28th Mar 2008 12:04
Zest Group PLC28 March 2008 28 March 2008 ZEST GROUP PLC ("Zest" or the "Group") Preliminary Results for the year ended 30 September 2007 CHAIRMAN'S STATEMENT I am pleased to present the results of the Group for the year ended 30 September2007. During the period the Group had turnover of £2.5 million (2006: £1.4 million)and a loss before taxation of £1.3 million (2006: loss £798,000). There was aloss per share of 0.77p (2006: loss per share 0.61p). During the period the Greensleeves business continued to produce all of theGroup's revenues. Despite the introduction of a number of initiatives designedto exploit the opportunities from the Greensleeves business since itsacquisition in March 2006, the business was not producing the returns toshareholders that Zest had originally expected, albeit against difficult andchanging market conditions in the international music sector. Therefore, following a strategic review of the Greensleeves business, and takinginto consideration the prevailing market conditions, particularly in the USmusic market which continued to worsen during the period, the decision was takento dispose of the Greensleeves business. Sale of Greensleeves business On 25 January 2008 the Company entered into an agreement for the disposal of itsGreensleeves business to VP Records (UK) Limited and the disposal wassubsequently approved by shareholders at a General Meeting on 13 February 2008and completed on 18 February 2008. The total consideration for the disposal was£3,100,000 in cash, £100,000 of which was on a deferred basis. The Greensleeves business was acquired on 31 March 2006 by the Company for aconsideration of £3,250,000, comprising of a cash consideration of £3,000,000and the issue of 8,333,334 Ordinary Shares which were issued at 3 pence pershare. On 19 June 2007, the Company announced that it had reached a settlementwith the vendors of the Greensleeves business in relation to the breach ofcertain specified warranties given at the time of the acquisition. The grosssettlement for these breaches was £455,687. The proceeds from the disposal were used by Zest to repay its borrowings ofapproximately £1.8 million and its creditors and to provide additional workingcapital for the Company. Operational review During the year the Group has continued to seek to exploit the publishing andrecording rights arising from its retained roster of artists. Tara Chinn Additional recording on Tara's debut album "Night Racing", produced andco-written by Tony Fennell and mixed by Grammy award winning Hugh Padgham, wascompleted during summer of 2007. On 12 December 2007 Zest signed a physical anddigital licence agreement with leading Australian based independent musicdistributor Amphead to launch Tara's album in Australia which goes on sale thereon 29 March 2008. The launch is being co-ordinated with Tara's promotional tripwhich includes live dates and a series of TV commercials to act as springboardto launch her career and develop other markets including Asia. Zest owns 100% ofthe recording masters and Tara's music publishing rights. Nasio Fontaine In June 2007, Zest Group released a compilation album under the Greensleeveslabel "Rise Up" which incorporated tracks from Nasio's first three albums and"Universal Cry". As at 30 September 2007, total sales for both "Universal Cry"and "Rise Up" are in excess of 30,000 since their launch. Nasio is currentlyworking on his next album which is expected to be recorded and released during2008. There are also further plans to re-release some of Nasio's earlierrecordings during 2008. Zest owns 100% of the recording masters and Nasio'smusic publishing rights. Tony Fennell A songwriter and record producer signed to Zest, Tony co-wrote 11 of the 13songs on Tara Chinn's debut album "Night Racing" which he also produced. Tonywill accompany Tara to Australia where he will act as MD of her band and workclosely with Amphead. Tony Fennell and Richard Griffiths, Chairman of Zest andalso a songwriter signed to Zest, are working on further writing projects withnew artists which are currently expected to feature in the second half of 2008. Board changes Following the disposal of the Greensleeves business, Marcus Lee and Grant Gadzigstepped down as Finance Director and Non-executive Director of the Companyrespectively and the Board would like to thank them both again for theircontributions to the Company. Outlook The Company will continue to seek to optimise the value of existing artists andwhere the opportunity arises, seek to add further rights by signing new artistsand songwriters. In addition, Zest continues to look for potential acquisitionopportunities. I would like to thank the staff and our shareholders for their continuedsupport. Richard GriffithsChairman28 March 2008 Note 2007 2006 (restated) £'000 £'000 Turnover 2,513 1,411 Cost of sales (1,452) (828)Gross profit 1,061 583 (177) (113) Administrative expenses - amortisation of goodwillOther administrative expenses (2,065) (1,192) (2,242) (1,305) Operating loss (1,181) (722) Net interest (153) (76) Loss on ordinary activities before taxation (1,334) (798) Taxation 2 - 22 Loss on ordinary activities after taxation and retained loss (1,334) (776) Loss per ordinary share- basic and diluted 3 (0.77)p (0.61)p All of the operations are classed as continuing as the disposal of theGreensleeves business was not completed until more than three months after 30September 2007. 2007 2006 (restated) £'000 £'000 Fixed assetsIntangible assets 3,005 3,599Tangible assets 685 694 3,690 4,293 Current assetsStocks of finished goods 429 422Debtors 1,983 2,097Cash at bank and in hand 32 55 2,444 2,574 Creditors: amounts falling due within one year (3,086) (2,294) Net current (liabilities)/assets (642) 280 Total assets less current liabilities 3,048 4,573 Creditors: amounts falling due after more than one year (1,352) (1,602) Net assets 1,696 2,971 Capital and reservesCalled up share capital 434 434Share premium account 3,598 3,598Share based payment reserve 126 67Profit and loss account (2,462) (1,128)Shareholders' funds 1,696 2,971 Note 2007 2006 (restated) £'000 £'000 Net cash outflow from operating activities 4 (509) (834) Returns on investments and servicing of financeInterest paid (154) (83) Interest received 1 7Net outflow from returns on investments and service of (153) (76)finance Capital expenditure and financial investmentsPayments to acquire tangible fixed assets (12) (694) Net cash outflow from capital expenditure and financial (12) (694)investment Acquisitions and disposals Purchase of subsidiary undertaking - (3,478) Cash acquired with subsidiary undertaking - 273Adjustment to purchase price of subsidiary undertaking 417 -Net cash inflow/(outflow) from acquisitions and 417 (3,205)disposals Net cash outflow before financing (257) (4,809) FinancingIssue of shares - 2,500Share issue costs - (16) Bank loan received - 1,854Repayment of bank loan (250) -Other loan receipt 484 -Net cash inflow from financing 4,338 234 Decrease in cash 5 (23) (471) 2007 2006 (restated) £'000 £'000 Loss for the financial year and total recognised gains and losses for (1,334) (776)the yearPrior year adjustment (67) - --------------------- --------------------Total gains and losses recognised since the last financial statements (1,401) (776) ============== ============== 1 BASIS OF PREPARATION The financial statements are prepared under the historical cost convention andin accordance with applicable United Kingdom accounting standards. The principal accounting policies of the Group remain unchanged from those setout in the Group's 2006 annual report and financial statements other than asdetailed below. CHANGES IN ACCOUNTING POLICY In preparing the financial statements for the current year, the Group hasadopted the following Financial Reporting Standards: FRS 20 'Share-based payment (IFRS 2)' FRS 20 'Share-Based Payment (IFRS 2)' requires the recognition of equity-settledshare-based payments at fair value at the date of the grant. Prior to theadoption of FRS 20, the Group did not recognise the financial effect ofshare-based payments until such payments were settled. In accordance with the transitional provisions of FRS 20, the Standard has beenapplied retrospectively to all grants of equity instruments after 7 November2002 that were unvested as of 1 October 2006. This change in accounting policy has resulted in a prior year adjustment for theGroup. For the year ended 30 September 2006, the change in accounting policy hasresulted in a net decrease in retained profit of £67,000. The balance sheet at30 September 2006 has been restated to reflect the inclusion of a share basedpayment reserve of £67,000. The profit and loss account for the year ended 30September 2006 has been adjusted to reflect the additional share based paymentcharge of £67,000. For the year ended 30 September 2007 the change inaccounting policy has resulted in a net charge to the profit and loss account of£59,000. At 30 September 2007, the share based payment reserve amounted to£126,000. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge or credit for the year ended 30 September 2007. The taxcredit for the year ended 30 September 2006 represents UK tax losses carriedback to prior periods. Unrelieved tax losses of approximately £2,100,000 (2006 : £990,000) remainavailable to offset against future taxable trading profits. The unprovideddeferred tax asset at 30 September 2007 amounts to £588,000 (2006 : £297,000). taxation on loss on ordinary activities (CONTINUED) The tax assessed for the year differs from the standard rate of corporation taxin the UK as follows: 2007 2006 (restated) £'000 £'000 Loss on ordinary activities before tax ' (1,334) (731)Loss on ordinary activities multiplied by standard rate (400) (219)of corporation tax in the UK of 30% Effect ofExpenses not deductible for tax purposes 60 34Carry back to prior periods - (22)Deferred tax asset not recognised 340 185Current tax credit for year - (22) 3 LOSS PER SHARE The calculation of the basic loss per share is based on the loss on ordinaryactivities after tax of £1,334,000 (2006: restated £776,000) divided by theweighted average number of ordinary shares in issue during the year of173,619,050 (2006: 127,911,287). The impact of the share options on the lossper share is anti-dilutive. 4 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Group 2007 2006 (restated) £'000 £'000 Operating loss (1,181) (722)Depreciation 21 12Amortisation 177 113 Increase in stocks (7) (64)Decrease/(increase) in debtors 114 (562)Increase in creditors 308 322Equity settled share based payments 59 67Net cash outflow from operating activities (509) (834) 5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) Group 2007 2006 £'000 £'000 Decrease in cash for the year (23) (471)Bank loans advanced - (1,854)Other loans advanced (484) -Repayment of bank loans - 250Change in net funds resulting from cashflows (257) (2,325)Net (debt)/funds brought forward (1,799) 526Net (debt) carried forward (2,056) (1,799) 6 ANALYSIS OF CHANGES IN NET DEBT Group At 1.10.2006 Cash flow 30.9.2007 £'000 £'000 £'000 Cash at bank and in hand 55 (23) 32Bank loans (1,854) 250 (1,604)Other loans - (484) (484) (1,799) (257) (2,056) 7 PUBLICATION OF NON STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The summarised consolidated balance sheet at 30 September 2007 and thesummarised consolidated profit and loss account, summarised consolidated cashflow statement, the summarised statement of total recognised gains and lossesand associated notes for the year then ended have been extracted from theGroup's 2007 statutory financial statements upon which the auditors opinion isunqualified and does not include any statement under Section 237 of theCompanies Act 1985. The accounts for the year ended 30 September 2007 will be posted to shareholdersand laid before the company at the Annual General Meeting on 9 May 2008. Copieswill also be available from Zest Group plc's Registered Office: Kitwell House,The Warren, Radlett, Hertfordshire, WD7 7DU and via the website(www.zestmusic.com) in accordance with AIM Rule 26. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Cadence Mineral