RNS Number:8541G
Internet Music & Media PLC
13 July 2001
Embargoed - not to be released until 7.00 a.m.
13th July, 2001
Internet Music & Media PLC ("Internet Music & Media" or "the Company")
Preliminary results for the period ended 31st December, 2000
Chairman's Statement
I am delighted to present my first report to shareholders since the
acquisition of Groovetech LLC and Lupine Ventures Limited in May 2000, which
transformed Chandra, a cash shell, into an Internet broadcaster and online
retailer of electronic dance music. The results for the period ended 31st
December 2000 showed a loss of #1,858,146 and a loss before taxation, but
after goodwill amortisation and depreciation, of #4,141,023.
In many ways, your Directors are satisfied with progress made to date. The
objectives set out in the prospectus issued by the Company in March 2000 have,
to a large extent, been achieved. These objectives were the establishment of a
London office to house an internet radio station, which became operational in
December 2000, the launch of Groovetech's own record label, which is
proceeding according to plan and the upgrading and updating of Groovetech's
website to allow greater interactivity and e-commerce in currencies and
territories outside the USA. The London facility also includes a recording
studio and a warehouse, which serves as the European distribution centre for
vinyl records, CDs and other merchandise.
This progress has been achieved at a cost which is in excess of the Company's
original budget and in a slower timeframe than originally envisaged. The
principal reason for this relates to the development of the Company's new
website. This entailed a significant amount of costly programming which
exceeded budget and did not produce a satisfactory result. Your Directors came
to the conclusion that it was necessary to spend significant further sums to
deliver a functional solution and to ensure the future robustness of the
website. I am pleased to report that this has now been achieved and the
Company's new website (www.groovetech.com) is now fully operational and
generating increasing sales. As a result of the cost overrun and delay,
however, the Company has found it necessary to raise additional funds. We
announced today a placing and open offer to raise #1.85 million (after
expenses) of new equity and full details of this are set out in the prospectus
which will be sent to shareholders today.
Following the difficulties encountered by the Company as set out above and the
costs of establishing a global business, the Directors now consider that
matters are improving due to a number of factors. The London facility is now
fully operational and this, in addition to the recording studio and internet
radio station, has given the Company a warehousing and distribution centre
from which to service the UK and continental Europe. Prior to the
establishment of the London distribution centre, products were despatched from
Seattle, which was both costly and slow. Products can now be supplied more
cheaply and more quickly than hitherto.
A feature of the Company's new website is the ability to list different prices
and fulfilment costs for UK and European customers and the Directors believe
that this will increase sales in these markets. Sales have been rising
steadily since November last year and early evidence shows that the impact of
the new website has increased sales in the USA. Furthermore, the new UK and
European section of the website is generating sales for the first time.
The Company's new record label is now operational. In May we released our
first compilation album on CD and vinyl, our second is due to be released
shortly, along with two 12 inch vinyl singles and we have signed a global
terrestrial distribution agreement with a well-established independent
distributor. Your directors are optimistic for this new source of revenue.
Negotiations for sponsorship deals continue and the Company is beginning to
market general merchandise through the new website.
For all these reasons, we now feel justified in looking to the future with a
measure of optimism and I hope to be able to describe significant progress
when I report to you next.
Nicholas Cowan
Chairman
13th July, 2001
Consolidated profit and loss account
for the period ended 31st December, 2000
Notes 2000
#
Turnover 294,242
Cost of sales (227,572)
--------
Gross profit 66,670
Administrative expenses (4,261,784)
--------
Operating loss (4,195,114)
Other interest receivable and similar income 56,445
Interest payable and similar charges (2,354)
--------
Loss on ordinary activities before taxation (4,141,023)
Tax on loss on ordinary activities -
--------
Loss on ordinary activities after taxation (4,141,023)
====
Loss per share 1 Pence
Basic (38.99)
Diluted (38.16)
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
Consolidated balance sheet
at 31st December, 2000
Group
2000
#
Fixed assets
Intangible assets 14,177,813
Tangible assets 1,725,741
--------
15,903,554
--------
Current assets
Stocks 276,386
Debtors 72,665
Cash at bank and in hand 191,976
--------
541,027
Creditors: amounts falling due within one year (594,257)
--------
Net current liabilities (53,230)
--------
Total assets less current liabilities 15,850,324
Creditors: amounts falling due after more than one year (572,302)
--------
15,278,022
====
Capital and reserves
Called up share capital 4,262,500
Share premium account 15,175,548
Profit and loss account (4,160,026)
--------
Shareholders' funds - equity interests 15,278,022
====
Consolidated cash flow statement
for the period ended 31st December, 2000
2000
#
Net cash outflow from operating activities (2,736,162)
Returns on investments and servicing of finance
Interest received 56,445
Interest paid (2,354)
--------
Net cash inflow for returns on investments and 54,091
servicing of finance
Capital expenditure
Payments to acquire tangible assets (1,603,323)
--------
Net cash outflow for capital expenditure (1,603,323)
Acquisitions and disposals
Purchase of subsidiary undertakings (net of cash 108,898
acquired)
--------
Net cash inflow for acquisitions and disposals 108,898
--------
Net cash outflow before management of liquid resources (4,176,496)
and financing
Financing
Issue of ordinary share capital 4,381,000
Cost of share issue (584,952)
--------
Issue of shares 3,796,048
--------
New long term bank loan 572,302
---------
Increase in debt 572,302
--------
Net cash inflow from financing 4,368,350
--------
Increase in cash in the period 191,854
====
Notes to the Consolidated Cash Flow Statement
1. Reconciliation of operating loss to net cash outflow from operating
activities
2000
#
Operating loss (4,195,114)
Depreciation of tangible assets 101,675
Amortisation of intangible assets 2,181,202
Increase in stocks (137,556)
Decrease in debtors 199,026
Decrease in creditors (866,392)
Net effect of foreign exchange differences (19,003)
--------
Net cash outflow from operating activities (2,736,162)
====
2. Analysis of net (debt)/funds
1 Cash Other non- 31
September flow cash changes December
1999 2000
# # # #
Net cash:
Cash at bank and in - 191,976 - 191,976
hand
Bank overdrafts - (112) - (112)
-------- -------- -------- --------
Net debt - 191,864 - 191,864
Debt:
Debts falling due - (572,302) - (572,032)
after one year
-------- -------- -------- --------
Net debt - (380,438) - (380,438)
==== ==== ==== ====
3. Reconciliation of net cash flow to movement in net debt
2000
#
Increase in cash in the period 191,864
Cash inflow from increase in debt (572,302)
--------
Movement in net (debt)/funds in the period (380,438)
Opening net funds/(debt) -
--------
Closing net debt (380,438)
====
Notes
1 Loss per share
The calculation of the basic loss per share is based on the loss on ordinary
activities after taxation of #4,177,087 and on 10,851,240 ordinary shares,
being the weighted average number of shares in issue during the period.
2 Dividends
The Directors are not proposing the payment of a dividend in respect
of the period ended 31st December, 2000.
3 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 financial information for the period ended 31st December, 2000
is extracted from the Group's financial statements to that date which received
an unqualified auditor's report and will be filed with the Registrar of
Companies in due course.
4 Copies of the Report and Accounts will be sent to shareholders later
today and are available from Unit 10, Latimer Road Industrial Estate, Latimer
Road, London W10 6RQ.
For Further Information please contact:-
Internet Music & Media PLC Tel: 07957 364 721
Nicholas Cowan - Chairman
Holborn Public Relations Tel: 020 7929 5599
David Bick
John East & Partners Limited Tel: 020 7628 2200
David Worlidge / Simon Clements
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