Papa Entertainment PLC
LSE : PAPP

October 30, 2012 11:01 ET

Unaudited Interim Results to 31 July 2012

30 October 2012

                                              PAPA ENTERTAINMENT PLC

                                      ("Papa Entertainment" or the "Company")

                                     Unaudited Interim Results to 31 July 2012


Statement by the Board

Papa Entertainment Plc today announces its unaudited interim results for the seven months to 31 July 2012 (the
"Period"). The interim results for the Period show a loss for the period after taxation of £404,862.

Since the admission of the Company's ordinary shares to trading on PLUS-quoted on 14 September 2012, Papa
Entertainment has, in particular, been progressing its "Rock Vault" project.  The Company is in the late stages of
assembling a live touring band for the Rock Vault project, which is to perform under the name of "Raiding The Rock
Vault". Papa Entertainment is finalising the line-up of performers for the first Raiding The Rock Vault concert,
which is planned to take place in Los Angeles and the Directors hope to make a further announcement in relation to
this project in due course.

Aside from the information above and contained within this announcement, there are no significant updates to  the
information on Papa Entertainment presented in the Company's admission document dated 13 September 2012.



Papa Entertainment Plc                                                            
Interim results for the Seven Months to 31 July 2012                              
                                                                                  
Consolidated profit and loss account                                              
For the seven months ended 31 July 2012                                           
                                                                         Pro forma
                                                         Unaudited       Unaudited
                                                       7 months to       Period to
                                                         31-Jul-12       31-Dec-11
                                                                 £               £
                                                                                  
Continuing operations                                                             
----------------------------------------------------------------------------------
                                                                                  
Turnover                                                     1,285           1,856
                                                                                  
Cost of sales                                             (11,550)        (43,235)
                                                   -------------------------------
                                                                                  
Gross loss                                                (10,265)        (41,379)
                                                                                  
Administrative costs                                     (109,317)       (192,394)
                                                   -------------------------------
                                                                                  
Underlying operating loss                                (119,582)       (233,773)
                                                                                  
Deemed cost of listing                      Note 7       (278,969)               -
                                                   -------------------------------
                                                                                  
Operating loss                                           (398,551)       (233,773)
                                                   -------------------------------
                                                                                  
Interest expense                                           (6,311)               -
                                                   -------------------------------
                                                                                  
Loss before taxation                                     (404,862)       (233,773)
                                                                                  
Tax on loss on ordinary activities          Note 3               -               -
                                                                                  
                                                   -------------------------------
                                                                                  
Loss for the period after taxation                       (404,862)       (233,773)
                                                   -------------------------------
                                                   -------------------------------
                                                                                  
Basic and diluted loss per share (pence)    Note 4          (0.63)          (0.36)
                          

There are no recognised gains or losses other than the loss for the above financial period.

Papa Entertainment Plc                                                            
Consolidated balance sheet                                               Pro forma
                                                         Unaudited       Unaudited
                                                             As at           As at
                                                         31-Jul-12       31-Dec-11
                                                                 £               £ 
Assets                                                                            
Non current assets                                                                
Tangible assets                                             68,326          77,718
                                                   -------------------------------
                                                                                  
Total non current assets                                    68,326          77,718
                                                   -------------------------------
                                                                                  
Current assets                                                                    
Debtors                                                    296,950         264,423
Cash at bank and in hand                                    15,629           6,989
                                                   -------------------------------
                                                                                  
Total current assets                                       312,579         271,412
                                                                                  
Creditors: amounts falling due within                                             
 one year                                                (355,088)       (333,036)
                                                   -------------------------------
                                                                                  
Net current liabilities                                   (42,509)        (61,624)
                                                   -------------------------------
                                                                                  
Total assets less current liabilities                       25,817          16,094
                                                   -------------------------------
                                                                                  
Creditors: amounts falling due after                                              
 more than one year                                      (256,500)       (128,500)
                                                   -------------------------------
                                                                                  
Total net liabilities                                    (230,683)       (112,436)
                                                   -------------------------------
                                                   -------------------------------
                                                                                  
Equity                                                                            
Capital and reserves                                                              
Called up share capital                     Note 5         711,023          64,002
Share premium account                                    1,964,662          16,000
Reverse acquisition reserve                            (2,102,435)         206,633
Profit and loss account                                  (803,933)       (399,071)
                                                   -------------------------------
                                                                                  
Shareholders' funds                                      (230,683)       (112,436)
                                                   -------------------------------
                                                   -------------------------------
    


Notes to the interim results                                                                                     
Seven months ended 31 July 2012                                                                                  


1. General Information

Papa Entertainment was incorporated on 12 May 2011 as a vehicle for the purpose of acquiring companies or businesses
engaged in the entertainment, music and media industries.
        
Papa Entertainment acquired Mission on 24 July 2012, the purchase consideration being satisfied through the issue
to the vendors of Mission Entertainment Group Ltd ("Mission") of new Ordinary Shares in Papa Entertainment.

Mission and its subsidiaries ("the Mission Group") is a group of music production and publishing companies with
studio and office facilities in Kingston-Upon-Thames, South West London. Its business consists of the delivery of
music to the listener, incorporating writing, recording, marketing and distribution, label management and production.

No interim dividend is to be paid in relation to the seven months to 31 July 2012.

2. Basis of preparation

The interim financial information is unaudited and does not constitute statutory financial statements as defined in 
Section 434 of the Companies Act 2006. The information in this announcement has not been reviewed by the Company's
auditor.

The financial information is prepared on the historical basis of accounting and in accordance with applicable United
Kingdom law and accounting standards.

Except as disclosed below, the same accounting policies, presentation and methods of computation have been followed
in this unaudited interim financial information as those which were applied in the preparation of the financial
statements of Mission Entertainment Group Ltd for the period ended 31 December 2011, upon which the auditors
issued an unqualified opinion, and which have been delivered to the registrar of companies.

Basis of consolidation of Papa Entertainment

The consolidated financial statements incorporate the financial statements of Papa Entertainment and its subsidiaries.

On 24 July 2012, Papa Entertainment became the legal holding company of the Mission Group via a share for share exchange.

UK company law and accounting standards do not envisage reverse acquisition accounting and to adopt that approach is a
departure from the law and accounting standards. However, such a departure is required by both the Companies Act and
accounting standards where it is necessary to give a true and fair view.

The directors have developed an accounting policy for this transaction as explained further in note 7.

Furthermore, as Papa Entertainment was incorporated on 12 May 2011, while the Mission Group began trading in 2010,  the
comparative profit and loss account and balance sheet are pro forma.

Going concern
       
The financial information has been prepared assuming the group will continue as a going concern. Under the going
concern assumption, a group is ordinarily viewed as continuing in business for the foreseeable future with neither the
necessity of liquidity, nor ceasing trading or seeking protection from creditors pursuant to laws or regulations. In
assessing whether the going concern assumption is appropriate, management takes into account all available information
for the foreseeable future, in particular for the twelve months from the date of approval of the financial
information. Management have a reasonable expectation that the entity has adequate resources to continue in its
operational exercises for the foreseeable future and has adopted the going concern basis of accounting in preparing
the financial information.

The interim financial information for the period ended 31 July 2012 were approved by the Board on 30 October 2012.


3. Taxation

No charge to taxation arises in the period ended 31 July 2012 (31 December 2011: nil).


4. Loss per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the period.
      
                                                                                       
A reconciliation is set out below:                                                     
                                                                              Pro forma
                                                            7 months to       Period to
                                                              31-Jul-12       31-Dec-11
Basic loss per share                                                  £               £ 
                                                                                       
Loss for the period                                           (404,862)       (233,773)
                                                                                       
                                                                                       
Weighted average number of shares                            64,236,511      64,002,070
                                                                                       
Loss per share (pence)                                           (0.63)          (0.36)


In calculating the weighted average number of ordinary shares outstanding (the denominator of the earnings per share
calculation) during the period in which the reverse acquisition occurs:
(a)      the number of ordinary shares outstanding from the beginning of that period to the acquisition date shall be
computed on the basis of the weighted average number of ordinary shares of the legal acquiree (accounting acquirer)
outstanding during the period multiplied by the exchange ratio established in the merger agreement; and
(b)      the number of ordinary shares outstanding from the acquisition date to the end of that period shall be the
actual number of ordinary shares of the legal acquirer (the accounting acquiree) outstanding during that period.
The  basic earnings per share for each comparative period before the acquisition date presented in the consolidated
financial statements following a reverse acquisition shall be calculated by dividing:
(a)      the profit or loss of the legal acquiree attributable to ordinary shareholders in each of those periods by
(b)      the legal acquiree's historical weighted average number of ordinary shares outstanding multiplied by the
exchange ratio established in the acquisition agreement.

There are no current dilutive instruments in issue.

5. Share capital

                                                                               31 Jul
                                                                                 2012
                                                                                    £
     
Called up share capital issued and fully paid
 71,102,270 ordinary shares of £0.01 each                                     711,023
                                                                              --------
                                                                              --------


                                                                                     
                                                                                             
                                                    Number of   Share Capital   Share Premium
                                                       Shares               £               £ 
                                                                                             
Ordinary shares issued at 1 January 2012            6,400,200          64,002          16,000
                                                                                             
Ordinary shares issued on 24 July 2012             64,002,070         640,021       1,920,062
Ordinary shares issued on 24 July 2012                700,000           7,000          28,000
                                                                                             
---------------------------------------------------------------------------------------------
Called-up and fully paid ordinary shares of                                                  
 £ 0.01 each at 31 July 2012                       71,102,270         711,023       1,964,062
---------------------------------------------------------------------------------------------

On 24 July 2012, the Company purchased the entire ordinary share capital of Mission, for an aggregate consideration of
£2,560,083, which was satisfied by the issue of Ordinary Shares of £0.01 in the company at an issue price of £0.04 per
Ordinary Share.

On 24 July 2012, 700,000 Ordinary Shares were issued by the Company to noteholders of Convertible Unsecured Loan Notes
following the receipt by the Company of their notice to exercise their right to convert the loan notes into shares
pursuant to the loan note instrument.


6. Reconciliation of movement in shareholders' funds




                                                                                            
                                                                                               
                                                            Reverse                            
                                     Share      Share   acquisition   Profit & loss            
                                   capital    premium       reserve         account       Total
                                ---------------------------------------------------------------
                                                                                               
At 1 September 2010                      -          -             -       (165,298)   (165,298)
Reverse acquisition adjustment      64,002     16,000       206,633               -     286,635
Loss for the period                      -          -             -       (233,773)   (233,773)
                                                                                               
                                ---------------------------------------------------------------
Balance at 31 December 2011         64,002     16,000       206,633       (399,071)   (112,436)
                                                                                               
Loss for the period                      -          -             -       (404,862)   (404,862)
Issue of shares on acquisition     640,021  1,920,062             -               -   2,560,083
Reverse acquisition adjustment           -          -   (2,309,068)               - (2,309,068)
Conversion of loan notes             7,000     28,600             -               -      35,600
                                                                                               
                                ---------------------------------------------------------------
Balance at 31 July 2012            711,023  1,964,662   (2,102,435)       (803,933)   (230,683)
                                                                                               
                                ---------------------------------------------------------------
                                ---------------------------------------------------------------

7. Reverse acquisition

On 24 July 2012, Papa Entertainment became the legal holding company of the Mission Group via a share for share
exchange. The aggregate consideration was £2,560,083, which was satisfied by the issue of 64,002,070 ordinary shares
of £0.01 each in Papa Entertainment at an issue price of £0.04 per ordinary share.

The accounting policy adopted by the directors applies the principles of UK GAAP in identifying the accounting
acquirer and the presentation of the consolidated financial statements of the legal parent (Papa Entertainment) as a
continuation of the accounting acquirer's financial statements (Mission). This policy reflects the commercial
substance of this transaction as follows:
- the original shareholders of the subsidiary undertakings are the most significant shareholders post initial public
  offering, owning 90 per cent. of the issued share capital; and
- the cash consideration paid as part of the initial public offering returned equity to the original shareholders of
  the legal subsidiary undertaking and as a consequence diluted their shareholding to 10 per cent.

Accordingly, the following accounting treatment and terminology has been applied in respect of the reverse acquisition:

-  the asset and liabilities of the legal subsidiary Mission are recognised and measured in the Group financial
   information at the pre-combination carrying amounts, without reinstatement to fair value;

-  the retained earnings and other equity balances recognised in the Group financial information reflect the retained
   earnings and other equity balances of Mission immediately before the business combination, and the results of the 
   period from 1 September  2010 to the date of the business combination are those of Mission. However, the equity
   structure appearing in the Group financial information reflects the equity structure of the legal parent, including
   the equity instruments issued under the share for share exchange to effect the business combination;

-  comparative numbers presented in the Group financial information are those reported in the financial statements of
   the legal subsidiary, Mission, for the period ended 31 December 2011.

-  the cost of the combination has been determined from the perspective of Mission. The fair value of the shares in
   Mission has been determined from the admission price of Papa Entertainment on admission to trading on PLUS for
   £0.04 pence per share. The value of the consideration shares was £2,560,083. The fair value of the notional
   number of equity instruments that the legal subsidiary would have had to have issued to the legal parent to
   give the owners of the legal parent the same percentage ownership in the combined entity is 10 per cent of the
   market value of the shares after issues, being £256,008. The difference between the notional consideration paid by
   Papa Entertainment for Mission and the Papa Entertainment net liabilities acquired of £22,961 has been recorded as
   goodwill, and charged to the consolidated profit and loss account at a cost of £278,969 with a corresponding entry
   to the reverse acquisition reserve.

Papa Entertainment plc had no significant assets nor significant other liabilities or contingent liabilities of its
own at the time that the share for share exchange took effect.

THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT

                                                     --ENDS--

CONTACT DETAILS:

Enquiries:

Papa Entertainment Plc
Harry Cowell
Tel: +44 (0) 208 977 0632

SVS SECURITIES PLC - PLUS Corporate Adviser
Peter Ward / Alexander Brearley
+44 (0)20 7638 5600


ABOUT PAPA ENTERTAINMENT PLC:

Papa Entertainment was incorporated as a vehicle for the purpose of acquiring companies or businesses engaged in the
entertainment, music and media industries. Papa Entertainment acquired Mission Entertainment Group Limited and its
subsidiaries (the "Mission Group") in July 2012.

Papa Entertainment is led by its Chief Executive Officer, "Sir" Harry Cowell, who has over 25 years' experience in
the music industry. The Company's Non-Executive Chairman is Korda Marshall, who has during his career has signed
artists, directed major label A&R departments, produced, executive produced and been a managing director of three
recording companies and has worked with performers including Take That, MUSE, Ash, Paul Oakenfold, the Eurythmics,
Annie Lennox, Peter Andre, Garbage, James Blunt, Gnarls Barkley and The Darkness, personally signing or
negotiating with several of these artists. Simon Napier-Bell, a Non-Executive Director of Papa Entertainment, has
enjoyed a long career in the entertainment industry, commencing in the 1960s, with notable highlights including
the management of well-known artists such as "Wham!" and the "Yardbirds" and the co-writing of the No. 1 Hit
Single "You don't have to say you love me" for Dusty Springfield.

The Mission Group is a group of music production and publishing companies with studio and office facilities in
Kingston-Upon-Thames, South West London. The Mission Group's business consists of the delivery of music to the
listener, incorporating writing, recording, marketing and distribution, label management and production. The
Company's policy through concentrating all the Group's operations under one roof and utilising its own studios is
to consolidate the functions of music production and publishing in-house in order to manage costs and to integrate
functions that would otherwise be subject to external contracting. Various contracts, artists, projects and
agreements are signed to the Mission Group's companies.

For further information please refer to the Company's website at: www.papaentertainmentplc.com

Contact Information

  • Papa Entertainment PLC