TIDMCXM
RNS Number : 3659T
Conexion Media Group PLC
27 September 2010
CONEXION MEDIA GROUP PLC (CXM)
Interim Results for the Six Months ended 30 June 2010
This document will shortly be available on the company's website
www.conexion-media.com.
Highlights
· Operating costs reduced
· Loss for the period reduced
· Successful integration of Los Angeles based acquisition.
Chairman's Statement
During the period Conexion Media Group Plc integrated Los Angeles based Kid
Gloves Music, now Conexion Entertainment Group USA, acquired in February 2010,
with its existing business, thereby increasing its platform for exploiting
copyrights and services to the Hollywood based film and television studios.
Revenue was GBP1.4m compared with GBP1.7m in the first half of 2009 and Gross
Profit was GBP636k (first half 2009 GBP875k.) Deals concluded during the period
with U.S. based clients such as Comcast International, Telenext,
Multivisionnaire and Broadway Classics as well as a TV production deal with
Harper Collins will begin to reverse this downward trend, as Conexion continues
its move into collecting ancillary film and television rights in addition to its
traditional music publishing base.
EBITDA loss was down to GBP125k due to reduced Operating Costs and the Loss for
the Period after Amortisation, Depreciation, and Finance Costs showed a
reduction of GBP229k to GBP402k, compared with the same period last year.
During the period, considerable effort has been focused to broaden the
intellectual property rights that the Company currently administrates. This is a
specialist area and our CEO Justin Sherry is one of the few who are conversant
with all these rights. International territorial sub-publishing relationships
with third parties are gradually being replaced by direct memberships with
collection societies which will give Conexion increased margins and benefit
cash-flow
Justin and his team have spent considerable time building Conexion's presence in
the US with our Nashville office taking over all the administrative back office
functions of Conexion Entertainment Group USA. This has reduced the head count
in Los Angeles with no increase in Nashville. From our new base in Los Angeles
we launched a drive to increase our business presence which resulted in the
signing of prestigious 'preferred vendor' deals with many of the major film
studios for the supply of music and services. I am confident Justin's approach
is working, building a platform to deliver long-term shareholder value.
Brian Scholfield
27th September 2010
For further information please contact:
+----------------------------------+----------------------------------+
| Conexion Media | |
+----------------------------------+----------------------------------+
| Justin Sherry, | 0208 987 4150 |
| CEO,justin@conexion-media.com | |
+----------------------------------+----------------------------------+
| | |
+----------------------------------+----------------------------------+
| FinnCap | |
+----------------------------------+----------------------------------+
| Corporate Finance | |
+----------------------------------+----------------------------------+
| Matthew Robinson/Charlotte | 0207 600 1658 |
| Stranner | |
+----------------------------------+----------------------------------+
| | |
+----------------------------------+----------------------------------+
| Corporate Broking | |
+----------------------------------+----------------------------------+
| Stephen Norcross | 020 7600 1658 |
+----------------------------------+----------------------------------+
CONEXION MEDIA GROUP PLC
Consolidated Income Statement
For the six months ended 30th June 2010
+------------------------------------------------+---------------+-------------+-------------+
| | Jan-June 2010 | Jan-June | Year |
| | | 2009 | to |
| | | | December |
| | | | 2009 |
+------------------------------------------------+---------------+-------------+-------------+
| | unaudited | unaudited | audited |
+------------------------------------------------+---------------+-------------+-------------+
| | GBP | GBP | GBP |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Revenue | 1,437,598 | 1,684,181 | 3,351,731 |
+------------------------------------------------+---------------+-------------+-------------+
| Direct costs | (801,614) | (809,102) | (1,560,763) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Gross Profit | 635,984 | 875,079 | 1,790,968 |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Operating costs | (761,259) | (1,234,321) | (1,879,536) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Operating loss before amortisation and | (125,275) | (359,242) | (88,568) |
| depreciation | | | |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Amortisation and depreciation | (240,955) | (234,521) | (475,241) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Operating loss | (366,230) | (593,763) | (563,809) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Finance income | 118 | 966 | 7,785 |
+------------------------------------------------+---------------+-------------+-------------+
| Finance costs | (35,691) | (38,294) | (73,978) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Loss before taxation | (401,803) | (631,091) | (630,002) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Taxation | - | - | - |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Loss for the period | (401,803) | (631,091) | (630,002) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Attributable to: | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Non-controlling interests | 4,102 | (1,008) | 30,220 |
+------------------------------------------------+---------------+-------------+-------------+
| Owners of the parent company | (405,905) | (630,083) | (660,222) |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Earnings/(loss) per share - continuing | | | |
| operations | | | |
+------------------------------------------------+---------------+-------------+-------------+
| Basic earnings per share (pence) | (0.55) | (1.05) | (1.09) |
+------------------------------------------------+---------------+-------------+-------------+
| Diluted earnings per share (pence) | (0.55) | (1.05) | (1.09) |
+------------------------------------------------+---------------+-------------+-------------+
Consolidated Statement of Comprehensive Income
For the six months ended 30th June 2010
+--------------------------------------------+-----------+------------+------------+
| | Jan-June | Jan-June | Year to |
| | 2010 | 2009 | December |
| | | | 2009 |
+--------------------------------------------+-----------+------------+------------+
| | unaudited | unaudited | audited |
| | | (restated) | (restated) |
+--------------------------------------------+-----------+------------+------------+
| | GBP | GBP | GBP |
+--------------------------------------------+-----------+------------+------------+
| | | | |
+--------------------------------------------+-----------+------------+------------+
| (Loss) for financial year | (401,803) | (631,091) | (630,002) |
+--------------------------------------------+-----------+------------+------------+
| Currency translation differences | (128,806) | 335,336 | 236,377 |
+--------------------------------------------+-----------+------------+------------+
| Total Comprehensive Income | (530,609) | (295,755) | (393,625) |
+--------------------------------------------+-----------+------------+------------+
+--------------------------------------------+-----------+-----------+-----------+
| Attributable to: | | | |
+--------------------------------------------+-----------+-----------+-----------+
| Non-controlling interests | 4,102 | (1,008) | 30,220 |
+--------------------------------------------+-----------+-----------+-----------+
| Owners of the parent company | (534,711) | (294,747) | (423,845) |
+--------------------------------------------+-----------+-----------+-----------+
| Total Comprehensive Income | (530,609) | (295,755) | (393,625) |
+--------------------------------------------+-----------+-----------+-----------+
CONEXION MEDIA GROUP PLC
Consolidated Statement of Financial Position
As at 30th June 2010
+------------------------------------------+--------------+-------------+-------------+
| | As at | As at | As at |
| | 30th June | 30th June | 31st |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------------+--------------+-------------+-------------+
| | unaudited | unaudited | audited |
| | | (restated) | |
+------------------------------------------+--------------+-------------+-------------+
| | GBP | GBP | GBP |
+------------------------------------------+--------------+-------------+-------------+
| Non-current assets | | | |
+------------------------------------------+--------------+-------------+-------------+
| Intangible assets | | | |
+------------------------------------------+--------------+-------------+-------------+
| Goodwill | 1,370,520 | 1,370,520 | 1,370,520 |
+------------------------------------------+--------------+-------------+-------------+
| Other | 4,134,617 | 3,433,812 | 3,231,306 |
+------------------------------------------+--------------+-------------+-------------+
| Investments | - | - | - |
+------------------------------------------+--------------+-------------+-------------+
| Property, plant and equipment | 47,295 | 123,107 | 75,616 |
+------------------------------------------+--------------+-------------+-------------+
| Trade and other receivables | 23,983 | 28,857 | 29,150 |
+------------------------------------------+--------------+-------------+-------------+
| | 5,576,415 | 4,956,296 | 4,706,592 |
+------------------------------------------+--------------+-------------+-------------+
| Current assets | | | |
+------------------------------------------+--------------+-------------+-------------+
| Trade and other receivables | 1,569,086 | 1,460,409 | 1,458,732 |
+------------------------------------------+--------------+-------------+-------------+
| Cash and short term deposits | 205,357 | 465,043 | 551,196 |
+------------------------------------------+--------------+-------------+-------------+
| | 1,774,443 | 1,925,452 | 2,009,928 |
+------------------------------------------+--------------+-------------+-------------+
| | | | |
+------------------------------------------+--------------+-------------+-------------+
| Current liabilities | | | |
+------------------------------------------+--------------+-------------+-------------+
| Trade and other payables | (6,021,766) | (5,320,935) | (5,366,595) |
+------------------------------------------+--------------+-------------+-------------+
| Amounts due to related parties | (1,034,421) | (1,273,910) | (1,052,546) |
+------------------------------------------+--------------+-------------+-------------+
| Bank overdraft and loans | (180,200) | - | - |
+------------------------------------------+--------------+-------------+-------------+
| Current tax liabilities | - | - | - |
+------------------------------------------+--------------+-------------+-------------+
| | (7,236,387) | (6,594,845) | (6,419,141) |
+------------------------------------------+--------------+-------------+-------------+
| | | | |
+------------------------------------------+--------------+-------------+-------------+
| Net current liabilities | (5,461,944) | (4,669,393) | (4,409,213) |
+------------------------------------------+--------------+-------------+-------------+
| | | | |
+------------------------------------------+--------------+-------------+-------------+
| Total assets less current liabilities | 114,471 | 286,903 | 297,379 |
+------------------------------------------+--------------+-------------+-------------+
| | | | |
+------------------------------------------+--------------+-------------+-------------+
| Non-current liabilities | | | |
+------------------------------------------+--------------+-------------+-------------+
| Amounts due to related parties | - | (165,000) | (53,875) |
+------------------------------------------+--------------+-------------+-------------+
| Net assets | 114,471 | 121,903 | 243,504 |
+------------------------------------------+--------------+-------------+-------------+
| | | | |
+------------------------------------------+--------------+-------------+-------------+
| Equity | | | |
+------------------------------------------+--------------+-------------+-------------+
| Called up share capital | 783,926 | 600,593 | 783,926 |
+------------------------------------------+--------------+-------------+-------------+
| Share premium account | 8,356,254 | 8,264,587 | 8,356,254 |
+------------------------------------------+--------------+-------------+-------------+
| Other reserves | 69,108 | 122,744 | 69,108 |
+------------------------------------------+--------------+-------------+-------------+
| Shares to be issued | 681,609 | 672,899 | 611,609 |
+------------------------------------------+--------------+-------------+-------------+
| Retained earnings | (10,112,083) | (9,403,880) | (9,577,372) |
+------------------------------------------+--------------+-------------+-------------+
| Equity share owners' funds | (221,186) | 256,943 | 243,525 |
+------------------------------------------+--------------+-------------+-------------+
| Non-controlling interest | 335,657 | (135,040) | (21) |
+------------------------------------------+--------------+-------------+-------------+
| Total equity | 114,471 | 121,903 | 243,504 |
+------------------------------------------+--------------+-------------+-------------+
CONEXION MEDIA GROUP PLC
Consolidated Statement of Cash Flows
For the six months ended 30th June 2010
+----------------------------------------+-----------+-----------+------------+-----------+
| | | Jan-June | Jan-June | Year to |
| | | 2010 | 2009 | December |
| | | | | 2009 |
+----------------------------------------+-----------+-----------+------------+-----------+
| | | unaudited | unaudited | audited |
| | | | (restated) | |
+----------------------------------------+-----------+-----------+------------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| | Note | *GBP | GBP | GBP |
+----------------------------------------+-----------+-----------+------------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Operating cash flow | 1 | 256,936 | (602,749) | (306,626) |
+----------------------------------------+-----------+-----------+------------+-----------+
| Net finance costs | | (35,573) | (37,328) | (66,193) |
+----------------------------------------+-----------+-----------+------------+-----------+
| Net cash inflow from operating | | 221,363 | (640,077) | (372,819) |
| activities | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Investing activities | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Purchase of subsidiary undertakings | | (614,525) | - | (21,406) |
+----------------------------------------+-----------+-----------+------------+-----------+
| Purchase of property, plant and | | (6,630) | (15,568) | (14,618) |
| equipment | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Purchase of intangible assets | | (12,839) | - | - |
+----------------------------------------+-----------+-----------+------------+-----------+
| Net cash flow from investing | | (633,994) | (15,568) | (36,024) |
| activities | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Financing activities | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Issue of shares from loan conversion | | - | - | 221,364 |
+----------------------------------------+-----------+-----------+------------+-----------+
| Convertible loan equity | | - | 34,079 | 34,079 |
+----------------------------------------+-----------+-----------+------------+-----------+
| Increase in borrowings | | 108,200 | 364,456 | 31,967 |
+----------------------------------------+-----------+-----------+------------+-----------+
| Net cash (outflow)/inflow from | | 108,200 | 398,535 | 287,410 |
| financing | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Foreign exchange differences | | (41,408) | 131,436 | 81,912 |
+----------------------------------------+-----------+-----------+------------+-----------+
| (Decrease)/Increase in cash and cash | | (345,839) | (125,674) | (39,521) |
| equivalents | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Cash and cash equivalents at start of | | 551,196 | 590,717 | 590,717 |
| period | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
| Cash and cash equivalents at end of | | 205,357 | 465,043 | 551,196 |
| period | | | | |
+----------------------------------------+-----------+-----------+------------+-----------+
CONEXION MEDIA GROUP PLC
Notes to the Consolidated Cash Flow Statement
For the six months ended 30th June 2010
+--------+----------------------------------------------+-----------+-------------+-------------+
| 1. | Reconciliation of profit before finance | Jan-June | Jan-June | Year to |
| | costs income and taxation | 2010 | 2009 | December |
| | to operating cash flow | | | 2009 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | | GBP | GBP | GBP |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Loss before finance costs and taxation | (366,230) | (593,763) | (563,809) |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Goodwill write back | (159,152) | - | - |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Depreciation | 34,952 | 33,119 | 70,871 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Loss on disposal of fixed assets | - | - | 8,516 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Amortisation of intangible assets | 206,003 | 201,402 | 404,370 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | (Increase)/decrease in trade and other | 5,167 | 1,109 | 816 |
| | receivables - non-current | | | |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | (Increase)/decrease in trade and other | (110,354) | 560,233 | 561,910 |
| | receivables - current | | | |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Increase/(decrease) in trade and other | 655,171 | (1,133,273) | (1,087,613) |
| | payables | | | |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Share options | 70,000 | 120,000 | 139,516 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Exchange difference | (78,621) | 208,424 | 158,797 |
+--------+----------------------------------------------+-----------+-------------+-------------+
| | Operating cash flow | 256,936 | (602,749) | (306,626) |
+--------+----------------------------------------------+-----------+-------------+-------------+
+--------+----------------------------------------------+-------------+------------+-----------+
| | | Jan-June | Jan-June | Year to |
| 2. | Reconciliation of net cash flow to movement | 2010 | 2009 | December |
| | in net debt | | (restated) | 2009 |
+--------+----------------------------------------------+-------------+------------+-----------+
| | | | | |
+--------+----------------------------------------------+-------------+------------+-----------+
| | | GBP | GBP | GBP |
+--------+----------------------------------------------+-------------+------------+-----------+
| | Increase/(decrease) in cash in the period | (345,839) | (125,674) | (39,521) |
+--------+----------------------------------------------+-------------+------------+-----------+
| | Cash inflow from increase in debt | (108,200) | (364,456) | (31,967) |
+--------+----------------------------------------------+-------------+------------+-----------+
| | Movement in net debt in the period | (454,039) | (490,130) | (71,488) |
+--------+----------------------------------------------+-------------+------------+-----------+
| | Net debt at 1st January 2010 | (555,225) | (483,737) | (438,737) |
+--------+----------------------------------------------+-------------+------------+-----------+
| | Net debt at 30th June 2010 | (1,009,264) | (973,867) | (555,225) |
+--------+----------------------------------------------+-------------+------------+-----------+
+---------+------------------------------------------+-------------+-----------+-------------+
| 3. | Analysis of changes in net debt | | | |
+---------+------------------------------------------+-------------+-----------+-------------+
| | | At 1st | Cash | At 30th |
| | | January | flow | June |
| | | 2010 | | 2010 |
+---------+------------------------------------------+-------------+-----------+-------------+
| | | GBP | GBP | GBP |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Cash at bank and in hand | 551,196 | (345,839) | 205,357 |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Bank loan and overdrafts | - | (180,200) | (180,200) |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Loans | (1,106,421) | 72,000 | (1,034,421) |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Total | (555,225) | (454,039) | (1,009,264) |
+---------+------------------------------------------+-------------+-----------+-------------+
+---------+------------------------------------------+-------------+-----------+-------------+
| | | At 1st | Cash | At 30th |
| | | January | flow | June |
| | | 2009 | | 2009 |
+---------+------------------------------------------+-------------+-----------+-------------+
| | | GBP | GBP | GBP |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Cash at bank and in hand | 590,717 | (125,674) | 465,043 |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Bank overdrafts | (5,465) | 5,465 | - |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Loans | (1,068,989) | (369,921) | (1,483,910) |
+---------+------------------------------------------+-------------+-----------+-------------+
| | Total | (483,737) | (490,130) | (973,867) |
+---------+------------------------------------------+-------------+-----------+-------------+
CONEXION MEDIA GROUP PLC
1. Accounting Policies
Basis of preparation
The Financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) adopted by the European Union. These
statements do not constitute a set of statutory financial statements within the
meaning of the Companies Act 2006.
The financial statements have been prepared on the historical cost basis and in
accordance with the accounting policies adopted in the last audited statutory
financial statements for the year ended 31 December 2009.
Going concern
The Directors have prepared cash flow forecasts to 30th September 2011 and
believe that the Group will be able to meet its working capital requirements.
Music Publishing companies have regular sources of income, as collection
societies distribute revenues on the same dates each year. There are monthly
and quarterly distributions. In addition, the Group has overseas partners known
as sub-publishers, from whom the
Group receives royalties quarterly and semi-annually depending on the contract.
Music publishing companies only incur a cost of sales after the royalties have
been received. The Group accounts for royalty income on an accruals basis, and
therefore provides for the related royalty payable. The total royalties payable
includes a significant amount relating to the royalty payable on the royalty
income which has not been received at the balance sheet date, and the royalty
due will therefore not be payable until some time after the balance sheet date.
Income has been forecast on the basis of prior year income adjusted for trading
developments. This includes new income generated as a result of the acquisition
of 70% of the assets of the Kid Gloves Music Group. Costs have been forecast on
the basis of the current operating costs, including those costs relating to the
Kid Gloves transaction.
The cash flow forecasts do not include any repayment of the loan from Polymer
Holdings Limited (PHL). The loan is convertible into shares, under warrants
granted to PHL. The shareholders gave the Board authority to issue these shares
at the EGM held on 10th February 2009. The Board understands that PHL will not
seek repayment of the loan, but will convert the loan into shares under the
terms of the agreement. On the 17th December 2009, PHL converted the first loan
facility of GBP275,000 into 18,333,333 fully paid ordinary shares of GBP0.01 at
the subscription price of GBP0.015 per share. On this basis, the Directors
consider that it is appropriate to prepare the financial statements on a going
concern basis. The financial statements do not include any adjustments that
would result if the loan from PHL was required to be repaid.
Accounting Estimates and Judgements
The Group makes estimates and judgements concerning the future and the resulting
estimates may, by definition, vary from the actual results. The Directors
considered the critical accounting estimates and judgements used in the
financial statements and concluded that the main areas of judgement are:
· Revenue recognition policies in respect of contracts which straddle the
period end;
· Contingent deferred payments in respect of acquisitions;
· Recognition and quantification of share based payments; and
· Valuation of intangible assets.
These estimates are based on historical experience and various other assumptions
that management and the Board of Directors believe are reasonable under the
circumstance.
2. Acquisition of Subsidiary
On the 3rd March 2010, Conexion Media Group acquired 70% of the assets in Kid
Gloves Music Group ("KGM") from Kid Gloves Productions Inc., Kid Gloves Inc.,
and Crossroads Music LLC. The assets comprise music publishing rights, master
recording rights and third party contracts. Based in Los Angeles, all assets of
KGM have been assigned into a new entity, Conexion Entertainment USA LLC. The
new entity is located in Los Angeles and is marketing Conexion Media Group's
copyrights and services to the film and television studios.
The total consideration payable was GBP614,525 and the fair value of the assets
acquired was GBP773,677, therefore negative goodwill arising was GBP159,152.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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