TIDMMFP
RNS Number : 7078D
Music Festivals PLC
21 May 2012
21 May 2012
Music Festivals plc
("Music Festivals" or the "Group")
Preliminary results for year ended 31 December 2011
Music Festivals plc (AIM: MFP), a company which owns, develops
and produces music festivals, is pleased to announce its
preliminary results for the year ended 31 December 2011.
Highlights
-- The Group admitted to trading on AIM on 28 June 2011, with
total equity funds raised of GBP9.2 million and debt funds, issued
by the Group, of which GBP5.2 million were in the form of
convertible loan notes
-- Five acquisitions completed, at a total cost of GBP10.7
million, namely Benicassim Limited, Kent Festival Limited, Finsbury
Park Events Limited, EP Events Limited and SP Events Limited
-- Turnover of GBP13.0 million generating a net profit before
taxation of GBP0.8 million
-- Benicassim ("FIB") generated the strongest ticket sales in
its history and Hop Farm Music Festival ticket sales over three
days was an 34.4% increase over 2010 which was over two days
-- New two day festival called Costa de Fuego being held in July
2012 utilizing same location and infrastructure as FIB
-- Two additional one-day concerts scheduled for September 2012
at The Hop Farm venue featuring the only UK appearance of Leonard
Cohen
-- Focus on cost savings from economies of scale and tight
control over costs to maximize returns
Vince Power, the Chief Executive Officer of Music Festivals plc,
said:
"We continue to firmly believe that live music will provide
strong growth and cash generating opportunities for the Group
notwithstanding the short term challenges of the current market.
The Group's management team is highly experienced in operating
music festivals, securing acts and adapting to short-term
challenges, which we believe remains the Group's competitive
advantage."
For further information please contact:
Music Festivals plc
Vince Power (Chief Executive) Tel: +44 (0)20
7644 1420
Merchant Securities Limited (Nominated Adviser and
Broker)
Simon Clements/Virginia Bull/Catherine Tel: +44 (0)20
Miles 7628 2200
Mission Public Relations
Andrew Murray-Watson Tel: +44 (0)20
7845 7800
Chairman's and Chief Executive Officer's Report
Introduction
We are pleased to report Music Festivals' results for the year
ended 31 December 2011.
Group activity
During the period the Group was admitted to trading on the
Alternative Investment Market ("AIM") and the day after
commencement of trading five acquisitions were completed, at a
total cost of GBP10.7 million, namely Benicassim Limited, Kent
Festival Limited, Finsbury Park Events Limited, EP Events Limited
and SP Events Limited.
The acquisitions own and manage the following music
festivals:
-- Benicassim ("FIB") - the largest international live music
festival in Spain, held annually in the Castellon region, close to
Valencia. Headline artists that have played the festival include
Oasis, Muse, The Killers, Gorillaz, Kings of Leon, Radiohead,
Kasabian and Franz Ferdinand with over 100 artists playing live
each year;
-- Hop Farm Music Festival - a large live music festival with
internationally acclaimed artists held annually at the Hop Farm,
Paddock Wood in Kent. Headline artists that have played the
festival include Neil Young, Bob Dylan, Eagles, Prince, Morrissey
and Paul Weller with around 80 artists playing live each year;
and
-- The Feis Festival - a two-day Irish-focused music festival
held in Finsbury Park, London.
Group trading
The Group's two major festivals, FIB and the Hop Farm Music
Festival, both took place in July 2011 during the period and the
Directors were encouraged by the performance of these festivals.
FIB generated the strongest ticket sales in its history with almost
double the number of tickets sold for the 2011 festival compared
with 2010.
The Hop Farm Music Festival ticket sales for 2011 were ahead of
2010 although this was over a three day period as opposed to the
two day period in 2010. The three day festival led to a 34.4%
increase in festival-goers against 2010.
Whilst the Directors were encouraged by the ticket sales, due to
increased costs, the gross margin and profitability was lower than
expected. We are looking to improve performance in 2012 by
increasing ticket sales and tighter cost control, although the
festival market remains highly competitive.
Financial review
The results for the period ended 31 December 2011 showed
turnover of GBP13m generating a net profit before taxation of
GBP0.8m. Adjusted basic and diluted earnings per share were 8 pence
(see note 4 of the financial statements).
To fund the five acquisitions, new funds of GBP5.7m in the form
of equity and debt were raised during the period, net of listing
expenses. Total equity funds of GBP9.2m were raised through the
issue of 14,189,640 new ordinary shares at 65p, the price at which
ordinary shares were placed on admission to AIM. Debt funds, issued
by the Group, were GBP5.2m in the form of convertible loan
notes.
Strategy The Group's strategy is to maximise the quality of the
experience to festival goers, increase the attendance levels where
capacity allows at the Hop Farm Music Festival and FIB, and hold
new events, which the Group believes will be cash generative. Using
the same location and infrastructure as FIB, a new two day festival
called Costa de Fuego is being held in 2012, a week after FIB. It
is devoted to hard rock and heavy metal with Guns and Roses and
Marilyn Manson confirmed as headline acts. At The Hop Farm venue,
two additional one-day concerts have been scheduled for September
2012 featuring the only UK appearance of Leonard Cohen.
The Group will seek further opportunities from organic growth
and potential further acquisitions as well as pursuing additional
sources of revenue and cost savings from economies of scale. An
example is the Group's primary ticketing agent agreement with CTS
Eventim AG, entered into during the period.
Board changes
During the period, Matt Heiman was appointed to the Board as
Non-executive Director. Matt has a mergers and acquisitions
background and has founded, as well as invested in, a number of
start-ups including Mobix Trading and Diagonal View.
Noel Lyons resigned from the Board as a Non-executive Director.
We would like to thank him for his contribution towards the Group's
IPO and wish him all the best for the future.
Prospects
In spite of the Group's improved attendances in 2011, the
festivals market in general has been affected by the continued
depressed economic climate and the availability of strong revenue
generating acts. The economic outlook in Spain, where we generate a
significant amount of income, is less encouraging than last year
and ticket sales for FIB are currently behind last year on a
like-for-like basis. Ticket sales for the Hop Farm Music Festival
are currently slower than last year. However, it is too early at
this stage to predict total ticket sales for either festival. As
set out above, we have responded to this by exercising tight
control over costs in order to maximise our return.
We continue to firmly believe that live music will provide
strong growth and cash generating opportunities for the Group
notwithstanding the short term challenges of the current market.
The Group's management team is highly experienced in operating
music festivals, securing acts and adapting to short-term
challenges, which we believe remains the Group's competitive
advantage.
We would like to thank all the staff of Music Festivals for
their contributions to the progress that we have made in the period
and we look forward to the current year's festival season and
another year of progress.
David Mansfield Vince Power
Non-executive Chairman Chief Executive Officer
Consolidated Income Statement for the period ended 31 December
2011
Period to
31 December
Note 2011
GBP
Revenue 12,976,758
Cost of sales (11,456,025)
------------
Gross profit 1,520,733
Administration expenses (571,934)
------------
Operating profit 948,799
Finance costs (154,422)
Finance income 1,247
------------
Profit before tax 795,624
Analysed as
Profit before tax adjusted for non-cash
charges 877,181
Depreciation (3,885)
Share based payments charge (77,672)
------------
Profit before tax 795,624
---------------------------------------- ---- ------------
Income tax expense 3 (433,808)
------------
Profit attributable to equity holders
of the parent 361,816
============
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Profit for the year 361,816
Exchange differences on translation
of foreign operations 161,088
============
Total comprehensive income for the
year attributable to owners of the
parent 522,904
Earnings per share
Basic and diluted 4 5.1p
============
Consolidated Balance Sheet as at 31 December 2011
At
31 December
Note 2011
GBP
ASSETS
Non-current
Goodwill 7,979,015
Other intangible assets 9,899,329
Property, plant and equipment 63,398
Deferred tax 607,214
------------
Non-current assets 18,548,956
Current
Trade and other receivables 5 1,281,517
Cash and cash equivalents 596,302
------------
1,877,819
Liabilities
Trade and other payables 6 3,749,449
Derivative financial instruments 236,603
------------
Current liabilities 3,986,052
Non-current Liabilities
Borrowings and other financial liabilities 3,500,977
Deferred tax 2,573,826
------------
6,074,803
Net assets 10,365,920
------------
Equity
Share capital 1,468,964
Equity element on convertible debt 1,076,620
Share premium 2,895,561
Merger reserve 4,324,199
Translation reserve 161,088
Retained earnings 439,488
------------
Total equity 10,365,920
------------
Consolidated Statement of Cash Flows for the period ended 31
December 2011
Period to
31 December
2011
GBP
Operating activities
Profit before tax 795,624
Adjustments
Depreciation and amortisation 3,885
Share based payments 77,672
Decrease in trade and other receivables 6,211,160
Decrease in trade and other payables (10,282,398)
------------
Cash outflow from operating activities (3,194,057)
------------
Investing activities
Purchase of property plant and
equipment (48,518)
Cash acquired with acquisitions 947,683
Purchase of subsidiary undertaking (2,846,731)
------------
Cash outflow from investing activities (1,947,566)
------------
Cash flows from financing activities
Issue of ordinary share capital 3,661,706
Issue of convertible loan stock 3,000,000
Expenses related to the issue of share
capital (923,781)
------------
Net cash inflow from financing 5,737,925
------------
Net change in cash and cash equivalents 596,302
Cash and cash equivalents, end
of period 596,302
============
Consolidated Statement of Changes in Equity for the period ended
31 December 2011
Equity
element
Share Share Merger Translation Retained of convertible Total
capital premium reserve reserve earnings debt Equity
GBP GBP GBP GBP GBP GBP GBP
Share issued during
the period 1,468,964 3,129,998 4,674,304 - - - 9,273,266
IPO costs - (234,437) (350,105) - - - (584,542)
Equity settled
share based payments - - - - 77,672 - 77,672
Loan notes issued
during the period - - - - - 1,076,620 1,076,620
Transactions with
owners 1,468,964 2,895,561 4,324,199 - 77,672 1,076,620 9,843,016
--------- --------- --------- ----------- --------- --------------- ----------
Profit for the
year - - - - 361,816 - 361,816
Other comprehensive
income:
Currency translation - - - 161,088 - - 161,088
At 31 December
2011 1,468,964 2,895,561 4,324,199 161,088 439,488 1,076,620 10,365,920
--------- --------- --------- ----------- --------- --------------- ----------
Notes
1. The full year results for the year ended 31 December 2011
have been extracted from the audited consolidated financial
statements which have not yet been dispatched to shareholders. The
financial information set out in this preliminary announcement does
not constitute statutory accounts but is derived from those
accounts. While the financial information in this preliminary
announcement has been prepared in accordance with International
Financial Reporting Standards ('IFRS'), this announcement does not
itself contain sufficient information to comply with IFRS.
The auditors have reported on the statutory accounts for the
year ended 31 December 2011 and their report was unqualified. The
audited accounts will be posted to all shareholders in due course
and will be available on request by contacting the Company
Secretary at the Company's Registered Office.
2. Basis of preparation
The financial statements of the Group have been prepared from
the date of incorporation of 28 September 2010 to 31 December 2011
in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") and the Companies
Act 2006 applicable to companies reporting under IFRS. The
financial statements have been prepared primarily under the
historical cost convention.
3. Income Tax
Major components of tax expense:
Period to
31 December
2011
GBP
Current tax:
UK corporation tax at 26% (47,639)
Foreign Tax:
Overseas tax 280,129
-----------
Total current tax 232,490
-----------
Deferred Tax:
Origination and reversal of temporary
timing differences 201,318
-----------
Tax on profit on ordinary activities 433,808
===========
UK corporation tax is calculated at 26% of the estimated
assessable profit for the year. Taxation for other jurisdictions is
calculated at the rates prevailing in those jurisdictions. The
charge for the year can be reconciled to the profit per the income
statement as follows:
Period to
31 December
2011
GBP
Profit before tax 795,624
Tax at UK corporation tax rate
of 26% 206,862
Effects of:
Unutilised tax losses 122,800
Differences between capital allowances
and depreciation 509
Expenses not deductible in determining
tax profits and foreign exchange gains (25,398)
Differences in tax rates (3,403)
Higher tax rates on overseas
earnings 112,243
Share-based payments 20,195
Tax on profit on ordinary
activities 433,808
===========
4. Earnings per share
Both the basic and diluted earnings per share have been
calculated using the profit after tax attributable to shareholders
of Music Festivals PLC as the numerator, i.e. no adjustments to
profit was necessary divided by the weighted average number of
shares in issue during the period.
Period to
31 December
2011
GBP
Profit for the period attributable
to ordinary shareholders (GBP) 361,816
Deferred taxation
charges 201,318
-------------
Adjusted profit for the period attributed
to equity holders of the parent 563,134
Weighted average
number of ordinary
shares 7,059,543
-------------
Basic and diluted
earnings per share
(pence) 5.1p
Adjusted basic and
diluted earnings
per share (pence) 8.0p
During the period all issued share options were not dilutive and
convertible loan notes anti-dilutive, therefore the diluted
earnings per share are the same as the basic earnings per
share.
5. Trade and other receivables
31 December
2011
GBP
Trade receivables 781,695
Less provision
for impairment (1,338)
------------
Net trade receivables 780,357
Other receivables 501,160
1,281,517
============
All trade receivable amounts are short term. All of the Group's
trade and other receivables have been reviewed for indicators of
impairment and, where necessary, a provision for impairment
provided. The carrying value is considered a fair approximation of
their fair value. The Group's management considers that all the
above financial assets that are not impaired or past due, are of
good credit quality.
In addition, some of the unimpaired trade receivables of the
Group are past due as at the reporting date. The age of financial
assets past due, but not impaired, is as follows:
At 31 December
2011
GBP
Not more than
three months 49,381
More than three months but
less than six months 19,777
More than one
year 274,930
--------------
344,088
==============
6. Trade and other payables
At 31 December
2011
GBP
Trade payables 881,956
Other payables 290,441
Other taxation and
social security 272,177
Accruals & deferred
income 2,304,875
3,749,449
==============
All amounts are short term and the Directors consider that the
carrying value of trade and other payables are considered to be a
reasonable approximation of fair value.
The average credit period taken for trade purchases is 28
days.
7. Transactions with directors /and other related parties
Acquisition of Kent Festival Limited, Finsbury Park Events
Limited and EP Events Limited On 13 June 2011, the Group entered
into call options with Vince Power and Jon Hale pursuant to which
the Company was granted options to acquire the entire issued share
capital held by them in Kent Festival Limited, Finsbury Park Events
Limited and EP Events Limited. Consideration of the shares in each
of Finsbury Park Events Limited and EP Events Limited will be
satisfied by the Group by the issue (or transfer) of Ordinary
Shares to Vince Power and Jon Hale (both Directors of Music
Festivals PLC) as follows:
Number
of Ordinary Total value
shares of the consideration
Shareholder Company shares sold issued GBP
------------ ---------------------- ------------ ---------------------
Vince Power Kent Festival Limited 2,958,472 1,923,007
Jon Hale Kent Festival Limited 428,765 278,697
Vince Power EP Events Limited 228,896 148,782
Jon Hale EP Events Limited 155,719 101,217
Finsbury Park Events
Vince Power Limited 234,615 152,500
Finsbury Park Events
Jon Hale Limited 150,000 97,500
In addition, the Group entered into a call option with Vince
Power on 13 June 2011 pursuant to which the company was granted
options to acquire the entire issued share capital of SP Events
Limited. Consideration for the shares for SP Events was satisfied
by the Group issuing ordinary shares to Vince Power with an
aggregate value at the placing price of GBP250,000.
Immediately prior to the acquisition of Kent Festival Limited, a
company controlled by Mr Vince Power, a loan of GBP1.4m owed by
Power Entertainment Ltd to Kent Festival Limited was written
off.
Acquisition of Benicassim Limited
The Group entered into four call option agreements on 13 June
2011, with Sharon Power; Brigid Power Ryce, Maurice Power and
Patrick Power Ryce who are all related parties due to their
relationship to Vince Power, a Director of Music Festivals PLC.
The call options were to purchase the share capital of
Benicassim Limited for the consideration detailed below.
Number
of Ordinary Total value
shares of the consideration
Shareholder Company shares sold issued EUR
------------------- -------------------- ------------ ---------------------
Brigid Power Ryce Benicassim Limited 708,699 520,540
Patrick Power Ryce Benicassim Limited 708,699 520,840
Maurice Power Benicassim Limited 850,439 624,648
Sharon Power Benicassim Limited 850,439 624,648
On success of the IPO, Vince Power and Jon Hale received
payments of GBP17,000 and GBP18,000 respectively.
In addition to the transactions above, GBP23,682 was paid to
Power Entertainment Limited a company controlled by Mr Vince Power
in respect of office rental.
8. Copies of the report and accounts
Copies of the Report and Accounts will be posted to shareholders
in due course and will be available from the Company's registered
office 332 Kilburn High Road, London NW6 2QN, and on the Company's
website www.musicfestivalsplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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