RNS Number:8170M
Galleon Holdings PLC
30 January 2008
Embargoed Release: 07:00hrs Wednesday 30 January 2008
Galleon Holdings plc
'Galleon' or 'the Company' or 'the Group'
Preliminary Results for the year ended 30 September 2007
Galleon Holdings plc, the AIM-listed intellectual property owner and developer
in the entertainment sector, is pleased to announce its results for the year
ended 30 September 2007.
CHAIRMAN'S STATEMENT
Group Highlights
* Group revenue up 240% to �4.5m
* Positive EBITDA of �169,321
* Galleon Entertainment contributes revenues in final quarter
* Croco Worldwide Sourcing Limited's revenues up 258% on last year and already
has an order book of �4.75m for 2008
* Acquisition of Phoenix Investment Global Limited provides pipeline to China
and Asia for Galleon Entertainment content
I am pleased to present Galleon's financial results for the year ended 30
September 2007. Our EBITDA for the year was �169,321 compared with a loss of
�982,078 for year ended 30 September 2006 and we have seen a 240% increase in
turnover which grew to �4.5m compared with �1.3m for the previous year.
Growth
Galleon has seen both organic growth and growth by acquisition in 2007. In our
interims we stated that the emerging markets were a strategic opportunity for a
company like ours with strength in developing cross-platform entertainment. The
subsequent acquisition of Phoenix Global Investment Limited has provided Galleon
with a pipeline into China and South East Asia for its content. Whilst this
acquisition happened just outside the 2006-2007 financial year it presents a
significant opportunity for Galleon in 2008 and future years as the TV and
mobile market continues to grow in these regions.
The source of our revenues has been much more balanced this year with our
entertainment division contributing significant revenues to this year's results.
All this has been underpinned by the continued growth of Croco Worldwide
Sourcing ("Croco") which has consolidated its position as a leading developer
and supplier of in pack premium toys in Europe. In addition, it has expanded its
geographical reach into Latin America, the world's largest market for this type
of product, securing 2 orders this year from both the food and drink divisions
of Pepsico .This coupled with our new presence in Asia presents Croco with a
much larger global distribution footprint for its new and existing products and
IP for 2008.
Outlook
In 2008 we have an entertainment division that is now generating revenues from
its children and family based IP across multiple platforms coupled with a
distribution channel to take this and other content into China and the rest of
South East Asia. In addition to this Croco Worldwide continues to grow
significantly, expanding its existing customer base, winning new clients and
introducing more of its product based IP into market. With the continued growth
in both divisions in mind we are optimistic that 2008 will be a defining year
for the company.
David Wong
Chairman
30 January 2008
CHIEF EXECUTIVE'S STATEMENT
Operational Strategy
Strategically we have focussed on investing in our entertainment division due to
the long term returns that we see in this area whilst also driving revenues
through the organic growth of Croco our product IP division which has continued
to build on earlier successes. This year both divisions have generated income.
Croco continues to grow and we expect our entertainment division to make a
significant contribution to performance in the current year. We have stated that
strategically we would be focussing on cross-platform entertainment. With this
in mind we turned our attentions to the emerging markets due to their
significant TV and online audiences and high mobile phone penetration. This led
to the acquisition in October 2007 of Phoenix Global Investment Limited, a
provider of interactive television services in China and rest of South East
Asia. Ownership of Phoenix will allow Galleon Entertainment's IP to be some of
the first to break into China at a crucial time in that market's growth. It also
presents opportunities to co-venture with other global media companies anxious
to be operational in this territory. This puts Galleon in a unique position in
the marketplace, allowing us to form some interesting strategic alliances going
forward. As well as being an owner and manager of cross-platform entertainment
content, Galleon now has a business model and channel for distributing
cross-platform entertainment into China and the rest of South East Asia.
Galleon Entertainment
Galleon Entertainment owns, develops and manages entertainment based
intellectual property (IP) and strategically we have focussed on building a
balanced portfolio through acquisition, internal development and co-ventures.
Our focus on multi platform content and the recent acquisition of Phoenix has
allowed us to differentiate ourselves in the Global media market.
Galleon Entertainment - Properties
Skunk fu! is now a truly global brand with the first series of 52 animated
episodes for 3-11 year olds having been sold into the main markets around the
world.The first 26 episodes were aired in the UK from June 2007 and Skunk fu!
was rated the number one show in its timeslot. Subsequently, KidsWB! acquired
the show for the US where it went on air in September 2007 becoming their joint
number one rated show on network TV on Saturday mornings alongside Scooby Doo.
In 2008, the BBC and KidsWB! will commence airing the second 26 episodes,
rotating it with their existing episodes. Meanwhile, all 52 episodes will go on
air in over 140 territories including Super RTL(Germany), France 5, Cartoon
Network Europe and Disney Latin America. Galleon Entertainment presented the
property to licensees during the Brand Licensing Europe show in October 2007 and
the response was strong. We have received proposals for key categories which we
anticipate will be announced to the market during the first quarter of 2008.
Apollo's Pad has been created to address the demand that 16-24 year olds have
for online entertainment brands that establish a direct relationship with them.
With this in mind our strategy has been to create an online community using our
animated comedy characters and music videos which feature the exclusive music
content produced with Sony BMG our global music distribution partner. Following
the development of this format we will be in a very strong position to sell a TV
series derived from the online brand to broadcast partners.
The first Apollo's Pad content was launched online in October as per our
schedule in order to test the consumer reaction and beta test our portal,
apollospad.com. We placed 2 music videos through online video channels such as
YouTube and Yahoo that successfully drove consumer traffic to the website. In
February of 2008 apollospad.com will have full functionality and we will be
launching the comedy content into the online market. This will drive sales of a
branded collection of music videos either through our own portal apollospad.com
or through Sony BMG. Further to this we will see revenues from apollospad.com in
the form of advertising, sponsorship, downloads and subscriptions. We will use
this as a launch pad to sell an Apollo's Pad TV series at MipTV in April 2008.
We are extremely excited by our Mysti feature film option deal with Cutstone
Productions. With the recent success of Disney and "High School Musical" we
believe that the market is receptive to "tween" targeted properties and Mysti is
well poised to take advantage of this. Subsequently, we are incorporating new
elements in the treatment for the next TV series of the property to make the
property more global in appeal. Meanwhile, the show continues to perform well
on CBBC.
Sokator-442, Galleon's football based fantasy targeting kids aged 6-11 is also
at an interesting stage. Such is the revenue potential of this property that
with current presales already made to Germany and Australia this property would
become commercially viable with one more partner in a significant territory such
as China, the UK or the US .
Galleon Entertainment - Phoenix Global Investment Limited
Phoenix specialises in the provision of interactive broadcast television
services in China and the rest of South East Asia. Its customers are leading
broadcasters in Asia such as Hunan ETV, Hunan Satellite, Guangdong Sports
Channel (China) and Media Prima (Malaysia). Phoenix embeds its staff and
technology platforms within the broadcaster and from here Phoenix provides the
broadcaster with a "one stop shop" for all interactive broadcast content. This
creates a very cooperative business relationship with our customers allowing us
to be a part of the broadcast and scheduling process.
Phoenix generates revenues in a number of ways. The most straightforward is
through the sale of its interactive media platforms to the broadcaster.
Following this Phoenix receives a royalty for the services it provides based on
the interactive transactions that take place as a result of the shows that are
broadcast on the platform. Since becoming a part of Galleon, Phoenix has been
able to widen its discussions to include the provision of content and IP to
television broadcasters. This is now creating opportunities to co-produce shows
with broadcasters where Phoenix receives a share of profits from all commercial
activities including sponsorship and advertising.
During 2008 we anticipate that we will update the market with new broadcaster
service deals and new content deals in South East Asia with particular emphasis
on China.
Croco Worldwide Sourcing Limited
Croco Worldwide Sourcing Limited is now truly a global toy and games company,
providing proprietary toy products to a range of customers. Strategically we
have focussed this innovative and dynamic division on the in pack premium
market. During the course of this year Croco has achieved a number of key
objectives.
Firstly by consistently developing superior toys and winning business it has
consolidated its customer base with Kraft and Pepsico and through this
established itself as one of Europe's leading suppliers of 'in-pack premiums'.
It already has an order book of �4.75m for 2008.
Croco has also leveraged its toy IP outside of the in-pack premium market. Our
product Blasterz has now been launched in 13 markets and is set to become a
perennial toy for the global premium market. Such has been the success of this
toy in market that in 2007 we have licensed it to global toy company Topps
Merlin to distribute it into retail the markets in the UK, France, Italy and
Germany and the first product is scheduled to be launched early in 2008 in
Italy. We have also successfully licensed Epix, one of the intellectual
properties in our portfolio, to Pepsico in Mexico. Epix was used to create, in
the lids of bottles soft drinks, a photo realistic image that is only revealed
when held up to the light.
South America is the largest market for in pack premiums and it has always been
our aim to grow our customer base to include this region. This year Croco
secured a test order for a leading food brand in Mexico. Following this and the
success of our products in other markets we are now discussing promotions with a
number of food brands in the South American region. Having a toy company within
Galleon also provides potential benefits for our children's brands like Skunk
fu!. In 2008 we have some opportunities to develop manufacture and supply a
retail focussed toy line for distribution in markets where the show is on air.
This ability to develop and manufacture toys ourselves means that we are able to
get additional product that compliments that of our Licensees into market at the
right time for the chosen brand.
Outlook
2007 has been a transitional year and we see this accelerating in 2008 with the
continued growth of our Entertainment division.
Finally, I would like to thank the staff for their hard work and our
shareholders for their continued support.
Stephen Green
Chief Executive
30 January 2008
FOR FURTHER DETAILS PLEASE CONTACT:
Stephen Green, Chief Executive Tel. +44(0) 20 8987 0011
Galleon Holdings Plc
Graham Swindells / Marc Young Tel: +44 (0) 20 3205 7500
Kaupthing Singer & Friedlander Capital Markets Limited
John Bick / Adam Reynolds Tel. +44 (0) 20 7245 1100
Hansard Group
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2007
Note 2006 2006
2007 2007 (Restated) (Restated)
� � � �
Turnover
Continuing operations 4,493,105 1,183,627
Discontinued operations - 134,371
4,493,105 1,317,998
Cost of sales (3,095,570) (1,095,622)
Gross profit 1,397,535 222,376
Administrative expenses (1,596,821) (1,438,163)
EBITDA 169,321 (982,078)
Depreciation, amortisation and impairment (368,607) (233,709)
Operating loss
Continuing operations (199,286) (1,183,739)
Discontinued operations - (32,048)
(199,286) (1,215,787)
Share of operating (loss)/profit of:
Joint venture (34) (41)
Associate 17,183 3,286
Net interest (209,905) (41,568)
Loss on ordinary activities before
taxation (392,042) (1,254,110)
Tax on loss on ordinary activities 2 - -
Loss on ordinary activities after taxation 4 (392,042) (1,254,110)
and loss for the financial year
Basic loss per ordinary share 3 (0.7)p (2.7)p
All of the activities of the group are classed as continuing. Operations
discontinued during 2007 did not contribute sufficiently to the Group's trading
results to be disclosed separately.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 2007
2007 2006
� �
Loss for the financial year (392,042) (1,254,110)
Total recognised gains and losses for the (392,042) (1,254,110)
year
Prior year adjustment (54,721) -
Total gains and losses recognised since (446,763) (1,254,110)
last financial statements
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2007
Note 2007 2007 2006 2006
(Restated) (Restated)
� � � �
Fixed assets
Intangible assets
Goodwill 500,904 669,066
Other 1,568,337 1,732,125
2,069,241 2,401,191
Tangible assets 11,620 14,057
Investments
Joint venture
Share of gross assets 734,925 734,925
Share of gross liabilities (736,166) (736,132)
(1,241) (1,207)
Associates - (17,183)
Other investments - 1,500
(1,241) (16,890)
2,079,620 2,398,358
Current assets
Stocks and work in progress 757,671 242,347
Debtors 1,176,866 147,362
Cash at bank and in hand 201,181 379,013
2,135,718 768,722
Creditors: amounts falling due within one year (1,085,696) (1,061,261)
Net current assets/(liabilities) 1,050,022 (292,539)
Total assets less current liabilities 3,129,642 2,105,819
Creditors: amounts falling due after more
than one year - (550,000)
Provisions for liabilities - (12,050)
Net assets 3,129,642 1,543,769
Capital and reserves
Called up share capital 648,240 494,393
Share premium account 6,649,925 4,881,771
Capital redemption reserve 9,601,469 9,601,469
Share option reserve 110,635 54,721
Other reserves 209,849 209,849
Profit and loss account (14,090,476) (13,698,434)
Equity shareholders' funds 4 3,129,642 1,543,769
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2007
Note 2007 2006
(Restated)
� �
Net cash outflow from operating activities 5 (1,344,141) (707,462)
Returns on investments and servicing of finance
Interest paid (215,017) (41,568)
Interest received 5,112 -
Net cash outflow from returns on investments
and servicing of finance (209,905) (41,568)
Capital expenditure
Purchase of tangible fixed assets (4,038) (7,095)
Purchase of intangible fixed assets (30,182) (191,425)
Net cash outflow from capital expenditure (34,220) (198,520)
Acquisitions
Purchase of subsidiary undertaking - (301,000)
Net cash outflow from acquisitions - (301,000)
Net cash outflow before financing (1,588,266) (1,248,550)
Financing
Issue of shares 2,000,000 1,428,000
Expenses paid in connection with share issues (78,000) (28,040)
Receipts/(repayment) of borrowings (300,000) 300,000
Net cash inflow from financing 1,622,000 1,699,960
Increase in cash 6 33,734 451,410
Significant non-cash movements
Purchase of subsidiary settled by shares and loan note - 1,200,000
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2007
1 BASIS OF PREPARATION
The preliminary announcement has been prepared in accordance with applicable
United Kingdom accounting standards and under the historical cost convention.
The principal accounting polices of the group have remained unchanged from those
set out in the group's 2006 annual report and financial statements apart from in
preparing the financial statements for the current year the Group has adopted
for the first time Financial Reporting Standard 20 (FRS 20) 'Share-based
payments'. With the introduction of FRS 20 there has been a change to the
treatment of share-based payments. The effects of the changes is/shown in note 8
to the preliminary announcement
Going concern
The directors have prepared cashflow forecasts which take account of the placing
of shares on 26 October 2007 which raised �8 million before expenses, and of
expected trading in the group's businesses. The forecasts demonstrate that the
group has sufficient cash resources and finance facilities available to allow it
to continue in business for a period of at least 12 months from the date of
approval of the financial statements.
On this basis the Directors consider it appropriate to prepare the financial
statements on a going concern basis. The financial statements do not include any
adjustments that would result if the assumptions detailed above were not met.
2 TAX ON LOSS ON ORDINARY ACTIVITIES
No tax charge arises on the loss for either year.
The tax assessed for the period differs from the standard rate of Corporation
Tax in the UK as explained below:
2007 2006
(Restated)
� �
Loss on ordinary activities before tax (392,042) (1,254,110)
Loss on ordinary activities before tax multiplied by standard rate of
Corporation Tax in the
UK of 30% (2006: 30%) (117,613) (376,233)
Effect of:
Expenses not deductible for tax purposes 52,425 81,302
Capital allowances for period in excess of depreciation (480) 600
Unrecognised deferred tax assets 65,688 294,331
Current tax credit for period - -
Subject to HM Revenue & Customs approval, the Group has unrelieved tax losses of
approximately �6,300,000 (2006 : �6,100,000) available to carry forward and
offset against future taxable trading profits. The unprovided deferred tax
asset in respect of these losses amounts to approximately �1,890,000 (2006 :
�1,830,000).
3 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss for the year
attributable to ordinary shareholders of �392,042 (2006: �1,254,110 Restated)
divided by the weighted average number of shares in issue during the year of
52,600,565 (2006: 45,974,861). The effect of the share options is anti-dilutive
and accordingly diluted loss per share would equal the basic loss per share.
4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2007 2006
� �
Loss for the financial year (as previously stated) (392,042) (1,199,389)
Prior year adjustment (note 29) - (54,721)
Loss for the financial year (as restated) (392,042) (1,254,110)
Issue of shares (net of issue costs) 1,922,001 2,121,960
Share options charge (note 29) 55,914 54,721
Shares to be issued no longer due - (1,875)
Net increase in shareholders' funds 1,585,873 920,696
Shareholders' funds at 1 October 2006 1,543,769 623,073
Shareholders' funds at 30 September 2007 3,129,642 1,543,769
5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2007 2006
� �
Operating loss (as previously stated) (199,286) (1,161,066)
Prior period adjustment (note 29) - (54,721)
Operating loss (as restated) (199,286) (1,215,787)
Loss on disposal of tangible fixed assets - 9,564
Provision against other fixed asset investments 1,500 27,300
Depreciation of tangible fixed assets 6,475 12,675
Amortisation and impairment of intangible fixed assets 193,970 136,872
Release of provision for joint venture/shares to be issued (12,050) (1,875)
Amortisation and impairment of goodwill on consolidation 168,162 84,162
(Increase) in stocks and work in progress (515,324) (69,327)
(Increase)/decrease in debtors (1,029,504) 329,216
Decrease in creditors (13,998) (96,983)
Share options charge 55,914 54,721
Shares allotted to settle expenses and creditors - 22,000
Net cash outflow from operating activities (1,344,141) (707,462)
6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2007 2006
� �
Increase in cash in the year 33,734 451,410
Payment of/(receipts) from borrowings 300,000 (300,000)
Issue of loan note - (500,000)
Change in net debt resulting from cash flows 333,734 (348,590)
Net debt at 1 October 2006 (632,553) (283,963)
Net debt at 30 September 2007 (298,819) (632,553)
7 ANALYSIS OF CHANGES IN NET DEBT
At At
1 October Cash flow 30 September
2006 2007
� � �
Cash at bank and in hand 379,013 (177,832) 201,181
Bank overdraft (211,566) 211,566 -
167,447 33,734 201,181
Other loan (300,000) 300,000 -
Loan note (500,000) - (500,000)
Net debt (632,553) 333,734 (298,819)
8 PRIOR YEAR ADJUSTMENT
The Company is required to adopt the provisions of Financial Reporting Standard
20: Share-based payments, which has given rise to a charge in the profit and
loss account in the current year and prior year resulting in a prior year
adjustment.
For the year ended 30 September 2006, the change in accounting policy has
resulted in a net increase in the loss for the year of �54,721 and the creation
in the balance sheet of a share option reserve of �54,721.
For the year ended 30 September 2007, the change in accounting policy has
resulted in a charge to the profit and loss account of �55,914. At 30 September
2007, the share options reserve amounted to �110,635
9 POST BALANCE SHEET EVENTS
On 23 October 2007 the Company acquired the entire issued share capital of
Phoenix Investment Global Limited, a Hong Kong based media solutions company,
for an initial consideration of �1.5m with deferred and contingent consideration
payable of up to a further �4.0m. The entire consideration is payable in
Galleon ordinary 1p shares. At the same time as the acquisition the Company
raised funds of �8 million (before expenses) via a Placing with Institutional
and other investors of 27,586,212 new ordinary shares of 1p each at a price of
29p per share. The majority of the proceeds of the Placing will be used to fund
the future development of the enlarged Group's interests in China, together with
providing additional funding for Croco and to develop the Group's entertainment
properties. On 21 January 2008 the Company settled �500,000 of the deferred
consideration by the issue of 1,621,272 new ordinary shares of 1p each at 30.84p
per share.
The Group has also entered into an agreement to lend a key supplier up to �1.4
million, on an arms length basis, in relation to the Croco business.
10 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 30 September 2007 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Group's 2007 statutory financial
statements upon which the auditors opinion is unqualified and does not include
any statement under Section 237 of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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