Embargoed: 18 January 2006 07:00hrs
Galleon Holdings Plc
("Galleon," the "Company" or the "Group")
Financial Statements for the year ended 30 September 2005
Group Highlights
* Significant increases in activity have resulted in Group turnover and gross
profit for the 12 months exceeding that of the previous 18 months
* New management's focus on core, revenue-generating activities has
streamlined the business
* Acquisition of Skunk fu!' and Mysti' has added 2 new revenue-generating
brands with excellent TV placement
* Croco Worldwide Sourcing Limited has won major new clients and enjoyed its
strongest turnover to date
Chairman's Statement
I am pleased to present Galleon's financial results for the 12-month period
ended 30 September 2005. The operating loss in this period was £1,416,285
compared with £6,202,872 as reported in our 2004 Annual Report for the 18-month
period up to 30 September 2004. Included in the operating loss for the 12-month
period ended September 2005 is a provision totalling £487,596 which includes a
write down of the debt owed by Peppers Patrol Limited and the writing off of
Professor Winklebottom's Smelly Universe', Malcolm' and Oggies'. Turnover
has significantly grown at £1,134,456 compared with £971,564 for the previous
18-month period.
New Management Team and Board Changes
In 2005, we introduced a new management team, with Stephen Green and Len Dunne
joining in January in the roles of CEO and Managing Director. In October 2005,
Hayden Eastwood joined the company as Finance Director.
Pritesh Desai joined the board during 2005 as non-executive Director.
Meanwhile, Andrew Flatt, who has served on the board as a non-executive
Director since 2001, has stepped down. We would like to thank Andrew for his
support.
Focused Future
The new management team has realigned the company to focus on the key areas of
the business. A series of intellectual property rights acquisitions made during
2005 have placed the company in a favourable position for continued growth in
2006 and beyond.
As part of this process existing activities were reviewed with a view to
prioritising our future efforts and resources. As a result, we have decided to
write off those projects which will no longer be our focus going forward, and
this includes a partial write down of the value attached to Peppers Patrol.'
Outlook
Galleon now has a totally focused strategy: a strong portfolio of long-term
sustainable children's IP with first revenues due imminently and, alongside
this, a premiums business which is delivering regular revenues and has an
attractive order book.
With the new management team in place, we are, without doubt, in our strongest
position to date with solid foundations from which to deliver real growth for
our shareholders
James C. Driscoll MBE
Chairman
Chief Executive's Statement
Review of Operations
During the period under review the new management team realigned the company's
focus on two key areas of the business: Galleon's entertainment business and
Croco Worldwide.
Galleon's Entertainment Business
Galleon owns, develops and manages entertainment based intellectual property
(IP) rights targeted at children and "tweens".
We have significantly strengthened our IP portfolio so that we are balanced in
terms of brand maturity as well as genre. Specifically, we have focused on
acquiring IP rights that will generate revenue from 2006 onwards.
In October 2005, we acquired a 15% equity stake and the global merchandising
rights, excluding Germany, to Skunk fu!', an animated series targeted at boys
and girls aged 5-11 years old. Currently 52 episodes of animation are in
production and the show has already been pre-sold to the BBC and Super RTL in
Germany. We believe that this property will have strong global reach. We signed
our first licensing deal for publishing in December with Imaginere. The
publishing programme is now being developed and this will seed the property in
the UK prior to the first airing of the TV series. This will help to build the
property whilst also delivering royalties to Galleon. Multiple territory
revenues coupled with the diverse category application of this brand will
provide Galleon with long-term sustainable income for the future.
In November 2005, we also acquired the "tween" girl targeted brand Mysti', the
number one rated BBC show for girls aged 10 - 15. The live action TV show, now
in its second series, was launched in the UK on the BBC in 2004. The property
also has a strong publishing presence at retail with book sales exceeding
130,000 units to date. The brand generates revenue from the production of the
TV series alone and we will be looking to build on this with new revenue
streams by introducing merchandise into the UK market and by selling the TV
series into international territories.
As well as building our portfolio of brands that are active in market, we have
significantly enhanced our development pipeline. Of the properties that are
wholly owned by Galleon, our focus has been on Sokator-442', the soccer-based
animated TV show for boys and girls aged 6-11 years old that was part of the
portfolio in Green and Dunne Ltd, which Galleon acquired in 2005. This has been
fully developed during 2005 and following a hugely positive reaction at Mipcom,
the TV sales market, in October, is currently under consideration with
broadcasters in all major territories.
Also in 2005, Galleon acquired the worldwide exploitation rights for Hoo Ha
House', the pre-school property developed by Imagination. Hoo Ha House' has
successfully been launched in the UK with a publishing programme. As part of
the publishing programme, 2,000 schools were sent books and activity packs as a
part of the launch of the first book in October 2005. By the end of 2006, 13
Hoo Ha House' titles will be in market, building awareness with both parents
and children. On the back of this heavyweight publishing programme, the
property has also been developed as an animated TV series of 52 x 10 minutes
and is currently being considered by UK broadcasters, with early interest from
the US.
Galleon has retained its 50% ownership of Peppers Patrol', the pre-school
property, currently being developed as a stop frame animated TV show by our JV
partners Coolabi.
Croco Worldwide Sourcing Limited
Croco Worldwide Sourcing Limited designs, patents, sources and supplies in-pack
premiums to global FMCG companies.
The focused strategy - of moving away from the low margin and highly
competitive general sourcing market segment and focusing on the higher margin
but more complex in-pack premium segment - is paying dividends.
Croco Worldwide is building a reputation for being highly creative and also
highly competent in delivering product into market, on time and on budget. The
company has developed a strong relationship with one of the main global FMCG
companies, resulting in a significant order exceeding $1M already in place for
delivery in Summer 2006.
Looking forward, we will be adding sales capabilities to this side of the
business to open up new clients.
Outlook
2005 was a year where we have focused the Group on building a solid platform
for future growth. In 2006, we will see the benefits of this coming through in
revenues, with the advances and royalties from Galleon Entertainment IP and
continued growth of the Croco Worldwide business.
The outlook for Galleon has never been stronger. The business from our existing
customers in 2006 and the increased levels of new business activity that we are
seeing at Croco, has encouraged us to add resource to sustain the growth of
this business. In Skunk fu!' and Mysti' we have 2 complementary brands that
are in market and will generate revenue from 2006 and, when combined with our
strong development slate, deliver a good balance of IP. A successful
fundraising in November raised £1.25 million and this has given us the capital
needed to fund this growth.
Strategically, we will be capitalising on the synergies between our
Entertainment IP and Product IP. We are starting to have discussions now with
our FMCG clients about future promotions where we are supplying the
Entertainment brand as well as the product IP. This provides added value to
Croco and a powerful marketing resource for the brand in market.
In summary, this has been a defining year for the Group and I'd like to thank
our employees for their commitment and passion during 2005 as well as our
shareholders, for your continued support.
Stephen T. Green
Chief Executive
For further information please contact:
James C. Driscoll MBE, Chairman
Stephen T. Green, Chief Executive
Hayden Eastwood, Finance Director
Galleon Holdings plc +44 (0)20 8987 0011
Ben Simons
Hansard Communications +44 (0)20 7245 1100
Consolidated Profit and Loss Account
For the year ended 30 September 2005
Note Year ended Year ended 18 months 18 months
30 30 ended 30 ended 30
September September September September
2005 2005 2004 2004
£ £ £ £
Turnover 1,134,456 971,564
Cost of sales (1,023,883) (914,917)
Gross profit 110,573 56,647
Other administrative (1,449,560) (1,498,382)
expenses
Amortisation and impairment (77,298) (4,761,137)
of goodwill
Administrative expenses (1,526,858) (6,259,519)
Operating loss prior to (1,338,987) (1,441,735)
impairment and amortisation
of goodwill
Amortisation and impairment (77,298) (4,761,137)
of goodwill
Operating loss (1,416,285) (6,202,872)
Share of operating (loss)/
profit of:
Joint venture (5) (1,117)
Associate 961 12,359
Amortisation of purchased - (103,789)
goodwill
in associate
Net interest (10,928) (40,377)
Loss on ordinary activities
before
taxation (1,426,257) (6,335,796)
Tax on loss on ordinary 2 - -
activities
Loss on ordinary activities (1,426,257) (6,335,796)
after taxation and loss for
the financial period
Basic loss per ordinary 3 (7.1)p (71.4)p
share
Balance Sheet at 30 September 2005
Note 30 30 30 30
September September
September September
2005 2004
2005 2004
£ £ £ £
Fixed assets
Intangible assets
Goodwill 753,228 596,670
Other 1,574 93,569
754,802 690,239
Tangible assets 29,201 36,962
Investments
Joint venture
Share of gross assets 734,925 734,925
Share of gross liabilities (736,091) (736,086)
(1,166) (1,161)
Associates (20,469) (21,430)
Other investments 28,800 28,800
7,165 6,209
791,168 733,410
Current assets
Stocks and work in progress 173,020 158,205
Debtors due within one year 376,576 140,756
Debtors due after more than 100,000 303,285
one year
Cash at bank and in hand 220,163 116,306
869,759 718,552
Creditors: amounts falling (1,025,804) (1,297,913)
due within one year
Net current liabilities (156,045) (579,361)
Total assets less current 635,123 154,049
liabilities
Creditors: amounts falling
due after more
than one year - (2,625)
Provisions for liabilities (12,050) (12,050)
and charges
Net assets 623,073 139,374
Capital and reserves
Called up share capital 279,393 99,036
Shares to be issued 1,875 1,875
Share premium account 2,974,811 1,455,061
Capital redemption reserve 9,601,469 9,601,469
Other reserves 209,849 -
Profit and loss account (12,444,324) (11,018,067)
Shareholders' funds 4 623,073 139,374
Consolidated Cash Flow Statement
For the year ended 30 September 2005
Note Year ended 18 months
30 ended
September
30
2005 September
2004
£ £
Net cash outflow from operating 5 (1,407,758) (599,473)
activities
Returns on investments and servicing of
finance
Interest paid (10,432) (38,184)
Hire purchase interest (496) (2,193)
Net cash outflow from returns on
investments
and servicing of finance (10,928) (40,377)
Capital expenditure
Purchase of tangible fixed assets (7,051) (16,070)
Proceeds from sale of fixed asset - 3,051
investments
Net cash outflow from capital (7,051) (13,019)
expenditure
Acquisitions
Purchase of subsidiary undertaking - (3,000)
Net cash outflow from acquisitions - (3,000)
Net cash outflow before financing (1,425,737) (655,869)
Financing
Issue of shares 1,616,327 680,000
Expenses paid in connection with share (66,189) (8,620)
issues
(Payment of)/receipts from borrowings (2,625) 6,300
Capital element of finance leases (835) (27,432)
Net cash inflow from financing 1,546,678 650,248
Increase/(decrease) in cash 6 120,941 (5,621)
notes to the preliminary announcement for the year ended 30 september 2005
1. BASIS OF PREPARATION
The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historical cost convention.
The principal accounting policies of the group are set out in the group's 2005
annual report and financial statements. The policies have remained unchanged
from the previous annual report.
2. Tax on loss on ordinary activities
No tax charge arises on the loss for the period.
The tax assessed for the period differs from the standard rate of Corporation
Tax in the UK as explained below:
Year ended 18 months
ended 30
30 September
September 2004
2005
£ £
Loss on ordinary activities before tax (1,426,257) (6,335,796)
Loss on ordinary activities multiplied by standard rate (427,877) (1,900,739)
of Corporation Tax in the UK of 30% (2004: 30%)
Effect of:
Expenses not deductible for tax purposes 23,994 1,486,514
Capital allowances for year in excess of depreciation 969 1,424
Other timing differences - 8
Unrecognised deferred tax assets 402,914 412,793
Current tax credit for year - -
Unrelieved tax losses of approximately £5,200,000 (2004: £3,900,000) remain
available to offset against future taxable trading profits.
3. LOSS per share
The calculation of the basic loss per share is based on the loss for the period
attributable to ordinary shareholders of £1,426,257 (period ended 30 September
2004: £6,335,796) divided by the weighted average number of shares in issue
during the year of 20,122,206 (period ended 30 September 2004: 8,875,218). The
effect of the share options is anti-dilutive.
4. Reconciliation of movements in shareholders' funds
Year ended 18 months
30 ended
September
2005 30
September
2004
£ £
Loss for the financial period (1,426,257) (6,335,796)
Issue of shares 1,909,956 1,663,882
Shares to be issued - 1,875
Net increase/(decrease) in shareholders' funds 483,699 (4,670,039)
Shareholders' funds at 1 October 2004 139,374 4,809,413
Shareholders' funds at 30 September 2005 623,073 139,374
5. Net cash outflow from operating activities
Year ended 18 months
30 ended
September
2005 30
September
2004
£ £
Operating loss (1,416,285) (6,202,872)
Loss on disposal of tangible fixed assets - 243
Loss on disposal of fixed asset investments - 408
Depreciation of tangible fixed assets 14,812 57,521
Amortisation and impairment of intangible fixed assets 91,995 185
Decrease in provision against investments - (6,400)
Release of provisions - (25,950)
Amortisation and impairment of goodwill 77,298 4,761,137
Increase in stocks and work in progress (14,815) (80,237)
(Increase)/decrease in debtors (32,536) 603,318
(Decrease)/increase in creditors (254,187) 214,674
Shares allotted to settle expenses 126,000 78,500
Net cash outflow from operating activities (1,407,758) (599,473)
6. Reconciliation of net cash flow to movement in net DEBT
Year ended 18 months
30 ended
September
2005 30
September
2004
£ £
Increase/(decrease) in cash in the period 120,941 (5,621)
Payment of/(receipts from) new borrowings 2,625 (6,300)
Capital element of hire purchase and finance lease 835 27,432
rentals
Change in net debt resulting from cash flows 124,401 15,511
Net debt at 1 October 2004 (408,364) (423,875)
Net debt at 30 September 2005 (283,963) (408,364)
7. Analysis of changes in net debt
At 1 Cash flow At 30
October September
2004 2005
£ £ £
Cash at bank and in hand 116,306 103,857 220,163
Bank overdraft (521,210) 17,084 (504,126)
(404,904) 120,941 (283,963)
Bank loans (2,625) 2,625 -
Finance leases (835) 835 -
(408,364) 124,401 (283,963)
8. 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 consolidated balance sheet at 30 September 2005, and the consolidated
profit and loss account, consolidated cash flow statement and associated notes
for the year then ended have been extracted from the Group's 2005 statutory
financial statements upon which the auditor's opinion is unqualified and does
not include any statement under s237of the Companies Act 1985.
END
GALLEON HOLDINGS PLC: Final Results
© 2006 PR Newswire
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