Galleon Holdings plc

Interim results for the six months ended 31 March 2008

Date:                      27 June 2008

On behalf of:          Galleon Holdings plc ('Galleon' or the 'Group')

Embargoed until:     0700hrs 

Galleon Holdings plc

Interim results for the six months ended 31 March 2008

Galleon Holdings plc (AIM: GON), the AIM-listed intellectual property owner and developer in the entertainment sector, is pleased to announce its interim results for the six months ended 31 March 2008.

Highlights:

• Maiden Profit before tax of £355,000 compared to loss of £357,000 for same period last year

• Turnover increased by 146% to £5.8million (H1 2007: £2.4 million) 

• Positive EBITDA of £480,000 compared to a loss of £148,000 for the same period last year

• Acquisition of Lushy Assets ("Yunbo"), a mobile service provider in China, adding to Phoenix our existing Chinese operation and consolidating our  China media strategy

• Launch of first show, Super Soccer Star, in China, co-produced with Guangdong Sports Channel and Chelsea Football Club

Commenting on the first half results, David Wong, Chairman, Galleon Holdings plc, said:

"The first six months of this financial year have been very solid as the Group moves into a profitable phase of growth. This is a huge achievement by the management which has generated a profit in a period when they acquired and then integrated Phoenix and Yunbo in China and South East Asia. 

"It is evident that we are steadily executing our business model in the emerging markets, particularly in China. Each of our divisions has continued to gain momentum and this will continue into the second half of the year. We are excited by the opportunities that we see ahead of us."

- Ends -

Enquiries:

Chairman's Statement

I am delighted to see the Group generate a profit for the first six months of the year with revenues coming from both the entertainment and the product division. In accordance with the requirements of the AIM market of the London Stock Exchange the Group is required to prepare this interim financial information under International Financial Reporting Standards (IFRS).

We have been consistent with our strategy for the entertainment division, focusing on multiplatform entertainment and interactive revenue streams in emerging markets such as China and South East Asia. We acquired Yunbo, a mobile service provider in China, in February 2008, for an initial consideration of US$3 million. This has bolstered our ability to provide Chinese broadcasters a complete media solution for multiplatform entertainment, giving us total control over the interactive content, its delivery to the consumer, data capture and the billing process. We have continued to grow our footprint in the region supplying interactive entertainment solutions to several broadcasters in China and Malaysia. Interactive entertainment revenues for this period was £1.1m compared to £nil for the same period last year. 

Entertainment

Our first multiplatform entertainment property Super Soccer Star, an interactive family orientated football talent show, was launched in April with co-producers Guangdong Sports Channel and Chelsea Football Club. The show has been a huge success and is one of the broadcaster's top 5 rated shows. This has led to the show being syndicated by the Shanghai Sports Channel, which will take it to another 11 million viewers. We are in discussions with other national satellite broadcasters for a second series in China. We are also in final negotiations for a series in Malaysia and there are discussions underway in Thailand, Vietnam and Indonesia. Our second show, The Limit, is set to air later in the year on Hunan Satellite, a leading broadcaster with a reach of 400 million homes. Our network and operational expertise has allowed us to develop relationships with other media companies looking to gain traction in China. During this period we agreed a deal with RDF Media to co-produce a select number of their properties and represent its shows in the region.

In addition to entertainment content deals Phoenix continues to provide interactive TV services for broadcasters in China and South East Asia. Recently it signed agreements with Malaysian TV stations, Metropolitan TV Sdn Bhd and CH-9 Media Sdn Bhd, to supply its multiplatform interactive system as part of a multi-year service agreement to provide SMS gateway, interactive advertising and SMS campaign management. Metropolitan TV is Malaysia's third-largest TV channel, targeting the urban and ethnic Chinese audience. CH-9 now ranks second in viewership ratings, and is focused on delivering programming for the mass and ethnic Malay market.  

Our general entertainment portfolio is also developing. As a result of its great ratings in the UK on the BBC, and on The CW in the US at weekends, Skunk Fu!, an award-winning children's animated action/comedy TV series aimed at children aged 6-11 years old, has now been placed on Cartoon Network, a major US kids network. This dual platform in the US has allowed us to launch our merchandising programme globally, using the critical mass that this territory gives us in core categories such as toys. In addition to English speaking territories the show is on air in France and about to go on air on leading platforms in Germany and more than 100 other markets. 

On 9 June, we announced the launch of Skunk Fu! as a merchandising brand  in the US and Canada. The brand was launched at the New York Licensing Show by The Sharpe Group Inc., which has been appointed as licensing agent for Skunk Fu! in North America.  Sharpe Group is a boutique intellectual property agency, with an emphasis in marketing IP in North America. A Skunk Fu! toyline has been developed by Croco Worldwide, Galleon's toy division and this was also previewed at the show.

In addition, NCircle has secured the DVD distribution rights for Skunk Fu! in the US. NCircle is an entertainment content distributor, specialising in children's programming. The company is a division of Alliance Entertainment Corporation (AEC), the largest single source of home entertainment, with distribution channels in over 110,000 stores throughout North America.  

Apollo's Pad, an interactive online animated sitcom, was launched in October 2007, targeting 16-24 year olds. We have developed strong relationships with the music majors which have widened to include EMI publishing as well as Sony BMG. 

We have also signed a development deal for another popular show, Mysti, with Planet Nemo, a leading French production company in the kids sector. We hope this will enable us to develop a more multi-territory treatment of the next TV series. Sokator-442, a comedy action fantasy targeted to children aged 6-11 years old, continues to attract strong interest in Europe. We have pre-sale offers in Germany, Australia and Scandinavia and are focusing on bringing in one more key territory to give the property the critical mass that it needs.

Croco Worldwide

Croco Worldwide is our global toy division, focusing on designing and manufacturing innovative bespoke in-pack premiums for the global FMCG companies. The division continues to grow in terms of volume, value and also geographical reach. Our relationship with Pepsico is expanding well beyond Europe and our presence in Latin America has been bolstered by the successful test of our product IP Blasterz in a promotion in Mexico.

Our focus for the remaining months will be to secure regular business from this region and to expand our sales and distribution into Asia. Greater visibility of business and stronger relationships allows us to be more strategic about our investment in product IP and also manufacturing technology, all of which provide significant barriers to entry for any competitors.

Current Trading & Outlook

The first six months of this financial year have been very solid as the Group moves into a profitable phase of growth. This is a huge achievement by the management which has generated a profit in a period when they acquired and then integrated Phoenix and Yunbo in China and South East Asia. We are fortunate to have excellent dedicated employees and managers locally in each of the markets where we operate which allows us to act efficiently, responsively and timely to our partners in this period of quantum growth.

It is evident that we are steadily executing our business model in the emerging markets, particularly in China. Each of our divisions has continued to gain momentum and this will continue into the second half of the year. We are excited by the opportunities that we see ahead of us.

David Wong

CHAIRMAN

27 June 2008

INDEPENDENT REVIEW report to GALLEON HOLDINGS PLC 

Introduction

We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 31 March 2008 which comprises the consolidated income statement, consolidated statement of changes in equity, consolidated balance sheet, consolidated cash flow statement and related notes 1 to 7. We have read the other information contained in the interim report which comprises only the Chairman's statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.  

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with the basis of preparation.

Our Responsibility 

Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on our review.

scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with the basis of accounting described in note 2.

GRANT THORNTON UK LLP
AUDITOR

Birmingham
27 June 2008  

GALLEON HOLDINGS PLC

CONSOLIDATED INCOME STATEMENT

For the six months ended 31 March 2008

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 March 2008

CONSOLIDATED BALANCE SHEET

For the six months ended 31 March 2008

cONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 March 2008