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REG - Zinc Media Group PLC - Preliminary Results <Origin Href="QuoteRef">ZIN.L</Origin> - Part 2

- Part 2: For the preceding part double click  ID:nRSZ7695Ra 

to the Company's ordinary shareholders divided by the
diluted weighted average number of issued ordinary shares. When the Group
makes a loss from continuing operations, diluted EPS equals the loss
attributable to the Company's ordinary shareholders divided by the basic
(undiluted) weighted average number of issued ordinary shares. This ensures
that EPS on losses is shown in full and not diluted by unexercised share
options or awards. 
 
                                                                                            2017              2016              
                                                                                            Number of Shares  Number of Shares  
 Weighted average number of shares used in basic                                                                                
 earnings per share calculation                                                             544,171,445       406,760,864       
 Dilutive effect of share options                                                           11,330,279        -                 
 Weighted average number of shares used in adjusted diluted earnings per share calculation  555,501,724       406,760,864       
                                                                                            £'000             £'000             
 Loss for year from continuing operations attributable to shareholders                      (72)              (3,710)           
 Amortisation and impairment of intangible assets                                           1,421             4,806             
 Restructuring costs                                                                        -                 44                
 Change in fair value of contingent consideration                                           (1,300)           -                 
 Exceptional items                                                                          41                -                 
 Adjusted profit for year attributable to shareholders                                      90                1,140             
 Loss for year from discontinued operations attributable to shareholders                    (37)              (2,661)           
 Continuing operations                                                                                                          
 Basic loss per share                                                                       (0.01)p           (0.91)p           
 Diluted loss per share                                                                     (0.01)p           (0.91)p           
 Adjusted basic profit per share                                                            0.017p            0.28 p            
 Adjusted diluted profit per share                                                          0.016p            0.28 p            
 Discontinued operations                                                                                                        
 Basic loss per share                                                                       (0.01)p           (0.65)p           
 Diluted loss per share                                                                     (0.01)p           (0.65)p           
                                                                                                                                    
 
 
6) INTANGIBLE ASSETS 
 
                                         Customer                 
                      Goodwill  Brands   Relationships  Total     
                      £000      £000     £000           £000      
 Cost                                                             
 At 1 July 2015       25,662    3,818    171            29,651    
 Additions            2,288     500      2,450          5,238     
 At 30 June 2016      27,950    4,318    2,621          34,889    
 At 30 June 2017      27,950    4,318    2,621          34,889    
 Amortisation                                                     
 At 1 July 2015       (18,765)  (3,818)  (171)          (22,754)  
 Charge for the year  -         (69)     (337)          (406)     
 Impairment charge    (4,399)   -        -              (4,399)   
 At 30 June 2016      (23,164)  (3,887)  (508)          (27,559)  
 Charge for the year  -         (71)     (350)          (421)     
 Impairment charge    (1,000)   -        -              (1,000)   
 At 30 June 2017      (24,164)  (3,958)  (858)          (28,980)  
 Net Book Value                                                   
 At 30 June 2017      3,786     360      1,763          5,909     
 At 30 June 2016      4,786     431      2,113          7,330     
 
 
Goodwill 
 
Goodwill arising on acquisitions after the date of transition to IFRS is
attributable to operational synergies and earnings potential expected to be
realised over the longer term. 
 
Brands and Customer Relationships 
 
Brand and customer relationships relate to the intangible assets arising on
the acquisition of Reef Television. 
 
Impairment Tests for Goodwill 
 
The carrying amount of goodwill by operating segment is: 
 
                         2017   2016   
                         £'000  £'000  
 Publishing              -      -      
 TV                      2,801  3,801  
 Digital Communications  985    985    
 Total                   3,786  4,786  
 
 
Goodwill is not amortised but tested annually for impairment with the
recoverable amount being determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount
rate, growth rates and forecasts in income and costs. 
 
The Group assessed whether the carrying value of goodwill was supported by the
discounted cash flow forecasts of operating segments based on financial
forecasts prepared by management. 
 
An impairment charge of £1.0m was made during the year in respect of the
carrying value of goodwill relating to Reef Television. 
 
7) NON-CURRENT LIABILITIES 
 
An analysis of the amounts presented as non-current liabilities in these
financial statements is given below: 
 
                                2017   2016   
                                £'000  £'000  
 Borrowings                     3,375  2,007  
 Other non-current liabilities  700    2,000  
 Total                          4,075  4,007  
 
 
The increase in long term borrowings during the year is as a result of the
debt restructuring in November 2016, as a result of which all of the Company's
debt was restructured to be repayable on 31 December 2020.  The Company also
received additional long term debt of £0.43m at that time.  Other non-current
liabilities relate to deferred contingent consideration payable to the Reef
sellers, the fair value of which was written down during the year. 
 
8) SHARE CAPITAL 
 
                                                     2017         2016         
 Ordinary shares with a nominal value of:            0.00025p     0.1p         
 Authorised:                                                                   
 Number                                              Unlimited    Unlimited    
                                                                               
 Issued and fully paid:                                                        
 Number                                              619,775,478  419,397,339  
 Nominal value (£'000)                               1.5          419          
                                                                               
 Deferred shares with a nominal value of 1.99p                                 
 Authorised, issued and fully paid:                                            
 Number                                              276,666,012  276,666,012  
 Nominal value (£'000)                               5,506        5,506        
                                                                               
 D Deferred shares with a nominal value of 0.09975p                            
 Authorised, issued and fully paid:                                            
 Number                                              419,397,339  -            
 Nominal value (£'000)                               418          -            
                                                                               
 Preference shares with a nominal value of 0.01p                               
 Authorised, issued and fully paid:                                            
 Number                                              2,908,631    2,908,631    
 Paid up value (£'000)                               2,909        2,909        
 
 
Fully paid ordinary shares carry one vote per share and carry the right to
dividends. 
 
In November 2016, at a General Meeting of the Company, shareholders approved
capital restructure proposals whereby each of the existing issued shares of
0.1 pence each in the capital of the Company were subdivided and converted
into one new ordinary share of 0.00025 pence and one D deferred share of
0.09975 pence. 
 
Deferred shares and D deferred shares have attached to them the following
rights and restrictions: 
 
- they do not entitle the holders to receive any dividends and distributions; 
 
- they do not entitle the holders to receive notice or to attend or vote at
General Meetings of the Company; 
 
- they have very limited rights on a return of capital; and 
 
- they are not admitted or listed on any stock exchange and are not freely
transferable. 
 
The principal terms of the preference shares are as follows: 
 
(a)  they are convertible at 2.5 pence per ordinary share at the holder's
option (which would give rise to the issue of 116,345,240 new ordinary shares
if the preference shares were completed in full and no dividend had accrued); 
 
(b)  they are redeemable at the Company's option on the date falling five
years after their issue; 
 
(c)  they have a dividend of 4.5 per cent per annum (which increases to 13.5
per cent per annum if they are not converted or redeemed within five years of
their issue) which is payable on 31 July each year, or accrued and repayable
when the preference shares are converted or redeemed; and 
 
(d)  they are freely transferable. 
 
The preference shares have been classified as equity rather than debt. The
intention by all parties at the inception of the preference shares was that
the preference shares would be converted to equity when the opportunity
presents itself, rather than be repaid.  Therefore the directors have valued
the debt component of the preference shares instrument using the assumption
that there will be no cash outflows, so the value is nil. 
 
                                                      2017              2016           
 Ordinary shares                                      Number of Shares  Share Capital  Share Premium  Number of Shares  Share Capital  Share Premium  
                                                                        £'000          £'000                            £'000          £'000          
 At start of year                                     419,397,339       419            22,671         276,666,012       5,534          15,228         
 Nominal value transferred to deferred share capital  -                 (418)          -              -                 (5,506)        -              
 Share consolidation (10 for 1)                       -                 -              -              (248,999,411)     -              -              
 Share placing and subscription for cash              111,711,471       0.28           838            225,000,000       225            4,275          
 Deferred consideration paid in shares                66,666,667        0.17           500            -                 -              -              
 Shares issued in lieu of fees                        22,000,001        0.050          165            26,516,660        26             504            
 Expenses of issue of shares                          -                 -              (98)           -                 -              -              
 Shares issued in debt conversion                     -                 -              -              140,214,078       140            2,664          
 Transfer to share premium account (see note 7)       -                 -              937            -                 -              -              
 At end of year                                       619,775,478       1.5            25,013         419,397,339       419            22,671         
 
 
Below is a description of the nature and purpose of the individual reserves: 
 
·      Share capital represents the nominal value of shares issued; 
 
·      Share premium includes the amounts over the nominal value in respect of
share issues. In addition, costs in respect of share issues are debited to
this account; 
 
·      Merger reserve is used where more than 90 per cent of the shares in a
subsidiary are acquired and the consideration includes the issue of new shares
by the Company, thereby attracting merger relief under the Companies Act 1985
and, from 1 October 2009, the Companies Act 2006; 
 
·      Share based payment reserve arises on recognition of the share based
payment charge in accordance with IFRS2 'Share Based Payment Transactions'; 
 
·      Retained earnings include the realised gains and losses made by the
Group and the Company; and 
 
·      Preference shares represents the nominal value of preference shares
issued. 
 
8) MOVEMENTS IN SHARE PREMIUM ACCOUNT, MERGER RESERVE AND RETAINED EARNINGS 
 
In order to correct a historical difference between the consolidated group
share premium account and the Zinc Media Group plc share premium account,
£0.669m was released from the merger reserve into the group share premium
account, following the sale of the trade of the subsidiary, Grove House
Publishing Limited, and subsequent dissolution.  In addition, £0.268m was also
transferred from group retained earnings into the share premium account to
correct a historical classification error.  The result of these adjustments is
that the group share premium account is now correctly stated and consistent
with the Zinc Media Group plc share premium account. 
 
9) AVAILABILITY OF REPORT AND ACCOUNTS 
 
The Company's annual report and accounts for the year ended 30 June 2017 will
be posted to shareholders in due course, a soft copy of which will also be
available to download from the Company's website at www.zincmedia.com. 
 
This information is provided by RNS
The company news service from the London Stock Exchange

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