DORI MEDIA GROUP
Interim Results
for the 6 Months Ended 30 June 2006
Dori Media Group ("DMG" or "Dori Media"), the international media company active
in the field of television, with a focus on production, distribution,
broadcasting and merchandising of Telenovela, today announced its interim
results for the first half of 2006.
First Half 2006 - Dori Media's strongest results ever
-- Group Revenue up 49% to US$9.65 million (US$6.47 million)
-- Gross Profit up 121% to US$6.75 million (US$3.05 million)
-- Profit before taxes on income reaching US$2.12 million (US$476,000)
-- Strong increase in Net Profit at US$1.72 million (US$139,000)
-- Net cash from operating activities reaching US$1.67 million (Net cash used
US$44,000)
Operating Highlights
-- International sales accounted for 68% of total sales in H1 2006 while they
represented 33% of total revenues in H1 2005;
-- 151% increase in Telenovela broadcasting and format rights sales due to
strong international sales (outside of Israel) represented 68% of all
revenues in H1 2006 (46% in 2005 and 24% in 2004) at US$4.16 million
(US$1.66 million);
-- 192% growth in merchandising and music CD ancillary business to US$2.21
million (US$754,000);
-- Launch of 'Televiva Vision 2', the first Telenovela dedicated TV channel in
Indonesia, through an exclusive partnership with Indovision, the biggest DBS
platform in Indonesia;
-- Creation of Dori Media Distribution GmbH ("DMD"), for the global
distribution of DMG's and other producers' Telenovela, giving DMG full
control of its sales chain;
-- Appointment of Silvana D'Angelo, who has 10 years' experience in the TV
industry, as head of DMD's International Sales & Marketing;
-- Library of 3,000 TV Hours of Telenovela - continued investment in production
of new TV series such as 'El Refugio' ('The Shelter') and acquisition of
rights of new popular Telenovelas, such as 'Sos Mi Vida' ('You are the
One');
-- Positive outlook for 2006, following successful meetings with European,
South American, Eastern European and Russian broadcasters at the DISCOP TV
conference in Budapest in June.
Change of Director
At the Board meeting held today by Dori Media to approve the results, Directors
were notified of Mr Pinchas Cohen's intention to resign from the Board of
Directors. Mr Pinchas Cohen had been a Non-Executive Director of DMG since 2004.
His resignation follows his departure from the Africa-Israel Investment group, a
20% shareholder of Mapal Communications Ltd., DMG's parent company, after
serving in the group since 2000.
Further to Mr Pinchas Cohen's resignation, the Board of Directors of DMG is
pleased to announce the appointment of Mrs Ruthy Leviev-Yealizarov as a new
Non-Executive Director.
Mrs Leviev-Yealizarov, aged 25, joined Africa-Israel Investments Ltd in 1999 as
sales manager in the sales department of the housing division. In 2004, Mrs
Leviev-Yealizarov became the marketing manager of Ramat Aviv shopping malls,
part of Africa-Israel Investment group, and in a short time, during 2005, became
its General Manager. Mrs Leviev-Yealizarov has a BA degree in business and
management from Kiriat Ono academic center in Israel.
Mrs Leviev-Yealizarov's current directorships are as follows:
- Gottex Fashion Ltd.
- Mapal Communication Holdings - The Russian channel in Israel Ltd,
- Mapal Communications Ltd.
- Mekarkeei Merkaz Ltd.
There is no further disclosure required pursuant to schedule 2(g) of the AIM
Rules.
CEO's comments
Talking about the results, Nadav Palti, President and CEO of Dori Media,
commented: "Dori Media demonstrated its strongest ever growth in the first half
2006, increasing its revenue compared to the first half of last year to nearly
US$10 million.
"Despite accelerating our international expansion, investing in new programming
and employing more sales people, we were able to surpass all expectations and
generate as much profit in the first six months of 2006 as we did for the entire
year 2005.
"These achievements, and the recent launch of our 'Televiva Vision 2' dedicated
Telenovela channel in Indonesia, demonstrate that the success of the Telenovela
TV genre is global and reflect our commitment to consolidate our leadership in
the industry and create value for all our shareholders."
Nadav Palti also commented on the change of Directors: "On behalf of Dori Media
Group, I would like to thank Mr Pinchas Cohen for his contribution to our Board
over the past two years. I would also like to welcome Ms Ruthy Leviev-Yealizarov
to the Board of Directors. Her experience at Africa-Israel Investment group will
be of great value to our organisation."
***
For further information on Dori Media Group, please visit our website on
www.dorimedia.com or contact:
Dori Media Group Ltd. Shared Value Limited
Nadav Palti, CEO & President Nicolas Duperrier
Tel: +972 3 7684000 / +972 54 4236828 Investor & Media relations
info@dorimedia.com Tel. +44 (0) 20 7321 5010
dmg@sharedvalue.net
Dori Media Group is an international media group active in the production,
distribution and broadcasting of Telenovela. The group owns and sells
high-loyalty TV content and branded merchandise attracting a wide variety of
audiences in over 50 countries. Dori Media Group owns and operates the 'Viva'
and 'Viva Platina' dedicated TV channels in Israel and 'Televiva Vision 2'
dedicated TV channel in Indonesia. Dori Media Group's production company in
Israel is 'Darset Productions Ltd'. Dori Media Group is controlled by Mapal
Communications Ltd, one of Israel's largest communications company. Dori Media
Group is publicly traded on the AIM Market of the London Stock Exchange. The
Company's ticker symbol is 'DMG'.
***
Chief Executive's Review
Overview
In the first half of 2006, Dori Media delivered on its promises to accelerate
its international expansion and play a leading role in the promotion of the
Telenovela genre worldwide. Based on the quality and diversity of the programmes
in the group's library, DMG was able to consolidate its presence in key European
markets, increasing its market share, and in Asia, with the launch of its
'Televiva Vision 2' channel in Indonesia, a similar channel to the TV channels
it already operates in Israel.
It is the objective of the company to continue to take advantage of the global
popularity of the Telenovela TV genre by launching more dedicated Telenovela TV
channels in appropriate markets under the Televiva brand and become, through its
newly created arm DMD, a unique Telenovela content distributor with unrivalled
programming and international reach.
Operational update
Dori Media reported sales of US$9.65 million for the 6 months ended 30 June
2006, up 49% from US$6.47 million for the same period last year. This buoyant
result was achieved despite the launch of 'Televiva Vision 2' in Indonesia,
increased investments in sales and marketing expenses and continued investment
in new programming.
For the first time, more than half of global sales came from outside of Israel.
International sales accounted for 68% of total sales in H1 2006 while they
represented 33% of total revenues in H1 2005. The breakdown of international
sales in the period was as follows:
-- 56% generated in Europe, representing 38% of global sales (17% in H1 2005);
-- 26% generated in Central America, representing 18% of global sales (14% in
H1 2005);
-- 15% generated in South America and 3% in the Far East, representing together
12% of global sales (less than 2% in H1 2005).
Focus on International Growth
Dori Media's teen Telenovela 'Rebelde Way' continues to be a blockbuster in many
European countries. In March, Grupo Sogecable, one of Spain's largest media
groups, purchased the first season of 'Rebelde Way' for screening in Spain and
Andorra. The success encountered by the Telenovela on Grupo Sogecable's
free-to-air TV channel Cuatro prompted Grupo Sogecable to buy the second season
from DMG in June.
In March, Cableuropa S.A.U. (Ono), the leading cable operator in Spain with over
1.7 million residential customers, purchased the licence from Dori Media to sell
the first season of 'Rebelde Way' in its video-on-demand offering in Spain for a
period of 24 months starting on 1 April 2006.
After MTV Networks in Germany in 2005, 'Rebelde Way' was also sold to Austria's
leading TV channel Austria Broadcasting Corporation ORF in April, demonstrating
that Telenovela is universal and that when dubbed it can still appeal to
non-Spanish European audiences.
In April, Dori Media launched its 'Televiva Vision 2' dedicated Telenovela TV
channel in Indonesia, in collaboration with PT Matahari Lintas Cakrawala
("Indovision"), Indonesia's first and biggest Direct Broadcast Satellite (DBS)
provider. The channel broadcasts 24 hours of programming per day in Bahasa
language. The launch was in line with DMG's strategy to become a leading
international Telenovela broadcaster as well as a distributor.
In addition to the start-up costs of the new channel, some of which occurred
during H1 2006, the cost of operating the channel, as well as purchasing content
and broadcasting rights, are expected to be offset over time with the income
stream generated from the channel as it continues to grow its viewing base in
the basic package of the Indovision DBS platform. Despite the initial start-up
costs, 'Televiva Vision 2' provides DMG with a strong platform in a buoyant
market with attractive long-term earnings prospects.
In June, Dori Media launched its fully-owned international distribution arm,
Dori Media Distribution GmbH (DMD), with global representation from Latin and
North America to Europe, the Middle East and Asia. Up until June, Dori Media was
distributing its Telenovelas through its Argentinean partner Telefe
International. The launch of DMD has given Dori Media full control of its sales
chain. DMD will distribute Dori Media's as well as other producers' Telenovelas.
Mrs. Silvana D'Angelo was appointed Head of International Sales & Marketing at
DMD, bringing her extensive experience and contacts in the TV industry to the
organisation.
The newly created DMD Distribution arm complements the two existing divisions of
the group, Dori Media International (DMI), the production, rights and
merchandising division and Televiva, Dori Media's Broadcasting division
operating the 'Viva' and 'Viva Platina' channels in Israel and the 'Televiva
Vision 2' channel in Indonesia. The three divisions enable the group to be
active and efficient in the full value chain of the Telenovela products,
including: Production, Distribution, Ancillary Business and TV channels.
Strong Telenovela Programming
DMG has continued to invest in new TV series, buying and producing hundreds of
TV hours in the 6 month period to 30 June 2006. DMG's library now contains
around 3,000 TV hours.
For the first time in June, Dori Media was a sponsor and a key participant in
the 2006 edition of DISCOP, the Eastern European TV Contents & Formats
conference in Budapest. The event was an opportunity for DMG to present to
industry professionals its new Telenovela series 'Sos Mi Vida' ('You are the
One'), 'El Refugio' ('The Shelter'), 'Collar de Esmeraldas' ('The Emerald
Necklace'), and 'Juanita la Soltera' ('Juanita is Single') as well as its other
popular Telenovelas. The Telenovelas encountered very high levels of interest
from TV buyers, including leading TV channels in Eastern Europe and Russia. Over
1,300 hours of DMG programming was sold to broadcasters from Russia, Romania,
Bulgaria and Albania at DISCOP.
Dori Media's new Telenovela 'Sos mi Vida' has been particularly successful with
broadcasters from Russia, Bulgaria, Albania, Macedonia, Czech Republic, Croatia,
Hungary, Lithuania, Poland, Romania, Ukraine and Venezuela. The Telenovela marks
the television comeback of one of the genre's leading and most loved couples:
international Telenovela stars Natalia Oreiro and Facundo Arana.
Dori Media's latest teen Telenovela 'El Refugio' ('The Shelter') is also set to
become a huge success, following in the footsteps of 'Rebelde Way'. DMG recently
sold it to Spain's Pretesa Group for broadcast on its regional channel Localia
from September 2006.
Outlook
DMG's strategy is to continue to capitalise on the international growth of the
Telenovela phenomenon by increasing the volume of international productions,
increasing sales of these productions and forming Telenovela dedicated channels
in appropriate markets during the second half of 2006 and beyond. The group is
confident that the positive trends it has experienced in the first half of the
year will continue beyond the period. Its participation at the DISCOP conference
has already shown signs of potential sales in Eastern Europe and Russia in the
near future.
Financial Performance
Revenue
DMG's revenues for the 6 months ended 30 June 2006 illustrate the company's
rapid expansion outside Israel and increased focus on broadcasting rights,
distribution and merchandising.
In H1 2006, DMG's Telenovela broadcasting and format rights sales were up 151%
to US$4.16 million, compared to US$1.65 million in the same period last year,
due to increased international sales, particularly in Western Europe.
Broadcasting and format rights represented 43% of total revenues in the period.
Income from merchandising, DVDs and music CDs ancillary sales increased from
US$754,000 in H1 2005 to US$2.2 million in H1 2006, up 192%, principally due to
the broadcasting of 'REBELDE' - Televisa's adapted version of Dori Media's
'Rebelde Way' - in Mexico, Brazil and the United States, which generated
significant merchandising and ancillary sales in North and South America. The
success of DMG's 'Rebelde Way' in Spain was also complemented by increased sales
of related merchandising, CDs and DVDs in the Iberic peninsula. Furthermore, in
March, Dori Media signed an agreement with Planeta Junior in Spain to pursue
merchandising opportunities in Spain, Andorra, Italy and Portugal for its
Telenovela 'Rebelde Way'. Merchandising and ancillary business generated 26% of
total revenues in the period.
Following the lower-than-expected results of the 'Floricienta' concerts in
Israel in 2005, Dori Media has decided to move away from the local live show
revenue model and therefore ceased organising live show events in Israel in
2006. As a result, the segment represented a significantly reduced part of the
group's business in H1 2006 and accounted for only 4% of all revenues in the
period, with US$317,000 net income mainly generated from 'REBELDE' concerts in
Mexico and the USA. This is in line with Dori Media's strategy to focus on
broadcasting, distribution and merchandising.
Broadcasting income from DMG's television channels, 'Televiva', 'Viva' and 'Viva
Platina' was unchanged at US$2 million in H1 2006.
Gross Margins
Gross margins improved to 69% in the 6 months to 30 June 2006 from 47% in H1
2005, with gross profit for H1 2006 increasing by 121% to US$6.75 million
compared with US$3.05 million for H1 2005.
The cost of goods sold in H1 2006 decreased by 15% to US$2.9 million compared to
US$3.4 million in H1 2005, which was mainly attributable to ceasing the
organisation of live show events in Israel in 2006 (US$ 1.26 million).
Amortisation of rights increased from US$417,000 in H1 2005 to US$994,000 in H1
2006, reflecting the expanded Telenovela library of the group.
Operating Expenses
Total operating expenses amounted to US$4.43 million in H1 2006 (US$2.5
million). Selling costs increased from US$913,000 in H1 2005 to US$1.83 million
in H1 2006 due to agency commissions from merchandising incomes and increasing
commissions in line with increased broadcasting and format rights sales. General
and administrative expenses increased by US$1.02 million in H1 2006 to US$2.6
million (US$1.58 million), principally because of higher salary expenses and
professional fees. Salary expenses increased from US$814,000 in H1 2005 to
US$1.51 million due to increased number of employees in the group comparing to
H1 2005. Professional expenses increased from US$272,000 in H1 2005 to
US$390,000 in H1 2006, principally as a result of becoming a publicly listed
company on London's AIM market.
Operating Profit
The operating profit was US$2.32 million in H1 2006 as compared to US$552,000 in
H1 2006. This strong increase was above expectations.
Financial Expenses
Financial expenses reached US$203,000 in H1 2006 compared to US$95,000 in H1
2005 due to increased use of credit line from bank.
Tax Expenses
Tax expenses in H1 2006 were stabilised at the effective rate of 18.5%
(US$391,000 for profit of US$2.1 million).
Net Income
The net income for the six months to 30 June 2006 was US$1.72 million compared
to US$139,000 in the first six months of 2005, above the net income of the
entire year 2005 of US$1.63 million.
***
Interim Condensed Consolidated Financial Statement
as of 30 June 200
U.S. Dollars in Thousands
Unaudited
DORI MEDIA GROUP LTD.
CONSOLIDATED STATEMENTS OF INCOME
Six months ended Year ended
30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 *) US$ '000 *) US$ '000 *)
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
Revenues 9,651 6,473 12,078
Cost of revenues 2,904 **) 3,426 **) 4,833
------------ ------------ ---------------
Gross profit 6,747 3,047 7,245
------------ ------------ ---------------
Selling and marketing expenses 1,828 **) 913 **) 1,791
General and administrative expenses 2,601 **)1,582 **) 3,494
------------ ------------ ---------------
Total operating expenses 4,429 2,495 5,285
---------------------------------------------------- ------------ ------------ ---------------
Operating profit 2,318 552 1,960
Financial expenses, net 203 95 229
Other income (expenses), net - 19 (51)
------------ ------------ ---------------
Profit before taxes on income 2,115 476 1,680
Taxes on income 391 337 52
------------ ------------ ---------------
Profit for the period 1,724 139 1,628
------------ ------------ ---------------
Basic and diluted earnings per share 0.09 0.01 0.09
============ ============ ===============
Weighted average number of shares used for computing
basic earnings per share 19,421,031 17,094,392 17,984,179
============ ============ ===============
Weighted average number of shares used for computing
diluted earnings per share 19,865,754 17,851,960 18,603,724
============ ============ ===============
*) Except per share amounts.
**) Reclassified.
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED BALANCE SHEETS
As of
As of 30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 US$ '000 US$ '000
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 688 1,332 2,085
Trade receivables 7,480 4,054 5,238
Other accounts receivable 784 302 376
Broadcasting rights 1,306 618 489
Inventory of TV series rights for sale 117 88 67
------------ ------------ ---------------
10,375 6,394 8,255
------------ ------------ ---------------
NON-CURRENT ASSETS:
Investments in rights of TV series 12,288 7,704 9,397
Investment properties, net - 1,160 -
Intangible assets, net 3,210 3,200 3,108
Property and equipment, net 1,011 206 968
Deferred tax assets 1,526 1,132 1,595
------------ ------------ ---------------
18,035 13,402 15,068
------------ ------------ ---------------
Total assets 28,410 19,796 23,323
---------------------------------------------------- ============ ============ ===============
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED BALANCE SHEETS
As of
As of 30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 US$ '000 US$ '000
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Credit from banks 4,024 4,543 3,559
Trade payables 3,376 1,208 1,719
Other current liabilities 1,642 1,808 1,355
------------ ------------ ---------------
9,042 7,559 6,633
------------ ------------ ---------------
LONG-TERM LIABILITIES:
Other long-term liabilities 2,086 116 1,270
------------ ------------ ---------------
2,086 116 1,270
------------ ------------ ---------------
EQUITY:
Issued capital 448 428 448
Share premium 11,302 9,434 11,257
Foreign currency translation reserve (156) (216) (249)
Asset revaluation surplus 240 240 240
Retained earnings 5,448 2,235 3,724
------------ ------------ ---------------
Total equity 17,282 12,121 15,420
---------------------------------------------------- ------------ ------------ ---------------
Total liabilities and equity 28,410 19,796 23,323
---------------------------------------------------- ============ ============ ===============
14 August, 2006
------------------------ ----------------------- ----------------------- -----------------------
Date of approval of the Tamar Mozes-Borovitz Nadav Palti Moshe Pinto
financial statements Chairman of the Director and Chief Financial Officer
Board of Directors Chief Executive Officer
The accompanying notes are an integral part of the consolidated financial
statements.
DORI MEDIA GROUP LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the parent
-------------------------------------------------------------------
Receipts Total
on Foreign recognized
account currency Asset income and
Issued Share of translation revaluation Retained Minority Total expenses
capital premium shares reserve surplus earnings Total interest equity Parent Minority
-------- -------- -------- ----------- ----------- -------- ------- -------- ------- ---------------
US$'000 US$'000 US$'000 US$ '000 US$ '000 US$ '000 US$'000 US$ '000 US$'000 US$'000 US$'000
-------- -------- -------- ----------- ----------- -------- ------- -------- ------- ------- -------
Six months ended 30
June 2006
(Unaudited)
Balance at
beginning of
period 448 11,257 - (249) 240 3,724 15,420 - 15,420 - -
Exercise of
options *) - 6 - - - - 6 - 6 -
Cost of share-
based payments - 39 - - - - 39 - 39 -
Currency
translation
differences - - - 93 - - 93 - 93 93 -
Profit for the
period - - - - - 1,724 1,724 - 1,724 1,724 -
-------- -------- -------- ----------- ----------- -------- ------- -------- ------- ------- -------
1,817 -
======= =======
Balance at end of
period 448 11,302 - (156) 240 5,448 17,282 - 17,282
======== ======== ======== =========== =========== ======== ======= ======== =======
Six months ended 30
June 2005
(Unaudited)
Balance at
beginning of
period 348 3,656 200 (137) 240 2,096 6,403 419 6,822 - -
Issuance of
shares 7 193 (200) - - - - - - - -
Issuance of
shares in IPO,
net of expenses 63 4,536 - - - - 4,599 - 4,599 - -
Issuance of
shares to
purchase
minority
interest in
subsidiary 10 984 - - - - 994 (190) 804 - -
Acquisitions of
shares of a
subsidiary - - - - - - - (229) (229) - -
Cost of share-
based payments - 65 - - - - 65 - 65 - -
Currency
translation
differences - - - (79) - - (79) - (79) (79) -
Profit for the
period - - - - - 139 139 - 139 139 -
-------- -------- -------- ----------- ----------- -------- ------- -------- ------- ------- -------
60 -
======= =======
Balance at end of
period 428 9,434 - (216) 240 2,235 12,121 - 12,121
======== ======== ======== =========== =========== ======== ======= ======== =======
Year ended 31
December 2005
(Audited)
Balance at
beginning of year 348 3,656 200 (137) 240 2,096 6,403 419 6,822 - -
Issuance of
shares 7 193 (200) - - - - - - - -
Issuance of
shares in IPO,
net of expenses 63 4,536 - - - - 4,599 - 4,599 - -
Issuance of
shares, net of
expenses 20 1,764 - - - - 1,784 - 1,784 - -
Issuance of
shares to
purchase
minority
interest in
subsidiary 10 984 - - - - 994 (190) 804 - -
Acquisitions of
shares of a
subsidiary - - - - - - - (229) (229) - -
Cost of share-
based payments - 124 - - - - 124 - 124 - -
Currency
translation
differences - - - (112) - - (112) - (112) (112) -
Profit for the
year - - - - - 1,628 1,628 - 1,628 1,628 -
-------- -------- -------- ----------- ----------- -------- ------- -------- ------- ------- -------
1,516 -
======= =======
Balance at end of
year 448 11,257 - (249) 240 3,724 15,420 - 15,420
======== ======== ======== =========== =========== ======== ======= ======== =======
*) Represents an amount lower than US$ 1 thousand.
The accompanying notes are an integral part of the consolidated financial
statements.
DORI MEDIA GROUP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 US$ '000 US$ '000
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
Cash flows from operating activities:
----------------------------------------------------
Profit for the period 1,724 139 1,628
Adjustments to reconcile profit to net cash provided
by (used in) operating activities (a) (54) (419) (1,672)
------------ ------------ ---------------
Net cash provided by (used in) operating activities 1,670 (280) (44)
------------ ------------ ---------------
Cash flows from investing activities:
----------------------------------------------------
Acquisition of minority interests in subsidiary - (1,041) (1,041)
Acquisition of newly consolidated subsidiaries and
jointly controlled entity (c) - 63 73
Investments in rights of TV series, net (4,165) (1,011) (2,714)
Proceeds from sale of property, equipment and
investment properties - 47 460
Purchase of property and equipment (61) (98) (225)
------------ ------------ ---------------
Net cash used in investing activities (4,226) (2,040) (3,447)
------------ ------------ ---------------
Cash flows from financing activities:
----------------------------------------------------
Proceeds from issuance of shares, net of issuance
costs 6 4,599 6,383
Repayment of loans from banks - (138) (271)
Receipt of long-term production financing 795 - 1,100
Short-term bank credit, net 347 (1,127) (1,978)
------------ ------------ ---------------
Net cash provided by financing activities 1,148 3,334 5,234
------------ ------------ ---------------
Effect of exchange rate changes on cash and cash
equivalents 11 (46) (22)
------------ ------------ ---------------
Increase (decrease) in cash and cash equivalents (1,397) 968 1,721
Cash and cash equivalents at beginning of period 2,085 364 364
------------ ------------ ---------------
Cash and cash equivalents at end of period 688 1,332 2,085
============ ============ ===============
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 US$ '000 US$ '000
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
(a) Adjustments to reconcile profit to net cash
provided by (used in) operating activities:
----------------------------------------------
Income and expenses not involving cash flows:
Cost of share-based payments 39 65 124
Depreciation and amortization 1,746 573 1,977
Deferred income taxes 88 (88) (530)
Other 14 (17) 59
Changes in operating assets and liabilities:
Increase in trade receivables (2,180) (1,260) (2,464)
Increase in other accounts receivable (400) (24) (96)
Decrease (increase) in short-term investments
in rights of TV series (48) 50 50
Decrease (increase) in broadcasting rights (1,443) 106 (527)
Decrease (increase) in inventory of TV series
rights for sale 2 (16) 5
Increase in trade payables 1,743 379 288
Increase (decrease) in other current
liabilities 385 (187) (558)
------------ ------------ ----------------
(54) (419) (1,672)
============ ============ ================
(b) Supplemental disclosure of cash flows:
----------------------------------------------
Cash paid during the period for:
Interest 129 269 357
============ ============ ================
Income taxes 388 323 513
============ ============ ================
Cash received during the period for:
Interest 7 - 25
============ ============ ================
The accompanying notes are an integral part of the consolidated financial
statements.
DORI MEDIA GROUP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
--------------------------
2006 2005 2005
------------ ------------ ---------------
US$ '000 US$ '000 US$ '000
------------ ------------ ---------------
Unaudited Audited
-------------------------- ---------------
(c) Acquisition of newly consolidated subsidiaries
and jointly controlled entity:
----------------------------------------------
The fair values of the assets and liabilities
at the date of acquisition were as follows:
Working capital deficiency (excluding cash) - 22 25
Property and equipment - (4) (6)
Investments in rights of TV series - (46) (84)
Long-term liabilities - 7 54
Carrying value of investment prior to
acquisition - 84 84
------------ ------------ ---------------
- 63 73
============ ============ ===============
(d) Significant non-cash transactions:
----------------------------------------------
Acquisition of rights in TV series on credit 476 - 587
============ ============ ===============
Issuance of shares to purchase minority
interest in subsidiary - 994 994
============ ============ ===============
Acquisition of minority interest in subsidiary
on credit - 390 383
============ ============ ===============
The accompanying notes are an integral part of the consolidated financial
statements.
DORI MEDIA GROUP LTD.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL
a. These financial statements have been prepared in a condensed format as of 30
June 2006 and for the six months then ended. These financial statements should
be read in conjunction with the Company's audited annual financial statements
and accompanying notes as of 31 December 2005 ("the annual financial
statements").
b. The Company and its subsidiaries are engaged in the rights purchase,
production and distribution of Telenovela TV series ("Telenovelas"),
broadcasting of Telenovela dedicated TV channels ("TV channels") and sale of
Telenovela series ("TV series") rights.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. The interim condensed consolidated financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting. The significant accounting
policies and methods of computations applied in the preparation of the interim
financial statements are the same as those applied in the annual financial
statements as of 31 December, 2005.
b. Following is data regarding the Israeli CPI and the exchange rate of the U.S.
dollar:
Exchange rate
As of Israeli CPI of U.S. $ 1
--------------------------------------------- --------------- ---------------
Points *) NIS
--------------- ---------------
June 30, 2006 187.9 4.440
June 30, 2005 181.6 4.574
December 31, 2005 185.1 4.603
Change during the period % %
--------------------------------------------- --------------- ---------------
June 2006 (six months) 1.5 (3.5)
June 2005 (six months) 0.3 6.2
December 2005 (12 months) 2.4 6.8
*) The index on an average basis of 1993 = 100.
NOTE 3:- BUSINESS SEGMENTS
a. General:
The Group companies operate in three principal business segments: production and
distribution of TV series, broadcasting of TV channels and sale of TV series
rights.
b. The following data is presented in accordance with IAS 14:
Six months ended 30 June 2006 (Unaudited)
--------------------------------------------------------------------
Broadcasting Sales of TV
Rights of of TV series Total
TV series channels rights Adjustments consolidated
------------- ------------- ----------- ------------ ---------------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
------------- ------------- ----------- ------------ ---------------
Revenues:
Sales to external
customers 7,641 2,010 - - 9,651
Intersegment sales 88 - 75 (163) -
------------- ------------- ----------- ------------ ---------------
Total revenues 7,729 2,010 75 (163) 9,651
--------------------- ============= ============= =========== ============ ===============
Segment results 2,735 180 62 - 2,977
============= ============= =========== ============
Unallocated expenses (659)
---------------
Operating profit 2,318
===============
Six months ended 30 June 2005 (Unaudited)
---------------------------------------------------------------------
Broadcasting Sales of
Rights of of TV TV series Total
TV series channels rights Adjustments consolidated
-------------- ------------- ---------- ------------ ----------------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
-------------- ------------- ---------- ------------ ----------------
Revenues:
Sales to external
customers 4,334 2,036 103 - 6,473
Intersegment sales 5 - 142 (147) -
-------------- ------------- ---------- ------------ ----------------
Total revenues 4,339 2,036 245 (147) 6,473
--------------------- ============== ============= ========== ============ ================
Segment results 506 360 138 - 1,004
============== ============= ========== ============
Unallocated expenses (452)
----------------
Operating profit 552
================
NOTE 3:- BUSINESS SEGMENTS (Cont.)
Year ended 31 December 2005 (Audited)
--------------------------------------------------------------------
Broadcasting Sales of
Rights of of TV TV series Total
TV series channels rights Adjustments consolidated
--------------- ------------ ---------- ----------- ----------------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
--------------- ------------ ---------- ----------- ----------------
Revenues:
Sales to external
customers 8,048 3,854 176 - 12,078
Inter-segment sales 5 - 323 (328) -
--------------- ------------ ---------- ----------- ----------------
Total revenues 8,053 3,854 499 (328) 12,078
--------------------- =============== ============ ========== =========== ================
Segment results 2,163 418 282 - 2,863
=============== ============ ========== ===========
Unallocated expenses (903)
----------------
Operating profit 1,960
================
DORI MEDIA GROUP LTD.
- -
-- Kost Forer Gabbay & Kasierer -- Phone: 972-3-6232525
3 Aminadav St. Fax: 972-3-5622555
Tel-Aviv 67067, Israel
The Board of Directors
Dori Media Group Ltd.
Report on review of interim condensed consolidated financial statements
for the six months ended 30 June 2006
Introduction
We have reviewed the accompanying interim condensed balance sheet of Dori Media
Group Ltd and its subsidiaries as of 30 June 2006, and the related interim
condensed consolidated statements of income, changes in equity and cash flows
for the six months then ended and explanatory notes. Management is responsible
for the preparation and presentation of these interim condensed consolidated
financial statements in accordance with International Financial Reporting
Standard IAS 34 Interim Financial Reporting ("IAS 34"). Our responsibility is to
express a conclusion on these interim condensed consolidated financial
statements based on our review.
We have been furnished with the report of other accountants in respect of the
review of the interim financial statements of a jointly controlled entity, whose
assets constitute approximately 1% of total consolidated assets as of 30 June
2006 and whose revenues constitute approximately 10% of total consolidated
revenues for the six months then ended.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity". A review of interim financial information
consists of making inquiries, 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 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, and the review report of other accountants referred to
above, nothing has come to our attention that causes us to believe that the
accompanying interim condensed consolidated financial statements are not
prepared, in all material respects, in accordance with IAS 34.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
14 August, 2006 A Member of Ernst & Young Global
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