TIDMPIXL
RNS Number : 7963Q
Pixel Interactive Media Limited
20 April 2009
+--------------------------------------+----------------------------------------+
| Press Release | 20 April 2009 |
+--------------------------------------+----------------------------------------+
Pixel Interactive Media Ltd
("Pixel Media" or "the Group")
Final Audited Results
for the year ended 31 December 2008
Pixel Media (AIM:PIXL), Asia's leading online advertising sales network, is
pleased to announce its final audited results for the year ended 31 December
2008.
Financial highlights
+------+-------------------------------------------------------------------------+
| * | Turnover up 51% to US$19.6 million (2007: US$13.0 million) |
+------+-------------------------------------------------------------------------+
| * | Gross profit up 3.5% to US$5.4 million (2007: US$5.3 million) |
+------+-------------------------------------------------------------------------+
| * | Underlying operating profit (operating profit excluding non-recurring, |
| | non-cash impairment charge) US$0.5 million (2007: US$1.5 million) |
+------+-------------------------------------------------------------------------+
| * | Loss before tax for the year US$4.0 million (2007: profit of US$1.5 |
| | million) |
+------+-------------------------------------------------------------------------+
| * | Net cash US$5.2 million (2007: US$7.8 million) |
+------+-------------------------------------------------------------------------+
| * | Chinese organic revenue growth up by 28 times to US$4.0 million in the |
| | world's fastest growing internet market |
+------+-------------------------------------------------------------------------+
Operational highlights
+------+--------------------------------------------------------------------------+
| * | Represented website partners up 194% on either an exclusive or |
| | authorised preferred partnership basis |
| | |
+------+--------------------------------------------------------------------------+
| * | Monthly ad impressions for the site representation business grew to over |
| | 9 billion, reaching over 60% of all internet users in each market |
| | |
+------+--------------------------------------------------------------------------+
| * | Successfully launched Adsfactor, the Ad Network division, in Hong Kong |
| | and Singapore. Adsfactor already works with 150 website partners |
| | |
+------+--------------------------------------------------------------------------+
| * | Worked with 585 unique advertisers, running 2,613 advertising campaigns |
+------+--------------------------------------------------------------------------+
| * | Successfully moved into Vietnamese market and currently exploring new |
| | North Asian markets |
| | |
+------+--------------------------------------------------------------------------+
| * | Chinese business, Easy Growth, strategically re-aligned to target fast |
| | growing Chinese online brand display advertising sector |
+------+--------------------------------------------------------------------------+
Commenting on the final results, Kevin Huang, CEO of Pixel, said: "The Group has
continued to trade well and gained market share in 2008 with overall revenue
growth of 51%, a figure above industry forecasts. Despite micro and macro
economic challenges, in particular with our Beijing operations, we remain
confident of the Group's future in the Asian online advertising sector as result
of our continued focus, existing infrastructure and market presence. Management
has already made adjustments to our business and operations in Beijing with a
series of cost cutting and strategic refocusing measures and we remain confident
about the Chinese market, now the world's largest internet population. Our
position as the leading Asian online advertising business remains robust and
accordingly we look to the future with confidence".
For further information:
+----------------------------------------+--------------------------------+
| Pixel Interactive Media Limited | |
+----------------------------------------+--------------------------------+
| Kevin Huang, Chief Executive Officer | Tel: +852 2851 2490 |
+----------------------------------------+--------------------------------+
| kevin.huang@pixelmedia-asia.com | www.pixelmedia-asia.com |
+----------------------------------------+--------------------------------+
| | |
+----------------------------------------+--------------------------------+
| Canaccord Adams Limited | |
+----------------------------------------+--------------------------------+
| Mark Williams / Adria Da Breo Richards | Tel: +44 (0) 20 7050 6500 |
+----------------------------------------+--------------------------------+
| | www.canaccordadams.com |
+----------------------------------------+--------------------------------+
Media enquiries:
+-------------------------------------------+----------------------------+
| Abchurch Communications | |
+-------------------------------------------+----------------------------+
| Charlie Jack / Joanne Shears / Simone | Tel: +44 (0) 20 7398 7700 |
| Alves | |
+-------------------------------------------+----------------------------+
| joanne.shears@abchurch-group.com | www.abchurch-group.com |
+-------------------------------------------+----------------------------+
Electronic copies can be obtained from the Group's website
www.pixelmedia-asia.com.
Chairman's Statement
We are pleased to announce that during the year, the Group has made significant
progress in the online advertising market in Asia, and continued to grow its
market share throughout the region. We are recognised as the market leader by
both the advertising community and publishers, and as a result our services are
increasingly sought after. We remain confident about the Group's progress and
future, as we continue our aggressive growth and investment strategy in Asia.
The global economy has presented significant challenges to Pixel in the second
half of 2008 and market conditions in 2009 have been less favourable. Our
business in China has gone through a restructuring and rationalisation process,
but despite these challenges, I believe the Group is extremely well placed to
continue on its growth path. The Group has US$5.2 million cash, remains
operationally cash flow positive and profitable.
The Board is satisfied with the Group's overall progress this year as we
continued to solidify our market position in each existing market. We have
explored and opened new emerging markets in Asia as evidenced by Vietnam, and
launched our new ad network division, Adsfactor, which gives advertisers
greater reach across niche vertical websites. Furthermore we continued to grow
our employee numbers with key office management roles including sales, business
development and marketing positions.
The Group operates in diverse geographical locations with a talented team of
managers and staff, and with proprietary technology advantages. We have strong
relationships with advertisers and publishers throughout Asia. Together, this
makes us a strong and unique value proposition to advertisers and publishers,
reaffirming the Group's commitment to become Asia's leading online ad sales
network.
The Group was saddened to hear of the passing of Kevin Steeds in December 2008.
I assumed Kevin's responsibilities when he became seriously ill in September
2008, and will continue to act as the Non-Executive Chairman on a temporary
basis. I look forward to the Group's continued expansion and progress in the
coming months and years, and to working with our Board, shareholders, management
team and employees to help realise Pixel's potential.
Douglas Khoo
Acting Non-Executive Chairman Chief Executive's Statement
During the year to 31 December 2008, the Group made significant progress in the
online ad market throughout Asia. We have solidified our leading market
positions in each country in which we now operate in, and have started to
explore emerging markets in South East Asia, as well as new markets in North
Asia where we have yet to develop a presence.
During the year, the Group started the restructuring and strategic re-alignment
of Easy Growth, the Beijing business Pixel acquired in 2007. This resulted in a
non recurring, non-cash impairment charge of US$4.4 million. The changing
business environment in China as well as increased competition in the Chinese
market saw Easy Growth face increasing challenges. Whilst we were disappointed
at the performance of Easy Growth, we remain confident about the prospects for
online advertising in China. The Group has already taken steps to reduce costs,
rationalise its business model and launch new products. We are now in the
process of launching Adsfactor, our ad network business, in China to capitalise
on the rapid growth of branded display advertising.
During 2008, our Shanghai operations, which focus on brand display advertising
and which have grown organically, continued to trade profitably.This has further
reinforced the Group's decision to re-focus its Beijing based business on brand
advertising models that have proven successful in all our markets, and away from
the affiliate model acquired in 2007. Outside China, our Hong Kong, Malaysia,
Singapore, and our newly established Vietnamese operations traded very well. We
have seen revenue growth above market expectations as a result of major new
business wins from advertisers and publishers.
Despite the economic downturn in the second half of 2008, we saw demand from
existing and new advertisers increase and view this as a positive trend for the
Group and industry as a whole. We believe that we have increased our market
share in all the markets in which we operate, and continue to do so as we
increase our investment in new products and services, expand our markets and
continue to hire sales and business development personnel.
During the year the Group won exclusive advertising sales mandates from many
new, major publishers including Media Prima Berhad owned portals (Malaysia),
Friendster (Singapore), HK Economic Journal, HK Trade Development Council
and Timeout Hong Kong. We have also been named preferred sales partners for
major portals and vertical sites in China, such as Sohu and Qunar, and others in
Indonesia, Thailand, Vietnam and the Philippines. All of our existing key
website partners such as Microsoft Advertising (HK), Atnext.com, Commercial
Radio, Sohu.com, Friendster and Klue remain of great importance to the Group and
we will continue to meet their growing needs going forward.
Advertising campaigns with first time online advertisers are an important part
of our growth strategy and continue to increase. New advertisers for the Group
during the year in review include high profile brands such as Fedex, Christian
Dior, Hasbro, Nikon, Sunway Resorts, U Mobile, Air Asia, Cebu Pacific Airways,
SAP, The Hong Kong SAR Government, Starwood Hotels, Centro Department Stores,
Avene, China Telecom and Martell.
The Group is confident that both past and future investments will provide good
returns and help to maintain and further develop our position as the Asian
market leader in online advertising sales. We remain excited about the Group's
prospects and believe that with our strong financial position, Pixel will
continue to reap the benefits of our investments in the years ahead.
Kevin Huang Jiunn Jin
Chief Executive Officer
Operational Review
Industry Forecast
Forecasts by various third parties suggest that global online advertising
markets will continue to show strong growth in the coming years. According to
Zenith Optimedia, online advertising is expected to grow by 8.6% globally in
2009 whereas advertising on other major mediums such as TV, radio, and
newspapers are expected to decline.
Within Asia, GroupM projects that online advertising growth is expected to grow
by 18% in 2009 with particularly high growth rates in markets in which the Group
operates. In North Asia (China, Hong Kong, Taiwan, South Korea) online
advertising is expected to grow by 21% and in ASEAN markets (Malaysia,
Singapore, Indonesia, Philippines, Thailand), growth is expected to be 27% in
2009. Of particular importance is China; the market is expected to grow by 33%
in 2009, commanding approximately 10% of total advertising expenditure. We
believe that Asia's online advertising market will continue to offer attractive
growth rates in the years to come surpassing those of more mature markets in the
west.
Internet usage in Asia continues to increase as broadband penetration and
wireless broadband facilities become increasingly common. Already in place are
initiatives from the Hong Kong and Singapore governments to enable free citywide
Wi-Fi which will give all their citizens easy access to the internet. China has
already solidified its position as the country with the world's largest internet
population*.
As internet usage becomes increasingly important, even vital to its users,
advertisers are placing stronger emphasis on online advertising and we are in a
particularly good position to meet advertisers' needs as well as those of web
publishers.
* China Internet Network Information Center, Statistical Survey Report on the
Internet Development in China (July 2008)
Operational Review
Full year revenue for the Group grew strongly by 51% to US$19.58 million (2007:
US$12.96 million), with growth in Hong Kong of 30%, 46% in Malaysia and 132% in
Singapore. Overall, revenue in China grew by 161%, with Shanghai growing
significantly at 28 times this year.
The Group's gross margin declined to 28% during the year (2007: 41%). The
Group's gross margin, excluding China, remained at more than 30%. However, the
gross margin for the Chinese business eroded to 11% which precipitated the
overall fall at the Group level. The gross margins for our brand display
advertising segment in China have been low as the market generally does not
accept exclusive advertising sales arrangements. Therefore, most advertising
sales agents in the market operate on a non-exclusive basis with the majority of
the major portals offering tiered commission levels starting at single digits.
These arrangements are different from those that Pixel operates in other markets
where our exclusive sales arrangement and services are offered and valued by
publishers, resulting in higher gross margins.
Hong Kong continued to show good growth with profits increasing by 70% to
US$1.36 million (2007: US$0.80 million). Profits in Shanghai also showed
significant growth of 253% to US$0.11 million (2007 Loss: US$0.07 million).Our
existing business in Hong Kong continues to be the market leader in the
advertising sales network space and continues to boost its offering and services
to both advertisers and publishers and continues to gain market share. Hong
Kong is an established region for the Group, having been in operation since
2002. It has a strong network and exclusive website partners. Although Hong
Kong's revenue increased by 30%, the gross margin remained constant at more than
30%. While in Shanghai, our continued focus on the brand display advertising
model with key clients with similar services as in Hong Kong has enabled us to
be profitable in 2008.
Profits in Malaysia declined by 11% to US$0.12million (2007: US$0.13million),
and losses in Singapore grew to US$0.12million (2007:US$0.01 million), resulting
from continued investment in office infrastructure and headcount. Headcount in
Singapore, in particular, grew to five people in 2008 from one in 2007 when the
business commenced operations.
The Beijing, China business also suffered losses in 2008 of US$0.49million (2007
Profit: US$1.25 million). The Beijing business is the online Chinese based
affiliate marketing company, Easy Growth, which was acquired in 2007. Easy
Growth has been experiencing increasing levels of competition, and a change in
market environment for its products and services, coupled with the effects of
the global economic crisis which has created margin pressure for the overall
affiliate marketing business.
In order to improve Group margins and profitability, Pixel has implemented a
restructuring programme for the Easy Growth business which includes staff and
cost reductions. As a result the Group incurred a non-recurring, non-cash,
impairment charge of US$4.4 million in the year, in relation to the carrying
value of intangible assets arising on the acquisition of Easy Growth.
Management will continue to work to re-establish healthy trading in China with
the launch of new products and services, and a re-focus of the Beijing business
on proven brand advertising models.
People
The Group continues to invest in talented people, focusing on management, sales
and business development. We believe that people are key to the success of our
business and have been successful in attracting enthusiastic new team members
with advertising, sales and digital experience throughout the region.
At the end of 2008, we employed a total of 82 full time staff, an increase of
46% from the previous year.
In addition, we made senior management hires in each market and now have a local
country head in each country in which we operate. Each manager will have overall
responsibility for their respective market and the Group is confident that this
investment will help to further strengthen the business and increase our market
share and presence in each country.
Site Representation and Ad Network Business
During the second half of year, the Group successfully launched its Ad Network
division, Adsfactor, in Hong Kong and Singapore. Pixel is now in the process of
rolling Adsfactor out throughout Asia. We have now classified our businesses
into two divisions, namely Pixel Media as our site representation
business, and Adsfactor which is our Ad Network business.
Our core site representation business continues to trade well. It has won new
exclusive ad sales mandates from leading publishers including Media Prima
Berhad, Friendster, HKEconomic Journal, HK Trade Development Council and
OpenRice, among others. In addition, we expanded our markets to include
the Philippines, Thailand, Indonesia, India and Vietnam. Websites such as
Microsoft Advertising (HK), Atnext.com, Friendster, Sohu.com, Klue, and
Commercial Radio continue to be our key partners and we saw little attrition of
website partners during the year while we won more new vertical websites
partners.
At the end of the year, the Group represented 203 website partners on either an
exclusive or authorised preferred partnership basis. This represents growth of
194% from the previous year and is a direct result of the expanded geographic
coverage of our site representation business to include new and emerging markets
throughout Asia.
Monthly ad impressions for our site representation business grew to over 9
billion while users reached was over 60% of all internet users in each market.
Although our new ad network's revenue contribution was small during the year,
the business has already shown immense potential and we expect to
see increasing contribution to our Group's revenues in the coming years. Our
Group revenue for the 2008 year has not been segmented in our audited accounts
but we will consider doing so once our ad network division revenue becomes more
significant.
In the ad network division, the Group now works with 150 website partners
throughout Asia to aggregate their advertising inventory into our ad network.
This reaches over 50% of all internet audiences in Hong Kong and Singapore, and
runs over 300 million advertising impressions per month. In this division, as
with our site representation business, we have formed direct relationships with
all our website partners which means that we do not need to utilise ad exchanges
and other ad networks. This ensures that we provide quality advertising
inventory to our advertisers.
Our ad network is aggregated into various content and demographic channels, and
sold to advertisers as part of reach based campaigns. We select content type or
demographics to complement their brand advertising and sponsorship needs while
enabling publishers to effectively monetise their advertising inventory via a
trusted third party.
With both the site representation and ad network divisions, the Group is now
better equipped to meet the varying needs of advertisers and publishers in the
region. We are extremely well positioned to work with larger numbers of
advertisers and publishers depending on their needs.
Advertising Customers
The Group continues to grow its advertising customer base to ensure a well
balanced portfolio of customers consisting of new online advertisers that
contribute to current and future growth of our business and industry as a whole,
as well as existing advertisers who are spending increasing amounts of their
advertising budget online.
Major brand advertisers who we work with throughout the region include Fedex,
Christian Dior, Hasbro, Nikon, Sunway Resorts, U Mobile, Air Asia, Cebu Pacific
Airways, SAP, The Hong Kong SAR Government, Starwood Hotels, Centro Department
Stores, Avene, China Telecom and Martell among others.
During the year, the Group worked with a total of 585 unique advertisers who ran
2,613 advertising campaigns with us. New advertisers were 37% of total unique
advertisers during this period with 216 campaigns.
Growth Priorities
The Group will continue to strengthen its market positioning by focusing on the
continued growth of its advertiser base and the products and services it offers
to those advertisers, both in the site representation and ad network divisions.
We continue to focus on developing new services to meet advertisers and
publisher's needs, and we are committed to enhancing our value proposition to
the online advertising community in Asia. We will work closely with advertisers
and agencies to deliver effective and accountable online advertising solutions.
The Group will continue to explore sensible opportunities in new markets as well
as product expansion.
Current Trading
Trading in the current year has started well, despite the traditionally slow
quarter one and the effects of the current global economic crisis. The Group
expects continued growth in all its existing markets and we remain confident
that we will be able to make further progress in this current year in terms
of revenue growth, profitability and market share.
Group Income Statement
for the year ended 31 December 2008
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | 2008 | | 2007 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | Notes | US$ | | US$ |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | Audited | | Audited |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Revenue | | 2 | 19,584,653 | | 12,960,608 |
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Cost of sales | | | (14,140,928) | | (7,706,231) |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Gross profit | | | 5,443,725 | | 5,254,377 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Other operating income | | | 290,284 | | 254,130 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Administrative expenses | | | (4,635,560) | | (3,480,748) |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Amortisation of intangible assets | | | (562,276) | | (353,259) |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Share option costs | | | (52,809) | | (158,430) |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Underlying operating profit | | | 483,364 | | 1,516,070 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Impairment of intangible assets | | | (4,415,235) | | - |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Operating (loss)/profit | | | (3,931,871) | | 1,516,070 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Share of losses of joint venture | | | (21,685) | | - |
+---------------------------------------+----+-----------+--------------+--+-------------+
| (Loss) / profit before taxation | | 2 | (3,953,556) | | 1,516,070 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Taxation | | 3 | (367,219) | | (179,428) |
+---------------------------------------+----+-----------+--------------+--+-------------+
| (Loss) / profit after taxation | | | (4,320,775) | | 1,336,642 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Attributable to: | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Equity holders of the parent | | | (4,320,775) | | 1,336,642 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Minority interests | | | - | | - |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | (4,320,775) | | 1,336,642 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| (Loss) / earnings per share (cents): | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Basic | | 5 | (10.97) | | 3.64 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Diluted | | 5 | (10.97) | | 3.31 |
+---------------------------------------+----+-----------+--------------+--+-------------+
| | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Adjusted earnings per share * | | | | | |
| (cents): | | | | | |
+---------------------------------------+----+-----------+--------------+--+-------------+
| Basic | | 5 | 0.24 | | 3.64 |
+---------------------------------------+----+-----------+--------------+--+-------------+
* Adjusted EPS is calculated after adding back the impairment of intangible
assets.
Group Balance Sheet
as at 31 December 2008
+------------+---+--------------+------+------+-----------+-------------+----+------------+
| | | | | | 2008 | | 2007 |
+------------+---+--------------+-------------+-----------+-------------+----+------------+
| | | | | Notes | US$ | | US$ |
+------------+---+--------------+-------------+-----------+-------------+----+------------+
| | | | | | Audited | | Audited |
+------------+---+--------------+-------------+-----------+-------------+----+------------+
| Assets | | | | | | | |
+------------+---+--------------+-------------+-----------+-------------+----+------------+
| Non-current assets | | | | | |
+-------------------------------+-------------+-----------+-------------+----+------------+
| Goodwill | | 6,126 | | 6,126 |
+---------------------------------------------+-----------+-------------+----+------------+
| Other intangible assets | 4 | - | | 4,639,792 |
+---------------------------------------------+-----------+-------------+----+------------+
| Property, plant and equipment | | 184,395 | | 154,273 |
+---------------------------------------------+-----------+-------------+----+------------+
| Interest in joint venture | | 78,315 | | - |
+---------------------------------------------+-----------+-------------+----+------------+
| Deferred tax asset | | 7,780 | | 6,114 |
+---------------------------------------------+-----------+-------------+----+------------+
| | | 276,616 | | 4,806,305 |
+---------------------------------------------+-----------+-------------+----+------------+
| Current assets | | | | |
+---------------------------------------------+-----------+-------------+----+------------+
| Trade and other receivables | | 9,167,579 | | 5,451,426 |
+---------------------------------------------+-----------+-------------+----+------------+
| Tax prepaid | | - | | 52,941 |
+---------------------------------------------+-----------+-------------+----+------------+
| Cash and cash equivalents | | 5,180,230 | | 7,849,075 |
+---------------------------------------------+-----------+-------------+----+------------+
| | | 14,347,809 | | 13,353,442 |
+---------------------------------------------+-----------+-------------+----+------------+
| Total assets | 2 | 14,624,425 | | 18,159,747 |
+---------------------------------------------+-----------+-------------+----+------------+
| | | | | |
+---------------------------------------------+-----------+-------------+----+------------+
| Equity and liabilities | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Current liabilities | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Trade and other payables | | 7,390,365 | | 7,113,450 |
+--------------------------------------+------------------+-------------+----+------------+
| Current tax liabilities | | 219,995 | | 34,871 |
+--------------------------------------+------------------+-------------+----+------------+
| | | 7,610,360 | | 7,148,321 |
+--------------------------------------+------------------+-------------+----+------------+
| Non-current liabilities | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Deferred tax liabilities | | 13,325 | | 4,880 |
+--------------------------------------+------------------+-------------+----+------------+
| | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Total liabilities | 2 | 7,623,685 | | 7,153,201 |
+--------------------------------------+------------------+-------------+----+------------+
| Capital and reserves | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Share capital | | 2,001,617 | | 1,943,847 |
+--------------------------------------+------------------+-------------+----+------------+
| Share premium | | 6,897,990 | | 5,549,401 |
+--------------------------------------+------------------+-------------+----+------------+
| Share option reserve | | 239,200 | | 208,613 |
+--------------------------------------+------------------+-------------+----+------------+
| Merger reserve | | 521,727 | | 521,727 |
+--------------------------------------+------------------+-------------+----+------------+
| Translation reserve | | (607,467) | | 514,510 |
+--------------------------------------+------------------+-------------+----+------------+
| (Accumulated losses) / retained | | (2,052,327) | | 2,268,448 |
| earnings | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Total equity attributable to equity | | 7,000,740 | | 11,006,546 |
| holders | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Total equity | | 7,000,740 | | 11,006,546 |
+--------------------------------------+------------------+-------------+----+------------+
| | | | | |
+--------------------------------------+------------------+-------------+----+------------+
| Total equity and liabilities | | 14,624,425 | | 18,159,747 |
+------------+---+--------------+------+------+-----------+-------------+----+------------+
Group Cash Flow Statement
for the year 31 December 2008
+--------------------------------------------+---------+-------------+----+-------------+
| | | 2008 | | 2007 |
| | | US$ | | US$ |
+--------------------------------------------+---------+-------------+----+-------------+
| | | Audited | | Audited |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Cash flows from operating activities | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| (Loss) / profit for the year | | (4,320,775) | | 1,336,642 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Adjustments for: | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Interest income | | (264,518) | | (247,285) |
+--------------------------------------------+---------+-------------+----+-------------+
| Depreciation | | 107,596 | | 83,186 |
+--------------------------------------------+---------+-------------+----+-------------+
| Amortisation of intangible assets | | 562,276 | | 360,295 |
+--------------------------------------------+---------+-------------+----+-------------+
| Impairment of intangible assets | | 4,415,235 | | - |
+--------------------------------------------+---------+-------------+----+-------------+
| Provision for impairment of accounts | | 319,584 | | 60,605 |
| receivable | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Gain on disposal of property, plant and | | (8,669) | | (571) |
| equipment | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Share option cost | | 52,809 | | 158,430 |
+--------------------------------------------+---------+-------------+----+-------------+
| Overprovision of profit tax in prior year | | - | | (112) |
+--------------------------------------------+---------+-------------+----+-------------+
| Taxation | | 197,776 | | (70,683) |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Operating cash flows before movements in | | 1,061,314 | | 1,680,507 |
| working capital | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Increase in net deferred revenue | | 49,446 | | 53,293 |
+--------------------------------------------+---------+-------------+----+-------------+
| Increase in receivables | | (2,891,351) | | (2,512,331) |
+--------------------------------------------+---------+-------------+----+-------------+
| Increase in payables | | 2,525,252 | | 1,296,259 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Net cash from operating activities | | 744,661 | | 517,728 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Cash flows from investing activities | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Investment in a joint venture | | (100,000) | | - |
+--------------------------------------------+---------+-------------+----+-------------+
| Acquisition of subsidiaries | | (2,195,688) | | (1,011,077) |
+--------------------------------------------+---------+-------------+----+-------------+
| Acquisition of property, plant and | | (148,385) | | (169,655) |
| equipment | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Interest received | | 264,518 | | 247,285 |
+--------------------------------------------+---------+-------------+----+-------------+
| Sales of property, plant and equipment | | 18,007 | | 1,407 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Net cash used in investing activities | | (2,161,548) | | (932,040) |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Cash flows from financing activities | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Placement | | - | | 2,953,965 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Net cash from financing activities | | - | | 2,953,965 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Net (decrease) / increase in cash and cash | | (1,416,887) | | 2,539,653 |
| equivalents | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Cash and cash equivalents at the beginning | | 7,849,075 | | 4,999,512 |
| of the year | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| Effect of foreign exchange rate changes | | (1,251,958) | | 309,910 |
+--------------------------------------------+---------+-------------+----+-------------+
| | | 6,597,117 | | 5,309,422 |
+--------------------------------------------+---------+-------------+----+-------------+
| Cash and cash equivalents at the end of | | 5,180,230 | | 7,849,075 |
| the year | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
| | | | | |
+--------------------------------------------+---------+-------------+----+-------------+
Group Statement of Changes in Shareholders' Equity
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| | | Share | Share | Share | Retained | Merger |Translation | Total |
| | | capital | premium | option | earnings | reserve |reserve US$ | US$ |
| | | US$ | US$ | reserve | / | US$ | | |
| | | | | US$ |(Accumulated | | | |
| | | | | | losses) | | | |
| | | | | | US$ | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Balance at 1 | | 1,740,131 | 2,799,152 | 48,956 | 931,806 | 521,727 | 195,741 | 6,237,513 |
| January 2007 | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Translation | | - | - | - | - | - | 318,769 | 318,769 |
| reserve | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Profit for | | - | - | - | 1,336,642 | - | - | 1,336,642 |
| the year | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| | | 1,740,131 | 2,799,152 | 48,956 | 2,268,448 | 521,727 | 514,510 | 7,892,924 |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Issue of | | 203,716 | 2,892,759 | - | - | - | - | 3,096,475 |
| shares | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Share issue | | - | (142,510) | - | - | - | - | (142,510) |
| costs | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Issue of | | - | - | 159,657 | - | - | - | 159,657 |
| share | | | | | | | | |
| options | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Balance at | | 1,943,847 | 5,549,401 | 208,613 | 2,268,448 | 521,727 | 514,510 | 11,006,546 |
| 31 December | | | | | | | | |
| 2007 | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Translation | | - | - | - | - | - | (1,121,977) | (1,121,977) |
| reserve | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Loss for the | | - | - | - | (4,320,775) | - | - | (4,320,775) |
| year | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| | | 1,943,847 | 5,549,401 | 208,613 | (2,052,327) | 521,727 | (607,467) | 5,563,794 |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Issue of | | 57,770 | 1,348,589 | - | - | - | - | 1,406,359 |
| shares | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Issue of | | - | - | 30,587 | - | - | - | 30,587 |
| share | | | | | | | | |
| options | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
| Balance at | | 2,001,617 | 6,897,990 | 239,200 | (2,052,327) | 521,727 | (607,467) | 7,000,740 |
| 31 December | | | | | | | | |
| 2008 | | | | | | | | |
+--------------+--+-----------+-----------+----------+--------------+----------+-------------+-------------+
Notes to the financial information
For the year ended 31 December 2008
1. Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union and
using the accounting policies which are consistent with those applied in the
audited financial statements for the year ended 31 December 2007.
The financial information set out in this announcement, which does not
constitute the statutory financial statements of the Group, is extracted from
the Group's statutory financial statements for the year ended 31 December 2008,
which were approved by the Board on 17 April 2009. The auditors have reported on
those financial statements and their report was unqualified.
The financial information for the year ended 31 December 2007 is derived from
the financial statements for that year. The Company's auditors have reported on
the 2007 financial statements; the report was unqualified.
The financial information set out in this announcement was approved by the Board
on 17 April 2009.
The Directors do not recommend the payment of a dividend.
The full statutory financial statements will be included in the Group's annual
report. Additional copies will be available our website,
www.pixelmedia-asia.com. The financial statements will be delivered to the
Registrar of Companies after the Company's Annual General Meeting, which is
scheduled on 18 June 2009.
2. Segmental reporting
The directors consider that the Group's activities represent a single class of
business. The analysis of the Group's turnover, profit before tax and minority
interests, assets, liabilities, additions to plant, property and equipment and
depreciation by geographical origin is set out below:
+------------------------------------------+-------------+------------+
| | 2008 | 2007 |
+------------------------------------------+-------------+------------+
| | US$ | US$ |
+------------------------------------------+-------------+------------+
| | | (Restated) |
+------------------------------------------+-------------+------------+
| Turnover | | |
+------------------------------------------+-------------+------------+
| Hong Kong | 12,520,419 | 9,625,275 |
+------------------------------------------+-------------+------------+
| Malaysia | 1,941,109 | 1,330,612 |
+------------------------------------------+-------------+------------+
| Singapore | 871,385 | 375,883 |
+------------------------------------------+-------------+------------+
| PRC | 4,251,740 | 1,628,838 |
+------------------------------------------+-------------+------------+
| | 19,584,653 | 12,960,608 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Profit before tax and minority interests | | |
+------------------------------------------+-------------+------------+
| Jersey | 6,298 | (227,167) |
+------------------------------------------+-------------+------------+
| Hong Kong | 1,356,375 | 799,234 |
+------------------------------------------+-------------+------------+
| Malaysia | 122,513 | 138,282 |
+------------------------------------------+-------------+------------+
| Singapore | (122,166) | (11,574) |
+------------------------------------------+-------------+------------+
| PRC | (389,134) | 1,178,251 |
+------------------------------------------+-------------+------------+
| British Virgin Islands | (4,927,442) | (360,956) |
+------------------------------------------+-------------+------------+
| | (3,953,556) | 1,516,070 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Carrying amount of assets | | |
+------------------------------------------+-------------+------------+
| Jersey | 3,306,450 | 10,968,288 |
+------------------------------------------+-------------+------------+
| Hong Kong | 4,753,769 | 4,433,121 |
+------------------------------------------+-------------+------------+
| Malaysia | 937,788 | 765,028 |
+------------------------------------------+-------------+------------+
| Singapore | 645,963 | 302,487 |
+------------------------------------------+-------------+------------+
| PRC | 4,892,081 | 1,680,768 |
+------------------------------------------+-------------+------------+
| British Virgin Islands | 88,374 | 10,055 |
+------------------------------------------+-------------+------------+
| | 14,624,425 | 18,159,747 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Liabilities | | |
+------------------------------------------+-------------+------------+
| Jersey | 47,371 | 55,846 |
+------------------------------------------+-------------+------------+
| Hong Kong | 2,635,658 | 2,392,706 |
+------------------------------------------+-------------+------------+
| Malaysia | 591,613 | 444,559 |
+------------------------------------------+-------------+------------+
| Singapore | 418,653 | 102,301 |
+------------------------------------------+-------------+------------+
| PRC | 3,160,839 | 181,678 |
+------------------------------------------+-------------+------------+
| British Virgin Islands | 769,551 | 3,976,111 |
+------------------------------------------+-------------+------------+
| | 7,623,685 | 7,153,201 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Additions to plant, property & equipment | | |
+------------------------------------------+-------------+------------+
| Hong Kong | 37,720 | 111,196 |
+------------------------------------------+-------------+------------+
| Malaysia | 68,731 | 34,527 |
+------------------------------------------+-------------+------------+
| Singapore | 25,617 | 5,475 |
+------------------------------------------+-------------+------------+
| PRC | 16,317 | 18,457 |
+------------------------------------------+-------------+------------+
| | 148,385 | 169,655 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Depreciation | | |
+------------------------------------------+-------------+------------+
| Hong Kong | 66,005 | 58,185 |
+------------------------------------------+-------------+------------+
| Malaysia | 23,907 | 20,908 |
+------------------------------------------+-------------+------------+
| Singapore | 8,469 | 833 |
+------------------------------------------+-------------+------------+
| PRC | 9,215 | 3,260 |
+------------------------------------------+-------------+------------+
| | 107,596 | 83,186 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
3. Taxation on profit from ordinary activities
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated entities as follows:
+---------------------------------------------+-----+-------------+-----------+
| | | 2008 | 2007 |
+---------------------------------------------+-----+-------------+-----------+
| | | US$ | US$ |
+---------------------------------------------+-----+-------------+-----------+
| | | | |
+---------------------------------------------+-----+-------------+-----------+
| (Loss) / profit on ordinary | | (3,953,556) | 1,516,070 |
| activities before taxation | | | |
+---------------------------------------------+-----+-------------+-----------+
| | | | |
+---------------------------------------------+-----+-------------+-----------+
| Profit on ordinary activities at 12.85% | | (508,032) | 386,598 |
| (2007: 25.5%) | | | |
+---------------------------------------------+-----+-------------+-----------+
| Tax effects of: | | | |
+---------------------------------------------+-----+-------------+-----------+
| Difference in tax rates of foreign | | (96,360) | (79,065) |
| countries | | | |
+---------------------------------------------+-----+-------------+-----------+
| Tax exempt in jurisdictions | | 507,396 | 168,624 |
+---------------------------------------------+-----+-------------+-----------+
| Expenses not deductible for tax purposes | | 107,007 | 12,822 |
+---------------------------------------------+-----+-------------+-----------+
| Tax redemption and rebates | | - | (343,417) |
+---------------------------------------------+-----+-------------+-----------+
| Under / (over) provision in prior year | | 36,469 | (168) |
+---------------------------------------------+-----+-------------+-----------+
| (Under) provision in current year | | (37,655) | (14,436) |
+---------------------------------------------+-----+-------------+-----------+
| Deferred tax assets not recognised | | 26,841 | 37,367 |
+---------------------------------------------+-----+-------------+-----------+
| Utilisation of previously unrecognised tax | | (21,808) | - |
| losses | | | |
+---------------------------------------------+-----+-------------+-----------+
| Recognition of previously unrecognised | | 16,555 | - |
| deferred tax | | | |
+---------------------------------------------+-----+-------------+-----------+
| Other | | (2,081) | 10,592 |
+---------------------------------------------+-----+-------------+-----------+
| Change in tax rate | | 338,887 | 511 |
+---------------------------------------------+-----+-------------+-----------+
| | | 367,219 | 179,428 |
+---------------------------------------------+-----+-------------+-----------+
| | | | |
+---------------------------------------------+-----+-------------+-----------+
The weighted average applicable tax rate was 12.85% (2007: 25.5%). The
reduction in overall rate has arisen as a result of the losses generated within
the Group.
4. Intangible assets
+--------------------------------+-----+----------+-------------+----------+-------------+
| | | | TBSA | Computer | Total |
| | | | | software | |
| | | | | licences | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| | | | US$ | US$ | US$ |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Cost | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 1 January 2008 | | | 4,987,187 | 21,109 | 5,008,296 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Additions | | | 337,719 | - | 337,719 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Written off | | | (5,324,906) | - | (5,324,906) |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 31 December 2008 | | | - | 21,109 | 21,109 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Accumulated Amortisation | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 1 January 2007 | | | 353,259 | 15,245 | 368,504 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Provision for the year | | | 556,412 | 5,864 | 562,276 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Eliminated on written off | | | (909,671) | - | (909,671) |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 31 Dec 2008 | | | - | 21,109 | 21,109 |
+--------------------------------+-----+----------+-------------+----------+-------------+
| | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| Net book value | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 31 December 2008 | | | - | - | - |
+--------------------------------+-----+----------+-------------+----------+-------------+
| | | | | | |
+--------------------------------+-----+----------+-------------+----------+-------------+
| At 31 December 2007 | | | 4,633,928 | 5,864 | 4,639,792 |
+--------------------------------+-----+----------+-------------+----------+-------------+
The "TBSA" is a Technical Consulting and Business Agreement between Pixel Media
Technology (Beijing) Co. Ltd and Share Freedom Wireless Co. Ltd. This asset is
tested for impairment where an indicator of impairment appears.
5. Earnings per share
(a) Basic
Basic (loss) / earnings per share is calculated by dividing the (loss) / profit
attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the period:
(Loss) / profit attributable to equity holders of the company: US$ (4,320,775)
(2007: US$ 1,336,642)
Weighted average number of ordinary shares in issue: 39,389,742
(2007: 36,667,922)
Basic (loss)/earnings per share: (10.97cents) (2007: 3.64cents)
The adjusted earnings per share is calculated after adding back the impairment
of intangible assets from the above calculation:
Profit attributable to equity holders of the company: US$94,460 (2007:
US$1,336,642)
Weighted average number of ordinary shares in
issue: 39,389,742 (2007: 36,667,922)
Adjusted basic earnings per share: 0.24cents (2007:3.64cents)
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted number of
ordinary shares in issue to assume conversion of all potential dilutive options
over ordinary shares during the period:
(Loss) / profit attributable to equity holders of the company: US$ (4,320,775)
(2007: US$ 1,336,642)
Weighted average number of ordinary shares in issue: 39,389,742
(2007: 40,395,440)
Diluted (loss) / earnings per share :(10.97cents) (2007: 3.31cents)
6. Share capital
On 22 July 2008, pursuant to the terms of the acquisition of Easy Growth Limited
as announced on 8 March 2007, the Group has issued 1,155,405 new ordinary shares
of US$0.05 each, issued at 61 pence per share.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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