Print   



HOLLYWOOD MEDIA SERVICES PLC ('HOLLYWOOD' OR THE 'COMPANY')

HALF-YEAR UNAUDITED REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2008

CHAIRMAN'S STATEMENT

I am pleased to report on our results for the six months to 30 June 2008.   

Highlights

• Acquisition of the contract for 'The Bill'

• Consolidated revenues up 73% to £990,981

• Pre tax loss of £212,570 after amortising the costs of The Bill for £130,046

Review of Operations

The key event of the first half was the acquisition of The Bill contract in February 2008 which has the potential to double the Group's turnover and provide a significant contribution to covering the Group's overheads. In the five months we have operated it, the contract has delivered an operating margin of 10%; at which rate it should generate profits for the year in excess of the cash consideration paid of £94,500. As previously reported total consideration is up to £575,000 (the balance being in shares) of which £275,000 is payable if the contract is extended beyond 31 December 2008. The contract is particularly valuable to the group because it provides a stable cash flow during the year and therefore reduces the seasonality of the business as a whole.  

Accounting for the contract is governed by IFRS 3, Business Combinations, under which the acquisition costs of The Bill are required to be written off over the remaining period of the contract, regardless of any renewal. Given the contract currently runs until 31 December 2008, this results in a write off of £130,046 in the period with the balance of approximately £156,000 to be written off in the second half. The directors are confident that the Company will be successful in extending the contract beyond 31 December 2008.  

As I reported with the 2007 results, the traditionally slow first quarter for the continuing operations was even slower than expected in 2008, due to the after effects of the writers' strike in the USA and postponements of new production commissions by both the BBC and ITV. The second quarter saw an improvement in volumes with productions serviced including 'Minder', 'Apparitions', 'Survivors', 'Trinity' and 'Damned United'.  In addition, we were appointed caterers to a number of pop festivals. This is a new area for the Company and follows the recruitment of a dedicated events manager as mentioned in our year end report.

Financial Review

The poorer than expected start to sales in the first half resulted in revenues from continuing operations for the period being down 3%. However, this was more than offset by the addition of The Bill contract as a result of which total revenues increased by 73% to £990,981 (2007: £572,336) in the first half of 2008. Trading profit (before head office costs, reorganisation costs and amortisation of goodwill) improved to £38,898 (2007: £21,769) with losses in continuing operations being exceeded by the performance of The Bill contract. Head office costs which comprise the costs of the Plc board and direct Plc overheads amounted to £74,589 (2007: nil). After the amortisation of The Bill contract of £130,046 an operating loss of £185,679 is reported for the 6 months (2007: profit of £21,769). After financial expenses of £26,891 (2007:£14,223) a pre and post tax loss of £212,570 was incurred in the 6 months (2007: pre tax profit of £7,546 and post tax profit of £8,949).

As noted in the year end report, cash reserves were at their worst in May 2008 since when the position has improved as trading has recovered from the slow start mentioned above. As well as the acquisition of The Bill contract mentioned above, the Company invested around £110,000 into new equipment with the result that the Company moved to a net debt position of £321,942 including lease obligations of £76,532 and utilising invoice discounting facilities of £192,679. Since June 2008, further capital expenditure of approximately £46,000 has been undertaken utilising an existing lease facility which would otherwise have expired but, in the current financial environment, there are no further plans for significant capital expenditure despite currently healthy demand for the group's services. The group is projected to generate cash in the second half in line with the expected improvement in trading.  

Current Trading

While increased macro economic risk makes for caution in commenting on trading prospects the improved volumes achieved in facilities in May and June have been maintained in the first three months of the second half, while the second half will also benefit from a full 6 months of The Bill. 

With regard to acquisitions, the board has commenced discussions with a number of potential opportunities since the year end and these remain ongoing. Whilst there can be no certainty that any discussions will conclude successfully, the Board continue to believe that there are opportunities to grow the business by acquisition, enabling cross selling of products and services as well as joint offerings to increase volume and margins.

James Holmes

Chairman

30 September 2008

For further information please contact:-

Hollywood		Tel:  0207 332 2200
Martin Eberhardt, Chief Executive
Dowgate Capital Advisers Limited		Tel: 020 7492 4777
Liam Murray, Antony Legge
IAF Securities Limited		Tel: 020 7747 7400
David Coffman

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS TO 30 JUNE 2008 

		Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Note	Unaudited		Unaudited		Audited
		£		£		£
Revenue
Continuing operations		553,096		572,336		1,090,775
Acquisitions		437,885		-		-
Total revenue		990,981		572,336		1,090,775
Gross profit
Continuing operations		197,884		217,464		367,246
Acquisitions		124,928		-		-
Total gross profit		322,812		217,464		(356,283)
Administrative expenses
Trading expenses
Continuing operations		(202,717)		(195,695)		(362,839)
Acquisitions		(81,197)		-		-
Total administrative expenses		(283,914)		(195,695)		(362,839)
Trading profit
Continuing operations		(4,833)		21,769		4,407
Acquisitions		43,731		-		-
Total trading profit		38,898		21,769		4,407
Head office costs		(74,589)		-		(95,393)
Acquisition/Float and reorganisation costs		(19,942)		-		(128,050)
Amortisation of contract cost		(130,046)		-		-
Operating profit/(loss)		(185,679)		21,769		(219,036)
Financial expenses		(26,891)		(14,223)		(42,407)
Profit/(loss) before taxation		(212,570)		7,546		(261,443)
Taxation	2	-		1,403		-
Profit/(loss) after taxation		(212,570)		8,949		(261,443)

UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENDITURE FOR THE SIX MONTHS TO 30 JUNE 2008

  

		Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
		Unaudited		Unaudited		Audited
		£		£		£
(Loss) for the financial year		(212,570)		8,949		(261,443)
Costs of flotation written off to share premium account		-		-		(377,156)
Total (losses)/gains recognised since last annual report		(212,570)		8,949		(638,599)
Total (losses)/gains attributable to equity holders of the parent		(212,570)		8,949		(638,599)

UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2008

	Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Unaudited £		Unaudited £		Audited £
Non current assets
Intangible asset	156,056		-		-
Property plant and equipment	592,492		472,226		529,422
Deferred tax asset	4,554		7,682		-
	753,102		479,908		529,422
Current assets
Inventories	31,523		15,825		15,406
Trade and other receivables	452,186		389,444		192,391
Cash and cash equivalents	-		-		275,909
	483,709		405,269		483,706
Total assets	1,236,811		885,177		1,013,128
Current liabilities
Trade and other payables	(535,160)		(506,059)		(421,981)
Financial liabilities (borrowings)	(321,942)		(192,574)		(171,149)
Tax liabilities	(1,403)		(3,128)		-
	(858,505)		(701,761)		(593,130)
Net Current (liabilities)	(374,796)		(296,492)		(109,424)
Non current liabilities
Borrowings	(2,600)		(79,130)		(38,259)
Net assets	375,706		104,286		381,739
Capital and reserves
Called up Share capital	89,171		50,000		85,417
Shares to be issued	205,700		-		70,000
Share premium account	504,511		-		437,427
Retained earnings	(428,676)		54,286		(216,105)
Share option reserve	5,000		-		5,000
Equity attributable to equity holders of the parent	375,706		104,286		381,739

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS TO 30 JUNE 2008

	Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Unaudited £		Unaudited £		Audited £
Net cash from operating activities	(182,166)		47,599		60,712
Cash flows from investing activities
Interest received	-		-		2,329
Proceeds on disposal of property plant and equipment	6,616		-		-
Purchases of property, plant and equipment	(110,429)		(69,953)		(176,367)
Business acquisition	(114,442)		-		-
Fair value adjustment	8,540		-		-
Net cash used in investing activities	(209,715)		(69,953)		(174,038)
Cash flow from financing activities
Costs of flotation	-		-		(377,156)
New finance lease liabilities	-		-		-
Repayment of obligations under finance leases	(38,637)		(34,165)		(87,574)
New borrowings	101,040		2,575		-
Issue of new shares	838		49,980		850,000
Net cash used in financing activities	63,241		18,390		385,270
Net (decrease)/increase in cash and cash equivalents	(328,640)		(3,964)		271,944
Cash and cash equivalents
At beginning of period	275,909		3,964		3,964
Net(decrease)/increase in cash and cash equivalents	(328,640)		(3,964)		271,945
At end of period	(52,731)		-		275,909

UNAUDITED CONSOLIDATED CASH FLOWS FROM OPERATING ACTIVITIES 

FOR THE SIX MONTHS TO 30 JUNE 2008

	Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Unaudited £		Unaudited £		Audited £
Profit/(loss) from operations	(185,679)		21,769		(219,036)
Adjustments for:
Movement in share option reserve	-		-		5,000
Depreciation of property, plant and equipment	53,043		38,859		88,077
Amortisation of intangible asset	130,046		-		-
Operating cash flow before movements in working capital	(2,590)		60,628		(125,959)
Increase in inventories	(2,917)		24,500		24,919
Increase in receivables	(264,350)		(98,427)		106,261
(Decrease)/increase in payables	114,582		73,718		100,227
Cash generated by operations	(155,275)		60,419		105,448
Income taxes refunded/(paid)	-		1,403		-
Interest paid	(26,891)		(14,223)		(44,736)
Net cash flow from operating activities	(182,166)		47,599		60,712

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE SIX MONTHS TO 30 JUNE 2007

 

1.    Accounting policies

Basis of Preparation

    The half-yearly financial information in this report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU applied in accordance with the provisions of the Companies Act 1985.

IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 31 December 2008.  

The half-yearly results for the six months to June 2008 and June 2007 have been prepared under the     historical cost convention, are unaudited and do not constitute statutory accounts in accordance with     Section 434 of the Companies Act 2006. The principal accounting policies set out below have been consistently applied to all periods presented.

Basis of consolidation

The consolidated financial statements include those of the holding company and its subsidiaries made up to 31 December 2007. As the company's results are included in the consolidated profit and loss account and disclosed in the reconciliation of movements in shareholders' funds, a separate profit and loss account is not presented, as permitted by s 230 (4) of the Companies Act 2006. Entities not owned by the group over which the group has the ability to exercise control are accounted for as subsidiaries. The results of subsidiary undertakings acquired in the year are included in the consolidated profit and loss account from the date of acquisition.

Acquisition accounting

The assets and liabilities of subsidiary undertakings and the acquired are incorporated at their fair value at the date of acquisition and the Group income statement includes only that proportion of the result of subsidiaries arising whilst meeting the definition of a subsidiary. 

Intangible assets other than goodwill are stated at cost less accumulated depreciation and any impairment losses. Intangible assets arising on acquisition are recognised separately from goodwill where the fair value of the asset can be identified separately and measured reliably. Amortisation is calculated on a straight line basis over the useful life of the asset. Amortisation methods and useful lives are reviewed annually and adjusted if appropriate.

Depreciation

    Fixed assets are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the cost of the assets, over their estimated useful lives, using the straight line method on the following bases:

Motor vehicles, trailers, plant and equipment    15% straight line

Fixtures and fittings    33% straight line

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at inception of the lease. The corresponding liability is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement.

Rentals payable under operating leases are charged to the income statement on a straight line basis over the term of the relevant lease.

2.    Taxation

 

No provision for corporation tax has been provided for, due to losses incurred in previous periods.

3.    Earnings per Share

The earnings per share has been calculated by dividing the loss after taxation of £75,368 (June 2007: profit of £8,949)     by the weighted average number of Ordinary £1 shares in issue of 49,285,732 (June 2007: 25,010). 

	Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Unaudited £		Unaudited £		Audited £
Loss/Profit attributable to shareholders	(212,570)		8,949		(261,443)
Weighted average number of ordinary shares in issue for calculating basic earnings per share	49,285,732		25,010		25,049,348
Increase in weighted average number of ordinary shares in issue at a nominal value of 0.125p following sub division of shares			19,982,990
Weighted average number of warrants and options	19,000,000				6,592,692
Weighted average number of preference shares	20,000,000				6,703,297
Weighted average number of shares for calculating dilutive earnings per share	88,285,732		20,008,000		38,345,337
Basic (loss)/earnings per share	(0.004)		0.36		(0.010)
Earnings per share of 0.125p			0.000
Fully diluted	(0.002)				(0.007)

4.    Statement of changes in equity

	Six month period ended 30 June 2008		Six month period ended 30 June 2007		Year ended 31 December 2007
	Unaudited £		Unaudited £		Audited £
Opening balance	381,739		45,358		45,358
Profit/(loss) for the period/year	(212,570)		8,948		(261,443)
Issue of shares	838		49,980		899,980
Flotation costs written off against Share Premium	-		-		(377,156)
Shares to be issued	205,700		-		70,000
Gain on share options granted	-		-		5,000
Closing balance	375,706		104,286		381,739

5.    Ultimate controlling party

As at 30 June 2007, the Company's ultimate controlling party was Catering 4 Events Plc. Following the Company's admission on 30 August, there was no ultimate controlling party. 

6.    Distribution of half-yearly report

This half-yearly report, together with the admission document, are available on the Company's website, www.hmservicesplc.com.

 

7.    Aim Compliance Committee

In accordance with AIM Rule 31 the Company is required to have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules; seek advice from its nominated adviser ('Nomad') regarding its compliance with the AIM Rules whenever appropriate and take that advice into account; provide the Company's Nomad with any information it requests in order for the Nomad to carry out is responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisers; ensure that each of the Company's directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and ensure that each director discloses without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with reasonable diligence be ascertained by the director.

In order to ensure that these obligations are being discharged, the Board has established a committee of the Board (the 'AIM Committee'), chaired by Michael Johnson, a non executive director of the Company.

Having reviewed relevant Board papers, and met with the Company's Executive Board and the Nomad to ensure that such is the case, the AIM Committee is satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.

ENDIR EAENEDDNPEFE