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Apace Media

  • BY: Andrew Hore |
  • POSTED: 08/02/2009 |

Apace Media is following much larger companies in moving its tax residence from the UK.

Apace, which has content production and broadcasting operations in the UK and Eastern Europe, is moving its tax residence to Luxembourg.

Balkan Media Group owns five TV channels in Bulgaria and Macedonia and it is a 50:50 joint venture between Apace and Modern Times Group. Apace is negotiating a merger of BMG with MTG’s 100%-owned terrestrial channel in Bulgaria. Apace would end up with a minority interest in the enlarged business.

The UK content operations have had mixed fortunes. The TV production business did well but the music business has found trading difficult.

The financial problems of Woolworths and other retailers and distributors means that the Apace Music business has been trading with the support of its creditors.

On 5 February 2009, these creditors approved the establishment of a Company Voluntary Arrangement, where they will receive a proportion of the money owed to them in full settlement of their claims. There will be an accounting provision relating to these CVA.

Apace expects to make a small profit for 2008, although there will be a small operating loss in the second half of the year.  Management had already informed shareholders that this would be the case.

A profit of £460,000 was reported in the first half of 2008, including a £385,000 contribution from BMG. There was a cash outflow of more than £1.5m before share issues are taken into account - mainly due to higher debtors.

Strengthening the group balance sheet is an important task for the next few months. That could be highly dilutive.

At 1.125p a share, Apace is valued at £1.08m. Apace is looking to acquire additional content businesses but this could be difficult with the share price as it is.

At the end of June 2008, net debt was £908,000. That includes £750,000 of a £1m facility to finance TV productions. The borrowings could have risen since then. The net asset value was £12m, which includes a valuation of £5m for the 50% stake in BMG.

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