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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Environ Group | LSE:EVN | London | Ordinary Share | GB00B50K2P36 | 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% | 0.55 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:7624A
Europe Vision PLC
24 July 2007
Europe Vision plc
(The 'Company')
Preliminary results for the year ended 31 December 2006
Chairman's statement to shareholders
Europe Vision was admitted to the AIM market of the London Stock Exchange in
July 2006.
Contemporaneously with admission the Company acquired 99pc of Tritel Media A/B,
which at the time was listed on the Stockholm Stock Exchange. In the transaction
the former shareholders of Tritel Media A/B became shareholders of Europe
Vision.
Tritel Media A/B then de-listed and the compulsory acquisition of the balance of
shares of Tritel Media A/B was initiated by redemption arbitration. This process
concluded in May 2007 with a ruling in favour of the Company's redemption
proposal and Tritel Media A/B became an entirely owned subsidiary of the
Company.
The audited results published herewith are therefore the first consolidated
accounts for Europe Vision plc and its subsidiary Tritel Media A/B. The figures
reflect the start up of the restructured operations and values the assets
acquired in the reverse takeover with Tritel Media A/B. These results should
have been published prior to 1 July 2007. The Board apologises for not reporting
results for the year ended 31 December 2006 within the timeframe required by the
AIM Rules. The Company is in this position because of the complex valuation
process required under International Accounting Standards applicable to the
audit of its 11pc stake in the Morocco Film City. Delivery of these valuations
was not accomplished by the independent valuers within the timeframe originally
set down and this has had a regrettable knock-on effect on the audit process.
Our initial business focus was biased towards Scandinavia because of the
Company's origins in Sweden. However it very quickly became apparent that we
were unable to agree satisfactory terms for the acquisition of a number of media
businesses that were targeted. As a result the Company announced in October 2006
that it would widen its geographical focus and concentrate on ensuring the
availability of product to supply the distribution network that it will create.
Our strategy continues to be that of ensuring the availability of a stream of
motion picture product while assembling a distribution network which will
ultimately be consolidated into a single coherent brand enjoying the benefits of
a multinational script-to-studio-to-screen operation.
Company philosophy
Outside the United States feature film production has historically been regarded
as a separate discipline from the business of distribution. The delivery of
media to the masses was the child of protected State controlled entities in both
Eastern and Western Europe. With the advent of new Media forms the last 20 years
have seen the gradual break-up of State control.
Europe Vision's model is based on the US structure of a vertically integrated
industry. To fully appreciate the Company's strategy it is important to
understand our philosophy that media production and distribution are symbiotic
activities which cannot flourish without each other.
Accordingly once we had established that the media properties we had been
evaluating in Scandinavia were not satisfactory we focused primarily on ensuring
that product will be available for the distribution network that we shall build.
Morocco Film City
In this respect Europe Vision's key asset is its 11pc stake in the Morocco Film
City (MFC) project which is being constructed at the city limits of Marrakech.
This is owned via Tritel Media A/S and is being developed by Tritel Management
Group Inc, (TMG). TMG was initially promoted by the same shareholder group as
Tritel Media but as the project developed those shareholders have become diluted
and now TMG is an entirely independent and separately controlled company.
Neither Tritel Media or Europe Vision have any substantial influence on the way
in which TMG conducts its affairs, save that as part of the investment
arrangements Europe Vision manages the studio and media complex within the
development and TMG has nominated me as Chairman of its Board.
Europe Vision has been engaged by the developers to manage and operate the film
studio facilities around which a leisure and real estate development is being
built and in which Europe Vision's only interest is via its said shareholding.
In addition, (subject to certain conditions) Europe Vision operates a Film
Investment Fund on behalf of the developers and, (where available) receives
outright and for-no-payment distribution rights for Scandinavia for all films
made at the facility in the first six years.
The Board and its advisers share the view that Europe Vision neither controls
nor has a significant influence on the overall business of Tritel Management
Group Inc. It is therefore appropriate to treat the 11pc investment as a fixed
asset investment.
TMG commissioned an economic feasibility study from a group of experts in their
fields, (theme parks, sports facilities, film valuers, hotels and accommodation,
etc) led by Grant Leisure, a leading international consultancy in this field.
This study valued the whole of the development at approximately Euro1.2 billion.
Tritel Media had originally paid Euro160 million for which it received its 11pc
shareholding in the project, the management contract for the studios and the
Scandinavian film distribution rights.
As part of the development process and for the purposes of bank financing, the
Board of TMG then engaged Humbert Leisure, the specialist chartered surveyors,
to produce a valuation and appraisal of the MFC development in accordance with
Royal Institute of Chartered Surveyors standards. Humbert's appraisal confirmed
a value of over Euro1.1 billion. The Company has been provided with copies of both
the Grant Leisure and Humbert reports.
Europe Vision plc and Tritel Media A/S have obtained independent expert separate
valuations of this investment to assist them in determining the fair value to be
included in the financial statements.
Accordingly Tritel Media A/S commissioned an independent expert valuation from
Oliver Wyman, the international business valuers. At the same time your company
commissioned a separate independent expert's valuation from Tenon, the UK
accounting and consultancy firm. The valuations were conducted separately,
independently and in accordance with the criteria set out in IAS 620,
(International Auditing Standards).
Notwithstanding the methodology being different from those applied by both Grant
Leisure and Humbert, these valuations have confirmed a global value of Euro1.125
billion in the case of Tenon and Euro1.3 billion in the case of Oliver Wyman. The
value of Scandinavian film rights to be added to the 11pc holding is between Euro16
million and Euro18 million. The Board is pleased at the consistency of the values
ascribed to the development.
Accounting matters
Despite these extremely positive conclusions and valuations, the Board has felt
it appropriate to take into account factors that might have a significant impact
on the value of the investment if adverse conditions arose. The studio and real
estate development plan is initially phased over six years during which many
external factors could effect both timing and costs. There is of course
political risk and those risks associated with the spread of terrorism around
the world; as well as to currency exchange and funding risks associated with
international real estate developments and motion picture production.
The Board has carefully considered all of the independent valuations mentioned
above and in particular that commissioned by the Company itself from Tenon. The
auditors themselves have noted the difficulties of such long term ambitious
projects. We have therefore decided that it world be prudent to impair the value
of the investment by 20pc from the original price paid, thereby valuing the
Company's interest in MFC at Euro128 million. We emphasise that this is not a
write-down and that we expect the project to continue as planned. The
independent valuations speak for themselves in their conformity. It is, however,
reasonable to be cautious at this very early stage.
Audit matters
You will read in the Auditor's Report that a limitation of scope has arisen in
relation to their work on the valuation of Tritel Media's investment in TMG. The
Auditors requested evidence of TMG's cash holdings but for reasons of strict
business confidentiality the Directors of TMG, (which is a privately held
company) concluded that they could not provide this information to our Auditors
with whom they have no connection.
The Board (which does not have any significant influence over TMG - as your
Company only holds 11pc of TMG's share capital) has therefore been unable to
procure that information for our Auditors.
We emphasise that we have absolutely no reason for concern as to TMG's custody
or use of the said cash. Through discussion with TMG, your Board will do it's
best so as to eliminate the limitation of scope in future years.
Corporate residency
The Company is incorporated in England and Wales. This means that it is
automatically characterised by the Inland Revenue as being tax resident within
the United Kingdom.
However since its admission to AIM and the start of trading the Company's
activities, management and decision making, (both day to day and at Board level)
have all been outside the United Kingdom. Since admission no Board meeting has
been held in the United Kingdom and there is currently no business conducted by
the Company in the United Kingdom. Consequently the Company is not subject to
the City Code on Takeovers and Mergers (the "Code").
It is your Board's intent to have the legal and tax structure of the Company's
business reflect reality and therefore it is appropriate that the Company
migrate to a jurisdiction appropriate to the way in which its business is
carried out.
The Company has sought detailed corporate and tax advice on the subject and
intends to circulate its proposals to shareholders based on such advice very
shortly.
Present activity
The first product under the MFC banner is a Cuban co-production called El Benny
which was Cuba's entry to this year's Oscar nominations for best foreign film.
The Company will be releasing the film in Scandinavia and in the United Kingdom
in the second half of this current year. Meanwhile the Company's film making
activities are on time and on budget in the current year although in the first
six months the Company only achieved one film instead of the three forecast in
its Admission Document. This could have an impact on eventual revenues to the
Company. However the Board is achieving "catch-up" in the current year. As well
as the completed El Benny, the Company has been involved with the production of
(and owns the Scandinavian distribution rights) to Deadline Beirut, (shot
entirely on location in North Africa) and Baby which are both being edited. A
French-Spanish co-production called Kato is currently shooting in Barcelona
before moving production to North Africa.
In the first six months of this current year four films have been green-lighted.
In addition other Film City sites are currently being evaluated and developed in
co-operation with TMG, with Europe Vision contracted to manage them as they come
on line and to take the benefit of obtaining distribution rights and studio
production fees. Earnings from such management activities as well as other
activities in the current year mean that the Company is being weaned away from
expanded financial dependence on the line of credit given to it by its major
shareholder, Aladdin Investment Services plc.
Europe Vision's strategy for growth and sustainable returns is sound. I
confidently look ahead to an operating profit in this coming year from our
production and management activities alone. Now that some certainty as to
continuity of feature film and television product has been achieved, we will
energetically focus to put in place suitable distribution arrangements for the
product in the pipe line.
David Lowe
Chairman
Europe Vision plc
Enquiries:
Europe Vision plc
David Lowe, Chairman
Bell Pottinger Corporate and Financial
Olly Scott 078 1234 5205
KBC Peel Hunt Ltd
Capel Irwin 020 7418 8897
Richard Newman 012 1698 2151
Connsolidated Income Statement Year Ended 31 December 2006
--------------------------- ------ --------- ----------
Note Year ended 2006 Period ended
2005
#000 #000
--------------------------- ------ --------- ----------
Revenue 14 -
Cost of sales (31) -
Gross loss (17) -
--------------------------- ------ --------- ----------
Administration expenses (1,967) (70)
Goodwill written off 9 (778) -
Impairment in value of prepayment 11 (11,076) -
Share based payment provision 14 (8,694) -
Operating loss before financial
costs 4 (22,532) (70)
Finance (cost)/income 6 (1,305) 73
(Loss)/profit before tax (23,837) 3
Taxation 7 - (1)
(Loss)/profit for the year (23,837) 2
--------------------------- ------ --------- ----------
Attributable to the equity
holders of the parent (23,836) 2
Minority Interest (1) -
Basic (loss)/earnings per share
(pence) 15 (17.5) 0.00
Fully diluted (loss)/earnings per
share (pence) 15 (17.5) 0.00
--------------------------- ------ --------- ----------
Consolidated Balance Sheet Year Ended 31 December 2006
------------------------- ------- --------- ---------
Note 2006 2005
#000 #000
------------------------- ------- --------- ---------
Assets
Property, plant and equipment 8 3 -
Investment 10 86,000 -
Prepayments 11 5,169 18,349
------------------------- ------- --------- ---------
Total non-current assets 91,172 18,349
------------------------- ------- --------- ---------
Trade and other receivables 12 2,520 14
Cash and cash equivalents 13 189 81,192
Total current assets 2,709 81,206
------------------------- ------- --------- ---------
Total assets 93,881 99,555
------------------------- ------- --------- ---------
Interest bearing loans and borrowings 16 27,818 73
Trade and other payables 17 990 38
Income tax payable 9 1
Total current liabilities 28,817 112
------------------------- ------- --------- ---------
Total liabilities 28,817 112
------------------------- ------- --------- ---------
Net assets 65,064 99,443
------------------------- ------- --------- ---------
Equity
Issued capital 14 13,809 99,441
Share premium 2,200 -
Merger reserve 85,826 -
Reverse acquisition reserve 410 -
Capital redemption reserve 46 -
Retained earnings (39,077) 2
Foreign exchange translation reserve 1,740 -
Total shareholder funds 64,954 99,443
------------------------- ------- --------- ---------
Minority interest 110 -
------------------------- ------- --------- ---------
Total equity 65,064 99,443
------------------------- ------- --------- ---------
These financial statements were approved by the Board and authorised for issue
on 20 July 2007.
Consolidated cash flow statement Year Ended 31 December 2006
------------------------- ------ ---------- ----------
Note Year Ended Period Ended
2006 2005
#000 #000
------------------------- ------ ---------- ----------
Cash flows from operating activities
Operating loss for the year (22,532) (70)
Adjustments for:
Depreciation 8 1 -
Goodwill written off 9 778 -
Impairment in value of prepayments 11,076 -
Share based payments provision 8,694 -
Operating loss before changes in working
capital and provisions (1,983) (70)
Increase in trade and other receivables (402) (14)
Increase in trade and other payables 1,235 38
Interest received 41 73
Interest paid (1,346) -
Income taxes repaid 8 -
Net cash used in operations (2,447) 27
Cash flows from investing activities
Acquisition of property, plant and
equipment (4) -
Purchase of investment (109,937) -
Net cash from investing activities (109,941) -
Cash flows from financing activities
New loans 27,745 73
New share capital net of expenses 1,900 81,092
Net cash from financing activities 29,645 81,165
Foreign exchange movements 1,740 -
Net decrease in cash and cash equivalents (81,003) 81,192
Cash and cash equivalents at 1 January 2006 81,192 -
------------------------- ------ ---------- ----------
Cash and cash equivalents at 31 December
2006 13 189 81,192
------------------------- ------ ---------- ----------
Notes to the consolidated financial statements Year Ended 31 December 2006
1. Significant Accounting Policies
Europe Vision plc (the "Company") is a company domiciled in the United Kingdom.
The Europe Vision plc Group ("the Group") comprises the Company and its wholly
owned subsidiary, Tritel Media AB.
These financial statements were authorised for issue by the directors on 20 July
2007.
(a) Statement of compliance
The Group's and Company's financial statements have been prepared in accordance
with international Financial Reporting Standards ("IFRSs") as adopted by the
European Union. These are the Group's and the Company's first financial
statements under which IFRSs have been applied.
(b) Basis of preparation and critical accounting estimates and judgments
The financial statements are presented in sterling, rounded to the nearest
thousand.
The financial statements are the consolidated financial statements of the Group
and not just the Company. The Company's financial statements are shown on pages
25 to 27 inclusive.
As permitted by section 230 of the Companies Act 1985, the income statement of
the Company has not been presented in these financial statements.
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgments
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Management has considered the development, selection and disclosure of the
Company's critical accounting policies and estimates.
Information about judgments and estimation is contained in the accounting
policies and the notes to the financial statements, and the key areas are noted
below. Areas of judgement that have the most significant effect on the amounts
recognised in the financial statements are:
* Fair value of investments.
* Carrying value of prepayments.
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements.
The comparative figures for 2005 that are shown in the financial statements
relate to the results of Tritel Media AB restated to be consistent with IFRSs.
IFRS 1, "First time adoption of international Financial Reporting Standards"
sets out the procedures that the Group must follow when it adopts IFRSs for the
first time as the basis for preparing consolidated financial statements. The
Group is required to establish its accounting policies as at 31 December 2006
and, in general, apply these retrospectively to determine the IFRS opening
balance sheet at its date of transition, 1 January 2005. The standard provides a
number of optional exceptions to this general provision, none of which are
significant to the Group. As stated in note 22, the directors consider that no
adjustments are necessary in order to restate the opening balance sheet under
IFRSs.
(c) Going Concern
The Group is currently at an early stage of development and has not yet
generated significant income.
The Group is dependent on a borrowing facility with Aladdin investment Services
Ltd, a related party, of Euro90 million of which Euro38 million has been utilised.
Amounts drawn down are repayable after five years.
The directors have reviewed the Group's cash flow forecasts for the period to
December 2008 and are satisfied that the borrowing facilities are adequate. The
financial statements have therefore been prepared on a going concern basis.
(d) Basis of consolidation. The Group financial statements consolidate those of
the Company and its subsidiary undertakings drawn up to 31 December 2006.The
acquisition of the subsidiary is dealt with as a reverse takeover transaction as
detailed below.
On 27 June 2006 the Company became the legal parent company of Tritel Media AB
in a share-for-share transaction. Due to the relative values of the companies,
the former Tritel Media AB shareholders became the majority shareholders with
99.93% of the enlarged share capital. Following the transaction the Company's
continuing operations and executive management were those of Tritel Media AB.
Accordingly, the substance of the combination was that Tritel Media AB acquired
Europe vision plc in a reverse acquisition, and therefore reverse acquisition
accounting has been adopted.
The directors have followed the required accounting treatment for this
transaction as prescribed by international Financial Reporting Standard 3
("Business Combinations").
As a consequence of applying reverse acquisition accounting, the results for the
Group for the year ended 31 December 2006 comprise the results of Tritel Media
AB for its year plus those of Europe Vision plc from 27 June 2006, the date of
the reverse acquisition, to 31 December 2006. The comparative figures for the
Group are those of Tritel Media AB for the period from 3 August 2005 to 31
December 2005.
As set out in note 9 goodwill amounting to #778,205 arose on the difference
between the sum of the fair value of Europe vision plc's share capital and the
costs of acquisition, and the fair value of its net assets at the reverse
acquisition date. The directors have decided that this amount should be impaired
in full. This loss has been recognised in the income statement.
(e) Property, plant and equipment
(i) Computer equipment
Computer equipment is held at cost less accumulated depreciation and any
recognised impairment loss.
(ii) Depreciation
Depreciation is charged to the income statement over the estimated useful lives
of each asset. The following rates and methods are applied:
Computer equipment 20%-50%
Assets' lives and residual values are reviewed at least annually.
(f) intangible assets
Goodwill represents the excess of the fair value of the consideration of an
acquisition over the fair value of the Company's share of the net identifiable
assets of the business at the date of acquisition. it is recognised as an asset
on the Group's balance sheet in the year in which it arises and is tested at
least annually for impairment. Goodwill is carried at cost less accumulated
impairment losses.
If the cost on acquisition is less than the fair value of the net assets
acquired, the difference is recognised immediately in the consolidated income
statement.
(g) Investments
The Group's investment, being an equity investment in an unquoted company, is
classified as being "available for sale", and is stated at fair value, with any
resultant gain or loss being recognised directly in equity.
There is no active market for this equity and the fair value of the investment
has therefore been determined by the directors using valuation techniques
commonly applied for equity investments where there is no active market.
Disclosures relating to the techniques used and key assumptions are set out in
note 10.
(h) Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash management are
included as a component of cash and cash equivalents for the purpose of the
statement of cash flows.
Notes to the consolidated financial statements Year Ended 31 December 2006
1. Significant accounting policies continued
(j) Impairment
The carrying amount of the Company's assets, other than deferred tax assets, are
reviewed at each balance sheet date to determine whether there is any indication
of impairment. If any such indication exists, the asset's recoverable amount is
estimated.
An impairment loss is recognised whenever the carrying amount of an asset
exceeds its recoverable amount. Impairment losses are recognised in the income
statement.
(k) Share capital
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company's residual assets.
The ordinary shares are classified as equity.
(l) Interest bearing borrowings
Interest bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest
bearing borrowings are stated at amortised cost with any difference between cost
and redemption value being recognised in the income statement over the period of
the borrowings.
(m) Trade and other payables
Trade and other payables are stated at cost.
(n) Revenue
Revenue for the sale of services is recognised in the income statement at the
fair value of consideration invoiced.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can be reliably measured.
(o) Finance costs
Net financing costs comprise interest payable on borrowings, and interest
receivable on funds invested.
(p) Taxation
Taxation on the profit or loss for the year comprises current and deferred tax.
Income tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on income for the year, using tax rates
enacted or substantially enacted at the balance sheet date, and any adjustment
for tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
Deferred tax assets are provided to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be
utilised. The carrying values of deferred tax assets are reviewed at each
balance sheet date and reduced to the extent that it is probable that the
related tax benefit will be realised.
(q) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the exchange rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the income statement. 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 transaction.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to exchange rates
ruling at the balance sheet date. The revenues and expenses of foreign
operations are translated at rates approximating to the foreign exchange rates
ruling at the dates of the transactions. Foreign exchange differences arising on
retranslation are recognised directly as a separate component of equity. They
are released into the income statement upon disposal.
(iii) Functional currency
The Directors consider the functional currency of the Company to be Pounds
Sterling.
(r) Application of new standards
The Company has not applied any new Standards or interpretations issued by the
IASB and endorsed by the EU where the effective date for which is after the date
of these financial statements. The application of such standards is not
anticipated to have a material impact on the Company's financial statements.
(s) Share based payments
Certain third parties have been rewarded with share based instruments. An
expense has been recognised in the income statement based on the fair value at
the date of grant, or value of the services provided as appropriate.
In addition certain third parties have been issued shares for services to be
provided.
2. Reverse Acquisition
On 27 June 2006, the Company became the legal owner by way of share exchange of
99.89% of the issued share capital of Tritel Media AB by the issue of
135,996,900 ordinary shares of 10p each. Following an assessment of the fair
value goodwill arose of #778,205 which has been written off. The resultant
charge is included in the income statement.
The acquisition of the Company was accounted for by reverse acquisition
accounting. Under this method Tritel Media AB has been identified as the
acquiror and accordingly the consolidated entity is considered to be a
continuation of Tritel Media AB and the historical financial information prior
to the acquisition is that of Tritel Media AB only. For accounting purposes
Europe vision plc is thus deemed to have been acquired by Tritel Media AB.
The difference between the amount recognised in respect of issued equity
instruments (being share capital, share premium and merger reserve) of Europe
Vision plc at the date of acquisition, and the issued equity instruments of
Tritel Media AB at the same date, plus the cost of acquisition has been shown as
a reverse acquisition reserve.
3. Group Segment Reporting
The Group is at an early stage of development with no significant provision of
products or services in the year. As such, the directors have concluded that for
2006 the Group had no reportable business or geographical segments.
4. Operating loss before financing costs
This is stated after charging:
------------------------------------ ------ -------
2006 2005
#000 #000
------------------------------------ ------ -------
Auditors' remuneration 143 11
Depreciation 1 -
------------------------------------ ------ -------
Auditors' remuneration has been incurred as follows:
Fees payable to the company's auditor for the audit of the
company's annual accounts: 40 -
Fees payable to the company's auditor and its associates for
services in respect of:
The audit of the company's legal subsidiary pursuant to
legislation 27 11
Corporate finance services 62 -
Other services 14 -
------------------------------------ ------ -------
The directors consider the auditors were best placed to provide the non-audit
services. The Audit Committee reviews the nature and extent of non-audit
services to ensure that independence is maintained.
5. Personnel expenses and directors remuneration
------------------------------------ ------ -------
2006 2005
#000 #000
------------------------------------ ------ -------
Wages and salaries 61 -
Compulsory social security contributions 17 -
------------------------------------ ------ -------
78 -
------------------------------------ ------ -------
The average monthly number of employees, including directors, during the period
was as follows:
----------------------------------- ------- -------
2006 2005
Number Number
----------------------------------- ------- -------
Management and administration 3 -
----------------------------------- ------- -------
5. Personnel expenses and directors remuneration
---------------------------------- ------- -------
2006 2005
#000 #000
---------------------------------- ------- -------
Directors' remuneration
Emoluments from qualifying services 95 -
---------------------------------- ------- -------
95 -
---------------------------------- ------- -------
Remuneration in respect of the highest paid director was as follows:
---------------------------------- ------- -------
2006 2005
#000 #000
---------------------------------- ------- -------
Emoluments from qualifying services 65 -
---------------------------------- ------- -------
65 -
---------------------------------- ------- -------
No director accrued retirement benefits.
6. Finance (cost)/income
---------------------------------- ------- -------
2006 2005
#000 #000
---------------------------------- ------- -------
Interest payable on loans (1,346) -
Interest receivable 41 73
---------------------------------- ------- -------
(1,305) 73
---------------------------------- ------- -------
7. Taxation Expense
Recognised in the income statement
---------------------------------- ------- -------
2006 2005
#000 #000
---------------------------------- ------- -------
Current tax expense
Current year - 1
Adjustments for prior years - -
---------------------------------- ------- -------
- 1
---------------------------------- ------- -------
Deferred tax expense
Origination and reversal of temporary differences - -
---------------------------------- ------- -------
Total income tax expense in income statement - 1
---------------------------------- ------- -------
Reconciliation of tax charge
---------------------------------- ------- -------
2006 2005
#000 #000
---------------------------------- ------- -------
(Loss)/profit on ordinary activities before tax (23,837) 3
---------------------------------- ------- -------
(Loss)/profit on ordinary activities multiplied by the
standard
rate of corporate tax applicable in the countries concerned (6,876) 1
(UK
30%; Sweden 28%)
Loses arising in year but not recognised 3,954 -
Expenditure not deductible for tax purposes 2,922 -
---------------------------------- ------- -------
Total tax expense in income statement - 1
---------------------------------- ------- -------
There are tax losses available to carry forward in Sweden amounting to
#13,751,000 and in the UK amounting to #347,000. The aggregate potential
deferred tax asset of #3,954,000 has not been recognised in the financial
statements due to: (a) uncertainty as to the timing of future profits against
which the losses might be offset; and (b) the possibility that the tax residency
of the Group may change with the effect that the tax losses might not be
available to carry forward.
8. Property, plant and equipment
------------------------------- --------- --------
Cost Computer 2005
Equipment #000
2006
#000
------------------------------- --------- --------
Additions 4 -
------------------------------- --------- --------
Balance at 31 December 2006 4 -
------------------------------- --------- --------
Depreciation
Depreciation charge for the year 1 -
------------------------------- --------- --------
Balance at 31 December 2006 1 -
------------------------------- --------- --------
Carrying Amounts
At 31 December 2006 3 -
------------------------------- --------- --------
At 31 December 2005 - -
------------------------------- --------- --------
9. Goodwill
--------------------------------- --------- -------
Cost 2006 2005
#000 #000
--------------------------------- --------- -------
Acquired during the year 778 -
--------------------------------- --------- -------
Impairment charge (778) -
--------------------------------- --------- -------
Balance at 31 December 2006 - -
--------------------------------- --------- -------
Carrying amounts
At 31 December 2006 - -
--------------------------------- --------- -------
At 31 December 2005 - -
--------------------------------- --------- -------
Impairment charge. The goodwill recognised in the table above arises in respect
of the combination with Tritel Media AB. in accordance with the provisions of
IAS 36, this goodwill has been fully impaired because at the time of the
combination Europe vision plc did not have a value in use to support it being
carried forward.
10. Investments
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Opening fair value - -
---------------------------------- ------- --------
At 1 January
Purchase at cost 109,937 -
Fair value adjustment charged to equity (23,937) -
---------------------------------- ------- --------
Fair value at
31 December 2006 86,000 -
---------------------------------- ------- --------
The Group's investment, being an equity investment in an unquoted company, is
classified as being "available for sale", and is stated at fair value, with any
resultant gain or loss being recognised directly in equity.
The investment is an 11% equity shareholding in Tritel Management Group Inc
("TMG"), a company registered in the British Virgin Islands. TMG is in the
process of developing the Morocco Film City project ("MFC"). There is no active
market for this equity and the fair value of the investment has therefore been
determined by the directors using valuation techniques commonly applied for
equity investments where there is no active market. The valuation techniques
used are:
* discounted cash flow;
* earnings multiple; and
* forecast asset values.
The directors have used independent experts to provide valuations of TMG and the
Group's 11% equity investment.
In arriving at the fair value at 31 December 2006, the directors have made a
reduction to the valuations provided by the experts to reflect their view on the
uncertainties inherent in a long term project such as MFC.
Key assumptions used include:
* weighted average cost of capital of 7%; and
* average earnings multiple of 13.5 times to the recurring earnings before
interest, tax, depreciation and amortisation (EBiTDA).
The sensitivity of the valuation to changes in these assumptions is estimated as
follows:
* A 1% increase in the weighted average cost of capital gives rise to a 5%
decrease in fair value.
* A reduction in the average earnings multiple of 1 gives rise to a 2.5%
decrease in fair value.
The fair value change recognised in the year has been charged to equity. The
directors do not consider that there has been a "loss event" in respect of the
investment that gives rise to an impairment charge to the income statement.
The MFC is at an early stage and work on the infrastructure has only recently
commenced. In common with many large scale and long term projects of a similar
nature it is exposed to a significant number of risk factors, including the
following key financial risks:
* Price risk - future cash flows of MFC.
* Interest rate risk - the MFC is partly funded by debt.
* Liquidity risk - the MFC may encounter funding difficulties.
The chairman's statement also provides more information on risk factors.
The directors are satisfied that the board of TMG Inc are taking appropriate
steps to mitigate these risk factors where possible. They are also satisfied
that these factors have been adequately considered in arriving at the fair value
of #86,000,000, for which the valuation process has been described above.
However, the occurrence of any of the risk factors could have a material adverse
effect on the project and consequently, the valuation of the Group's investment
in TMG Inc.
11. Other non-current assets
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Prepayments 5,169 18,349
---------------------------------- ------- --------
5,169 18,349
---------------------------------- ------- --------
Prepayments relate to share based payments made by the subsidiary in respect of
the provision of film distribution rights to Tritel Media AB, and the provision
of marketing and advertising services for the benefit of Tritel Media AB. The
agreements cover the period 2006 to 2009 inclusive. The utilisation of these
payments is dependent upon the Group successfully implementing its business
strategy. The directors have concluded that based on current plans they are
unlikely to be able to utilise the prepaid film distribution rights in the
agreement period. Accordingly, they believe it appropriate to make a full
impairment provision in respect of this prepayment of #11,076,000.
They believe that prepaid marketing and advertising services will be fully
utilised in the period of the agreement but that #5,169,000 will be used in 2008
and is therefore treated as a non current asset.
12. Trade and other receivables
---------------------------------- -------- -------
2006 2005
#000 #000
---------------------------------- -------- -------
Trade receivables - -
Other receivables 305 14
Prepayments 2,215 -
---------------------------------- -------- -------
2,520 14
---------------------------------- -------- -------
Prepayments of #2,215,000 relate to the current portion of the prepaid marketing
and advertising services described in note 11 above.
13. Cash and cash equivalents
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Bank balances 189 81,192
---------------------------------- ------- --------
Net cash and cash equivalents 189 81,192
---------------------------------- ------- --------
14. Capital and reserves
The share capital in the Group balance sheet at 31 December 2005 reflected that
of Tritel Media AB prior to the reverse acquisition. This represents 136,150,000
authorised, called up and fully paid ordinary shares of 10 Swedish Kroner (SEK)
each.
On 27 June 2006 the Company issued 135,996,900 ordinary shares of 10p each in
respect of the reverse acquisition by Tritel Media AB.
On 24 November 2006 the Company issued 2,000,000 ordinary shares of 10p each at
120p per share. The difference between the nominal value of #200,000 and the
total consideration of #2,400,000 has been credited to the share premium
account.
Share options
(i) The Company had granted an option over 238,095 shares. The
exercise price was 105p and the expiry date of the option was 3 July 2007. The
option was not exercised.
(ii) The Company has issued options to acquire ordinary shares
at a price equivalent to 95% of the average closing mid market price of an
ordinary share for the five business days prior to exercise. The consideration
for shares so acquired will be no more than #250,000. The agreement expires on 2
January 2008.
(iii) Tritel Media AB issued options to acquire up to 1% of the
issued ordinary share capital of Tritel Media AB at a price of SEK10. Under a
novation agreement dated 20 June 2006, Tritel Media AB transferred, and Europe
vision accepted, all of the rights, liabilities, duties and obligations of
Tritel Media AB under the original agreement. The option holders consented to
the novation. The agreement expires on 27 April 2008.
(iv) The Company has granted an option to acquire 30,000,000
ordinary shares at a price of 127p. This agreement expires on23 November 2009.
(v) In respect of paragraphs (i), (ii) and (iii) above, the
options were granted to professional advisors in connection with the Company's
listing on AiM. The directors are of the view that a fair total fee of #1
million in respect of the work performed by the advisors was reasonable. The
cash element of this total fee was #400,000 thereby valuing the options granted
to the advisors at #600,000.
(vi) In respect of paragraph (iv) above, the Company cannot
reasonably value the services to be provided by the option holder as it is of a
subjective nature. As a consequence, the options have been valued using the
Black Scholes model with the following assumptions:
volatility 39%
Expected life November 2009
Exercise price 127p
Grant price 120p
Risk free interest rate 5.6%
Assumed dividend 4%
Expected volatility was determined by reference to a selection of AiM listed
companies operating in similar sectors.
Based on the above assumptions, the value of the options granted is estimated at
#8,094,000.
--------------------------------- --------- --------
Number Weighted
Average
Exercise
Price (p)
--------------------------------- --------- --------
Outstanding on 1 January 2006 - -
Granted 31,817,555 124.5
Outstanding at 31 December 2006 31,817,555 124.5
Exercisable at 31 December 2006 31,817,555 124.5
-------------------------------- --------- --------
------- -------- -------- ---------
Exercise Weighted Number Weighted
price Average Of Remaining
Exercise shares Contractual
Price (p) Life (years)
------- -------- -------- ---------
74.5 74.5 1,360,162 1.33
105 105 238,095 0.5
114 114 219,298 1.0
127 127 30,000,000 2.9
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Authorized share capital
500,000 ordinary shares of 10p each 50,000 -
---------------------------------- ------- --------
136,150,000 ordinary shares of SEK10 each - 99,441
---------------------------------- ------- --------
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Issued share capital
138,089,997 ordinary shares of 10p each 13,809 -
---------------------------------- ------- --------
136,150,000 ordinary shares of SKE10 each - 99,441
---------------------------------- ------- --------
During 2006, 500,000 ordinary shares were issued on incorporation in exchange
for cash of #50,000, 135,996,900 ordinary shares were issued in exchange for
99.89% of the issued share capital of Tritel Media AB, 47,619 ordinary shares
were issued to other shareholders in exchange for cash of #4,000, 456,522
ordinary shares were gifted by certain shareholders to the Company and
cancelled; and 2,000,000 ordinary shares were exchanged for cash of #2.4
million.
Details of other movements in equity are shown in the statement of changes in
equity on page 11.
15. Loss/earnings per share
Basic loss/earnings per share
The calculation of basic earnings (loss) per share at 31 December 2006 is based
on the loss attributable to ordinary shareholders of #23,836,000 and a weighted
average number of ordinary shares outstanding during the year ended 31 December
2006 of 136,392,207 (2005: 55,952,054) calculated as follows:
---------------------------------- ------- --------
Loss/profit attributable to ordinary shareholders 2006 2005
#000 #000
---------------------------------- ------- --------
(Loss)/profit in the year (23,837) 2
(Loss)/profit attributable to ordinary shareholders (23,836) 2
---------------------------------- ------- --------
---------------------------------- ------- --------
Weighted average number of ordinary shares 2006 2005
#000 #000
---------------------------------- ------- --------
Weighted average number of ordinary shares at 31 December
2006 136,392 55,952
---------------------------------- ------- --------
Subsequent to the year end, the Company issued one million new ordinary shares
at 100p each and raised #1 million.
Diluted (loss) per share
The potential increase in common shares from the exercise of any of the warrants
or share options would be anti-dilutive as the Company has a net loss. These
potential common shares are therefore excluded from the calculation and the
diluted loss per share figure reported is the same as the basic earning per
share.
16. Interest-bearing loans and borrowings
Aladdin investment Services Ltd, a related party, has made available to Tritel
Media AB an unsecured line of credit of up to Euro90 million. interest accrues
quarterly at the rate of LiBOR plus 2.5%. Amounts drawn down are repayable after
five years.
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Current liabilities
Unsecured loans 27,818 73
---------------------------------- ------- --------
27,818 73
---------------------------------- ------- --------
17. Trade and other payables
---------------------------------- ------- --------
2006 2005
#000 #000
---------------------------------- ------- --------
Trade payables 158 -
---------------------------------- ------- --------
Non-trade payables and accrued expenses 832 38
---------------------------------- ------- --------
990 38
---------------------------------- ------- --------
18. Financial Instruments
Exposure to credit risk and foreign currency risk arises in the normal course of
the Company's business. Additional information in respect of the investment in
Tritel Management Group inc is provided in note 10.
Credit risk
Management has a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount. The Company does not require collateral
in respect of financial assets.
At the balance sheet date there were no significant concentrations of credit
risk. The maximum exposure to credit risk is represented by the carrying amount
of each financial asset.
Fair values
The directors have reviewed the carrying amounts of financial instruments shown
in the balance sheet and have concluded that the balances represent the fair
values.
Foreign currency risk
During the year the Group's expenses were predominantly made in Pounds Sterling
(#) and Swedish Kroner (SEK) being the functional currencies of the Company and
legal subsidiary. However, the borrowing facility is in Euros (Euro) and therefore
the Group has a downside exposure to any strengthening of the Euro against the
Kroner. in addition, any movement in Kroner will affect the presentation of the
Consolidated Balance Sheet when the net assets of Tritel Media AB are translated
from this functional currency to Pounds Sterling.
19. Capital commitments
No commitments have been entered into in respect of future capital expenditures.
20. Ultimate controlling party and related parties
The directors do not consider there to be an ultimate parent company. They
consider Sovereign Trust (TCi) Limited, which is incorporated in the Turks and
Caicos islands, to be the ultimate controlling party.
Tritel Media AB, as a wholly owned subsidiary, is a related party. Transactions
with this company were as follows:
Tritel Media AB paid a number of expenses on behalf of the Company, the majority
of which were associated with the listing on AiM.
The total of these expenses was #554,208. During the year, the Company lent
Tritel Media AB #1,624,000, which remained outstanding at the year end.
Tritel investments Inc is considered to have been a related party as a
beneficial shareholder in the Company. It is owned by Sovereign Trust (TCi)
Limited.
No transactions occurred with Tritel investment Inc, although Tritel investments
Inc had made available a facility of #60.6 million (Euro90 million) to Tritel Media
AB of which #27,818,000 had been drawn down at 31 December 2006. The benefits
and burdens of this facility have now been assumed on identical terms by Aladdin
Investment Services Ltd.
Aladdin investment Services Ltd is considered to be a related company as a
beneficial shareholder in the Company. It is also owned by Sovereign Trust (TCi
Limited). Transactions with this company were as follows:
In respect of rent and office services #190,178
Consultancy services #267,854
The balance outstanding at the year end was #458,032.
The Company was appointed on 10 April 2007 by Aladdin investment Services Ltd to
provide consultancy services to CiAC A/S, a subsidiary of Europe visions' A/S
which is a wholly owned subsidiary of Aladdin Investment Services Ltd. The
consultancy period is for three months with a minimum fee payable to the Company
of Euro500,000.
David Lowe, a director of the Company, is also a director of TMG, and a
shareholder of TMG in which the legal subsidiary, Tritel Media AB, has an
investment.
Remuneration of key management is shown in note 5.
21. Subsequent events
On 30 April 2007 the Company issued one million new ordinary shares at 100p and
raised #1 million.
22. Adoption of IFRSs
This is the first year that the Group has presented its financial statements
under iFRSs.
The last financial statements were for the period ended 31 December 2005 and
were prepared under Swedish GAAP.
In preparing the opening IFRS balance sheet, the directors reviewed the previous
financial statements and considered that no adjustment was necessary.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR RIMJTMMMTBMR
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