Final Results
October 10 2003 - 6:03AM
UK Regulatory
RNS Number:7579Q
Health Media Group PLC
10 October 2003
10 October 2003
Health Media Group plc
Audited Results for the year end 28 February 2003
As previously reported, following the continuing loss position, negative cash
flow and the inability of the Company to raise additional working capital, the
Board was left with no alternative but to sell the business and assets of its
sole operating subsidiary, Pang Health Limited (formerly HMG Worldwide Limited)
in August 2002, following an approach by a third-party consultant to the
Company.
Subsequently on 12 September 2002, Pang Health Limited was placed into
liquidation, since it no longer contained any on-going business activities from
which to generate significant cash to pay off remaining creditors.
As such Health Media Group plc returned to being a quoted shell company, with a
small level of cash to fund its on-going running costs.
The audited results for the year ended 28 February 2003 and the year ended 28
February 2002, (which were prepared using the reverse acquisition accounting),
were as follows:
Year ended Year ended
28 February 28 February
2003 2002
#'000 #'000
Turnover 535 2,001
--------- ---------
Operating loss before exceptional items and goodwill (1,194) (2,564)
--------- ---------
Loss before tax (118) (5,345)
--------- ---------
Loss per share
- basic (0.5p) (27p)
- fully diluted (0.5p) (27p)
Since September 2002, the Board has been actively seeking new reversal
opportunities for the Company, which may benefit from the significant level of
capital losses and utilising the AIM quotation.
During June 2003 a formal approach was made by Bybrook Limited, a company in
which Andrew Brode is both chairman and majority shareholder, to reverse into
Health Media Group plc. Having considered the proposal carefully, those members
of the Board who do not have a financial interest in the proposed acquisition,
are recommending that this transaction proceeds and a Circular to Shareholders
which contains details of the proposal and related matters is being sent to
Shareholders today.
N Fisher
Deputy Chairman
10 October 2003
Consolidated profit and loss account
for the year ended 28 February 2003
Note 2003 2002
#'000 #'000
Group turnover 1 535 2,001
Cost of sales (497) (1,989)
--------- ---------
Gross profit 38 12
Selling and distribution expenses (491) (1,096)
--------- ---------
(453) (1,084)
Administrative expenses (741) (4,321)
--------- ---------
Operating loss before exceptional items and goodwill (1,194) (2,564)
Exceptional items 2 - (502)
Amortisation of goodwill - (168)
Impairment of goodwill - (2,171)
--------- ---------
(1,194) (5,405)
Group operating loss (1,194) (5,405)
Disposal of subsidiary business and assets 2 182 -
Effect of liquidation of subsidiary 2 891 -
Loss on ordinary activities before interest (121) (5,405)
Net interest receivable and similar charges 3 60
--------- ---------
Loss on ordinary activities before and after taxation
and retained loss for the year (118) (5,345)
========= =========
Loss per share
Basic 3 (0.5p) (27p)
Diluted 3 (0.5p) (27p)
The results are derived from operations that were discontinued on 16 August
2002.
The above figures represent the total recognised gains and losses for both
financial periods.
There is no difference between the reported results and those prepared on a
historical cost basis.
Consolidated balance sheet
at 28 February 2003
28 February 2003 28 February 2002
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets - -
Tangible assets - 168
--------- ---------
- 168
Current assets
Debtors - 1,030
Cash at bank and in hand 3 368
--------- ---------
3 1,398
Creditors: amounts falling due within
one year (58) (1,503)
--------- ---------
Net current liabilities (55) (105)
--------- ---------
(55) 63
========= =========
Capital and reserves
Called up share capital 5,776 5,776
Share premium account 737 737
Other reserve 5,533 5,533
Profit and loss account (12,101) (11,983)
--------- ---------
Equity shareholders' (deficit)/funds (55) 63
========= =========
Consolidated cash flow statement
for the year ended 28 February 2003
Note 28 February 28 February
2003 2002
#'000 #'000
Cash outflow from operating activities 4 (557) (2,778)
Returns on investments and servicing of
finance 5 3 60
Capital expenditure 5 - (29)
Acquisitions and disposals 5 189 537
--------- ---------
Cash outlfow before financing (365) (2,210)
Financing 5 - 482
--------- ---------
Decrease in cash in the year (365) (1,728)
========= =========
Reconciliation of net cash flow to movement in net funds
28 February 28 February
2003 2002
#'000 #'000
Decrease in cash in the year (365) (1,728)
Repayments of loans in year - 265
--------- ---------
Change in net debt resulting from cash
flows (365) (1,463)
Net funds at the start of the year 368 1,831
--------- ---------
Net funds at the end of the year 3 368
========= =========
Notes to the Accounts for the year ended 28 February 2003
1. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Group's financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with the Companies Act
1985 and applicable accounting standards and under the historical cost
accounting rules, apart from the departure referred to below under "Basis of
Consolidation".
Under section 230(4) of the Companies Act 1985 the Company is exempt from the
requirement to present its own profit and loss account.
The loss dealt with in the company for the year ended 28 February 2003 was
#292,000 (2002: #6,255,000).
Going concern
Since the sale of the Group's only operating business on 16 August 2002, the
Company has not traded. The operating subsidiary itself was put into liquidation
on 12 September 2002. As a result of the Directors' decision not to draw any
fees or remuneration since 31 July 2002, the Company has had sufficient funds to
continue as a going concern whilst searching for potential reversal targets.
Following the year-end, an approach was made by Bybrook Limited to reverse
itself into the Company. The Board are recommending the acquisition of Bybrook
Limited - details of which are included in a circular to shareholders
accompanying the Annual Report. A number of costs in relation to this
transaction have been incurred by the Company, which may mean that in the event
that the transaction does not proceed, the Company may no longer remain as a
going concern. However, in view of the level of undertakings received voting in
favour of the transaction the Directors expect that the reversal will be
completed and as a consequence, the Company will have sufficient funds injected
into it to meet its liabilities as they fall due. As such, the accounts have
been prepared on a going concern basis and no adjustments have been made to the
financial statements that may result from the Company not being considered a
going concern.
Basis of consolidation
The assets and trade of Pang Health Limited were sold to a third party on 16
August 2002. On 12 September 2002 Pang Health Limited was placed into
liquidation. As severe long-term restrictions substantially hinder the rights of
the group over Pang Health Limited, it has been excluded from consolidation from
12 September 2002 in accordance with Financial Reporting Standard No. 2,
"Accounting for Subsidiary Undertaking". Since that date, the group's investment
in Pang Health Limited has been recorded at #nil.
With effect from the 13 August 2001, Health Media Group plc (the "Company",
"HMG" or the "Group") became the legal parent company of Pang Management Limited
("HMH", formerly known as Health Media Holdings Limited) and its subsidiary
undertakings in a share-for-share transaction. Due to the relative values of the
companies, the former HMH shareholders became the majority shareholders with 85%
of the share capital of the enlarged share capital of HMG, prior to the placing
and open offer in August 2001. Further, HMG's continuing operations and
executive management were those of HMH. Accordingly, the substance of the
combination was that HMH acquired HMG in a reverse acquisition. As part of the
business combination, the Company changed its name from Internet Direct plc to
Health Media Group plc and changed its year end to 28 February.
Under the requirements of the Companies Act 1985, it would normally be necessary
for the Company's consolidated accounts to follow the legal form of the business
combination - in that case the pre-combination results would be those of the
Company and its subsidiary undertakings, which would exclude HMH. HMH's results
would then be brought into the Group from 13 August 2001, being the date of
reverse acquisition. However this would portray the combination as an
acquisition of HMH by HMG and would, in the opinion of the Directors, fail to
give a true and fair view of the substance of the business combination.
Accordingly, the Directors have adopted reverse acquisition accounting as a
basis of consolidation in order to give a true and fair view, which is necessary
as the Companies Act 1985 does not allow this method of accounting.
In invoking the true and fair override, the Directors note that reverse
acquisition accounting is endorsed under International Accounting Standard 22
and that the Urgent Issues Task Force of the UK's Accounting Standards Board
considered the subject and concluded that there are instances where it is right
and proper to invoke the true and fair override in such a way.
As a consequence of applying reverse acquisition accounting, the results for the
12 months ended 28 February 2002 comprise the results of HMH for its 12 months
ended 28 February 2002 plus those of HMG from 13 August 2001, the date of
reverse acquisition, to 28 February 2002.
2. Exceptional items
2003 2002
#'000 #'000
Disposal of Pang Health Limited business and assets (see
below) 182 -
Effect of liquidation of Pang Health Limited (see below) 891 -
Discount on options granted - (200)
National Insurance on share options - 68
Reorganisation costs - (110)
Loss on disposal of discontinued operation - (50)
Compensation for loss of office - (30)
Write off of leasehold improvements - (81)
Provision against shares held by Employee Share Ownership
Trust - (99)
------- -------
1,073 (502)
======= =======
The disposal of the Pang Health Limited business on 16 August 2002 resulted in
the following profit:
#'000
Proceeds 125
Less legal costs (10)
-------
115
(Assets)/liabilities sold
Fixed assets (113)
Debtors and prepayments (332)
Creditors and accruals 323
Overdraft taken over 189
-------
Profit on disposal 182
=======
The effect of the liquidation of Pang Health Limited on 12 September 2002 was as
follows:
#'000
(Assets)/liabilities disposed of:
Cash (115)
Recoverable VAT (33)
Creditors and accruals 1,034
-------
886
Liquidator fees 5
-------
Profit arising from liquidation of subsidiary 891
=======
3. Loss per share
28 February 28 February
2003 2002
Loss per share
Basic (0.5p) (27p)
Diluted (0.5p) (27p)
========= =========
The basic loss per share is based on the loss for the financial period of
#118,000 (2202: #5,345,000).
The weighted average number of ordinary shares being the average number of
shares in issue during the period used in the calculation of the basic and
diluted loss per share is as follows:
28 February 28 February
2003 2002
Weighted average number of shares in issue during
the period used in the calculation of basic and
diluted loss per share 23,104,748 19,908,149
========== ==========
4. Reconciliation of operating loss to operating cash flows
2003 2002
#'000 #'000
Operating loss (1,194) (5,405)
Depreciation and fixed asset write off 55 227
Goodwill amortisation - 168
Goodwill write off - 2,171
Share option charge - 237
Decrease/(increase) in debtors 666 (8)
Decrease in creditors (84) (171)
Profit on disposal of fixed asset - 3
Movement in provision - 99
------- -------
(557) (2,778)
======= =======
5. Analysis of cash flows
2003 2002
#'000 #'000
Returns on investment and servicing of finance
Interest received 3 60
------- -------
Capital expenditure and financial investment
Purchase of tangible fixed assets - (43)
Receipts from sale of fixed assets - 14
------- -------
- (29)
======= =======
Acquisitions and disposals
Payments made on the reverse acquisition of HMG - (743)
Cash acquired on the reverse acquisition of HMG - 1,280
Net cash disposed of on liquidation (115) -
Net overdrafts disposed of on sale of business 189 -
Cash proceeds from sale of subsidiary undertaking 115 -
------- -------
189 537
======= =======
Financing
Issue of ordinary share capital - 658
Repayments of loans in the period - (176)
------- -------
- 482
======= =======
6. Non-statutory accounts
The financial information for the financial year ended 28 February 2003 does not
constitute the company's statutory accounts for that financial year. These
accounts have been reported on by the company's auditors and will be delivered
to the Registrar of Companies in due course. The report of the auditors included
the following explanation of a limitation in the scope of their work:
"The evidence available to us was limited because no accounting records were
made available to us for Pang Health Limited, the principle trading subsidiary
of Health Media Group plc. The assets and trade of Pang Health Limited were sold
to a third party on 16 August 2002. On 12 September 2002 Pang Health Limited was
placed into liquidation. The liquidator currently holds the accounting records
of Pang Health Limited. There were no other satisfactory procedures that we
could adopt to confirm that the income and expenses and cash flows of Pang
Health Limited for the period up to 12 September 2002, the loss on disposal of
its assets and trade and the loss arising on its liquidation were correctly
stated."
together with the following qualified opinion:
"Because of the possible effect of the limitation in evidence available to us,
we are unable to form an opinion as to whether the group profit and loss
account, the group cash flow statement and their related notes give a true and
fair view of the loss of the group and the cash flows of the group for the year
ended 28 February 2003 and whether they have been properly prepared in
accordance with the Companies Act 1985.
"In our opinion, the financial statements give a true and fair view of the state
of affairs of the group as at 28 February 2003 and have been properly prepared
in accordance with the Companies Act 1985."
and the following statement under section 237 (2) and (3) of the Companies Act
1985:
" In respect alone of the limitation on our work relating to Pang Health Limited:
* we have not obtained all the information and explanations that we
considered necessary for the purpose of our audit; and
* we were unable to determine whether proper accounting records had been
maintained."
The report also contained an emphasis of matter relating to the preparation of
the accounts on a going concern basis as explained in note 1 above.
The financial information for the financial year ended 28 February 2002 is not
the company's statutory accounts for that financial year. These accounts have
been reported on by the company's auditors and have been delivered to the
Registrar of Companies. The report of the auditors was unqualified but contained
an emphasis of matter relating to the preparation of the accounts on a going
concern basis.
The report did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985.
The full accounts for the year ended 28 February 2003 are expected to be posted
to Shareholders today.
This information is provided by RNS
The company news service from the London Stock Exchange
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