Pilat Media Global plc
AIM : PGB

Pilat Media Global plc

June 01, 2006 02:04 ET

Pilat Media Global plc: Results for the Three Months Ended 31 March 2006

LONDON, UNITED KINGDOM--(CCNMatthews - June 1, 2006) - Pilat Media Global plc ("PMG" or the "Company")(AIM:PGB), the London-based supplier of business management software to broadcasters around the world, today announces its results for the three months ended 31 March 2006 (the "Quarter" or "Q1").

Summary:



- Q1 revenues 68% higher at Pounds Sterling 3.71m
(Q1 2005: Pounds Sterling 2.21m)
- Q1 profit before tax of Pounds Sterling 392k
(Q1 2005: loss Pounds Sterling 313k)
- Two major contracts signed since the beginning of 2006:
- BBC World Service (UK)
- Media General Broadcast Group (USA)
- Dutch software company ML Software B.V. acquired
- A Pounds Sterling 3m placing announced in May 2006


Commenting on the results, Michael Rosenberg, Chairman said:

"We are pleased to have started 2006 with two major contract wins which, combined with the existing work we have been contracted for, leads us to believe we will see significant growth in both revenues and profits in our business this year."



For further information:

Pilat Media Global plc

Avi Engel, Chief Executive Officer Tel: +44 (0) 20 8782 0700
Martin Blair, Chief Financial Officer
aengel@pilatmedia.com www.pilatmedia.com


Shore Capital

Alex Borrelli Tel: +44 (0) 20 7408 4090
alex.borrelli@shorecap.co.uk www.shorecap.co.uk


Media enquiries:

Abchurch

Heather Salmond / Chris Lane Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch-group.com


Chairman's and CEO's Statement

Pilat Media Global plc is pleased to announce a strong set of results for the three months ended 31 March 2006, representing a healthy start to this financial year.

Revenues are significantly higher than in the first quarter of last year, resulting from the aggregated contribution of several existing clients subscribing for additional services above their maintenance fees and a growing number of implementation contracts progressing through their milestones. Implementation projects include the high value contracts with Discovery, CTV, Fox Television Stations, and now also the new contract with the BBC World Service. The other new major contract recently signed with Media General Broadcast Group will start to contribute only in the second quarter. From March 2006 we have also benefited from the contribution of our new Dutch subsidiary, ML Software B.V. ("Media Line"), which was acquired in February 2006, and we are pleased with the progress that is being made.

The new contracts signed since the year started are significant beyond their financial impact:

The BBC World Service is Pilat Media's first major client where radio services are its core business. The BBC World Service currently delivers radio programmes globally via satellite, short wave, medium wave, FM and the Internet, in 33 languages, to approximately 150 million listeners, with more than 1,400 live programmes being transmitted each week from approximately 100 studios around the world. The IBMS Content Scheduling System will be part of an overall technology modernisation programme covering the scheduling, transmission and distribution systems required to support the delivery of Radio, TV, Internet and mobile services.

Media General is a multimedia company operating leading newspapers, television stations and online enterprises, primarily in the south eastern United States. The company's broadcasting assets include 26 network-affiliated television stations. As one of the most respected media groups in the U.S. and the second group of TV stations (after Fox Television Stations) to select IBMS as its centralised business management system, this contract is a strategic milestone for Pilat Media as we aim to further expand our North American client base.

A smaller, but still significant contract, recently signed is Media Line's first post acquisition contract, for the supply of their MediaPro advertising sales support system to TV Denmark. Media Line remains on course to achieve its targets in 2006 and is a welcome addition to Pilat Media's product portfolio, complementing our larger scope product IBMS.

Results

Q1 revenues of Pounds Sterling 3,712,000 (Q1 2005: Pounds Sterling 2,213,000) were in line with our expectations. These Q1 revenues included Pounds Sterling 2,264,000 (Q1 2005: Pounds Sterling 1,242,000) for implementation services (customisation, integration, training and consulting fees), Pounds Sterling 801,000 (Q1 2005: Pounds Sterling 443,000) for the proportion of IBMS licences recognised in respect of the long-term contract accounting projects according to the progress made during the Quarter and Pounds Sterling 647,000 (Q1 2005: Pounds Sterling 528,000) of recurring maintenance and support fees from existing clients.

In Q1 2006, as in previous quarters, PMG generated a high proportion of its revenues from long-term contracts, with their licence and implementation fees combined being recognised gradually according to the progress achieved. These continuing contracts will help to smoothen somewhat the quarterly fluctuations that occurred last year although new contracts and the fact that Media General only started in Q2 will still make the second half stronger than the first half of the year.

Gross profit in Q1 was Pounds Sterling 1,974,000 (Q1 2005: Pounds Sterling 515,000), which represents a margin of 53% compared, similarly to 2005's annual figure and an unrepresentative 23% in Q1 2005. It is anticipated that gross margins for 2006 will remain similar to those achieved last year.

The level of research and development expenditure in Q1 has increased in comparison to the corresponding quarter last year as we have undertaken more development to enhance IBMS further to suit to US station group market. In addition we have invested in a new Business Intelligence and data warehousing system which will benefit large clients, both existing and prospective. The above R&D does not include the special technology upgrade project reported in previous quarters as this investment is being capitalised.

Sales and marketing costs in Q1 2006 at Pounds Sterling 237,000 (Q1: 2005 Pounds Sterling 195,000) have increased slightly over previous quarters, reflecting the increase in sales and marketing activity.

General and administrative costs at Pounds Sterling 711,000 (2005 Pounds Sterling : 561,000) were higher than the equivalent period last year due to increased travel as new staff recruited overseas are brought to the UK for training and additional property costs are incurred as additional space has been taken. General and administrative costs in the first quarter of 2006 were higher due to the one-off purchase of software development tools.

In Q1 2006 we started to comply with FRS 20 - share based payments. Under this standard we are required to calculate the value of share options issued since November 2002. The application of this standard has meant profits in Q1 2006 being reduced by Pounds Sterling 80,000 (Q1 2005: Pounds Sterling 19,000), and that prior year profits have been reduced by Pounds Sterling 267,000.

With revenues significantly above those of the equivalent period last year, the loss in the first quarter has been turned into a profit.

Balance Sheet

The investment in the technology upgrade project this Quarter was Pounds Sterling 323k, and this project is expected to continue until mid 2007. In addition, the Company made a one-off investment in leasehold improvements as it has taken additional office space in its London headquarters to accommodate the growth in staff required to meet the demands of new contracts. These two investments approximately balance the net cash flowing from operations. However, following the investment of Pounds Sterling 1.4 million in cash to acquire the Dutch software company, ML Software B.V., the cash balances of the Company have declined to Pounds Sterling 2.2 million.

Against the above background and given the cash profile of the new contracts, signed and anticipated, the Board felt it would be prudent to increase the working capital by Pounds Sterling 3 million through a placing of shares, and have recently reported an agreement with Eurocom and Mr. Sami Totah to this effect. This agreement is subject to shareholders approval in respect of Pounds Sterling 2.5 million at an EGM called for 7th June 2006. The Board considers Eurocom and Mr. Totah as value adding investors, particularly Mr. Totah who is an ex COO of the software giant Amdocs, and has therefore requested him to join the Board. The Company still has access to bank facilities as and when needed but, with a view to further expansion over the next couple of years, an increase in cash resources in times of uncertain and volatile markets was considered in the best interests of shareholders.



Michael Rosenberg Avi Engel
Chairman CEO

31 May 2006


CONSOLIDATED PROFIT AND LOSS ACCOUNTS
Unaudited Audited
3 Months ended 12 Months ended
31 March 31 December
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling

TURNOVER 3,712,325 2,213,157 13,004,880

Cost of sales (1,738,413) (1,698,521) (6,064,060)
------------------------------------
GROSS PROFIT 1,973,912 514,636 6,940,820
Operating costs and expenses:
Research and development (653,678) (114,892) (1,928,357)
Selling and marketing (237,470) (195,065) (821,708)
General and administrative (711,077) (560,532) (2,065,763)
------------------------------------
Total operating costs and
expenses (1,602,225) (870,489) (4,815,828)

OPERATING PROFIT / (LOSS) 371,687 (355,853) 2,124,992

Interest receivable 20,584 42,448 140,743
------------------------------------
PROFIT / (LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION 392,271 (313,405) 2,265,735

Taxation (138,656) - (756,343)
------------------------------------
PROFIT / (LOSS) ON ORDINARY
ACTIVITIES AFTER TAXATION 253,615 (313,405) 1,509,392
------------------------------------

EARNINGS / (LOSS) PER SHARE
Basic 0.49p (0.62p) 2.99p
Diluted 0.48p (0.62p) 2.90p
------------------------------------

STATEMENT OF TOTAL RECOGNISED Unaudited Audited
GAINS AND LOSSES 3 Months ended 12 Months ended
31 March 31 December
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling

Retained profit / (loss) for
the period 253,615 (313,405) 1,509,392
------------------------------------
Total recognised gains and
losses relating to the period 253,615 (313,405) 1,509,392
Prior year adjustment (266,876) - -
------------------------------------
Total recognised gains and
losses since last annual
report (13,261) (313,405) 1,509,392
------------------------------------



CONSOLIDATED BALANCE SHEETS

Unaudited Audited
March 31 31 December
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
FIXED ASSETS
Intangible assets 3,461,456 - 727,361
Tangible assets 516,864 216,818 311,676
------------------------------------
3,978,320 216,818 1,039,037
------------------------------------


CURRENT ASSETS
Debtors
- due within one year 9,296,682 6,628,084 8,858,140
- due after more than one year 205,236 335,774 241,193
Cash at bank and in hand 2,228,371 3,908,707 3,522,387
------------------------------------
11,730,289 10,872,565 12,621,720

CREDITORS: Amounts falling due
within one year (3,722,924) (2,223,595) (2,775,726)
------------------------------------
NET CURRENT ASSETS 8,007,365 8,648,970 9,845,994
------------------------------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 11,985,685 8,865,788 10,885,031
------------------------------------

CAPITAL AND RESERVES
Called up share capital 2,617,467 2,525,778 2,529,103
Share premium account 5,875,020 5,183,779 5,196,081
Capital redemption reserve 50,000 50,000 50,000
Merger reserve (853,955) (853,955) (853,955)
Other reserve 3,108,000 3,108,000 3,108,000
Share option reserve 346,612 86,057 266,876
Profit and loss account 842,541 (1,233,871) 588,926
------------------------------------
EQUITY SHAREHOLDERS' FUNDS 11,985,685 8,865,788 10,885,031
------------------------------------



CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Audited
March 31 31 December
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
Net cash inflow / (outflow)
from operating activities a 693,517 (321,890) 843,909

Returns on investments and
servicing of finance b 20,584 42,448 140,743

Taxation (150,000) - (721,983)

Capital expenditure and
financial investment c (530,491) (34,171) (978,229)

Acquisitions and disposals d (1,351,831) - -
------------------------------------

CASH OUTFLOW BEFORE MANAGEMENT
OF LIQUID RESOURCES AND
FINANCING (1,318,221) (313,613) (715,560)

Management of liquid
resources e 1,124,617 314,738 952,894

Financing f 24,205 9,006 24,633
------------------------------------
(DECREASE) / INCREASE IN CASH
IN THE PERIOD (169,399) 10,131 261,967
------------------------------------



RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET FUNDS
Unaudited Audited
March 31 December 31
Restated Restated
2006 2005 2005

(Decrease) / increase in cash
in the period (169,399) 10,131 261,967

Cash inflow from decrease in
liquid resources (1,124,617) (314,738) (952,894)
------------------------------------
MOVEMENT IN NET FUNDS IN THE
PERIOD (1,294,016) (304,607) (690,927)

NET FUNDS AT BEGINNING OF
PERIOD 3,522,387 4,213,314 4,213,314
------------------------------------
NET FUNDS AT END OF PERIOD
2,228,371 3,908,707 3,522,387
------------------------------------



APPENDICES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited Audited
March 31 December 31
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
a. Reconciliation of operating
result to net cash (outflow) /
inflow from operating activities

Operating profit / (loss) 371,687 (355,853) 2,124,992
Share option valuation 79,736 19,445 200,264
Depreciation and amortisation 56,850 57,599 180,408
Loss / (Profit) on sale of
fixed assets - 742 (229)
Decrease /(increase) in
debtors 125,828 113,113 (2,033,808)
Decrease in creditors 59,416 (156,936) 372,282
------------------------------------
Net cash inflow /(outflow)
from operating activities 693,517 (321,890) 843,909
------------------------------------

b. Analysis of cash flows for
headings netted in the cash flow
statement

Returns on investments and
servicing of finance
Interest received 20,584 42,448 140,743
------------------------------------
Net cash inflow from returns
on investments and servicing
of finance 20,584 42,448 140,743
------------------------------------


c. Capital expenditure and
financial investment
Purchase of tangible fixed
assets (207,013) (34,171) (252,508)
Purchase of intangible fixed
assets (323,478) - (727,361)
Sale of tangible fixed assets - - 1,640
------------------------------------
Net cash outflow from capital
expenditure and financial
investment (530,491) (34,171) (978,229)
------------------------------------
------------------------------------



Unaudited Audited
March 31 December 31
Restated Restated
2006 2005 2005
Pounds Pounds Pounds
Sterling Sterling Sterling

d. Acquisitions and disposals
Purchase of subsidiary
undertaking (1,389,902) - -

Net cash acquired with
subsidiary 38,071 - -
------------------------------------
Net cash outflow from
acquisitions and disposals (1,351,831) - -
------------------------------------

e. Management of liquid resources

Cash drawn from / term
deposits 1,124,617 314,738 952,894
------------------------------------
Net cash inflow from
management of liquid
resources 1,124,617 314,738 952,894
------------------------------------

f. Financing
Issue of share capital 24,205 9,006 24,633
------------------------------------
Net cash inflow from financing 24,205 9,006 24,633
------------------------------------



Analysis of net funds

At 1 Cash flow At 31
January March
2006 2006
Pounds Pounds Pounds
Sterling Sterling Sterling

Cash at bank and in hand 639,064 (169,399) 469,665
Cash on deposit 2,883,323 (1,124,617) 1,758,706
------------------------------------
3,522,387 (1,294,016) 2,228,371
------------------------------------


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Presentation of results

This Report was approved by the directors on 31 May 2006.

The current and the comparative first quarters to March have been prepared using accounting policies and practices consistent with those adopted in the accounts for the year ended 31 December 2005 with the exception of the application of FRS 20 (see below) and the new goodwill policy described below and are also consistent with those which will be adopted in the 2006 Annual Report and Accounts but have not been audited by the auditors.

FRS 20

The adoption of FRS 20 - share based payments requires a prior period adjustment to be made. This has created a share option reserve at 31 December 2005 of Pounds Sterling 266,876 and reduced the retained profits by Pounds Sterling 266,876; of this amount, Pounds Sterling 200,264 is attributable to the year ended 31 December 2005.

Goodwill

Goodwill representing the excess of the purchase price compared with the fair value of net assets acquired is capitalised and annually reviewed for impairment by the Board as the acquired business has a customer base and contracts in place which provide competitive advantage and durable value.

Accordingly the Board is of the opinion that amortisation of the goodwill would not show a true and fair view. It is subject to annual impairment reviews in accordance with Financial Reporting Standard 11. Impairment of the goodwill is evaluated by comparing the present value of the expected future cashflows, excluding tax, ('the value in use') to the carrying value of the underlying goodwill. If goodwill were to exceed the value in use, an impairment would be deemed to have occurred and the resulting write-down in the goodwill would be charged to the profit and loss account immediately.

Had the goodwill been amortised in accordance with Companies Act 1985 over the FRS10 rebutable assumption period of 20 years, an additional Pounds Sterling 10,035 would have been charged to the profit and loss account in the quarter ended 31 March 2006.

The audited results for the year ended 31 December 2005 are an abridged version of the company's Annual Report and Accounts which have been filed with the Registrar of Companies and on which the auditors gave an unqualified audit opinion.

The financial information contained in this Report does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985.

2. Dividends

The directors do not recommend the payment of a dividend for the quarter.

3. Earnings / (Loss) per share

Basic and diluted earnings / (loss) per share is based on the profit / (loss) on ordinary activities after taxation and on the following weighted average number of shares in issue.



Shares in Issue
31 March 31 March 31 December
2006 2005 2005
Basic 51,314,066 50,485,339 50,540,523
Adjustments:
Issue of outstanding share
options 1,509,774 - 1,511,775
--------------------------------------
Diluted 52,823,840 50,485,339 52,052,298
--------------------------------------


Due to the loss incurred in the quarter ended 31 March 2005 there is no dilutive effect in the comparative period from the issue of share options.

4. Acquisition - ML Software BV

On February 20 2006, the Company paid EUR 1,913,600 (Pounds Sterling 1.3 million) in cash and issued 1,664,272 shares in the Company and has provided Pounds Sterling 347,662 of contingent consideration payable if certain development and turnover levels are achieved by the acquired company, to acquire the whole of the issued share capital of ML Software B.V. (known as Media-Line) a Dutch supplier of software solutions for airtime advertising sales. The effective date of the acquisition was 20 February 2006 and the results of Media Line have been consolidated with those of the group from that date and goodwill of Pounds Sterling 2,408,407 on the acquisition has been capitalised.

5. Turnover in Geographical Markets

The Group operates only one principal business segment which operates globally. Turnover in the following geographical markets was:



3 months to 3 months to 12 Months to
31 March 2006 31 March 2005 31 December 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
Europe, Middle East
and Africa 1,251,302 777,279 3,961,207
("EMEA")
Americas 2,220,324 1,151,320 7,768,820
Australasia 240,699 284,558 1,274,853
----------------------------------------------
3,712,325 2,213,157 13,004,880
----------------------------------------------
----------------------------------------------


6. Acquisition - ML Software B.V.

The results for the period include the following balances in relation to the acquisition



Turnover Pounds Sterling 141,319

Cost of sales Pounds Sterling 28,981

Research and development Pounds Sterling 3,411

Selling and marketing Pounds Sterling 5,354

General and administrative Pounds Sterling 22,239


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