Media Corporation plc
(“Media Corp” or the “Group”)
FOR THE YEAR ENDED 30 SEPTEMBER 2010
Media Corporation plc, a leading AIM quoted media and online gaming group, announces its audited results for the year ended 30 September 2010.
- Group Revenue £ 24.3m ( 2009: £3.5m) – Increased by 594%
- Gross Profit £5m (2009: £0.9m) – Increased by 456%
- Operating Loss £1.4m ( 2009: 2.7m) – reduced by 47%
- Cash Balances at the year end £2.2m (2009: £1.7m)
- Acquisition of Purple Lounge, a leading online poker and casino operator
- Removal of the Gambling.com Google penalty
- Upgraded Ad-serving capability for Eyeconomy, the Group’s advertising network
- Re-launch of Gambling.com website
- Purple Lounge reached milestone of 100,000 registered customers
- Eyeconomy signed new contract with Express Newspapers
Commenting on the results, Justin Drummond, Chief Executive, of Media Corp, said:
"The Board is pleased with the progress that Media Corp has made during 2010. During the year the Group made a significant step forward with the acquisition of internet gaming business Purple Lounge. The acquisition provided a huge increase in revenues for the Group as a whole; in addition this has brought a well established and scalable business which has benefited from the Group’s extensive online marketing expertise”.
The 2010 Annual Report and Accounts together with the notice of annual general meeting and proxy materials have today been sent to shareholders. These are also be available at the Company’s registered office and website, www.mediacorpplc.com. Further information can be found on the company's website, at www.mediacorpplc.com or by contacting:
|Media Corporation Plc||Tel: +44 20 7618 9000|
|Justin Drummond - CEO|
|Nilesh Jagatia - Finance Director|
|Northland Capital Partners limited||Tel: + 44 20 7492 4750|
|Luke Cairns / Rod Venables (Nomad)|
|Katie Shelton (Joint Broker)|
|Bishopsgate Communications||Tel: + 44 20 7562 3350|
Duncan McCormick/Deepali Schneider/Natalie Quinn
2010 has been a mixed year for Media Corporation. The Group made a significant step forward with the acquisition of Purple Lounge which provided a huge increase in revenues for the Group as a whole, Eyeconomy has had a positive year of revenue growth but the online publishing business has proved disappointing and contributed in a like for like fall in revenues for the continuing operations.
The acquisition of Purple Lounge Limited (“Purple Lounge”) brought an already sizeable and completely scalable business into the Group and one which could benefit from the Group’s extensive online marketing experience. Purple Lounge has continued to grow throughout the year and this trend has continued into the first few months of this financial year.
This strong performance at Purple Lounge has been driven by a number of new marketing initiatives that have gained momentum since the acquisition in October 2009. Whilst direct marketing has been a priority, the Purple Lounge team has also strengthened its team with the addition of a very experienced poker and casino manager’s and a multilingual customer support and customer re-activation team covering four languages.
In addition, Purple Lounge has agreed over 300 new affiliate contracts during the year. As a result of these initiatives daily customer registrations and player activity have escalated rapidly and it is anticipated that this trend will continue during the course of 2011.
In addition, when the Group acquired Purple Lounge in October 2009, it had 77,475 registered users and by utilising our online advertising and marketing expertise we grew this database to over 100,000 registered users in August last year, an increase of over 29% from when we acquired it. Furthermore, the conversion to cash depositors on the day of registration is currently running at over 30% which is significantly higher than the industry average.
Eyeconomy had another year of revenue growth and built the foundations necessary for sustained profitability going forward. The new lead generation division has performed exceptionally well to the Directors are optimistic for its growth in the coming year.
In addition, during the year the Group made a planned upgrade to the advertising delivery system at Eyeconomy. This upgrade provides Eyeconomy with greater capacity to deliver its proprietary advertising formats ("Sub Sites") as well as making enhanced reporting tools available to advertisers to track campaigns. Previously, peak advert distribution volume was estimated at 30 million Sub Sites per month. Following completion of the upgrade, the Directors estimate that peak capacity has increased to approximately 150 million Sub Sites per month. Current run-rate figures are estimated at over 50 million Sub Sites which includes over 100 individual campaigns for leading brands including Vodafone, UPS and PKR.com.
This increased capacity and functionality will allow Eyeconomy to deliver larger campaigns whilst also servicing a greater number of clients simultaneously. The Directors also believe that the increased system functionality will lead to decreased CPA (cost per acquisition) resulting in the ability to achieve higher sales margins.
The business of the publishing division has continued to be challenging during the year. As announced post year end we are undertaking an auction for the sale of Gambling.com. There have been a number of bidders and the Directors anticipate the auction process to be nearing completion at which point an announcement will be made. The Board is also considering the sale of other underperforming publishing assets and this review will continue through 2011.
During the current financial year there has, overall, been a material shift in the Group's fortunes and in particular we have benefited from a strong performance by Purple Lounge and Eyeconomy. We feel very positive about the outlook and we look forward to providing further updates over the course of the year.
31 March 2011
For the year ended 30 September 2010
Throughout 2010, Media Corporation continued consolidating its ongoing strategy to invest in the Group’s growth and streamline costs within the business. This investment took place in the acquisition of Purple Lounge, personnel and technology and resulted in more efficient operations during the financial year.
The Group now has three principal divisions: Internet Gaming, Advertising Network and Internet Publishing:
Purple Lounge is an internet gaming company which was established in 2005 with a gaming Licence in Malta. Purple Lounge was acquired during the financial year and the Group used its in-depth expertise in developing and monetising the brand which offers poker, card and casino games.
The Advertising Network business, Eyeconomy, was established in 1996 and is a separate operating division of Media Corporation. Eyeconomy specialises in online media planning as well as buying and managing online media campaigns for clients including AOL, Dell, T-Mobile and American Express.
The division currently:
- produces dynamic and engaging online advertising solutions including exit traffic (Sub Sites), rich-media floating toolbar (Sub Lines) and has recently launched a new online advertising division
- offers a total reach of 50 million unique users every month, from over 850 quality host sites in all major channels including Finance, Travel, Motors, Sport, Male/Female, Student/Youth, Property, Entertainment, Film, Music and TV, Mobile/Gadget and Recruitment
- produces in-house creative media
- boasts a Brand team whose successful contract wins include the Express Newspaper Group
- is seeing return value on significant presence at trade shows and in trade PR
Media Corporation has a diverse publishing division specialising in premium destinations and portals.
Our impressive portfolio of websites includes a number of market-leading sites including Onthebox.com (UK’s definitive TV listings and entertainment guide with over 2 million unique visitors per month), Sport.co.uk (sport content site with 2 million unique visitors), Flightcomparison.co.uk (a leading flight booking portal), Gambling.com (a comprehensive gambling and sports portal providing industry news, tips and strategies) and Creditcardexpert.co.uk (a credit card comparison website).
The audited results for the year ended 30 September 2010 show a better overall performance for the business than the previous year with turnover having increased by 594% to £24.3m (2009: £3.5m). The gross profit increased by 456% to £5m (2009: £0.9m). Operating loss reduced by 47% to £1.4m (2009: £2.7m) Net assets were £5.6m (2009: £5.9m) and cash at the end of the financial year was £2.2m (2009: £1.7m).
|Key Performance Indicators (KPI’s)||FY2010||FY2009|
|Revenue – Continuing Operations||3.0||3.5|
|Revenue – Acquired Operations||21.3||-|
|Other non-financial KPI|
|Employees - Number||38||37|
Current trading and prospects
The Board is aiming for continued growth during 2011, as we seek to maximize the potential of the Group’s Internet Gaming, Publishing and Advertising businesses and is targeting a return to profitability. Following the successful acquisition of Purple Lounge it is the Board’s strategy to focus on the online gaming sector and the Board will continue to look to strengthen the business further by strategic acquisitions in the current year.
The Directors are hopeful of a successful conclusion to the auction process for gambling.com which should strengthen the cash position and balance sheet of the Company and provide capital for further expansions.
|Justin Drummond||Nilesh Jagatia|
|Chief Executive||Group Finance Director|
Consolidated Income Statement
For the year ended 30 September 2010
|Acquisition during the year||21,266||-|
|Cost of sales|
|Acquisition during the year||(17,161)||-|
|Selling and distribution costs||(3,118)||(276)|
|Total Operating costs||(6,436)||(3,588)|
|Loss before income tax||(1,398)||(2,659)|
|Income tax expense||8||-||14|
|Loss from continuing activities attributable to equity holder of the company.||(1,398)||(2,645)|
|Loss earnings per share attributable to equity holders of the company||9||Pence per share||Pence per share|
The Company has elected to take exemption under section 408 of the Companies Act 2006 to not present the parent Company income statement. The loss for the Company is shown in the Statement of changes in shareholders’ equity.
As at 30 September 2010
|Non current assets|
|Property, plant and equipment||10||44||85||47||80|
|Deferred tax asset||17||-||8||-||8|
|Trade and other receivables||13||670||675||2,585||2,167|
|Cash at bank and in hand||14||2,153||1,697||276||187|
|Trade and other payables||15||(3,440)||(1,342)||(1,364)||(927)|
|Current tax liabilities||15||-||(18)||-||-|
|Total assets less liabilities||5,688||5,935||8,283||8,274|
|Total shareholders equity||5,688||5,935||8,285||8,274|
Company registration number 4058698
The financial statements were approved by the Board on 31 March 2011 and were signed on its behalf by:
Justin Drummond Nilesh Jagatia
Chief Executive Officer Group Finance Director
Consolidated Statement of changes in shareholders’ equity
for the year ended 30 September 2010
|Group||Share capital||Share premium||Currency translation reserve||Other reserves||Retained earnings||Total|
|At 1 October 2007||4,764||12,917||(471)||1,422||852||19,484|
|Loss for the year||-||-||-||-||(11,279)||(11,279)|
|Currency translation differences||-||-||166||-||-||166|
|Purchase of own shares||-||-||-||-||(497)||(497)|
|Issue of shares||9||10||-||-||-||19|
|At 30 September 2008||4,773||12,927||(305)||1,422||(10,924)||7,893|
|Loss for the year||-||-||-||-||(2,645)||(2,645)|
|Share based payments||-||-||-||-||27||27|
|Currency translation differences||-||-||841||-||-||841|
|Purchase of own shares||-||-||-||-||(222)||(222)|
|Issue of shares||25||16||-||-||-||41|
|At 30 September 2009||4,798||12,943||536||1,422||(13,764)||5,935|
|Loss for the year||-||-||-||-||(1,398)||(1,398)|
|Share based payments||-||-||-||-||6||6|
|Currency translation differences||-||-||(39)||-||-||(39)|
|Sale of own shares||-||-||-||-||719||719|
|Issue of shares||290||175||-||-||-||465|
|At 30 September 2010||5,088||13,118||497||1,422||(14,437)||5,688|
Parent Company Statement of changes in shareholders’ equity for the year ended 30 September 2010
Consolidated statement of recognised income and expenses
for the year ended 30 September 2010
|Currency translation differences||(39)||841|
|Total income recognised directly in equity||(39)||841|
|Loss for the year||(1,398)||(2,645)|
|Total recognised expense for the year||(1,437)||(1,804)|
All amounts attributable to equity holders of the company
Consolidated Cash Flow Statement
for the year ended 30 September 2010
|Depreciation and amortisation||201||255|
|Decrease in receivables||5||78|
|Increase in payables||2,172||107|
|Other cash movements||58||-|
|Share based payments||6||68|
|Net cash used in operating activities||1,053||(2,190)|
|Purchase of property, plant and equipment||(27)||(34)|
|Purchase of intangibles||(171)||(82)|
|Acquisition of subsidiary undertaking - Net Assests||(2,017)||-|
|Acquisition of subsidiary undertaking -net cash acquired||827||-|
|Net cash used in investing activities||(1,382)||(77)|
|Issue of share capital from exercised warrants||278||-|
|Sale /(purchase) of treasury shares||719||(222)|
|Net cash used in financing activities||997||(222)|
|Net increase /(decrease) in cash and cash equivalents||668||(2,488)|
|Cash and cash equivalents at beginning of period||1,697||3,809|
|Effects on exchange movements||(212)||376|
|Cash and cash equivalents at end of period||2,153||1,697|
Notes to the Financial Statements
for the year ended 30 September 2010
1. General Information
Media Corporation plc (“the Company”) and its subsidiaries (together “the Group”) is engaged in Internet advertising, internet gaming and internet publishing. The Company is a public limited company which is listed on the AIM Market of the London Stock Exchange and is incorporated and domiciled in the United Kingdom. The address of the registered office is 77 Queen Victoria Street, London EC4V 4AY.
The registered number of the Company is 4058698.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Media Corporation has the following subsidiaries:
|Name of Company||Proportion Held||Class of shareholding||Nature of Business|
|Xworks Limited||100%||Ordinary||Internet Publishing|
|Eyeconomy Limited||100%||Ordinary||Internet Advertising|
|Search Focus Limited||100%||Ordinary||Internet Publishing|
|Newbold Publications Limited||51%||Ordinary||Internet Publishing|
|Result Online Limited||100%||Ordinary||Internet Publishing|
|Flight Comparison Limited||100%||Ordinary||Internet Publishing|
|Purple Lounge Limited||100%||Ordinary||Internet Gaming|
|Purple Lounge (Malta ) Limited||100%||Ordinary||Internet Gaming|
|Purple Lounge N.V.||100%||Ordinary||Internet Gaming|
|Career Plus Limited *||100%||Ordinary||IT Recruitment Agency|
|Interactive Consulting Limited T/A Nash Digital||100%||Ordinary||Internet Advertising|
|Gaming Corporation (Curacao) Limited||100%||Ordinary||Internet Publishing|
* - Indirectly held
2. Financial Information
The financial information relating to the year ended 30 September 2010 set out in this announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006, but has been extracted from the statutory accounts, which received an unqualified auditors' report and which have not yet been filed with the Registrar of Companies. The financial information relating to the period ended 30 September 2009 is extracted from the statutory accounts, which incorporated an unqualified audit report and which has been filed with the Registrar of Companies.
3. Accounting policies
Basis of preparation
The annual report and accounts of Media Group plc have been prepared in accordance with IFRS as adopted by the European Union, IFRIC interpretations, the Companies Act 2006 applicable to companies reporting under IFRS and the AIM listing rules. The annual report and accounts have been prepared under the historic cost convention as modified by available for sale financial assets and financial assets and financial liabilities at fair value through profit or loss.
The annual report and accounts have been prepared on a going concern basis in accordance with the Group’s accounting policies set out below which are based on the recognition and measurement principles of IFRS.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are shown below.
Fundamental accounting concept – going concern
The financial statements have been prepared on the assumption that the Group is a going concern. The accounts of the Group for the year ended 30 September 2010 show a loss including exceptional items for the year of £1.5 million.
At the date of these financial statements the Group’s ability to continue as a going concern reflects the net funds of £2.2 million cash available to the Group at the year end and the forecasts for the Group for the current financial year. On this basis, in the opinion of the Directors, the financial statements have been properly prepared on the assumption that the Group is a going concern.
Basis of consolidation
Subsidiaries are all entities over which the Group (directly or indirectly) has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded from the consolidation from the date on which control ceases.
The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement for the year.
Intra-group transactions, balances and unrealised gains on intra-group transactions are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Subsidiaries’ accounting policies have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Transactions and Minority Interests
The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of the net assets of the subsidiary.
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those in segments operating in other economic environments.
The individual financial statements of each Group Company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group Company are expressed in Pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the profit and loss account for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such monetary items, any exchange component of the gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income and expense in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.
Sales of goods are recognised when goods are delivered and title has passed.
Sales of services are recognised when the service has been completed and invoiced to the customer.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
Where the assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as a liability. Where a finance lease has been awarded to a group entity at a non-commercial interest rate is applied. Depreciation on the relevant assets is charged to the income statement.
All other leases are treated as operating leases. Their annual rentals are charged to the income statement on a straight line basis over the term of the lease.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
The cost of property, plant and equipment includes those costs which are directly attributable to purchasing the assets and bringing them into working condition. The Group does not capitalise interest as part of the cost of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation is provided on the following tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value based on prices prevailing at the date of acquisition or revaluation, of each asset evenly over its expected useful life as follows:
Fixtures and fittings 25% reducing balance
Office equipment 25% reducing balance
Computer equipment 33.3% per annum
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Operating expenses’ in the Income Statement.
The Group reviews its depreciation rates regularly to take account of any changes in circumstances. When setting useful economic lives, the principal factors the Group takes into account are the expected rate of technological developments and the intensity at which the assets are expected to be used.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the acquisition date. Goodwill on acquisition of subsidiaries is included in goodwill and intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units that are expected to benefit from the business combination in which the goodwill arose.
In accordance with IFRS 3 ‘Business Combinations’, any excess of acquirer’s interest in the fair value of acquiree’s identifiable net assets is immediately recognised in the income statement.
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised over their useful economic lives (3 to 5 years). Costs associated with developing and maintaining computer software programmes are recognised as an expense when incurred, subject to the capitalization criteria of IAS 38.
Trade names/Domain names
Acquired trade names/domain names are recognised where their fair value can be reliably measured. These assets are considered to have finite lives and are tested annually for impairment and carried at cost less accumulated impairment losses.
Acquired websites are capitalised where their fair value can be reliably measured. Development of these websites are also capitalised as long as there are considered generating revenues. These assets are considered to have finite lives and are amortised on a straight line basis over their useful economic lives of 3 years.
Impairment of non current assets
The carrying amount of the Group’s assets, other than deferred income tax assets, are reviewed at each
balance sheet date to determine whether there is any indication of impairment. Assets that have an indefinite economic life are not subject to amortisation and are tested annually for impairment.
If an indicator of a possible impairment is noted, the need for any asset impairment provision is assessed by comparing the carrying value of the asset against the higher of fair value less costs to sell or value in use (recoverable amount). An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. For the purposes of assessing impairment, the assets are grouped at the lowest levels for which they have separately identifiable cash flows (cash generating units).
Impairment losses recognised in the income statement in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (groups of units) and then, to reduce the carrying amount of the other assets of the unit (group of units) on a pro rata basis.
Impairment charges are included in the administrative expenses line item in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expenses.
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents comprise cash on hand, deposits held on call with banks and other short-term highly liquid investments with original maturities of three months or less.
Trade and other receivables
Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within ‘Operating expenses’. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to ‘Operating expenses’ within the income statement.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. Loans and receivables are initially recognised at cost, being the fair value of consideration together with any associated issue costs. After initial recognition, interest bearing loans are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated taking into account any issue costs and discount or premium on settlement.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental costs (net of income taxes), is included in equity attributable to the Company’s equity holders
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Borrowing costs are expensed to the income statement unless used to fund a qualifying asset as described by IAS 23.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the Group controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Share based payments Transactions
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (‘equity-settled transactions’). In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date.
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by using an appropriate pricing model, further details of which are given in note 23.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (further details are given in note 9).
Research and development costs
Research expenditure is written off to the profit and loss account in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects.
Accounting Standards issued but not yet effective and/ or adopted.
At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following standards and interpretations which are effective for annual accounting periods beginning on or after the stated effective date. These standards and interpretations are not effective for and have not been applied in the preparation of these consolidated financial statements:
IAS 27: Consolidated and Separate Financial Statements (Amended) (effective as of 1 July 2010).
IFRS 3: Business Combinations (Revised) (effective as of 1 July 2010) includes an amendment to the treatment of minority interests (renamed non-controlling interests), amendments to the calculation of goodwill, a change to the method of accounting for acquisitions in stages, amendment to the accounting for contingent consideration and changes to the recognition and measurement of certain assets and liabilities.
IFRS 9: Financial instruments (issued November 2009)
IFRIC Interpretation 13: Customer Loyalty Programmes (effective as of 1 July 2010).
IFRIC Interpretation 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective as of 1 July 2010).
Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement (effective as of 1 January 2011)
IFRIC Interpretation 16: Hedges of a Net Investment in a Foreign Operation (effective as of 1 October 2010).
IFRIC Interpretation 17: Distributions of non-cash assets to owners (effective 1 July 2010).
IFRIC Interpretation 18: Transfers of assets from customers (effective 1 July 2010)
IFRIC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments (effective as of 1 July 2010)
Eligible Hedged Items (Amendment to IAS 39 Financial Instruments: Recognition and Measurement). Entities shall apply the amendment retrospectively for annual periods beginning on or after 1 July 2010.
Amendments to IFRIC 9 and IAS 39: Embedded Derivatives (effective as of 30 June 2010)
Improvements to IFRSs (effective date is various, earliest is as of 1 January 2010, not yet endorsed by the EU).
Amendment to IFRS 2: Group Cash-settled Share-based Payment Transactions (effective as of 1 January 2010).
Amendment to IFRS 1: Additional Exemptions for First-Time Adopters (effective as of 1 January 2010).
Amendment to IAS 32: Classification of Rights Issues (effective as of 1 February 2010).
Revised IAS 24: Related-Party Transactions (revised) (effective as of 1 November 2011).
The directors anticipate that the adoption of these standards and interpretations will not have a material impact on the Group’s financial statements in the period of initial adoption with the exception of IFRS 3: Business Combinations (Revised), which will require transaction costs arising on business combinations to be expensed to the income statement as opposed to the existing treatment of capitalisation, in the event that acquisitions are undertaken.
Significant judgments, key assumptions and estimates
In the course of the preparation of the financial statements, the Group has made the following significant estimates:
- Estimates of the future cash flows of the Group’s subsidiaries upon which goodwill is carried, in order to arrive at whether an impairment provision is required. These have been based on each subsidiary’s budgets for 2011 and projections for 2012 and 2013 with expected growth rates and discount rates.
- Judgements made on the estimates of the useful life of property, plant and equipment, as set out in the relevant accounting policies above.
4. Segmental analysis
As at 30 September 2010, the Group’s continuing business is classified by management into three main segments.
The primary segment results for the year ended 30 September 2010 are as follows:
|Advertising Network||Internet Publishing||Internet Gaming||Group|
|Total segment revenue||2,856||130||21,266||24,251|
|Net finance income||6|
|Loss before income tax expense||(1,484)|
|Income tax expense|
|Loss from continuing activities||(1,484)|
|Depreciation and amortisation||(38)||(146)||(18)||(201)|
The segment results for the year ended 30 September 2009 are as follows:
|Advertising Network||Internet Publishing||Group|
|Total segment revenue||2,602||905||3,507|
|Net finance income||39|
|Loss before income tax expense||(2,659)|
|Income tax expense||14|
|Loss from continuing activities||(2,645)|
|Depreciation and amortisation||(37)||(218)||(255)|
The above disclosures are consistent with how management reports information internally for the purpose of evaluating the Group's performance and for making decisions about future allocations of resources to the Group.
Under the definitions contained in IAS 14 the only material geographic segment that the Group operates in is the UK.
5. Loss per share
|Loss for the purpose of basic and diluted earnings per share||(1,398)||(2,645)|
|Weighted average number of ordinary shares for the purpose of basic earnings per share||323,445,648||293,467,124|
|Effect of dilutive potential ordinary shares:|
|Weighted average number of ordinary shares for the purpose of diluted earnings per share||327,345,648||318,552,055|
|Loss per share – basic||(0.43p)||(0.90p)|
|Loss per share – diluted||(0.43p)||(0.83p)|
Basic loss per share has been calculated by dividing loss for the year by the weighted average number of ordinary shares in issue during the year.
Diluted loss per share has been calculated by dividing loss for the year by the weighted average number of ordinary shares in issue during the year adjusted to assume conversion of all dilutive potential options/warrants. Losses are not subject to dilution.
6. Share Capital
|Ordinary shares of 1p each||814,566,400||8,146||814,566,400||8,146|
|Deferred shares of 4p each||46,358,400||1,854||46,358,400||1,854|
|Allotted, called up and fully paid|
|Ordinary shares of 1p each||323,445,648||3,234||294,436,389||2,944|
|Deferred shares of 4p each||46,358,400||1,854||46,358,400||1,854|
1,259,259 Ordinary shares were issued on 20 August 2010 to Rivington Street Holdings pursuant to contractual obligations for services provided to the Company and the average price of the shares at the issue date was 2.7 pence.
During the year 1,400,000 warrants exercisable at 2.25p per share were granted on 26 May 2010 to employees and directors. The warrants give right to subscribe for new shares for a period of three years from the grant date.
7. Events after balance sheet date
8. AGM notice and availability of accounts
The annual general meeting will be held at 11am on Wednesday 4th May 2011 at the Company’s registered office of 77 Queen Victoria Street, London EC4V 4AY. The notice of annual general meeting and proxy materials will be posted to shareholders with the 2010 Annual Report and Accounts on 31 March 2011. These will also be available at the Company’s registered office and website, www.mediacorpplc.com.