+-----------------------------------------------+-------+------------+------------+------------+
| Bank borrowings drawn / (eliminated) | | | - | (342) |
+-----------------------------------------------+-------+------------+------------+------------+
| Proceeds from issue of shares in subsidiaries | | | - | 23 |
| to | | | | |
| minority interests | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Dividends paid - minority interest | | | (75) | (70) |
+-----------------------------------------------+-------+------------+------------+------------+
| Net cash generated from financing activities | | | 168 | (1,766) |
+-----------------------------------------------+-------+------------+------------+------------+
| | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Net decrease in cash, cash equivalents and | | | (299) | (970) |
| bank overdrafts | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Cash, cash equivalents and bank overdrafts at | | | 555 | 1,525 |
| beginning of the year | | | | |
+-----------------------------------------------+-------+------------+------------+------------+
| Cash, cash equivalents and bank overdrafts at | | | 256 | 555 |
| the end of the period | | | | |
+-------------------------------------------+---+-------+------------+------------+------------+---+
Statement of changes in equity
For the year ended 31 December 2008
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| | Called up | | | | | | |
| Group | share | Share | Other | Translation | Shares to | Retained | |
| | capital | premium | reserve | reserve | be issued | earnings | Total |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| | | | | | | | |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| At 1 January 2007 | 7,797 | 6,840 | 1,375 | - | 18 | (1,077) | 14,953 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Loss for period | - | - | - | - | - | (3,575) | (3,575) |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Movement in period | - | - | - | - | 31 | - | 31 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| 31 December 2007 | 7,797 | 6,840 | 1,375 | - | 49 | (4,652) | 11,409 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Prior year adjustment | - | - | - | - | - | (9) | (9) |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Shares issued | 339 | 68 | - | - | - | - | 407 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Exchange difference on | | | | | | | |
| associate's opening net | | | | | | | |
| assets | - | - | - | (183) | - | - | (183) |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Loss for period | - | - | - | - | - | (2,858) | (2,858) |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| Movement in period | - | - | - | - | 11 | - | 11 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
| 31 December 2008 | 8,136 | 6,908 | 1,375 | (183) | 60 | (7,519) | 8,777 |
+----------------------------+------------+------------+------------+----------------+-------------+------------+------------+
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| | | | | | | | |
| Company | | Called up | Share | Other | Shares to | Retained | |
| | | share | premium | reserve | be issued | earnings | Total |
| | | capital | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | GBP'000 | | | | | |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| | | | | | | | |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| At 1 January 2007 | | 7,797 | 6,840 | 1,375 | 18 | (459) | 15,571 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| Loss for period | | - | - | - | - | (2,462) | (2,462) |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| Movement in period | | - | - | - | 31 | - | 31 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| 31 December 2007 | | 7,797 | 6,840 | 1,375 | 49 | (2,921) | 13,140 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| Shares issued | | 339 | 68 | - | - | - | 407 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| Loss for period | | - | - | - | - | (4,088) | (4,088) |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| Movement in period | | - | - | - | 11 | - | 11 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
| 31 December 2008 | | 8,136 | 6,908 | 1,375 | 60 | (7,009) | 9,470 |
+---------------------------+-------------+-------------+-------------+------------+-------------+------------+------------+
The principal accounting policies are summarised below. They have all been
applied consistently throughout the period.
Companies legislation and Accounting Standards
These financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted for use by the European Union ("IFRS"),
International Financial Reporting Interpretations Committee ("IFRIC")
interpretations and the Companies Acts 1985 and 2006 (to the extent in force)
applicable to companies reporting under IFRS.
Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the preparation of the
financial statements. The estimates and assumptions that have a significant risk
of causing material adjustment are discussed below:
(a) Impairment testing of goodwill
The Group tests annually whether goodwill has suffered any impairment in
accordance with the Goodwill accounting policy. The recoverable amounts of
cash-generating units have been determined using value-in-use calculations.
Details of the impairment review are provided in note 13.
(b) Revenue recognition
In making its judgement of when to recognise revenue, management have applied
the detailed criteria for the recognition of revenue from the sale of goods and
rendering of services as detailed in IAS 18.
Going concern
The going concern basis has been used to prepare the financial statements of the
Company and the Group for the year ended 31 December 2008.
The Group had net assets of GBP8,828,000 as at 31 December 2008 (2007:
GBP11,229,000). The directors consider that the going concern basis is
appropriate on the grounds that there is sufficient cash to meet the Group's
liabilities as they fall due over the twelve months from the date of approval of
these statements.
Basis of consolidation
The financial statements of the Group include the results of the Company and all
of its subsidiary and associate undertakings.
No profit and loss account is prepared for the Company, as permitted by Section
230 of the Companies Act 1985. The Company made a loss for the year of
GBP4,088,000 (2007: loss of GBP2,462,000).
Business combinations
The results of subsidiary undertakings are included in the consolidated
financial statements from the date that control commences until the date that
control ceases. Control exists where the Group has the power to govern the
financial and operating policies of the entity so as to obtain benefits from its
activities. Accounting policies of the subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
All business combinations are accounted for by using the acquisition accounting
method. This involves recognising identifiable assets and liabilities of the
acquired business at fair value. Goodwill represents the excess of the fair
value of the purchase consideration for the interests in subsidiary undertakings
over the fair value to the Group of the net assets and any contingent
liabilities acquired.
Business combinations (continued)
Intra-group balances and any unrealised gains and losses or income and
expenses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated into sterling at
exchange rates ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated into sterling at year end exchange rates.
Foreign exchange differences arising on retranslation of opening net investments
in foreign operations are recognised directly in a separate translation reserve
within equity.
Minority interests represent the portions of profit or loss and net assets of
subsidiaries that are not held by the Group and are presented separately within
equity in the consolidated accounts.
Associates are all entities over which the Group has significant influence but
not control, generally accompanying a shareholding between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost. The Group's
investment in associates includes goodwill identified on acquisition, net of any
accumulated impairment loss.
The Group's share of its associates' post-acquisition profits or losses is
recognised in the income statement, and its share of post-acquisition movements
in reserves is recognised in reserves. The cumulative post-acquisition movements
are adjusted against the carrying amount of the investment. When the Group's
share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further
losses unless it has incurred obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of the associates have
been changed where necessary to ensure consistency with the policies adopted by
the Group.
Revenue recognition
Turnover comprises sales of goods and services after deduction of discounts and
VAT. It does not include sales between group companies.
Turnover is recognised when the risks and rewards of the underlying products and
services have been substantially transferred to the customer. Revenue from
services is recognised as the services are performed.
For television production, turnover comprises amounts receivable for work
carried out in producing television programmes, which is recognised over the
period of the production in line with the terms of the underlying contract, and
licence fees in respect of the distribution of those programmes to the extent
that the company has a contractual right to such fees, exclusive of Value Added
Tax.
For programme distribution, turnover comprises revenue recognised on selling
licences at the point of contractually agreeing the distribution, exclusive of
Value Added Tax.
For the sale of CDs, turnover comprises revenue recognised at the point of
delivering the CD, exclusive of Value Added Tax.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated at the exchange rate ruling at the balance sheet date.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date of
the transaction. Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Exchange gains and losses
are recognised in the income statement.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the net identifiable assets of the acquired subsidiary /
associate at the date of acquisition. Goodwill on the acquisition of
subsidiaries is disclosed separately.
Goodwill on the acquisition of subsidiaries is allocated on acquisition to
cash-generating units that are anticipated to benefit from the combination. It
is not amortised but is reviewed annually for impairment. Impairment is
determined by assessing the recoverable amount of the cash-generating unit to
which the goodwill relates. This estimate of recoverable amount is performed at
each balance sheet date. The estimate of recoverable amount requires significant
judgement, and is based on a number of factors such as the near-term business
outlook for the cash-generating unit, including both its operating profit and
operating cash flow performance. Where the recoverable amount of the
cash-generating unit is less than the carrying amount, an impairment loss is
recognised.
Goodwill on the acquisition of associates is included in 'investments in
associates' and is reviewed for impairment at least annually. More regular
reviews are performed if events indicate that they are necessary.
Intangible fixed assets
The Group recognises any specifically identifiable intangible assets separately
from goodwill. Intangible fixed assets are stated at cost less accumulated
amortisation and impairment losses. Amortisation of intangible assets is charged
to administrative expenses in the income statement on a straight-line basis over
the estimated useful lives of intangible assets. The estimated useful lives are
as follows:
Music catalogue: 20 years
Other music rights: 3 years or, if less, the life of the rights
Film and sports rights: over the life of the rights
The carrying value of intangible assets is reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any provision for impairments in value.
Depreciation is provided on a straight-line or reducing balance basis to write
off the cost, less the estimated residual value over the estimated useful lives
of the asset. Estimated useful lives are as follows:
Leasehold improvements:15% p.a. or the length of the lease
Office equipment: between 5 and 8 years
Computer equipment:3 years
Property, plant and equipment is subject to review for impairment if triggering
events or circumstances indicate that it is necessary. Any impairment is charged
to the income statement as it arises.
Investments - acquisition projects in progress
Acquisition projects in progress held as fixed assets are stated at cost less
provision for impairment in value, if any.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other categories.
They are included in non-current assets unless management intends to dispose of
the investment within 12 months of the balance sheet date. Gains or losses
arising from changes in fair value are presented in the income statement within
"exceptional administrative expenses".
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's UK cash management facility are netted against credit balances in the
same facility and are included as a component of cash equivalents for the
purposes of the cash flow statement.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event and it is probable
that an outflow of economic benefits will be required to settle the obligation.
Provisions are recognised at an amount equal to the best estimate of the
expenditure required to settle the Group's liability.
Inventory and work in progress
Inventory and work in progress are valued at the lower of cost and net
realisable value. Cost represents direct costs incurred and, where appropriate,
a proportion of attributable overheads. Inventory is accounted for on a
first-in, first-out basis. Provision is made for slow moving and obsolete items
based on an assessment of technological and market developments and on an
analysis of historic and projected usage.
Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Deferred tax is provided in full using the balance sheet liability method for
all taxable temporary differences arising between the tax bases of assets and
liabilities and their carrying values for financial reporting purposes. Deferred
tax is measured using currently enacted or substantively enacted tax rates.
Deferred tax assets are recognised to the extent that the temporary difference
will reverse in the foreseeable future and that it is probable that future
taxable profit will be available against which the asset can be utilised.
Share based payments
The Group issues equity settled share-based awards to certain employees. A fair
value for the equity settled share award is measured at the date of grant. The
Group measures the fair value using the valuation technique most appropriate to
value each class of award.
The fair value of the award is recognised as an expense over the vesting period
on a straight-line basis, after allowing for an estimate of the proportion of
share awards that will eventually vest. The level of vesting is reviewed
annually; and the charge is adjusted to reflect actual or estimated levels of
vesting with the corresponding entry to equity.
Financial instruments
In relation to the disclosures made in the notes to the financial statements:
* Short term debtors and creditors are not treated as financial assets or
financial liabilities except for the currency disclosures; and
* The Group does not hold or issue derivative financial instruments for trading
purposes.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Assets held under finance leases are recognised as non-current assets of the
Group at their fair value at the date of commencement of the lease or, if lower,
at the present value of the minimum lease payments. The corresponding liability
to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments relating to operating leases are charged to the income statement
on a straight-line basis over the lease term.
International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of these consolidated financial statements, the
IASB and IFRIC have issued the following standards and interpretations which are
effective for annual accounting periods beginning on or after the stated
effective date. These standards and interpretations are not effective for and
have not been applied in the preparation of these consolidated financial
statements:
* IFRS 8: Operating Segments (effective as of 1st January 2009)
* IAS 1: Presentation of Financial Statements (revised) (effective as of 1st
January 2009)
* IFRS 3: Business Combinations (revised) (effective as of 1st July 2009)
* IAS 27: Consolidated and Separate Financial Statements (amended) (effective as
of 1st July 2009)
* IAS 23: Borrowing Costs (amended) (effective as of 1st January 2009)
The directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the Group's financial statements
in the period of initial adoption. However, the directors are aware that the
application of IFRS 8 may significantly alter the amount and complexity of
disclosure contained in the Group's financial statements. Other standards,
amendments and interpretations have been issued but are not yet effective and
are not expected to be relevant to the Group's operations.
Notes to the financial statements
For the year ended 31 December 2008
1. Segmental reporting
The Group has two business segments, which are separately managed and which have
very different business risks and returns. The Board regards this segmentation
as its primary format for segmental reporting and geographical segmentation as
its secondary format.
Primary reporting format - business segments
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | Eastern European | Content Creation | Unallocated | Group |
| | Broadcasting | | | |
+----------------------------------------+---------------------+--------------------+---------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Continuing operations | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Revenue | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| External sales | - | - | 11,518 | 8,059 | - | - | 11,518 | 8,059 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Segment operating result | - | - | (509) | (778) | (76) | (3,782) | (585) | (4,560) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Impairment of goodwill | - | - | (3,096) | - | - | - | (3,096) | - |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Interest expense | - | - | - | (30) | (21) | - | (21) | (30) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Interest income | - | - | - | 1 | 59 | 117 | 59 | 118 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Share of profit / (loss) of associate | 588 | (760) | - | - | - | - | 588 | (760) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit / (loss) before tax | 588 | (760) | (3,605) | (807) | (38) | (3,665) | (3,055) | (5,232) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Income tax | - | - | 40 | (16) | - | - | 40 | (16) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit /(loss) for the year from | | | | | | | | |
| continuing operations | 588 | (760) | (3,565) | (823) | (38) | (3,665) | (3,015) | (5,248) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Discontinued operations | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Revenue | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| External sales | - | 902 | - | - | - | - | - | 902 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Inter-segment sales | - | - | - | - | - | - | - | - |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | - | 902 | - | - | - | - | - | 902 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Segment operating result | - | (550) | - | - | - | - | - | (550) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Interest expense | - | (23) | - | - | - | - | - | (23) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Interest income | - | - | - | - | - | - | - | - |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit on disposal of operation | - | 2,034 | - | - | - | - | - | 2,034 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit before tax | - | 1,461 | - | - | - | - | - | 1,461 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Income tax | - | - | - | - | - | - | - | - |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit for the year from discontinued | | | | | | | | |
| operations | - | 1,461 | - | - | - | - | - | 1,461 |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| | | | | | | | | |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit /(loss) attributable to | | | | | | | | |
| minority interests | - | (181) | (157) | (31) | - | - | (157) | (212) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
| Profit /(loss) attributable to equity | | | | | | | | |
| shareholders | 588 | 882 | (3,408) | (792) | (38) | (3,665) | (2,858) | (3,575) |
+----------------------------------------+----------+----------+----------+---------+----------+----------+-----------+-----------+
1. Segmental reporting (continued)
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Eastern European | Content Creation | Unallocated | Group |
| | Broadcasting | | | |
+--------------------------------+---------------------+---------------------+---------------------+---------------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Other information | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Segment assets | - | - | 3,822 | 4,945 | 2,928 | 4,854 | 6,750 | 9,799 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Investment in equity accounted | | | | | | | | |
| associate | 5,198 | 4,585 | - | - | - | - | 5,198 | 4,585 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Total assets | 5,198 | 4,585 | 3,822 | 4,945 | 2,928 | 4,854 | 11,948 | 14,384 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Segment liabilities | - | - | 2,793 | 2,696 | 327 | 459 | 3,120 | 3,155 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Total liabilities | - | - | 2,793 | 2,696 | 327 | 459 | 3,120 | 3,155 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Capital expenditure | - | 159 | 276 | 247 | 8 | 2 | 284 | 408 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Depreciation | - | 73 | 143 | 91 | 39 | 36 | 182 | 200 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| Amortisation of intangibles | - | 34 | 212 | 235 | - | - | 212 | 269 |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
Secondary reporting format - geographic segments
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| | Revenue | Segment assets | Capital |
| | | | expenditure |
+-------------------------------------------------+----------------------+---------------------+-------------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Continuing operations | | | | | | |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Content Creation | | | | | | |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| UK & Ireland | 7,902 | 5,612 | 3,822 | 4,945 | 276 | 247 |
| Rest of Europe | 2,266 | 1,041 | - | - | - | - |
| Rest of the World | 1,350 | 1,406 | - | - | - | - |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Total Content Creation | 11,518 | 8,059 | 3,822 | 4,945 | 276 | 247 |
| Unallocated | - | - | 2,928 | 4,854 | 8 | 2 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Total continuing operations | 11,518 | 8,059 | 6,750 | 9,799 | 284 | 249 |
| | | | | | | |
| Discontinued operations | | | | | | |
| Eastern European Broadcasting | | | | | | |
| Rest of Europe | - | 902 | - | - | - | 159 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| | | | | | | |
| Total continuing and discontinued operations | 11,518 | 8,961 | 6,750 | 9,799 | 284 | 408 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Investment in equity accounted associate | - | - | 5,198 | 4,585 | - | - |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
| Total | 11,518 | 8,961 | 11,948 | 14,384 | 284 | 408 |
+-------------------------------------------------+-----------+----------+----------+----------+---------+---------+
2. Other income
Other income comprises the net revenue from disposal of investments in quoted
securities.
3. Finance income and costs
+-------------------------------------------------------------+------------+------------+-----+
| | 2008 | 2007 |
+ +------------+------------------+
| | | |
+ +-------------------------------------------------------------+-------------------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------------------+-------------------------------------------------------------+-------------------------+
| | | |
+-------------------------------------------------------------+------------+------------+
| Finance income - all continuing | | |
+-------------------------------------------------------------+------------+------------+
| Interest income on short-term bank deposits | 14 | 66 |
+-------------------------------------------------------------+------------+------------+
| Other interest income | 45 | 52 |
+-------------------------------------------------------------+------------+------------+
| | 59 | 118 |
+-------------------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------------------+------------+------------+
| Finance costs | | |
+-------------------------------------------------------------+------------+------------+
| Continuing operations | 21 | 29 |
| Interest cost to banks | | |
+-------------------------------------------------------------+------------+------------+
| Other interest cost | - | 1 |
+-------------------------------------------------------------+------------+------------+
| | 21 | 30 |
+-------------------------------------------------------------+------------+------------+
| Discontinued operations | - | 13 |
+-------------------------------------------------------------+------------+------------+
| | 21 | 43 |
+-------------------------------------------------------------+------------+------------+-----+
4. Loss on ordinary activities before income tax
Loss on ordinary activities before income tax is stated after charging /
(crediting):
+-----------------------------------------------------------+------------+------------+---+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+----------------+
| | | |
+-----------------------------------------------------------+------------+----------------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------------+------------+----------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Depreciation of property, plant and equipment | 182 | 200 |
+-----------------------------------------------------------+------------+------------+
| Amortisation of intangibles | 212 | 269 |
+-----------------------------------------------------------+------------+------------+
| Operating lease rentals and hire of plant and | | |
| machinery | | |
+-----------------------------------------------------------+------------+------------+
| - land & buildings | 123 | 92 |
+-----------------------------------------------------------+------------+------------+
| - equipment hire | 14 | 10 |
+-----------------------------------------------------------+------------+------------+
| Foreign exchange differences | (493) | 11 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Amounts payable to Rawlinson & Hunter in respect of | | |
| both audit and non-audit services: | | |
+-----------------------------------------------------------+------------+------------+
| - Statutory audit of the Company and Group financial | 32 | 40 |
| statements | | |
+-----------------------------------------------------------+------------+------------+
| - Statutory audit of subsidiary undertakings | 28 | 25 |
+-----------------------------------------------------------+------------+------------+
| - Tax planning, compliance and other services | 60 | 18 |
+-----------------------------------------------------------+------------+------------+---+
Exceptional administrative expenses are disclosed in Note 5.
5. Exceptional administrative expenses
The charge for the year relates to:
+----------------------------------------------------------+------------+------------+--+
| | 2008 | 2007 |
+ +------------+---------------+
| | | |
+ +----------------------------------------------------------+-------------------------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------------+----------------------------------------------------------+-------------------------+
| Charge for impairment of goodwill | 3,096 | - |
+----------------------------------------------------------+------------+------------+
| Provisions against investment in Albanian project | - | 2,755 |
+----------------------------------------------------------+------------+------------+
| Provision for related legal expenses | - | 106 |
+----------------------------------------------------------+------------+------------+
| Abortive investment projects written off | - | 212 |
+----------------------------------------------------------+------------+------------+
| Revaluation of investments held for resale | 130 | 120 |
+----------------------------------------------------------+------------+------------+
| Provision for settlement of litigation | - | 90 |
+----------------------------------------------------------+------------+------------+
| | 3,226 | 3,283 |
+----------------------------------------------------------+------------+------------+--+
The charge for impairment of goodwill has resulted from a detailed review of the
value of the Company's subsidiaries following the entry of Apace Music Limited
into a Company Voluntary Arrangement ("CVA") on 5 February 2009 and the trading
performance of the other UK content companies being less than the budgeted
figures used in the goodwill calculation last year owing to the impact of the
global economic conditions on the business.
In accordance with the Group's accounting policy for goodwill, the carrying
values of the Group's cash-generating units and the goodwill relating to those
carrying values have been reviewed for impairment and the detailed review of the
goodwill is provided in note 13.
6. Staff costs
Staff costs, including directors' remuneration, were as follows:
+----------------------------------------------------------+------------+------------+--+
| | 2008 | 2007 |
+ +------------+---------------+
| | | |
+ +----------------------------------------------------------+-------------------------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------------+----------------------------------------------------------+-------------------------+
| | | |
+----------------------------------------------------------+------------+------------+
| Wages and salaries | 1,965 | 2,464 |
+----------------------------------------------------------+------------+------------+
| Severance/termination payments | 176 | - |
+----------------------------------------------------------+------------+------------+
| Social security costs | 224 | 265 |
+----------------------------------------------------------+------------+------------+
| Other pension costs | 10 | - |
+----------------------------------------------------------+------------+------------+
| | 2,375 | 2,729 |
+----------------------------------------------------------+------------+------------+--+
The average monthly number of employees, including the executive directors,
during the year was as follows:
+----------------------------------------------------------+------------+------------+--+
| | 2008 | 2007 |
+ +------------+---------------+
| | | |
+ +----------------------------------------------------------+-------------------------+
| | No. | No. |
+----------------------------------------------------------+----------------------------------------------------------+-------------------------+
| | | |
+----------------------------------------------------------+------------+------------+
| Management | 7 | 9 |
+----------------------------------------------------------+------------+------------+
| Development | 2 | 4 |
+----------------------------------------------------------+------------+------------+
| Production | 13 | 53 |
+----------------------------------------------------------+------------+------------+
| Sales | 4 | 10 |
+----------------------------------------------------------+------------+------------+
| Administration | 11 | 22 |
+----------------------------------------------------------+------------+------------+
| | 37 | 98 |
+----------------------------------------------------------+------------+------------+--+
7. Directors' remuneration
Directors' remuneration for the year under review was as shown in the report of
the directors.
8. Loss per ordinary share
The calculations of loss per share are based on the following losses and numbers
of shares:
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| | 2008 | | 2008 | | 2007 | | 2007 |
+ +------------------------------------+ +-------------+ +-------------+ +----------+
| | Loss | | per share | | Loss | | per |
| | | | | | | | share |
+ +------------------------------------+ +-------------+ +-------------+ +----------+
| | | | | | | | |
+ +------------------------------------+ +-------------+ +-------------+ +----------+
| | GBP'000 | | p | | GBP'000 | | p |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Loss | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Loss after | (2,858) | | (3.04) | | (5,217) | | (5.86) |
| taxation | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Loss after | (2,858) | | (3.04) | | (3,575) | | (4.01) |
| taxation | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| | Number | | | | Number | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Shares | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Weighted | | | | | | | |
| average | | | | | | | |
| number of | | | | | | | |
| shares | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
| Basic and | 94,094,078 | | | | 89,069,331 | | |
| diluted | | | | | | | |
+-------------------------------------+------------------------------------+-------------+-------------+---+-------------+--+----------+
9. Taxation on loss on ordinary activities
+------------------------------------------------+-----------------+----------------+-+
| Analysis of charge in the period | 2008 | 2007 |
+------------------------------------------------+-----------------+------------------+
| | | |
+------------------------------------------------+-----------------+------------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+-----------------+------------------+
| Current tax on continuing activities (see | - | (2) |
| below) | | |
+------------------------------------------------+-----------------+----------------+
| Deferred tax (note 21) | 40 | (14) |
+------------------------------------------------+-----------------+----------------+
| Income tax credit/ (expense) on loss on | 40 | (16) |
| ordinary activities | | |
+------------------------------------------------+-----------------+----------------+
| | | |
+------------------------------------------------+-----------------+----------------+
| Loss before tax: | | |
+------------------------------------------------+-----------------+----------------+
| Continuing operations | (3,055) | (5,232) |
+------------------------------------------------+-----------------+----------------+
| Discontinued operations | - | 1,461 |
+------------------------------------------------+-----------------+----------------+
| Loss before tax | (3,055) | (3,771) |
+------------------------------------------------+-----------------+----------------+
| | | |
+------------------------------------------------+-----------------+----------------+
| Continuing | | |
+------------------------------------------------+-----------------+----------------+
| Loss before tax | (3,055) | (5,232) |
+------------------------------------------------+-----------------+----------------+
| | | |
+------------------------------------------------+-----------------+----------------+
| Tax at 28.5% (2007 - 30%) on loss on ordinary | (871) | (1,570) |
| activities | | |
+------------------------------------------------+-----------------+----------------+
| | | |
+------------------------------------------------+-----------------+----------------+
| Effects of: | | |
+------------------------------------------------+-----------------+----------------+
| Expenses not deductible for tax purposes | 86 | 445 |
+------------------------------------------------+-----------------+----------------+
| Depreciation in excess of capital allowances | 41 | 7 |
+------------------------------------------------+-----------------+----------------+
| Other timing differences | 45 | - |
+------------------------------------------------+-----------------+----------------+
| Foreign tax consolidation adjustments | (167) | - |
+------------------------------------------------+-----------------+----------------+
| Impairment of goodwill on consolidation | 882 | - |
+------------------------------------------------+-----------------+----------------+
| Gains not taxable | (76) | - |
+------------------------------------------------+-----------------+----------------+
| Tax losses carried forward | 60 | 1,116 |
+------------------------------------------------+-----------------+----------------+
| Current tax on continuing activities | - | (2) |
+------------------------------------------------+-----------------+----------------+-+
The Group has tax losses of GBP3.881m (2007 - GBP3.668m) available to be carried
forward against future trading profits. No deferred tax asset has been
recognised in respect of these losses within these financial statements as
future recovery and utilisation is uncertain.
10. Discontinued operations
Analysis of income statement result:
+-----------------------------------------------------------+------------+------------+---+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+----------------+
| | | |
+-----------------------------------------------------------+------------+----------------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------------+------------+----------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Revenue | - | 902 |
+-----------------------------------------------------------+------------+------------+
| Expenses | - | (1,475) |
+-----------------------------------------------------------+------------+------------+
| Profit before tax of discontinued operations | - | (573) |
+-----------------------------------------------------------+------------+------------+
| Income tax expense | - | - |
+-----------------------------------------------------------+------------+------------+
| Profit after tax of discontinued operations | - | (573) |
+-----------------------------------------------------------+------------+------------+
| Gain on disposal | - | 2,034 |
+-----------------------------------------------------------+------------+------------+
| Profit from discontinued activities | - | 1,461 |
+-----------------------------------------------------------+------------+------------+---+
Discontinued operations in the year ended 31 December 2007 arose from the
partial disposal of the Group's interests in various operations in Eastern
Europe.
11. Property, plant and equipment
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Group | Leasehold | | Fixtures, | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| |improvements | | fittings & | | Total |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| | | | equipment | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Cost | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| At 1 January 2008 | 73 | | 1,198 | | 1,271 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Prior year adjustment | - | | 39 | | 39 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Additions | - | | 148 | | 148 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| At 31 December 2008 | 73 | | 1,385 | | 1,458 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Depreciation | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| At 1 January 2008 | (28) | | (764) | | (792) |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Prior year adjustment | - | | (9) | | (9) |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Charge for the period | (15) | | (167) | | (182) |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| At 31 December 2008 | (43) | | (940) | | (983) |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| Net book value | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| 31 December 2008 | 30 | | 445 | | 475 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| | | | | | |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
| 31 December 2007 | 45 | | 434 | | 479 |
+-----------------------------------------+--------------+---+-------------+--+-------------------------+
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Group - comparatives | Leasehold | | Fixtures, | | Motor | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| |improvements | |fittings & | | vehicles | | Total |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| | | | equipment | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Cost | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| At 1 January 2007 | 509 | | 2,363 | | 154 | | 3,026 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Disposed to associate | (453) | | (1,288) | | (138) | | (1,879) |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Additions | 17 | | 168 | | - | | 185 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Disposals | - | | (45) | | (16) | | (61) |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| At 31 December 2007 | 73 | | 1,198 | | - | | 1,271 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Depreciation | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| At 1 January 2007 | (103) | | (1,271) | | (82) | | (1,456) |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Disposed to associate | 106 | | 636 | | 72 | | 814 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Charge for the period | (31) | | (164) | | (5) | | (200) |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Eliminated on disposal | - | | 35 | | 15 | | 50 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| At 31 December 2007 | (28) | | (764) | | - | | (792) |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| Net book value | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| 31 December 2007 | 45 | | 434 | | - | | 479 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| | | | | | | | |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
| 31 December 2006 | 406 | | 1,092 | | 72 | | 1,570 |
+--------------------------+--------------+--+------------+--+--------------+--+-------------------------+
11. Property, plant & equipment (continued)
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Company | Leasehold | | Fixtures, | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| |improvements | | fittings | | Total |
| | | | & | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | equipment | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Cost | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 1 January 2008 | 73 | | 75 | | 148 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Additions | - | | 8 | | 8 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 31 December 2008 | 73 | | 83 | | 156 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Depreciation | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 1 January 2008 | (28) | | (39) | | (67) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Charge for the period | (15) | | (24) | | (39) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 31 December 2008 | (43) | | (63) | | (106) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Net book value | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| 31 December 2008 | 30 | | 20 | | 50 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| 31 December 2007 | 45 | | 36 | | 81 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Company - comparatives | Leasehold | | Fixtures, | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| |improvements | | fittings | | Total |
| | | | & | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | equipment | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Cost | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 1 January 2007 | 73 | | 73 | | 146 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Additions | - | | 2 | | 2 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 31 December 2007 | 73 | | 75 | | 148 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Depreciation | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 1 January 2007 | (13) | | (17) | | (30) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Charge for the period | (15) | | (22) | | (37) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| At 31 December 2007 | (28) | | (39) | | (67) |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| Net book value | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| 31 December 2007 | 45 | | 36 | | 81 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| | | | | | |
+-----------------------------------------+--------------+---+------------------+--+----------------+
| 31 December 2006 | 60 | | 56 | | 116 |
+-----------------------------------------+--------------+---+------------------+--+----------------+
12. Intangible fixed assets
+-----------------------------------------+--------------------+
| Group | Music |
+-----------------------------------------+--------------------+
| | rights |
+-----------------------------------------+--------------------+
| | GBP'000 |
+-----------------------------------------+--------------------+
| Cost | |
+-----------------------------------------+--------------------+
| At | 1,442 |
| 1 | |
| January | |
| 2008 | |
+-----------------------------------------+--------------------+
| Additions | 136 |
+-----------------------------------------+--------------------+
| At | 1,578 |
| 31 | |
| December | |
| 2008 | |
+-----------------------------------------+--------------------+
| | |
+-----------------------------------------+--------------------+
| Depreciation | |
+-----------------------------------------+--------------------+
| At | (502) |
| 1 | |
| January | |
| 2008 | |
+-----------------------------------------+--------------------+
| Charge | (212) |
| for | |
| the | |
| period | |
+-----------------------------------------+--------------------+
| At | (714) |
| 31 | |
| December | |
| 2008 | |
+-----------------------------------------+--------------------+
| | |
+-----------------------------------------+--------------------+
| Net | |
| book | |
| value | |
+-----------------------------------------+--------------------+
| 31 | 864 |
| December | |
| 2008 | |
+-----------------------------------------+--------------------+
| | |
+-----------------------------------------+--------------------+
| 31 | 940 |
| December | |
| 2007 | |
+-----------------------------------------+--------------------+
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Group | Music | Film | Other | |
| - | | | | |
| comparatives | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| | rights | rights | Intangibles | Total |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Cost | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | 474 | 1,143 | 54 | 1,671 |
| 1 | | | | |
| January | | | | |
| 2007 - | | | | |
| as | | | | |
| previously | | | | |
| reported | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Capitalised | 796 | - | - | 796 |
| on | | | | |
| implementation | | | | |
| of IFRS | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | 1,270 | 1,143 | 54 | 2,467 |
| 1 | | | | |
| January | | | | |
| 2007 - | | | | |
| restated | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Additions | 172 | 51 | - | 223 |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Disposed | - | (1,194) | (54) | (1,248) |
| to | | | | |
| Associate | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | 1,442 | - | - | 1,442 |
| 31 | | | | |
| December | | | | |
| 2007 | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Depreciation | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | (201) | (91) | (36) | (328) |
| 1 | | | | |
| January | | | | |
| 2007 - | | | | |
| as | | | | |
| previously | | | | |
| reported | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Arising | (66) | - | - | (66) |
| on | | | | |
| implementation | | | | |
| of IFRS | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | (267) | (91) | (36) | (394) |
| 1 | | | | |
| January | | | | |
| 2007 - | | | | |
| restated | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Charge | (235) | (33) | (1) | (269) |
| for | | | | |
| the | | | | |
| period | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Disposed | - | 124 | 37 | 161 |
| to | | | | |
| Associate | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| At | (502) | - | - | (502) |
| 31 | | | | |
| December | | | | |
| 2007 | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| Net | | | | |
| book | | | | |
| value | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| 31 | 940 | - | - | 940 |
| December | | | | |
| 2007 | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
| 31 | 1,003 | 1,052 | 18 | 2,073 |
| December | | | | |
| 2006 - | | | | |
| restated | | | | |
+-------------------------------------------+--------------------+-----------------------+----------------------+-----------------------------+
Included within music rights are mastering costs, CD packaging - design
costs, buyout costs relating to the acquisition of music rights and the costs
incurred in the development of a CD. Following the entry of Apace Music Limited,
which held the music right assets into a CVA, a review was performed on the
valuation of the intangible asset. Estimates of the future cash flow streams
from the exploitation of the rights over the next 10 years were made and a
discounted cash flow analysis performed using a pre-tax discount rate of 10%.
Based on this review the directors do not consider that the asset is materially
impaired.
13. Goodwill
Group
+---------------------------------------------------------------+----------------------+----------------------+
| | 2008 | 2007 |
+---------------------------------------------------------------+----------------------+----------------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------------------+----------------------+----------------------+
| Cost | | |
+---------------------------------------------------------------+----------------------+----------------------+
| At 1 January 2008 | 2,633 | 8,732 |
+---------------------------------------------------------------+----------------------+----------------------+
| Transfer to Intangible assets on | - | (796) |
| implementation of IFRS | | |
+---------------------------------------------------------------+----------------------+----------------------+
| Additions | - | 80 |
+---------------------------------------------------------------+----------------------+----------------------+
| Disposals | - | (5,383) |
+---------------------------------------------------------------+----------------------+----------------------+
| Goodwill arising from the acquisition | 463 | - |
| of minority interests | | |
+---------------------------------------------------------------+----------------------+----------------------+
| At 31 December 2008 | 3,096 | 2,633 |
+---------------------------------------------------------------+----------------------+----------------------+
| | | |
+---------------------------------------------------------------+----------------------+----------------------+
| Amortisation | | |
+---------------------------------------------------------------+----------------------+----------------------+
| At 1 January 2008 | - | - |
+---------------------------------------------------------------+----------------------+----------------------+
| Charge arising from impairment review | (3,096) | - |
+---------------------------------------------------------------+----------------------+----------------------+
| At 31 December 2008 | (3,096) | - |
+---------------------------------------------------------------+----------------------+----------------------+
| | | |
+---------------------------------------------------------------+----------------------+----------------------+
| Net book value | | |
+---------------------------------------------------------------+----------------------+----------------------+
| 31 December 2008 | - | 2,633 |
+---------------------------------------------------------------+----------------------+----------------------+
| | | |
+---------------------------------------------------------------+----------------------+----------------------+
Purchased goodwill arising on the acquisition of subsidiary undertakings is
capitalised and accounted for in accordance with the accounting policies for
business combinations and goodwill.
+-------------------------------------------------------------+-------------------------------------+--------------+
| Goodwill comprises: | 2008 | 2007 |
+-------------------------------------------------------------+-------------------------------------+--------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------------------+-------------------------------------+--------------+
| At 1 January 2008 | 2,633 | 8,732 |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Transfer to Intangible Assets | - | (796) |
| upon implementation of IFRS | | |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Balkan acquisitions | - | 80 |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Sale of Balkan subsidiaries to | - | (5,383) |
| Balkan Media Group Ltd | | |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Acquisition of minorities in | 463 | - |
| UK content companies | | |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Provision for impairment | (3,096) | - |
+-------------------------------------------------------------+-------------------------------------+--------------+
| Net book value at 31 December | - | 2,633 |
| 2008 | | |
+-------------------------------------------------------------+-------------------------------------+--------------+
Goodwill on consolidation arises in respect of the Group's UK Content Creation
businesses. As detailed in note 5, following the entry of Apace Music Limited
into a CVA and the impact of the global economic climate, the directors have
reviewed goodwill and have decided to make an impairment charge equivalent to
the carrying value of goodwill.
14. Investments in subsidiary undertakings
+-------------------------------------------------------------+----------------------+----------------------+
| | Company |
+-------------------------------------------------------------+---------------------------------------------+
| | 2008 | 2007 |
+-------------------------------------------------------------+----------------------+----------------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------------------+----------------------+----------------------+
| | | |
+-------------------------------------------------------------+----------------------+----------------------+
| At 1 January 2008 | 4,363 | 10,260 |
+-------------------------------------------------------------+----------------------+----------------------+
| Balkan acquisitions: | - | 143 |
+-------------------------------------------------------------+----------------------+----------------------+
| Sale of Balkan subsidiaries to | - | (6,040) |
| Balkan Media Group Ltd | | |
+-------------------------------------------------------------+----------------------+----------------------+
| Inter-company debts | 2,212 | - |
| capitalised | | |
+-------------------------------------------------------------+----------------------+----------------------+
| Provision for impairment | (4,834) | - |
+-------------------------------------------------------------+----------------------+----------------------+
| | | |
+-------------------------------------------------------------+----------------------+----------------------+
| At 31 December 2008 | 1,741 | 4,363 |
+-------------------------------------------------------------+----------------------+----------------------+
At 31 December 2008, the Company owned the following subsidiary undertakings:
+--------------------------------------+----------------------+---------------+---------------+
| Subsidiary undertaking | Principal activity | Country of | % of equity |
| | |incorporation | and votes |
| | | | held |
+--------------------------------------+----------------------+---------------+---------------+
| Apace Television Limited | Holding company | England | 85% |
+--------------------------------------+----------------------+---------------+---------------+
| Apace Rights Limited | Dormant | England | 100% |
+--------------------------------------+----------------------+---------------+---------------+
| Pro-Active Projects Limited * | Television | England | 100% |
| | production | | |
+--------------------------------------+----------------------+---------------+---------------+
| Apace Music Limited * | Record label and | England | 100% |
| | music publishing | | |
+--------------------------------------+----------------------+---------------+---------------+
| Steadfast Television Limited * | Television | England | 100% |
| | production | | |
+--------------------------------------+----------------------+---------------+---------------+
| Steadfast International Limited * | Television programme | England | 100% |
| | distribution | | |
+--------------------------------------+----------------------+---------------+---------------+
* - subsidiary undertakings of Apace Television Limited.
In April and October 2008, Apace Television Limited acquired shares in the
companies listed (*) above from Apace Media plc. In October 2008, Apace
Television Limited acquired the remaining shares in those companies from the
minority shareholders and in consideration issued ordinary shares. As a result
of the share issues to the minority shareholders of Pro-Active Projects Limited
and Steadfast Television Limited, those minority shareholders acquired a 15%
holding in Apace Television Limited.
In March 2009, Apace Media plc acquired shares from minority shareholders in
Apace Television Limited, reducing the minority holding to 12.1%.
15. Investment in associate undertaking
+--------------------------+----------------------------------+---------------+---------------+
| Associate undertaking | Principal activity | Country of | % of equity |
| | |incorporation | held |
+--------------------------+----------------------------------+---------------+---------------+
| Balkan Media Group | Holding company for media | England | 50% |
| Limited | businesses in Bulgaria and | | |
| | Macedonia | | |
+--------------------------+----------------------------------+---------------+---------------+
+--------------------------------------------------+----------+------------+
| | Group |
+--------------------------------------------------+-----------------------+
| | 2008 | 2007 |
+--------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------+----------+------------+
| At 1 January 2008 | 4,585 | - |
+--------------------------------------------------+----------+------------+
| Book value transferred from subsidiary | - | 3,069 |
| undertakings | | |
+--------------------------------------------------+----------+------------+
| Acquisition of remaining minority shares in | - | 2,078 |
| Diema Vision AD | | |
+--------------------------------------------------+----------+------------+
| Acquisition of remaining minority shares in TV | - | 15 |
| Era | | |
+--------------------------------------------------+----------+------------+
| Share placing in lieu of Bulgarian consultancy | 100 | - |
| fee | | |
+--------------------------------------------------+----------+------------+
| Further costs capitalised | 108 | 183 |
+--------------------------------------------------+----------+------------+
| Exchange difference on opening net assets | (183) | - |
+--------------------------------------------------+----------+------------+
| | 4,610 | 5,345 |
+--------------------------------------------------+----------+------------+
| Share of associate's profit / (loss) for the | 588 | (760) |
| year | | |
+--------------------------------------------------+----------+------------+
| At 31 December 2008 | 5,198 | 4,585 |
+--------------------------------------------------+----------+------------+
+--------------------------------------------------+----------+------------+
| | Company |
+--------------------------------------------------+-----------------------+
| | 2008 | 2007 |
+--------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------+----------+------------+
| At 1 January 2008 | 4,585 | - |
+--------------------------------------------------+----------+------------+
| Book value transferred from subsidiary | - | 3,069 |
| undertakings | | |
+--------------------------------------------------+----------+------------+
| Acquisition of remaining minority shares in | - | 2,078 |
| Diema Vision AD | | |
+--------------------------------------------------+----------+------------+
| Acquisition of remaining minority shares in TV | - | 15 |
| Era | | |
+--------------------------------------------------+----------+------------+
| Share placing in lieu of Bulgarian consultancy | 100 | - |
| fee | | |
+--------------------------------------------------+----------+------------+
| Further costs capitalised | 108 | 183 |
+--------------------------------------------------+----------+------------+
| | 4,610 | 5,345 |
+--------------------------------------------------+----------+------------+
| Movement on impairment provision | 405 | (760) |
+--------------------------------------------------+----------+------------+
| At 31 December 2008 | 5,198 | 4,585 |
+--------------------------------------------------+----------+------------+
Diema Vision AD and TV Era are subsidiaries of the associate undertaking.
Further information about the principal subsidiaries of Balkan Media Group
Limited is given in the Directors' Report.
The results of the associate for the year and its aggregated assets and
liabilities at the balance sheet date are as follows:
+--------------------------------------------------------------------+----------------+-----------------+
| Aggregate amounts relating to associates: | 2008 | 2007 |
+--------------------------------------------------------------------+----------------+-----------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------------------------+----------------+-----------------+
| Assets | 10,036 | 6,948 |
+--------------------------------------------------------------------+----------------+-----------------+
| Liabilities | 10,122 | 7,801 |
+--------------------------------------------------------------------+----------------+-----------------+
| Revenues | 13,173 | 4,223 |
+--------------------------------------------------------------------+----------------+-----------------+
| Profit / (loss) for the year | 1,176 | (1,826) |
+--------------------------------------------------------------------+----------------+-----------------+
16. Available for sale financial assets
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Investment in | 169 | 187 | 169 | 187 |
| quoted shares | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Investment | - | 294 | - | 294 |
| property | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 169 | 481 | 169 | 481 |
+----------------------------------------+-----------+-----------+-----------+-----------+
Available for sale financial assets are held at fair value, being the mid-market
price for quoted equities and cost less provision for impairment for investment
property.
17. Investments - acquisition projects
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| East European | 73 | 2 | 73 | 2 |
| media | | | | |
| projects | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Interest in | - | 518 | - | 518 |
| Bulgarian | | | | |
| broadcasting | | | | |
| licence | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 73 | 520 | 73 | 520 |
+----------------------------------------+-----------+-----------+-----------+-----------+
18. Inventories
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Work in | 226 | 484 | - | - |
| progress | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Finished | 418 | 585 | - | - |
| goods and | | | | |
| goods for | | | | |
| resale | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 644 | 1,069 | - | - |
+----------------------------------------+-----------+-----------+-----------+-----------+
As a result of the entry of Apace Music Limited into a CVA and the subsequent
need to liquidate significant amounts of inventory to generate cash, its
inventories were assessed and an impairment provision of GBP245,000 made as at
31 December 2008. The resulting book value of inventory is considered to
represent fair value.
19. Trade and other current receivables
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Trade | 2,196 | 1,496 | 288 | - |
| receivables | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Amounts due | - | - | 139 | 2,556 |
| from group | | | | |
| undertakings | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Prepayments & | 745 | 664 | 49 | 57 |
| accrued | | | | |
| income | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Loan to associate | 1,092 | 667 | 1,092 | 667 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Other receivables | 236 | 295 | 51 | 209 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 4,269 | 3,122 | 1,619 | 3,489 |
+----------------------------------------+-----------+-----------+-----------+-----------+
Prepayments of GBPnil (2007: GBP100,000) are recoverable in more than 12 months.
Trade receivables are provided for based on estimated irrecoverable amounts from
sales, determined by the company's management based on prior experience, their
knowledge of the Group's debtors and their assessment of the current economic
environment.
Movement in the allowance for doubtful debts:
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 | 58 | 10 | - | - |
| January | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Amounts | (30) | - | - | - |
| written off | | | | |
| during the | | | | |
| year | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Increase in | 299 | 48 | - | - |
| allowance | | | | |
| recognised in | | | | |
| the income | | | | |
| statement | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 327 | 58 | - | - |
+----------------------------------------+-----------+-----------+-----------+-----------+
In determining the recoverability of a trade receivable, the Group considers any
change in the credit quality of the trade receivable from the date credit was
initially granted up to the reporting date. The concentration of credit risk is
limited as the Group's exposure is spread over a large number of customers. The
significant increase in the provision in the year relates to the Apace Music
Limited customers which entered Administration.
The Group's trade receivable balance does not include a material amount relating
to debtors, which are past due at the reporting date and for which provision has
not been made.Group companies do not hold collateral over receivable balances.
20. Trade and other current payables
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Trade | 1,220 | 1,188 | 246 | 242 |
| payables | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Amounts due | - | - | 3 | 122 |
| to related | | | | |
| parties | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Social | 212 | 273 | 14 | 76 |
| security and | | | | |
| other taxes | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Accruals and | 1,462 | 1,286 | 276 | 458 |
| deferred | | | | |
| income | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Other | 202 | 343 | - | 315 |
| payables | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 3,096 | 3,090 | 539 | 1,213 |
+----------------------------------------+-----------+-----------+-----------+-----------+
21. Provision for liabilities and charges
+----------------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+----------------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Deferred | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| taxation | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| At 1 January | 65 | 51 | - | - |
| 2008 | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| (Credit)/ | (41) | 14 | - | - |
| charge to the | | | | |
| income | | | | |
| statement | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| At 31 December | 24 | 65 | - | - |
| 2008 | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
Deferred taxation is provided in respect of accelerated capital allowances and
the timing of the reversal is uncertain.
No asset has been recognised in
respect of the capital and trading tax losses accumulated within the Group as
the extent and timing of recovery of these against future profits is uncertain.
22. Share capital
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Ordinary shares | 2008 | | 2007 |
+-----------------+-------------------------------------------------------------+--+---------------------------+
| | Old Ordinary shares | | New Ordinary shares | | Old Ordinary shares |
+-----------------+-----------------------------+--+----------------------------+--+---------------------------+
| | Number | Par | | | Number | Par | | | Number | Par | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | 000s |value |GBP'000 | | 000s |value |GBP'000 | | 000s |value |GBP'000 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Authorised | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 1 January 2008 | 138,500 | 5p | 6,925 | | - | | - | | 138,500 | 5p | 6,925 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Redesignation & | (138,500) | | (6,925) | | 138,500 | 1p | 1,385 | | - | | - |
| subdivision | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 31 December | - | | - | | 138,500 | | 1,385 | | 138,500 | | 6,925 |
| 2008 | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Issued, called | | | | | | | | | | | |
| up and fully | | | | | | | | | | | |
| paid | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 01 January 2008 | 89,069 | 5p | 4,453 | | - | | - | | 89,069 | 5p | 4,453 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Share placings | 6,764 | 5p | 338 | | - | | - | | - | | - |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | 95,834 | 5p | 4,792 | | - | | - | | - | | - |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Redesignation & | (95,834) | 5p | (4,792) | | 95,834 | 1p | 958 | | - | | - |
| subdivision | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 31 December | - | | - | | 95,834 | | 958 | | 89,069 | | 4,453 |
| 2008 | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Deferred shares | 2008 | | 2007 |
+-----------------+-------------------------------------------------------------+--+---------------------------+
| | A Deferred shares | | B Deferred shares | | A Deferred shares |
+-----------------+-----------------------------+--+----------------------------+--+---------------------------+
| | Number | Par | GBP'000 | | Number | Par | GBP'000 | | Number | Par | GBP'000 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Authorised | 000s | value | | | 000s | value | | | 000s | value | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 1 January 2008 | 22,293 | 15p | 3,344 | | - | | - | | 22,293 | 15p | 3,344 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Creation of B | - | | - | | 138,500 | 4p | 5,540 | | - | | - |
| Deferred shares | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 31 December | 22,293 | | 3,344 | | 138,500 | | 5,540 | | 22,293 | | 3,344 |
| 2008 | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Issued, called | | | | | | | | | | | |
| up and fully | | | | | | | | | | | |
| paid | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 1 January 2008 | 22,293 | 15p | 3,344 | | | | | | 22,293 | 15p | 3,344 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Creation of B | - | | - | | 95,834 | 4p | 3,834 | | - | | - |
| Deferred shares | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 31 December | 22,293 | | 3,344 | | 95,834 | | 3,834 | | 22,293 | | 3,344 |
| 2008 | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| Total issued | | | | | | | | | | | |
| share capital | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 01 January 2008 | | | | | | | 7,797 | | | | 7,797 |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
| 31 December | | | | | | | 8,136 | | | | 7,797 |
| 2008 | | | | | | | | | | | |
+-----------------+-----------+-------+---------+--+----------+-------+---------+--+---------+-------+---------+
At the Annual General Meeting of the Company on 22 July 2008, resolutions were
passed whereby each issued Existing Deferred Share was re-designated as an A
Deferred Share and each issued Existing Ordinary Share was subdivided into one
New Ordinary Share and one New Deferred Share (designated a B Deferred Share).
The rights attaching to the deferred shares, which have not been admitted to
trading on AIM or any other recognised investment exchange, render them
effectively valueless. No share certificates have been issued in respect of
deferred shares. It is intended that the deferred shares will be repurchased by
the Company for a nominal amount in due course. The deferred shares will have no
rights to vote or to participate in dividends and will carry limited deferred
rights on any return on capital (whether on a liquidation or otherwise).
23. Share options
The Company has two option schemes for employees, the "Apace Media plc Employee
Share Option Scheme" and the "Apace Media plc Unapproved Share Option Scheme".
All employees are eligible to participate in the schemes. The details of the
arrangements are described in the following table:
+------------------------------+-------------+---------------+------------+--------------+
| | | |
+------------------------------+------------------------------------------+--------------+
| Nature of the arrangement | Share | Approved | Share | Unapproved |
| | options |Share options | options | Share |
| | | | | options |
+------------------------------+-------------+---------------+------------+--------------+
| Date of grant | 15 May 2006 | 8 June 2006 | 13 October | 8 June 2006 |
| | | | 2006 | |
+------------------------------+-------------+---------------+------------+--------------+
| Outstanding at 1 January | 476,190 | 2,121,409 | 932,500 | 722,760 |
| 2008 | | | | |
+------------------------------+-------------+---------------+------------+--------------+
| Granted during the year | - | - | - | - |
+------------------------------+-------------+---------------+------------+--------------+
| Forfeited during the year | - | (531,667) | (500,000) | (125,000) |
+------------------------------+-------------+---------------+------------+--------------+
| Outstanding at 31 December | 476,190 | 1,589,742 | 432,500 | 597,760 |
| 2008 | | | | |
+------------------------------+-------------+---------------+------------+--------------+
| Exercise price (pence) | 20 | 20 | 20 | 20 |
+------------------------------+-------------+---------------+------------+--------------+
| Share price at grant (pence) | 18 | 18 | 18 | 18 |
+------------------------------+-------------+---------------+------------+--------------+
| Vesting period (years) | 3 | 3 | 3 | 3 |
+------------------------------+-------------+---------------+------------+--------------+
| Vesting conditions | None | None | None | None |
+------------------------------+-------------+---------------+------------+--------------+
| Option life (years) | 10 | 10 | 10 | 10 |
+------------------------------+-------------+---------------+------------+--------------+
| Expected volatility | 20.00% | 20.00% | 20.00% | 20.00% |
+------------------------------+-------------+---------------+------------+--------------+
| Risk free rate | 4.75% | 4.75% | 4.75% | 4.75% |
+------------------------------+-------------+---------------+------------+--------------+
| Number of employees | 1 | 16 | 4 | 3 |
+------------------------------+-------------+---------------+------------+--------------+
| Settlement | Shares | Shares | Shares | Shares |
+------------------------------+-------------+---------------+------------+--------------+
| % expected to vest | 90.00% | 90.00% | 90.00% | 90.00% |
+------------------------------+-------------+---------------+------------+--------------+
| Number expected to vest | 428,571 | 1,430,768 | 389,250 | 537,984 |
+------------------------------+-------------+---------------+------------+--------------+
| Fair value per granted | 2.29 | 2.29 | 2.29 | 2.29 |
+------------------------------+ + + + +
| instrument (pence) | | | | |
+------------------------------+-------------+---------------+------------+--------------+
| Charge for year ending | 3,641 | 6,378 | (1,153) | 2,398 |
+------------------------------+ + + + +
| 31 December 2008 (GBP) | | | | |
+------------------------------+-------------+---------------+------------+--------------+
In accordance with the Group's accounting policy for share based payments, share
options have been valued using an appropriate option pricing model. The total
fair value of options in issue at the date of grant was GBP107,000, of which
GBP11,000 has been charged to the income statement for the year (2007 -
GBP31,000).
24. Reserves
Movements on reserves are shown in the Statement of changes in equity.
The other reserve represents the premium on allocation of shares by the Company
in pursuance of the arrangement in consideration for the acquisition of 100% of
the shares in Apace Sports Limited (previously called Apace Group Limited) on 25
April 2005, as permitted by section 131 of the Companies Act. This reserve is
not currently distributable.
25. Cash generated from operations
+-------------------------------------------------------------+-------------+-------------+
| | Year | Year |
+-------------------------------------------------------------+-------------+-------------+
| | to 31 | to 31 |
| | December | December |
+-------------------------------------------------------------+-------------+-------------+
| | 2008 | 2007 |
+-------------------------------------------------------------+-------------+-------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------------------+-------------+-------------+
| Continuing operations | | |
+-------------------------------------------------------------+-------------+-------------+
| Loss for the year | (3,015) | (5,248) |
+-------------------------------------------------------------+-------------+-------------+
| Adjustments for: | | |
+-------------------------------------------------------------+-------------+-------------+
| (Profit) / loss reported by | (588) | 760 |
| associate | | |
+-------------------------------------------------------------+-------------+-------------+
| Impairment of Goodwill | 3,096 | - |
+-------------------------------------------------------------+-------------+-------------+
| Impairment of investment in TV | - | 992 |
| Arberia (Albania) | | |
+-------------------------------------------------------------+-------------+-------------+
| Impairment of loan to TV Arberia | - | 1,763 |
| (Albania) | | |
+-------------------------------------------------------------+-------------+-------------+
| Aborted investment projects | - | 212 |
| written off | | |
+-------------------------------------------------------------+-------------+-------------+
| Revaluation of investments held | 172 | 120 |
| for resale | | |
+-------------------------------------------------------------+-------------+-------------+
| Amortisation of intangible fixed | 211 | 235 |
| assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Depreciation of tangible fixed | 181 | 127 |
| assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Gain on termination of | (268) | - |
| acquisition project | | |
+-------------------------------------------------------------+-------------+-------------+
| Profit on disposal of investments | - | (20) |
+-------------------------------------------------------------+-------------+-------------+
| Loss on disposal of tangible | - | 11 |
| fixed assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Share-based payment expense | 11 | 31 |
+-------------------------------------------------------------+-------------+-------------+
| Interest expense | 21 | 30 |
+-------------------------------------------------------------+-------------+-------------+
| Interest receivable | (59) | (119) |
+-------------------------------------------------------------+-------------+-------------+
| Unrealised exchange gain | (254) | - |
+-------------------------------------------------------------+-------------+-------------+
| Decrease / (Increase) in | 425 | (394) |
| inventories | | |
+-------------------------------------------------------------+-------------+-------------+
| Decrease / (increase) in trade | (746) | 612 |
| and other receivables | | |
+-------------------------------------------------------------+-------------+-------------+
| Increase / (decrease) in payables | (35) | 1,608 |
+-------------------------------------------------------------+-------------+-------------+
| Cash generated from continuing | (847) | 720 |
| operations | | |
+-------------------------------------------------------------+-------------+-------------+
| Discontinued operations | | |
+-------------------------------------------------------------+-------------+-------------+
| Profit for the year | - | 1,461 |
+-------------------------------------------------------------+-------------+-------------+
| Adjustments for: | | |
+-------------------------------------------------------------+-------------+-------------+
| Gain on disposal of subsidiary | - | (2,034) |
+-------------------------------------------------------------+-------------+-------------+
| Amortisation of intangible fixed | - | 34 |
| assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Depreciation of tangible fixed | - | 73 |
| assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Profit on disposal of investments | - | - |
+-------------------------------------------------------------+-------------+-------------+
| Profit on disposal of tangible | - | - |
| fixed assets | | |
+-------------------------------------------------------------+-------------+-------------+
| Interest expense | - | 23 |
+-------------------------------------------------------------+-------------+-------------+
| Increase in inventories | - | (8) |
+-------------------------------------------------------------+-------------+-------------+
| Decrease / (increase) in trade | - | (806) |
| and other receivables | | |
+-------------------------------------------------------------+-------------+-------------+
| Increase / (decrease) in payables | - | 1,375 |
+-------------------------------------------------------------+-------------+-------------+
| Cash flow for discontinued | - | 118 |
| operations | | |
+-------------------------------------------------------------+-------------+-------------+
| Cash generated from operations | (847) | 838 |
+-------------------------------------------------------------+-------------+-------------+
26. Financial instruments
The Group's financial instruments comprise loans to participating interests,
cash and liquid resources and various other items, such as trade debtors, trade
creditors and other debtors and creditors. These arise directly from the Group's
operations.
The Group has not entered into any derivatives transactions.
It is, and has been throughout the period 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 price risk,
credit risk, liquidity risk, interest rate cash flow risk and currency risk. The
Board reviews and agrees policies for managing each of these risks and they are
summarised in the Directors' Report under "Financial Risk Management".
Interest rate profile
The Group has no financial assets other than cash balances of GBP256,000
(2007:GBP555,000), which are part of the financing arrangements of the Company.
The sterling cash balances comprise bank current accounts and deposits placed at
investment rates of interest, which ranged between 0.5% and 5.20% p.a. in the
period (2007: ranged between 5.20% and 5.83% p.a). Cash deposits are available
on immediate access.
Currency hedging
During the period, the Group did not engage in any form of currency hedging
transaction (2007: none).
Financial liabilities
The Company has established a bank borrowing facility, which is available to all
UK members of the Group. Under the facility:
* A Group net overdraft of up to GBP500,000 is available;
* GBP1,000,000 is available for the funding of TV productions;
* Interest is calculated daily on the Group's sterling net borrowings at 1.5% over
RBS base rate;
* Interest is credited daily on the Group's net sterling credit balance at a
variable rate in excess of base rate;
* Each UK group company guarantees the bank's exposure to each other group
company.
The Group net overdraft is subject to a personal guarantee given by Didier
Stoessel.
Fair values
The fair values of the financial assets and liabilities at 31 December 2008 are
not materially different from their book values.
27. Commitments under operating leases
As at 31 December 2008, the Group was committed to make the following future
aggregate minimum lease payments in respect of continuing operations on
operating leases:
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| | 2008 | 2007 |
+----------------------------------------------------------+---------------------------+---------------------------+
| | Land & | | Land & | |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| | buildings | Other | buildings | Other |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| Expiring: | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| Within a year: | 12 | - | - | 1 |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| In more than a year | 192 | 19 | 331 | 29 |
| but less than five years: | | | | |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
| In more than five years: | 204 | - | 238 | - |
+----------------------------------------------------------+-------------+-------------+-------------+-------------+
28. Contingent liabilities
Litigation
The Company is a defendant in civil proceedings issued in the Tirana
District Court in the Republic of Albania by Artan Sevrani and Arjan Lamaj,
ex-shareholders in Television Arberia, claiming damages of EUR1.1m for breach of
contract. This claim is being vigorously defended by the Company. In the opinion
of the directors, there is little likelihood of this action being successful and
provisions have only been raised for the costs of defending this claim.
The Company has obtained judgment in proceedings brought by the Company in
the High Court of Malaya for refund of a percentage of the purchase price due
under a sale and purchase agreement dated 5.7.2007 for purchase of a parcel of
the land known as Parcel No. AV-38, Level No. 38, The Avare, Kuala Lumpur. This
judgment indicates that the Company is entitled to a refund of GBP221,000.
Guarantees
The Company is co-guarantor with MTG Broadcasting AB (MTG) of a bank facility
granted to Diema Vision AD, a wholly owned subsidiary of Balkan Media Group Ltd.
The facility allows for overdraft borrowing and bank guarantees up to a total of
EUR6 million. The facility expires on 31 August 2009 and is currently being
renegotiated. On completion of the agreements with MTG referred to in note 29,
this guarantee will lapse.
The Company has confirmed to the auditors of Diema Vision AD that the Company
would not initiate an insolvency procedure for Diema before the end of the next
financial year and that it is the Company's intention to continue to extend its
financial support for Diema in the foreseeable future in agreement with and in
the same amounts as the shareholder of the remaining 50% of Balkan Media Group
Limited, namely MTG.
29. Post balance sheet events
1. On 5 February 2009, the Apace Music Limited subsidiary entered into a Company
Voluntary Arrangement ("CVA") with its third party creditors. This was
necessitated by the failure of that company's main distribution channels, with
both Pinnacle and Entertainment UK, which were the principal entities operating
CD distribution across the United Kingdom, entering into Administration
proceedings during November and December 2008. The directors are confident that
this subsidiary can trade through its current problems but have made full
provision against any related goodwill balances within the Group Balance Sheet.
The effects of the agreement of the CVA by the creditors of Apace Music Limited
have been reflected in these consolidated financial statements with the writing
down of third party liabilities to the amounts agreed as payable in full and
final settlement of these liabilities within the CVA (to the extent that these
relate to balances recorded at 31 December 2008).
2. On 2 March 2009, the Company signed an Agreement with Modern Times Group MTG AB
(MTG) to merge Balkan Media Group Limited (BMGL) with Nova Televizia (Nova), the
number two terrestrial broadcaster in Bulgaria. Until completion, Apace and MTG
each own 50% of BMGL and MTG owns 100% of Nova. After completion, which is
contingent upon further regulatory approval in Bulgaria, Apace will own 5% of
the merged business. Completion will occur if and when the contractual
conditions are satisfied, including the obtaining of all necessary regulatory
consents and approvals. At completion, debt owed by BMGL companies will be
repaid and any surplus cash in BMGL will be distributed, generating cash for
Apace of between EUR1m and EUR1.7m. Apace and MTG have entered into a new
shareholder agreement with the customary minority provisions.
3. On 17 March 2009, shareholders approved the issue of 50 million ordinary
shares at a price of 2 pence each to Balkan Advisors EOOD, a company controlled
by Didier Stoessel. At the same meeting, shareholders approved the Rule 9 Waiver
"White Wash" from the Takeover Panel removing the requirement for Mr Stoessel
and his concert party to make a general offer for the remaining shares in Apace
which they do not own. These new ordinary shares were admitted for trading on
AIM on or about 18 March 2009. As a result of this placing and subsequent
purchases of shares in the market, Didier Stoessel is the beneficial owner of
66.07% of the Company's issued ordinary share capital.
4. In order to reflect the international nature of the Company's businesses,
the Board of the Company resolved on 29 January 2009 to relocate the board level
management of the parent company, Apace Media plc, from the United Kingdom to
Luxembourg. This action does not result in any changes in the day-to-day conduct
of the Company's trading subsidiaries but is being done out of logistical
necessity for the efficient management of Group affairs.
30. Related party transactions
During the year, the company entered into the following transactions with Diema
Vision AD. Diema Vision AD is a subsidiary of Balkan Media Group Limited (BMGL),
an associate of the Company:
+---------------------------------+---------------+-------------------------+---------------------+-------------------+-----------------+
| | Management charges | Loan |
| | | interest |
+---------------------------------+---------------------------------------------------------------+-------------------------------------+
| | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+---------------+-----------------------------------------------+-------------------+-----------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+---------------+-----------------------------------------------+-------------------+-----------------+
| Apace Media Bulgaria | - | 82 | - | - |
+---------------------------------+-----------------------------------------+---------------------+-------------------+-----------------+
| Diema Vision AD | 192 | - | 45 | 40 |
| | | | | |
+---------------------------------+---------------+-------------------------+---------------------+-------------------+-----------------+
As at 31 December 2008, BMGL owed the Company EUR127,000 and loans totalling
EUR996,000 were owed by subsidiaries of BMGL, comprising EUR963,000 owed by Diema
Vision AD and EUR33,000 owed by TV ERA OOD. Under the terms of the agreements
signed on 2 March 2009, as disclosed in the post balance sheet events note,
these loans will be repaid in full upon completion of the merger between Diema
Vision AD and Nova.
During the year, there were no transactions with directors other than matters
disclosed within the Directors' Report in respect of directors' remuneration.
31. Ultimate controlling party
The directors consider Didier Stoessel to be the ultimate controlling party
This information is provided by RNS
The company news service from the London Stock Exchange
END
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