RNS Number:2365E
Cosmedia Group Holdings Limited
21 September 2007
Cosmedia Group Holdings Limited
Interim Results for the Six Months ended 30 June 2007
Cosmedia Group Holdings Limited ("Cosmedia" or the "Company") (AIM: CGHL), the
holding company of a Chinese media group with a focus on television advertising
and home shopping in China, announces its unaudited interim results for the six
months ended 30 June 2007.
Highlights:
* Revenue increased by 99.6% to HK$10.8 million (June 2006: HK$5.4 million),
predominately generated from Cosmedia's advertising sales.
* Administrative expenses increased by 28.1% to HK$36.7 million (June 2006:
HK$28.7 million) mainly due to Cosmedia's trial testing and other
preparations for its entry into the home shopping business.
* As a result, the loss of HK$71.8 million is comparable to the previous
period (June 2006: HK$69.6).
* Loss per share is HK$1.63 (June 2006: HK$2.45).
* Cash and cash equivalents (inclusive of pledged bank deposits) is HK$206.1
million (31 December 2006: HK$128.2 million).
* Continue to build up team and infrastructure ahead of home shopping
launch.
* Since the conclusion of the half year, shareholders have approved
resolutions permitting the Company to issue new shares up to a further
one-third of the current share capital - affording the Board significantly
greater operational flexibility.
* Also since the half year end, the Company has signed agreements with
Sowell Resources and Bingo City taking over the naming and operating rights
for two Hong Kong entertainment venues - which will provide an exciting
opportunity to promote the "PopTV" brand for the Company.
Commenting on the interim results, Stanley Pong, Executive Chairman, said: "I
am pleased that we are progressing according to plan. The nationwide satellite
channel on which we have exclusive rights to act as advertising sales agent for
the commercial airtime ("Channel") reached approximately 13 million households
in 20 cities as of 30 June 2007, and we remain very optimistic that the Channel
will reach its target of 22 million households by the end of this year. The
Channel's aggressive expansion of its coverage is expected to result in
increased advertising revenues to us."
"Meanwhile, we have hired a core team of experienced home shopping executives to
lay the foundations for the launch of our home shopping business, which I am
certain will be a key driver for our future growth."
"This growth in the Channel's coverage allied with the prospective launch of our
home shopping business leave us very optimistic for the full year and the
future."
For further information, please contact:
Cosmedia Group Holdings Limited
Stanley Pong/Antony Chan +852 2136 8222
Collins Stewart Europe Limited
Adrian Hadden +44 (0) 20 7523 8350
Catullus Consulting
Alex Mackey +44 (0) 20 7736 2938
Note to Editors:
Cosmedia's business
* Foreign ownership of television and broadcasting channels in China is not
permitted and all such Chinese channels are state-owned and operated under
the supervision of the Chinese government. Cosmedia has established a
long-term relationship with China Great Wall Art and Culture Centre ("Great
Wall") a subsidiary of the Chinese State Administration of Radio, Film and
Television ("SARFT"), to act as exclusive advertising sales agent to a
Chinese television channel with nationwide broadcasting potential ("the
Channel").
* Cosmedia generates revenue by selling the Channel's advertising airtime
and providing integrated solutions to advertisers such as programme title
sponsorship, product placement and product messages embedded in programmes.
In the future, Cosmedia is looking to generate home shopping revenue as well
as new media advertising income through, for example, co-operation with the
Channel's dedicated website, the Internet, wireless operators and service
providers.
Market overview
* Television is currently the largest media sector in China, both in terms
of its reach and influence. With the benefit of new technologies, the
Chinese television industry has grown and diversified, developing into a
complex network of satellite, cable, video-on demand and Internet-based
service providers.
* According to ZenithOptimedia, China is the largest television market in
Asia Pacific, with 355 million television households representing a
penetration rate of 95 per cent as of 2004. Of these, 128 million are cable
households. In 2005, ZenithOptimedia forecast that by the end of 2007 total
television households and cable households would increase to 385 million and
164 million respectively.
The Company has listed on AIM in order to raise the Company's profile as a
quoted company and to provide access to the capital markets for future
expansion.
Group President's Review
The key drivers for our advertising business are coverage and viewership ratings
of the Channel. With respect to the former, as of the date of this
announcement, the Channel has now penetrated 36 cities covering 20 million
households. The target for 2007 is 22 million households, so that it looks most
likely the target coverage will be obtained. On the latter, the Channel is
working with producers renowned in Greater China for the production of
high-rating entertainment programmes, and with proven local content providers to
support its new programme wheel and increase viewership. Concurrently, we
continue to develop mobile VAS (value-added-services). Such progress is
expected to translate into increased advertising revenue.
Our plan to move into home shopping continues to progress. Not only have we
successfully trial tested our systems, but we have also lined up a major brand
owner to work with us. This effort will be spearheaded by our newly-employed
Home Shopping Chief Executive Officer, Mr. Jones Guo. Mr. Guo, who is sought
after for his success in starting up and building profitable home shopping
businesses in Mainland China and Taiwan, will be bringing along his team to us.
We are fortunate to have him.
In summation, we have made significant progress toward fulfilling our vision to
be a leading multi-platform, multi-access media service provider in China.
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
NOTES Six months ended Six months ended Year ended
30-June-07 30-June-06 31-Dec-06
(Unaudited) (Audited) (Audited)
HK$'000 HK$'000 HK$'000
Revenue 4 10,809 5,416 13,541
Cost of sales (44,271) (38,916) (84,095)
________ ________ ________
Gross loss (33,462) (33,500) (70,554)
Other income 5,982 2,302 8,187
Gain on disposal of subsidiaries - - 576
Selling expenses (1,322) (1,082) (2,872)
Administrative expenses (36,720) (28,656) (107,517)
Finance costs 5 (6,271) (8,696) (13,880)
________ ________ ________
Loss before taxation (71,793) (69,632) (186,060)
Income tax expense - - -
________ ________ ________
Loss for the period/year 6 (71,793) (69,632) (186,060)
======= ======= =======
Attributable to:
Equity holders of the Company (71,793) (69,632) (186,060)
Minority interests - - -
________ ________ ________
(71,793) (69,632) (186,060)
======= ======= =======
Loss per share (HK$) 7
Basic (1.63) (2.45) (5.41)
======= ======= =======
Diluted (1.63) (2.45) (5.41)
======= ======= =======
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2007
NOTES Six months ended Six months ended Year ended
30-June-07 30-June-06 31-Dec-06
(Unaudited) (Audited) (Audited)
HK$'000 HK$'000 HK$'000
Non-current assets
Property, plant and equipment 26,327 25,615 25,321
Programme and film rights 751 317 751
Loan receivable 2,389 - 2,324
________ ________ ________
29,467 25,932 28,396
________ ________ ________
Current assets
Inventories 513 - -
Trade receivables 4,807 1,505 5,175
Prepayments, deposits and other receivables 36,979 59,949 107,874
Amount due from immediate holding company 18 14 14
Amounts due from fellow subsidiaries 448 178 2,072
Amount due from a director - 76 -
Other financial assets 2,585 - 4,401
Pledged bank deposits 141,108 8,085 119,627
Cash and cash equivalents 64,955 190,677 8,543
________ ________ ________
251,413 260,484 247,706
________ ________ ________
Current liabilities
Trade payables 727 1,009 512
Other payables 13,985 14,616 15,754
Amounts due to fellow subsidiaries - 12 -
Amount due to a minority shareholder of a 526 523 526
subsidiary
Other financial liabilities 25,003 - 24,046
Bank borrowings 267,500 155,175 206,500
Bank overdrafts - 42,814 -
________ ________ ________
307,741 214,149 247,338
________ ________ ________
Net current assets (liabilities) (56,328) 46,335 368
________ ________ ________
Total assets less current liabilities (26,861) 72,267 28,764
======= ======= =======
Capital and reserves
Share capital 8 36,285 28 35,623
Reserves (63,229) 72,156 (12,294)
________ ________ ________
Equity attributable to equity holders of the (26,944) 72,184 23,329
Company
________ ________ ________
Non-current liabilities
Other financial liabilities - - 5,352
Deferred tax liabilities 83 83 83
________ ________ ________
83 83 5,435
________ ________ ________
(26,861) 72,267 28,764
======= ======= =======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Share Share Special Own Equity Exchange Accumulated Attributable Minority Total
capital premium reserve instrument reserve losses to equity interests
shares reserve holders of
held the Company
by a
trust
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January 2006 18 63,399 - - - 51 (299,896) (236,428) - (236,428)
Foreign exchange
differences
recognised - - - - - (684) - (684) - (684)
directly in equity
Loss for the period - - - - - - (69,632) (69,632) - (69,632)
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Total recognised
income and
expense for the - - - - - (684) (69,632) (70,316) - (70,316)
period
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Capitalisation of a 1 186,523 - - - - - 186,524 - 186,524
shareholder loan
Issue of shares of
a then subsidiary
-Cosmedia Capital 9 193,739 - - - - - 193,748 - 193,748
Limited ("CCL")
Expenses incurred
in connection
with the issue of
shares
of a then
subsidiary
- CCL - (1,344) - - - - - (1,344) - (1,344)
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
At 30 June 2006 28 442,317 - - - (633) (369,528) 72,184 - 72,184
Foreign exchange
differences
recognized directly - - - - - (4,091) - (4,091) - (4,091)
in equity
Loss for the period - - - - - - (116,428) (116,428) - (116,428)
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Total recognised
income and
expense for the - - - - - (4,091) (116,428) (120,519) - (120,519)
period
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Issue of shares of
the Company upon
group 31,105 (442,317) 411,212 - - - - - - -
reorganisation
(Note)
Elimination of
issued share
capital
of a then
subsidiary - CCL
upon
group (28) - 28 - - - - - - -
reorganisation
Treasury shares of
the Company held by
the Group - - - (1,781) - - - (1,781) - (1,781)
Issuance of equity - - - - (5,434) - - (5,434) - (5,434)
instruments
Issue of new shares 4,518 75,263 - - - - - 79,781 - 79,781
Expenses incurred
in connection
with the issue of - (1,614) - - - - - (1,614) - (1,614)
shares
Recognition of
equity-settled
share-based - - - - 712 - - 712 - 712
payments
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
At 31 December 2006 35,623 73,649 411,240 (1,781) (4,722) (4,724) (485,956) 23,329 - 23,329
Loss for the period - - - - - - (71,793) (71,793) - (71,793)
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Total recognised
income and
expense for the - - - - - - (71,793) (71,793) - (71,793)
period
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
Exercise of share 662 19,523 - 21 1,314 - - 21,520 - 21,520
options
____ ____ ____ ____ ____ ____ ____ ____ ____ _____
At 30 June 2007 36,285 93,172 411,240 (1,760) (3,408) (4,724) (557,749) (26,944) - (26,944)
======= ======= ======= ======== ======= ======== ======== ======== ======== ========
Note :
The special reserve represents the difference between the nominal amount of the
shares issued by the Company and the aggregate amount of share capital and share
premium of the subsidiaries acquired pursuant to the Group's reorganisation.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Six months Six months Year ended
ended ended 31-Dec-06
30-June-07 30-June-06 (Audited)
(Unaudited) (Audited)
HK$'000 HK$'000 HK$'000
Operating activities
Loss before taxation (71,793) (69,632) (186,060)
Adjustments for:
Cash-settled share-based payment expenses 90 - 19,562
Finance costs 6,271 8,696 13,880
Allowance for bad and doubtful debts 520 30 13,074
Impairment and write off of programme and film rights 1,802 4,701 10,031
Depreciation of property, plant and equipment 4,798 2,746 6,470
(Profit) loss from recognition of a loan receivable (65) - 1,627
Write off of programming prepayments - 344 1,183
Equity-settled share-based payment expenses - - 712
Amortisation of programme and film rights - - 248
Loss on disposal of property, plant and equipment 8 19 19
Interest income (4,112) (593) (3,004)
Gain on disposal of subsidiaries - - (576)
________ ________ ________
Operating cash flows before movements
in working capital (62,481) (53,689) (122,834)
Increase in inventories (513) - -
Increase in trade receivables (152) (1,057) (5,771)
Decrease (increase) in prepayments,
deposits and other receivables 70,895 9,347 23,834
Increase in trade payables 215 (167) (711)
(Increase) decrease in other payables (1,769) 4,341 6,711
________ ________ ________
Cash generated from (used in) operations 6,195 (41,225) (98,771)
Interest paid (6,271) (5,010) (10,308)
________ ________ ________
Net cash generated from (used in) operating activities (76) (46,235) (109,079)
________ ________ ________
Investing activities
Purchase of property, plant and equipment (5,812) (5,786) (8,708)
Addition of programme and film rights (1,802) (1,365) (7,623)
Advance of a loan - - (4,000)
Advance to fellow subsidiaries - - (883)
Disposal of subsidiaries - - (110)
Advances to immediate holding company (4) (5) (5)
Interest received 4,112 593 3,004
Proceeds on disposal of property, plant and equipment - - 296
Repayment from directors - (59) 17
________ ________ ________
Net cash used in investing activities (3,506) (6,622) (18,012)
________ ________ ________
Six months ended Six months Year ended
ended
30-June-07 30-June-06 31-Dec-06
(Unaudited) (Audited) (Audited)
HK$'000 HK$'000 HK$'000
Financing activities
Proceeds from issue of shares of a subsidiary - 193,748 193,748
Bank borrowings raised 61,000 83,654 142,290
Advances from ultimate holding company - 11,092 11,092
Proceeds from issue of new shares 18,851 - 5,360
Advances from fellow subsidiaries 1,624 331 328
Increase in pledged bank deposit (21,481) (70) (111,291)
Repayment of bank borrowings - (57,692) (70,172)
Expenses paid in connection with the issue of shares of the - (1,614)
Company
-
Expenses incurred in connection with the issue of shares of a - (1,344)
then Subsidiary - CCL
-
Advance to a minority shareholder of a subsidiary - (3) -
________ ________ ________
Net cash from financing activities 59,994 231,060 168,397
________ ________ ________
Net increase in cash and cash equivalents 56,412 178,203 41,306
Cash and cash equivalents at beginning of the period/year 8,543 (30,514) (30,514)
Effect of foreign exchange rate changes - 174 (2,249)
________ ________ ________
Cash and cash equivalents at end of the period/year 64,955 147,863 8,543
======= ======= =======
Analysis of cash and cash equivalents:
Bank balances and cash 64,955 190,677 8,543
Bank overdrafts - (42,814) -
________ ________ ________
64,955 147,863 8,543
======= ======= =======
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2007
1. GENERAL
The results for the six months ended 30 June 2007 are unaudited and does not
constitute the Group's financial statements for the period ended 30 June 2007.
They have been prepared on the same basis and by applying the same accounting
policies as the audited financial statements for the year ended 31 December
2006.
The consolidated income statements, consolidated statement of changes in equity
and the consolidated cash flow statements for each of the reporting periods
ended 30 June 2006, 31 December 2006 and 30 June 2007 have been prepared on the
basis as if the current group structure had been in existence throughout the
years or since their date of incorporation where this is a shorter period. The
consolidated balance sheets of the Group as at 30 June 2006, 31 December 2006
and 30 June 2007 have been prepared to present the assets and liabilities of the
companies now comprising the Group as if the current group structure had been in
existence as at those dates.
The interim financial statements were approved by the Board of Directors on 5
September 2007.
2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
Although the Group's total liabilities exceeded its total assets by
approximately HK$26,944,000 as at 30 June 2007, the interim financial statements
have been prepared on a going concern basis because the Company currently is in
the process of raising additional capital.
On 20 August 2007, at an Extraordinary General Meeting, the Shareholders of the
Company authorised the directors to raise funds through the issuance of share
capital up to an additional one-third of the current share capital.
3. SIGNIFICANT ACCOUNTING POLICIES
These preliminary results have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and on the historical cost basis except
for certain financial instruments which are measured at fair value. The newly
adopted principal accounting policies are set out below.
Revenue recognition
Revenue from Sales of goods is recognised when goods are delivered and title has
passed.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is
calculated using first in first out method. Net realizable value represents the
estimated selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
4. REVENUE
Revenue represents (i) income from the sale of advertising airtime; (ii)
licensing income from the distribution of programmes and films; and (iii) sales
of purchased and consignment goods via home shopping, net of business tax and
rebate.
Revenue for the year is analysed as follows:
Six months ended Six months ended Year ended
30-June-07 30-June-06 31-Dec-06
(Unaudited) (Audited) (Audited)
HK$'000 HK$'000 HK$'000
Advertising income 10,110 5,416 13,086
Licensing income - - 455
Home shopping sales 699 - -
________ ________ ________
10,809 5,416 13,541
======= ======= =======
5. FINANCE COSTS
Six months Six months Year ended
ended ended 31-Dec-06
30-June-07 30-June-06 (Audited)
(Unaudited) (Audited)
HK$'000 HK$'000 HK$'000
Interest on:
- bank borrowings wholly repayable within five 6,271 5,319 10,503
years
- loans from ultimate holding company and
a fellow subsidiary - 3,377 3,377
________ ________ ________
6,271 8,696 13,880
======= ======= =======
6. LOSS FOR THE PERIOD/YEAR
Loss for the period/year has been arrived at after charging:
Six months Six months Year ended
ended ended 31-Dec-06
30-June-07 30-June-06 (Audited)
(Unaudited) (Audited)
HK$'000 HK$'000 HK$'000
Directors' emoluments 1,251 1,013 8,191
Other staff's cash-settled share-based payments 90 - 13,559
Other staff cost 13,977 13,303 24,453
Other staff retirement benefit scheme 1,575 756 2,092
contributions
________ ________ ________
Total staff cost 16,893 15,702 48,295
________ ________ ________
Auditors' remuneration 104 334 1,530
Allowance for bad and doubtful debts 520 30 13,074
Depreciation of property, plant and equipment 4,798 2,746 6,470
Impairment and write-off of programme and film 1,802 4,701 10,031
rights
Amortisation of programme and film rights - - 248
Equity-settled share-based payment expenses - - 712
Write off of programming prepayments - 344 1,183
Loss on disposal of property, plant and equipment
8 19 19
And after crediting:
Rental income under operating leases in respect
of office premises, net of insignificant
outgoings
1,879 1,754 3,976
Bank interest income 4,112 593 3,004
======= ======= =======
7. LOSS PER SHARE
The calculation of the basic and diluted losses as per share attributable to
ordinary equity holders of the Company is based on the following data:
Losses
Six months Six months Year ended
ended ended 31-Dec-06
30-June-07 30-June-06 (Audited)
(Unaudited) (Audited)
HK$'000 HK$'000 HK$'000
Losses for the purposes of basic and diluted
losses per share being losses attributable
to equity holders of the Company (71,793) (69,632) (186,060)
======= ======= =======
Number of shares
Six months ended Six months Year ended
30-June-07 ended 31-Dec-06
(Unaudited) 30-June-06 (Audited)
(Re-stated)
Weighted average number of ordinary shares for 43,970,404 28,373,547 34,399,203
the purposes of calculating basic and diluted
losses per share
======== ======== ========
The weighted average number of ordinary shares is calculated on the assumption
that the Group Reorganisation has been effective on 1 January 2005. Such number
of shares for the ended of the periods has been arrived at after eliminating the
shares in the Company held by the trust. The computation of diluted loss per
share does not assume the exercise of the outstanding share options and warrants
since they would result in a decrease in loss per share.
8. SHARE CAPITAL
Authorised Issued and fully paid
Number of Number of
shares Amount shares Amount
US$ US$
Ordinary shares
- on incorporation at US$1.0 each 250,000,000 250,000,000 1 1
- sub-division of authorised and
issued share capital from
US$1.0 per share into
US$0.10 per share 2,250,000,000 - 9 -
- issued pursuant to the Group - - 39,878,289 3,987,829
Reorganisation
- issue of shares by admission on AIM - - 3,508,772 350,877
- issue of shares to employee
benefit trust - - 2,283,719 228,372
At 31 December 2006 2,500,000,000 250,000,000 45,670,790 4,567,079
- issue of shares upon exercise of 847,988 84,799
share options/warrants
At 30 June 2007 2,500,000,000 250,000,000 46,518,778 4,651,878
Disclosed in the consolidated financial statements as
HK$ equivalent
At 30 June 2007 HK$36,285,000
At 30 December 2006 HK$35,623,000
On 2 March 2007, 456,708 shares of US$0.10 each of the Company were issued at
the exercise price of US$2.85 pursuant to the Option Agreement entered into with
Collins Stewart Europe Limited.
On 2 March 2007, 391,280 shares of US$0.10 each of the Company were issued at
the exercise price of US$2.85 pursuant to the Call and Put Option Agreement
entered into with Stanley Kit Pong.
All the shares issued during the period rank pari passu with the then existing
shares in all respects.
The share capital of the Group at 1 January 2006 and 30 June 2006 represented
the issued share capital of CCL.
9. SHARE-BASED PAYMENT TRANSACTIONS
On 20 December 2006, the Company adopted a share option scheme (the "Scheme")
for the primary purpose of attracting skilled and experienced personnel and to
provide incentive for them to remain with the Group. Under the Scheme, the
option-holders do not have the right to acquire ordinary shares of the Company.
Instead, they receive a conditional right to be paid a cash bonus based on the
value of such shares at the time of exercise.
At their meeting on 25 May 2007, the directors of the Company unanimously
approved amending the Scheme to allow, to the extent not prohibited by relevant
laws and regulations, option-holders the right to elect to receive shares or
cash.
-END-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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