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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Responzetv | LSE:RETV | London | Ordinary Share | GB00B18X8Z87 | ORD 16P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 24.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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ResponzeTV PLC
Preliminary Results for the year ended 31 December 2006
CHAIRMAN'S STATEMENT
RESULTS
For the financial year ended 31 December 2006, Group revenues were US$2.2
million (2005:US$4.7 million) and Group losses were US$4.2 million (2005:US$31.7
million).
The reduction in revenues as compared to 2005 reflects the decision made during
the year to move the focus of the Group's TV home shopping business away from
activities involving high media costs in China and high overheads and instead to
focus on lower-risk activities within the TV home shopping and DRTV sector.
The Group continued, in the second half of the year, its process of liquidating
slow moving inventories, resulting in a reduction of gross margins. However, as
a result of the various measures taken to reduce costs, expenditure in the
second half of the year continued to drop by an amount significantly in excess
of the fall in revenues and gross margin. Group losses for the second half of
the year were reduced to US$1.2 million.
The reduction in costs for the full year, compared to 2005, was US$26.6 million,
or US$10.2 million prior to the US$16.4 million charge for goodwill impairment
made during 2005.
The Group losses for the full year of US$4.2 million are net of a US$1.1 million
reversal of unrealised foreign exchange charges attributable to the first half
of the year. The financial results for 2006 represent a significant improvement
of US$27.5 million over the loss for 2005.
REVIEW OF STRATEGY AND OPERATIONS
The reduced loss for the full year, and in particular the continuing reduction
in losses during the second half of the year, came as a direct result of the
implementation of the review of the Group's strategy and operations. The key aim
of this was to stabilise the Group in the short-term by reducing the Group's
cash burn and by imposing tight control of costs, in order to establish a
platform from which the Group's business areas could be developed and growth
opportunities considered in the medium and longer terms.
As a result of that review, during the second half of the year the Group
completed a capital reorganisation, moved its listing to AIM, converted US$21.5
million of debt into equity and changed its name.
At an operational level, the Group restructured its business in China to focus
on sourcing wholesale products for sale to competing DRTV and TV home shopping
operators in Europe, the USA and North Asia and sought to sell its products into
the retail sector in Greater China. The Board also implemented reductions in
overheads through cuts in aggregate levels of directors' remuneration, reduced
premises costs and lower staff costs.
All of these measures were designed to place the Group into a stable position,
such that it could consider expansion by acquisition in its core geographic and
business areas, where appropriate opportunities were identified.
Capital Reorganisation, Move to AIM, Debt Conversion and Change of Name
On 31 July 2006, shareholders approved a consolidation and sub-division of the
Company's share capital and the delisting of the Company's shares from the
Official List and a move to AIM, which became effective on 29 December 2006.
On 28 December 2006, shareholders approved the conversion of US$21.5 million of
debt owed to MediaXposure Limited (Cayman) ("MediaXposure") into 46,253,305
ordinary shares of the Company. The remaining amount owed to MediaXposure,
aggregates to US$4.2 million.
The Company changed its name to ResponzeTV PLC on 28 December 2006, to associate
it more closely with its core business activities and to assist in the
recognition of the ResponzeTV brand name used by the Group.
Acquisitions of Reliant International Media LLC and Famous Discoveries
Having implemented the above measures, the Company was able to make its first
significant acquisition as part of its new strategy. On 11 January 2007, the
Company acquired Reliant International Media LLC ("Reliant"). Reliant acts as a
DRTV operator in the US market, developing proprietary products, producing
infomercials and buying media. On completion of the acquisition Kevin Harrington
and Tim Harrington, the vendors of Reliant, joined the board as Chief Executive
Officer and Chief Operating Officer respectively.
In further support of its new strategy, the Company made a further acquisition,
on 30 March 2007, of EXI International Corp, a TV home shopping business which
trades under the name of `Famous Discoveries'.
Directors
During the first half of 2006, Robert C Harris and Raymond Chang resigned as
directors and James Huang joined the board. Darren Shaw resigned as a director
on 31 July 2006 and I became executive Chairman on that date. On 28 December
2006 Clive Ng, resigned as a director.
On 11 January 2007, Kevin Harrington and Tim Harrington joined the board, Andre
Koo resigned as a director and James Huang became a non-executive director.
The board currently therefore comprises six directors. Four are executive
directors (myself as executive Chairman, Kevin Harrington as CEO, Tim Harrington
as COO and Grahame Farquhar as CFO) and two are non-executive directors (David
Shrimpton and James Huang).
Businesses
Following the acquisition of Reliant, the Group now has two main divisions,
Reliant and the International Supply Business. The business of Reliant is
described above, and includes Famous Discoveries. The International Supply
Business sources wholesale products for sale to TV home shopping operators, with
a focus on customers in Europe, the US and North Asia.
Outlook
The Group is seeing the anticipated improvement in its financial performance as
a result of the strategic and operational review which took place in 2006. It
expects, in the 2007 financial year, to see the full impact of the cost savings
it implemented in the second half of 2006.
The Board has been encouraged by the start to 2007 for its International Supply
Business. This business is showing continuing growth in revenues. Its
performance, already ahead of expectations, is anticipated to be well above its
performance for the previous year. The Board is already seeing signs that the
product sourcing strength in China of the International Supply Business is a
good fit with the Reliant business, as was anticipated.
The Reliant business has, in the first quarter of 2007, been focusing on
completing the development of new products and projects for launch in 2007. A
number of new products and projects have recently been launched and more are
planned for the rest of 2007, to add to its existing stable of products. The
Board is encouraged by this and expects to see substantial growth in the
business during the rest of 2007 and beyond, and to see additional benefits from
the acquisition of Famous Discoveries.
The Board believes that the Group can look back over the period since June 2006
and be pleased that the challenging targets it set for restructuring the Group
during that time have been met. More importantly, the Board believes that, with
the start to the year made by its International Supply Business and with the
foundations for the rest of the year and beyond which have been set by Reliant,
which is expected to be enhanced by Famous Discoveries, it can look to the
future with some confidence that the Group now has in place the required
elements to deliver success and value to its shareholders.
The Board believes there is potential for further growth through acquisition, to
strengthen the Group's position as a supplier to major home shopping channels
around the world. This sector of suppliers is relatively fragmented and is
characterized by a large number of small and medium-sized businesses which might
benefit from being within a larger group such as ResponzeTV. The Board will
therefore continue to consider opportunities to expand the business through
appropriate acquisitions.
I would like to take this opportunity to thank our employees for their hard
work, and our customers, suppliers, partners and of course our shareholders for
their much needed support in 2006.
Steven Goodman
Executive Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2006
Note For the For the
year ended year ended
31 December 31 December
2006 2005
US$'000 US$'000
Revenue 2,174 4,650
Cost of sales (2,001) (1,378)
----------- -----------
Gross profit 173 3,272
Administrative Expenses (4,240) (23,134)
Distribution Costs (688) (8,353)
----------- -----------
Operating loss 2 (4,755) (28,215)
Share of loss of associate - (93)
Investment revenue 2 7
Finance income 3 3,177 -
Finance costs 3 (2,580) (3,424)
----------- -----------
Loss before tax (4,156) (31,725)
Income tax - 26
----------- -----------
Loss from continuing operations (4,156) (31,699)
----------- -----------
Loss for the financial year (4,156) (31,699)
======= =======
Basic/diluted loss per ordinary 4 US$(0.49) Restated
share from continuing US$(4.66)
operations
CONSOLIDATED BALANCE SHEET
at 31 December 2006
2006 2005
US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 142 605
Goodwill - -
Investment in associate - -
Other investments - -
Total non-current assets 142 605
Current Assets
Inventories - 432
Trade and other receivables 1,008 735
Cash and cash equivalents 189 257
Total current assets 1,197 1,424
Total Assets 1,339 2,029
LIABILITIES
Current liabilities
Trade and other payables (2,793) (6,695)
Tax liabilities (68) (63)
Other financial liabilities (3,619) (9,677)
Total current liabilities (6,480) (16,435)
Non-current liabilities
Other financial liabilities (3,132) (8,100)
Total non-current liabilities (3,132) (8,100)
Total Liabilities (9,612) (24,535)
Total Assets less Total (8,273) (22,506)
Liabilities
Equity
Share capital 16,853 2,155
Equity component of convertible 665 323
bond
Share premium account 7,058 -
Other reserve 11 -
Translation reserve (6,321) (2,601)
Accumulated losses (26,539) (22,383)
Total Equity (8,273) (22,506)
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2006
2006 2006 2005 2005
$'000 $'000 $'000 $'000
Operating activities
Loss for the year (4,156) (31,699)
Adjustments for:-
Loss on disposal of property, 356 -
plant and equipment
Depreciation of property, 168 159
plant and equipment
(Write back of) provision on (153) 580
inventories
Impairment of goodwill 55 16,378
Share-based payment expense 11 -
Gain on disposal of associate - (259)
Finance income (3,177) -
Finance costs 2,580 3,424
Interest receivables (2) (7)
Tax (refund)/ paid - (26)
(162) 20,249
Operating cash flows before (4,318) (11,450)
movements in working capital
Decrease / (increase) in 635 (899)
inventories
Decrease in receivables 72 430
(Decrease) / increase in (2,466) 1,386
payables
(1,759) 917
Cash generated from operations (6,077) (10,533)
Income taxes refunded/ (paid) - 26
Interest paid (180) (559)
(180) (533)
Net cash from operating (6,257) (11,066)
activities
Investing activities
Interest received 2 7
Acquisition of subsidiary (77) -
Disposal of associate - 669
Disposal of property, plant 33 -
and equipment
Purchases of property, plant (79) (506)
and equipment
Net cash from investing (121) 170
activities
Financing activities
Issue of new shares 252 -
New other loans raised 6,600 8,725
Net cash from financing 6,852 8,725
activities
Net increase/(decrease) in 474 (2,171)
cash and cash equivalents
Cash and cash equivalents at 257 2,661
the beginning of the year
Effect of foreign exchange (542) (233)
rate changes
Cash and cash equivalents at 189 257
the end of the year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
Year to Year
31 to 31
Dec Dec
2006 2005
US$'000 US$'000
Changes in equity
Exchange differences arising on (3,720) 1,068
translation of foreign operations
Net (loss)/ income recognised directly (3,720) 1,068
in equity
Loss for the year (4,156) (31,699)
Total recognised income and expense (7,876) (30,631)
for the year
Issue of share capital 119 1,129
Issue of share capital upon conversion 14,579 -
of debts
Equity element of convertible loan - 403 323
issue of convertible debt
Equity element of convertible loan - (61) (1,846)
conversion of debt
Share premium arising from issue of 133 6,062
ordinary share capital
Share premium arising from conversion 6,925 -
of debts
Issue of share options 11 -
14,233 (24,963)
Equity brought forward (22,506) 2,457
(8,273) (22,506)
NOTES TO THE PRELIMINARY RESULTS
For the year ended 31 December 2006
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2006 and 2005. The
financial information for the year ended 31 December 2006 has been prepared
using the accounting policies which are consistent with those adopted in the
audited accounts for the year ended 31 December 2005. The financial information
for the year ended 31 December 2005 is derived from the statutory accounts for
that year, which have been delivered to the Registrar of Companies. The auditors
have reported on the 2005 accounts; their report was unqualified and did not
contain a statement under section 237 (2) or (3) of the Companies Act 1985. The
auditors have signed their report on the 2006 accounts. The statutory accounts
for the year ended 31 December 2006 will be finalised on the basis of the
financial information presented by the Directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The financial information set out in this
announcement was approved by the Board of Directors on 2 April 2007.
1. ACCOUNTING POLICIES
Basis of Preparation
These preliminary results have been prepared in accordance with International
Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the
International Accounting Standards Board (IASB) as adopted by the EU and with
those parts of the Companies Act 1985 applicable to companies preparing their
financial statements under IFRS.
The preliminary results have been prepared on the historical cost basis, except
for the revaluation of certain financial instruments as disclosed in the
respective accounting policies associated with each item. The principal
accounting policies adopted are set out below. The policies have been
consistently applied to all the years presented unless otherwise stated.
Going Concern
As at 31 December 2006 the Group had net liabilities of US $ 8.3 million and net
current liabilities of US $ 5.3 million. The Board has obtained confirmation from
MediaXposure, the main source of financial support to the Group, that MediaXposure
will continue to support the Group. On this basis, the directors believe that the
Group should have sufficient funding to continue in operational existence for at
least twelve months from the date of approval of these preliminary results. On
this basis, the directors consider it is appropriate to prepare the financial
statements on the going concern basis. The preliminary results do not include any
adjustments that may be necessary should the Group's financing arrangements be
insufficient.
Foreign Currency
The functional currency for the Company is Sterling, however, the presentational
currency for the Group is US$. The Company is listed on the London Stock Exchange
and has its shares issued in Sterling and therefore adopts Sterling as its
functional currency. The majority of the Group operations, however, are conducted
in US $ including funding, sales contracts with customers and purchase terms with
suppliers. Accordingly, the presentational currency for consolidated accounts is
US$. Many of the transactions entered into by Group entities in a currency other
than their functional currency are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the balance sheet date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are
similarly recognised immediately in the income statement.
On consolidation, the results of overseas operations are translated into United
States Dollars at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations, including goodwill
arising on the acquisition of those operations, are translated at the rate ruling
at the balance sheet date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas operations at
actual rate are recognised directly in equity (the "translation reserve").
Exchange differences recognised in the income statement of Group entities'
separate financial statements on the translation of long-term monetary items
forming part of the group's net investment in the overseas operation concerned
are reclassified to the translation reserve if the item is denominated in the
functional currency of the Group or the overseas operation concerned.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the translation reserve relating to that operation up to the date
of disposal are transferred to the income statement as part of the profit or loss
on disposal.
Basis of Consolidation
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The consolidated
preliminary results present the results of the Company and its subsidiaries ("the
Group") as if they formed a single entity. Inter-company transactions and
balances between Group companies are therefore eliminated in full.
The consolidated preliminary results incorporate the results of business
combinations using the purchase method. In the consolidated balance sheet, the
acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date. The results
of acquired operations are included in the consolidated income statement from the
date on which control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of identifiable assets, liabilities and contingent
liabilities acquired. Cost comprises the fair values of assets given,
liabilities assumed and equity instruments issued, plus any direct costs of
acquisition. Goodwill is capitalised as an intangible asset and reviewed for
impairment at least annually. Any impairment in carrying value is charged to the
income statement.
Where the fair value of identifiable assets, liabilities and contingent
liabilities exceeds the fair value of consideration paid, the excess is credited
in full to the income statement. On disposal of a subsidiary or associate, the
attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
Associates
Where the Group has the power to participate in (but not control) the financial
and operating policy decisions of another entity, it is classified as an
associate. In the Group preliminary results, interests in associated undertaking
are accounted for using the equity method of accounting. Associates are initially
recognised in the consolidated balance sheet at cost. The Group's share of post-
acquisition profits and losses is recognised in the consolidated income
statement, except that losses in excess of the Group's investment in the
associate are not recognised unless there is an obligation to make good those
losses.
Profits and losses arising on transactions between the Group and its associates
are recognised only to the extent of unrelated investors' interests in the
associate. The investor's share in the associate's profits and losses resulting
from these transactions is eliminated against the carrying value of the
associate.
Any premium paid for an associate above the fair value of the Group's share of
the identifiable assets, liabilities and contingent liabilities acquired is
capitalised and included in the carrying amount of the associate and subject to
impairment in the same way as goodwill arising on a business combination
described above.
Revenue Recognition
Revenue is stated exclusive of sales tax and consists of sales of goods and
services to third parties. Revenue is recognised when the Group has transferred
the significant risks and rewards of ownership and control of the goods sold and
the amount of revenue can be measured reliably and it is probable that the
economic benefits of the transaction will flow to the Group.
Retirement Benefits: Defined Contribution Schemes
Contributions to defined contribution pension schemes are charged to the income
statement in the year to which they relate.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Leased Assets
Where substantially all of the risks and rewards incidental to ownership are
retained by the lessor (an "operating lease"), the total rentals payable under
the lease are charged to the income statement on a straight-line basis over the
lease term.
Property, Plant and Equipment and Depreciation
Items of property, plant and equipment are initially recognised at cost. As well
as the purchase price, cost includes directly attributable costs and the
estimated present value of any future costs of dismantling and removing items.
Depreciation is provided on a straight line basis in order to write down the
cost of each asset over its expected useful life to an estimated residual value,
as follows:
Leasehold improvements - 3 years
Plant, equipment and vehicles - 3 years
Impairment of Tangible and Intangible Assets Excluding Goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. An intangible
asset with an indefinite useful life is tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (cash-
generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for
the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately, unless the relevant asset is carried at
a re-valued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present
location and condition.
First-In-First-Out method is used to determine the cost of ordinarily
interchangeable items.
Financial Instruments
Financial assets and liabilities are recognised on the balance sheets when the
Group and/or the Company becomes a party to the contractual provisions of the
instrument.
Trade and Other Receivables
Trade and other receivables do not carry interest. Trade receivables are
recognised at original invoiced amount less any provision for impairment. Other
receivables are carried at cost less any provision for impairment.
Trade and Other Payables
Trade and other payables are not interest bearing and are stated at nominal
value.
Interest Bearing Loans
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Such interest bearing liabilities are
subsequently measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the period to repayment is
at a constant rate on the balance of the liability carried in the balance sheet.
"Interest expense" in this context includes initial transaction costs and
premium payable on redemption, as well as any interest or coupon payable while
the liability is outstanding.
Convertible Loan Notes
The proceeds received on issue of the Group's convertible debt are allocated
into their liability and equity components. The amount initially attributed to
the debt component equals the discounted cash flows using a market rate of
interest that would be payable on a similar debt instrument that did not include
an option to convert. Subsequently, the debt component is accounted for as a
financial liability measured at amortised cost.
The difference between the net proceeds of the convertible debt and the amount
allocated to the debt component is credited direct to equity and is not
subsequently re-measured. On conversion, the debt and equity elements are
credited to share capital and share premium as appropriate.
Equity Instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Derivative Financial Instruments and Hedge Accounting
The Group's activities expose it primarily to the financial risks of changes in
foreign currency exchange rates and interest rates. The Group has not entered
into any hedge accounting arrangements.
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that
have arisen as a result of past transactions and are discounted at a pre-tax
rate reflecting current market assessments of the time value of money and the
risks specific to the liability.
Share-based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the income statement over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also charged to the income statement over the remaining
vesting period.
Significant accounting estimates and judgements
Management is required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results
may differ from these estimates, and accordingly they are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period.
Standards, amendments and interpretations to published standards not yet
effective
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory
for the group's accounting periods beginning on or after 1 January 2007 or
later periods but the group has decided not
to adopt early. These are:
- IFRS 8, Operating Segments (effective from 1 January 2009). This standard sets
out requirements for disclosure of information about an entity's operating
segments and also about the entity's products and services, the
geographical areas in which it operates, and its major customers. It
replaces IAS 14, Segmental Reporting. The group will apply this standard in
the accounting period beginning on 1 January 2009 and the application will
not result in any impact on the results or net assets of the group.
- IFRIC 10, Interim Financial Reporting and Impairment (effective for accounting
periods beginning on or after 1 November 2006). IFRIC 10 prohibits the
impairment losses recognised in an interim period on goodwill and
investments in equity instruments and in financial assets carried at cost
to be reversed at a subsequent balance sheet date. The group will apply
IFRIC 10 from 1 January 2007 but it is not expected to have any impact on
the group's accounts.
2. OPERATING LOSS
2006 2005
$'000 $'000
This has been arrived at after
charging/(crediting):
Staff costs 2,290 4,359
Depreciation of property, plant and 168 159
equipment
Operating lease expenses
- plant and machinery 15 17
- property 361 393
Loss on disposal of property, plant and 356 -
equipment
Goodwill impairment charge 55 16,378
(Write-back)/ write-down of inventory to (153) 580
net realisable value
Gain on disposal of associate - (259)
Audit fees - for the year 199 145
- over provision in prior years 27 42
Fees paid to the Company's auditors for
non-audit services:
- Audit related regulatory reporting 1 -
- Tax compliance services 1 44
- Tax advisory services 1 33
- Corporate Finance consulting 69 98
======= =======
Audit fees include an amount of $101,200 (2005: $121,969) in respect of the
Company.
In 2006 BDO advised in respect of the Company's move to AIM. In 2005 the Company's
auditors provided services in relation to the Company's plans to launch a
television auction channel in China.
3. FINANCE INCOME/ COSTS
2006 2005
$'000 $'000
FINANCE INCOME
Translation exchange gain 3,177 -
_______ _______
_ _
FINANCE COSTS
Interest payable on convertible (2,414) (1,696)
loans and other loans
Translation exchange charge - (1,578)
Amortisation of equity component (166) (150)
of convertible debt
_______ _______
_ _
(2,580) (3,424)
_______ _______
_ _
The functional currency for the Company is Sterling, however, the presentational
currency for the Group is US$. Transactions entered into by Group entities in a
currency other than their functional currency are recorded at the rates ruling
when the transactions occur. Foreign currency monetary assets and liabilities
are translated at the rates ruling at the balance sheet date. A translation
exchange gain or charge arises from the movement in foreign currency values
between balance sheet dates, principally as between Sterling and US$.
4. LOSS PER ORDINARY SHARE
The basic and diluted loss per ordinary share has been calculated using the loss
for the financial year of $4,156,000 (2005: $31,699,000) and the weighted average
number of ordinary shares in issue during the year of 8,475,979 (2005 restated:
6,805,027). Re-statement for 2005 is required consequent to the capital re-
organisation approved at AGM on 31 July 2006. The number of shares used for the
diluted loss per share basis is not adjusted in respect of outstanding convertible
loan stock or warrants since none are dilutive.
On 11 January 2007 the Company issued 13,620,551 new ordinary shares to the
vendors of Reliant International Media LLC as consideration in respect the entire
issued share capital of that entity. The Company will issue a further 4,540,184
new ordinary shares to the vendors by 31 August 2007. The issue of up to a further
26,415,614 new ordinary shares of the Company will be by way of earn-out and is
dependant on the financial performance of Reliant for the financial years ending
31 December 2007 and 2008.
On 30 March 2007 the Company acquired the entire issued share capital of EXI
International Corp (Famous Discoveries). The Company has agreed to pay to the
vendors of Famous Discoveries by 31 August 2007 the sum of US$2,500,000, which
will be satisfied by the issue of 3,144,594 new ordinary shares at an issue
price of 40.5p per share, representing 4.41% of the current issued share capital
of the Company as enlarged by such issue. Payment of the balance of up to
US$2,600,000, which will be satisfied by the issue of new ordinary shares issued
at the market price as at the dates of each such issue, will be by way of earn-
out and is dependant on the financial performance of the business of Famous
Discoveries for the two years ending 28 February 2009.
5. POST BALANCE SHEET EVENTS
On 11 January 2007 the Company announced that with effect from 1 January 2007, it
had acquired the entire issued share capital of Reliant International Media LLC
(Reliant), a Florida, USA based TV home shopping and DRTV operator. The
consideration payable to the vendors of Reliant is an aggregate of 44,576,349 new
ordinary shares of 16p, representing 45% of the current issued share capital of
the Company as enlarged by such issue. On completion the Company issued to the
vendors 13,620,551 shares representing 20% of the current issued share capital of
the Company as enlarged by such issue. The Company will issue a further 4,540,184
new ordinary shares to the vendors by 31 August 2007, representing a further 5% of
the current issued share capital of the Company as enlarged by such issues. The
issue of the balance of 26,415,614 new ordinary shares (being a further 20% of the
issued share capital of the Company as enlarged by all such issues) will be by way
of earn-out and is dependant on the financial performance of Reliant for the
financial years ending 31 December 2007 and 2008. Completion accounts in respect
the Reliant transaction are being prepared and full consolidated accounting will
be provided within the Interim Results at 30 June 2007.
On 19 January 2007, Reliant entered into a revolving credit line loan promissory
note with Grand Pacific in respect of a US$2 million credit line loan made
available by Grand Pacific to Reliant, secured on the assets of Reliant. The
credit line loan is repayable by 1 January 2009 and is at an interest rate of
Prime Rate plus 2% per annum. The Company provided a guarantee to Grand Pacific
in respect of the loan.
On 30 March 2007 the Company acquired the entire issued share capital of EXI
International Corp comprising a Florida-based TV home shopping business which
trades under the name "Famous Discoveries". The Company has agreed to pay to the
vendors of Famous Discoveries by 31 August 2007 the sum of US$2,500,000, which
will be satisfied by the issue of 3,144,594 new ordinary shares at an issue
price of 40.5p per share, representing 4.41% of the current issued share capital
of the Company as enlarged by such issue. Payment of the balance of up to
US$2,600,000, which will be satisfied by new ordinary shares issued at the
market price as at the dates of each such issue, will be by way of earn-out and
is dependant on the financial performance of the business of Famous Discoveries
for the two years ending 28 February 2009.
For further enquiries contact:
Steven Goodman, Executive Chairman, ResponzeTV PLC +852 2295 1161
Paul Lockstone, Edelman Financial, London +44 (0)20 7344 1325
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