RNS Number:4152K
Newsplayer Group PLC
28 April 2003
28th April, 2003
NEWSPLAYER GROUP PLC
AUDITED RESULTS FOR THE YEAR ENDED 31ST OCTOBER, 2002
Newsplayer Group plc (NPG), the media company, today announces audited results
for the year ended 31st October 2002, the Company's second full year of trading.
Financial Highlights:
* Turnover of #954,264, up #52,163 (2001: #902,101)
* Pre-tax loss was #3.46 million, (2001: #1.6million)
* Exceptional write off: #998,699
* Cash reserves: #438,000 at 31st October 2002.
Business Highlights:
Over the last year, NPG has achieved the successful launch of VideoTV and
PureWorldCup and continued to expand its portfolio of quality video content
through agreements with the BBC and Associated Rediffusion to strengthen the
FrostTV offering.
Distribution relationships have been formed with NTL, BT and Freeserve in the UK
as well as SingaporeONE, SFR in France and Cross Media Entertainment in the USA.
In July 2002 NPG appointed Prime Entertainment as exclusive European sales agent
and are also working in partnership with Global Media Services (GMS) in New York
to build distribution in the USA. The partnership with GMS has allowed NPG to
strengthen technical resources and further develop the FOOTAGE.net business, the
worlds' leading footage portal.
Commenting on the results, Paul Duffen, Chief Executive Officer, said:
Over the past three years we have invested significant capital and resource in
the acquisition of rights and licences and in the tools and technology to enable
the exploitation of that content. This investment has enabled us to deliver six
video-on-demand channels each with a choice of payment, rights protection and
asset management solutions. We are now firmly established as the market leader
in the provision of streaming media content and are confident that our revenues
will grow as a direct result of the proliferation of broadband globally and the
distribution partnerships we are now forming.
Over the last year, we have embarked on a significant overhead reduction
programme and have been successful in raising #310,000 in new equity. The
overheads for the group are now approximately #60,000 per month (#160,000 per
month up to 31st October 2002) with the substantial part of the reduction coming
from rationalisation of our administration and technology outgoings.
We have stated that it is our intention to acquire GMS in New York. We now
anticipate this to be completed in the summer of 2003. We continue to work
closely as strategic partners in the meantime and I am confident that the
combination of our two businesses with complementary products, skill sets,
geographical location and a low cost base will enable the Group to reach
profitability by the end of 2003.
Appointment of New Broker
The Company is pleased to announce that it has appointed Shore Capital as
nominated advisor and stockbroker, effective 28th April 2003.
Board Changes
Rodger Sargent resigned as a Non-Executive Director with effect from 26th July
2002
NPG is pleased to announce that Steven Smith will shortly be appointed to the
Board of NPG. Steven Smith, ACA ATII, is a significant shareholder in NPG
through his wholly owned investment company, Reef Securities Limited, which has
a 9.9% interest in NPG
Enquiries:
Paul Duffen, Chief Executive Tel: 020 7927 6699
Newsplayer Group plc
Philip Ranger, Merlin Financial Tel: 020 7606 1244
Alex Borrelli, Shore Capital Tel: 020 7408 4090
CHAIRMAN'S STATEMENT
2002 was a year of growth and development for the Company. In difficult market
conditions we continued to grow our revenues, secure rights to additional
content, sign distribution deals and launch new channels.
In addition to our existing activities, 2002 saw the Company increasing its
focus on the stock Footage market through our American subsidiary, NPG Inc,
which acquired the business and assets of Footage.Net in December 2001.
Footage.Net, the leading stock footage portal, manages the databases for the
world's major stock footage libraries and makes them available to researchers in
a single environment. The Company is committed to the evolution of Footage.Net
into a fully transactional licensing platform through the combination of
investment and the integration of existing NPG technology. This development will
significantly increase the revenue that NPG Inc is able to generate.
During the year the Group undertook a detailed analysis of the strategic options
in respect of its business. The results of the strategic analysis were
incorporated into the annual impairment review of the carrying value of the
Group's acquired intellectual property rights. This impairment review assesses
whether the carrying value of the intangible assets was supported by the net
present value of future cash flows to be derived from the relevant assets. The
review indicated that an impairment charge of #998,699 was required in respect
of the carrying value of the acquired intellectual property rights. There was no
impairment to any other assets.
During the year we signed significant new content deals: a five year licence for
EMI's catalogue of audio and video material; a ten year licence for World Cup
footage from North American Institute and deals with both the BBC and Associated
Rediffusion for further Frost material This new content enabled us to launch two
additional streaming media channels, Video TV and Pure World Cup which, added to
Frost TV, Newsplayer, Screenplayer and Birdstream, brings our total of consumer
video-on demand channels to six, which confirms NPG as the leader in its field.
There is no doubt that general trading conditions have been difficult and are
likely to remain so in the short term. However, NPG has the benefit of long term
rights and licences, which will enable it to profit from the upturn in the
economic cycle and the continuing growth in Broadband proliferation worldwide.
In response to the immediate challenge the Company has been successful in
attracting #310,000 of new capital and has implemented a 60% reduction in
overheads. Furthermore, we have sought additional revenue streams, which will
hasten the time to the Company becoming cash generative.
In December 2002 we announced that NPG had signed a letter of intent to acquire
Global Media Services (GMS), a leading provider of managed Media and
Professional Services based in New York. GMS was founded by Adam Cohen, who most
recently served as the Chief Media Officer for Cable and Wireless in North
America and was responsible for the overall vision and strategy of Cable and
Wireless's Media Services business and Jennifer Sultan, who recently served as
Director of Operations for Cable and Wireless.
Cohen and Sultan were previously founders of New York-based Live On Line, which
was founded in 1995 and acquired by Digital Island in January 2000. Live On Line
was an early pioneer in the production, acquisition, and delivery of streaming
media and rich media over the Internet.
The acquisition of GMS will provide the Company with service based revenues from
activities such as the encoding, hosting, delivery, encryption, distribution and
rights management of audiovisual assets as well as revenues from e-messaging and
e-mail based direct marketing. The consideration for GMS will be wholly
satisfied by the issue of shares in NPG and we expect the transaction to be
completed by summer 2003. As a pre cursor to the acquisition we have signed a
distribution agreement with GMS, which is already enabling us to pursue
service-based revenues both in America and the UK.
With the combination of additional content, a reduction in core overheads, the
growth of our stock footage business and the introduction of new services based
revenue I am confident that the Company faces a bright and exciting future.
David Holdgate, Chairman.
OVERVIEW
These results cover the year ended 31st October, 2002, NPG's second full year of
trading.
NPG's principal activity is exploiting rights and/or licenses to quality
cultural and historical video content and marketing them globally to business,
educational and consumer audiences using interactive technology. Revenues are
generated from the licensing of content to third parties, from subscription and
pay-per-view fees paid by consumers, and from shared advertising revenues.
Financial Results
Revenues for the year were #954,264, up from #902,101 for the period ended 31st
October 2001. Revenues were generated from subscriptions to the various NPG
websites, from licensing of content, and from product licensing to third
parties.
Gross profit generated from activities was #427,527, compared with #897,662 for
the period ended 31st October 2001.
The pre-tax loss for the year was #3,464,596 compared with a loss of #1,620,443
for the period ended 31st October 2001.
Cash reserves in the bank on 31st October 2001 were #438,000. No dividend has
been paid or is proposed.
Business review
Overview
NPG is a media company that exploits rights and/or licenses in television and
cinema content and markets them globally to business, education and consumer
audiences using interactive technology. Revenues are generated from the
licensing of content to third parties, from subscription and pay-per-view fees
paid directly by consumers and from advertising revenues. 2002 saw increased
focus on business-to-business activities with the acquisition of FOOTAGE.net,
the leading stock footage portal, based in Virginia, USA. The year saw continued
progress in our accumulation of compelling content with the addition of VideoTV
and PureWorldCup. The FrostTV channel was further enhanced by the additional
material from the BBC and Associated Rediffusion. NPG now has a critical mass of
six video-on-demand (VOD) streaming media channels with licenses to exploit the
content globally for up to 17 years.
NPG Inc. and its primary business, FOOTAGE.net, continued to expand on its
position as the leading portal for stock footage. Between NPG's acquisition of
FOOTAGE.net in December 2001 through to October 2002, the number of stock
footage agencies that work with FOOTAGE.net increased by 50% in spite of a
continued advertising and media slump worldwide. Technical advances in the
delivery of FOOTAGE.net services and a strong focus on customer support were
instrumental in driving that growth and supporting high renewal rates. These
improvements are expected to underpin continued growth in demand for FOOTAGE.net
services.
VideoTV
In November 2001, NPG announced a five-year, non-exclusive agreement with EMI
Recorded Music to license footage from EMI's catalogue of historic and current
video material to VideoTV, NPG's video-on-demand (VOD) channel. The Company also
announced that Virgin Holdings Inc. (a division of EMI Recorded Music) was
taking an equity stake in NPG.
The VideoTV service was launched towards the end of 2002 with over 3,000 music
videos.
Screenplayer
Screenplayer (www.screenplayer.com) provides an additional revenue stream for
NPG by offering consumers on a subscription basis, over 600 hours of on-demand
programming related to the stars of Hollywood cinema, 20th Century musicians and
musicals, comedians and other entertainers. The catalogue originates from the
archives of Passport International Productions from whom NPG obtained an
exclusive 12-year worldwide licence for the programmes in June 2001.
The subscription fee for Screenplayer is #25 per annum although those who are
already subscribers to other NPG websites receive a discount.
NPG pays royalties to Passport International in the amount of 50% of gross
revenues received.
UcreateTV
UcreateTV is an application designed and developed by NPG, which allows
customers to upload home-shot video footage to their PCs and edit them on-line
to create films. A patent for UcreateTV is pending having satisfied criteria for
novelty, inventiveness and industrial application required by the European
Patent Office. As part of the joint venture with JVC in April 2001, purchasers
of the JVC Miniature video camera in the UK and Ireland receive pre-paid
subscriptions to Newsplayer.com and UcreateTV. Using UcreateTV and
Newsplayer.com together, subscribers can select newsreel footage from the ITN
archives and edit them together with their home-shot video to create montages
and mini films for their own entertainment. The UcreateTV facility is available
to consumers for a one-off payment of #75 with an accompanying subscription to
Newsplayer.com for a further #25 per annum.
RSPB Film Collection
NPG has an agreement with the Royal Society for the Protection of Birds (RSPB)
covering both content and distribution and targeting both consumers and
professional filmmakers. This agreement has been in place since December 2001.
NPG manages the archives of the RSPB Film Collection to make them easily
available, for a licensing fee, to professional programme-makers at
www.rspb.org.uk/films. The Film Collection is the world's most comprehensive
resource for UK and European bird footage. The archive dates back to 1953 and
features more than 100 different species of birds.
NPG receives a monthly service fee from RSPB for managing its film collection
online and a commission for licensing material to programme makers.
Birdstream
NPG also offers consumers and educational institutions access to the RSPB Film
Collection through its on-demand subscription channel Birdstream. The RSPB
supports the marketing of this service in its member publication and receives a
30% share of the #7.95 annual subscription fee.
FrostTV
FrostTV (www.frost.tv) is a joint venture between NPG and internationally
acclaimed TV interviewer and broadcaster Sir David Frost. NPG has acquired the
exclusive rights hundreds of interviews with leading politicians and celebrities
conducted over 40 years, much of which has not been seen since its original
screening. Additional programming from Sir David's catalogue has been acquired
from other sources including the BBC, which provides the Breakfast with Frost
series. The material has been catalogued, tagged and digitised by NPG and can be
searched and viewed online at FrostTV. The subscription fee is #25 per annum,
but discounted for subscribers to other NPG channels.
The joint venture agreement, which was signed in December 2000, gives NPG
exclusive rights to exploit opportunities in both online and off-line
syndication. NPG also allows broadcasters and programme makers to license the
content for FrostTV online. Further revenue opportunities exist in the
post-production of the material, the syndication to third party websites and
portals, and the production and sale of DVDs.
The joint venture is structured as a revenue share between NPG and Sir David
Frost.
Newsplayer.com
Newsplayer.com is NPG's original and flagship website. It is a
subscription-based VOD channel enabling consumers to search for and stream video
and audio clips of major news events around the world since 1896. The content
for Newsplayer.com is provided via NPG's 20-year non-exclusive licence (acquired
in 1999) to the ITN archives, which include news from ITN, Reuters, French
Pathe, Gaumont, Paramount, Empire News, and Visnews. The base subscription model
of #25 per annum was launched in August 2000.
Whilst all the material on the site is encoded at both narrowband and broadband
speeds, it is significant that most of the footage streamed by customers has
been over broadband connections. This supports the Directors' belief that the
Company is well positioned to benefit from the rapid take up of high speed
Internet connections around the world.
PureWorldCup
In February 2002, NPG acquired ten-year worldwide internet rights to 11 hours of
World Cup football programming from the North American Institute, Miami.
PureWorldCup (www.pureworldcup.com) features 11 post-produced films celebrating
the highlights from each World Cup tournament from 1958 to 1998. NPG expects to
add highlights from the 2002 tournament in Japan/South Korea to PureWorldCup
shortly. This series is available to consumers for on-demand streaming for #9.99
for a three-month subscription.
NPG Inc. FOOTAGE.net
FOOTAGE.net is the world's leading portal for stock footage. Over 3.5 million
searches are conducted annually over the combined online network of databases.
NPG acquired the trade and assets of FOOTAGE.net in December 2001 through its US
subsidiary NPG Inc.
FOOTAGE.net creates and maintains databases for dozens of the world's leading
stock footage libraries including ABC News, CNN, Action Sports and National
Geographic.
The site brings together in one single location hundreds of thousands of clips
that can be searched with a single query enabling researchers, advertising
agencies and programme makers to find specific footage 24 hours a day, 365 days
a year. The database is currently text only, however NPG is currently building
an advanced platform to incorporate a video facility within the site which will
enable users to view, select, license and order clips online.
The FOOTAGE.net portal has now positioned NPG to take a leading role in the
stock footage industry.
Other Content Rights
In addition to the content currently distributed over NPG's media channels, NPG
maintains the rights, obtained in 2000, to exploit additional video content from
the Alison Mercer Collection and Stock Video of Boston that will provide
opportunities for future revenue growth.
NPG holds 20-year exclusive rights for Internet distribution of The Alison
Mercer Collection, comprising 1,400 video clips and 280 hours of material of
cinema-related and newsreel footage. NPG intends to generate revenues from
licensing the material to third-party websites and from video-on-demand
streaming direct to consumers.
NPG holds 10-year exclusive rights for Internet distribution of The Stock Video
of Boston archive, comprising 800 hours of US sports footage and originating
from Columbia Sports News and Castlefilms. NPG intends to generate revenues from
licensing the material to third-party websites and from video-on-demand
streaming direct to consumers. Together with the Alison Mercer Collection, this
material represents an important addition of content specifically relevant to a
US audience, a key target market for the Company.
Other Strategic Partnerships
* In March 2003 NPG agreed syndication and referral partnerships with Cross
Media Entertainment (CME) and Global Media Services (GMS) on a percentage share
of video on demand (VOD) revenues and broaden distribution beyond ISP audiences
to other online communities.
* In January 2003 French mobile operator SFR selected VideoTV for use in
its trial of mobile streaming and download technology.
* The October 2001 agreement with SingaporeONE continues to bring in
advertising and subscription revenues through a service featuring NPG properties
only.
* In the UK, both NTL and BT feature NPG properties as premium content,
providing greater incentive for their broadband services. The NTL agreement made
in 2001 shares NPG subscription revenues and will grow during 2003 into an
additional, VOD entertainment channel exclusive to NTL subscribers.
* In August 2002, BT entered into a referral agreement, offering bounty
payments for broadband sales directly referred to from several NPG properties.
* The June 2001 agreement with Freeserve Plus expanded in 2002 to include
the PureWorldCup.com and VideoTV channels.
* In March 2003, NPG's partnership with EMI expanded to include the
provision and distribution rights of audio downloads from the EMI catalogue.
* NPG also partnered with GMS for streaming backbone services.
* NPG's technology agreement with Microsoft continues with the exclusive
use of the Windows Media Player as an online streaming format. In return,
Microsoft promotes newsplayer.com on windowsmedia.com as part of the product
launch of the Windows Media Player 9 series.
* Hollinger International (Telegraph Group) a strategic investor and
partner of NPG continue to provide an important and valuable resource to the
Company.
FINANCIAL RESULTS
Extract of the audited financial information for the year ended 31st October
2002 is as follows:
Consolidated Profit and Loss account
Year ended Year ended
31st Oct 2002 31st Oct 2001
(audited) (audited)
Note # #
Turnover 954,264 902,101
Cost of sales (526,737) (4,439)
Gross profit 427,527 897,662
Operating expenses (3,951,978) (2,809,651)
Operating loss (3,524,451) (1,911,989)
Net interest receivable 59,855 291,546
Loss on ordinary activities (3,464,596) (1,620,443)
before taxation
Taxation (1,000) (1,333)
---------- -----------
Loss on ordinary activities (3,465,596) (1,621,776)
after taxation
Loss per ordinary share - (5.03p) (2.46p)
basic
Loss per ordinary share - (5.03p) (2.52p)
diluted
No statement of total recognised gains and losses has been presented, as there
are no recognised gains and losses other than the loss for the financial year.
Consolidated Balance Sheet
31st Oct 2002 31st Oct 2001
(Audited) (Audited)
Note # # # #
Fixed assets:
Intangible assets 2,727,455 1,007,793
Tangible assets 237,370 217,520
--------- ---------
2,964,825 1,225,313
--------- ---------
Current assets:
Debtors 1,067,839 1,793,980
Investments - -
Cash at bank and in 438,874 1,506,713 3,798,221 5,592,201
hand -------- --------
Creditors due within one (342,349) (311,984)
year --------- ---------
Net current assets 1,164,364 5280,217
--------- ---------
Net assets 4,129,189 6,505,530
========= =========
Capital and Reserves
# #
Called up share capital 692,688 658,054
Share premium account 11,707,380 10,652,759
Merger reserve (509,386) (509,386)
Profit and loss account (7,761,493) (4,295,897)
---------- ----------
Shareholders' funds 4,129,189 6,505,530
========== ==========
Consolidated Cash Flow Statement
Year ended 31st Year ended
Oct 2002
31st Oct 2001
(Audited) (Audited)
Note # #
Net cash outflow from operating (1,223,993) (2,335,360)
activities
Returns on investment and servicing of 59,855 346,988
finance
Taxation (1,500) (1,000)
Capital expenditure and financial (1,893,015) (1,084,053)
investment
Management of liquid resources - (5,100,000)
Acquisition (335,330) -
Financing:
Issue of ordinary share capital 34,636 -
--------- -----------
Increase in cash (3,359,347) 2,026,575
--------- -----------
Notes to the Financial Highlights
The results for the year ended 31st October 2002 are audited and the comparative
results for the year ended 31st October 2001 are taken from the group's
statutory accounts.
1. Accounting policies
This statement of the 2002 results has been prepared under the historical cost
convention as modified by the revaluation of certain assets and in accordance
with applicable accounting standards. There have been no changes in accounting
policies over the previous year.
2. Turnover
Turnover is subscription income for access to web sites and fees from licensing
of content and applications.
3. Loss per share
The calculation of loss per share is based on a weighted average of 68,942,343
issued ordinary shares (2001: 65,805,357) and on the loss attributable to
ordinary shareholders of #3,465,596 (2001: #1,621,776).
No adjustment has been made to the diluted loss per share for out of money
options and diluted loss per share therefore equals basic loss per share.
4. Share Capital
#
Authorised:
90,000,000 ordinary shares of 1 pence each 900,000
Allotted, issued and fully paid:
69,268,797 ordinary shares of 1 pence each 692,688
There have been alterations in the issued share capital during the year.
On November 2001 EMI Recorded Music Holdings, Inc. was issued 3,290,300 1p
shares in exchange for #32,903 and a five year non-exclusive agreement to
license footage from EMI's catalogue of historic and current video material.
The license was valued at #1,054,621. EMI Recorded Music Holdings, Inc. was also
given the option to subscribe to an additional 173,140 1p shares. This option
was exercised on 25 April 2002.
At 31st October 2001 there were 3,729,330 unapproved share options outstanding
under the Executive Share Option Scheme. Of these, 1,250,303 options are
exercisable at any time between 30th May 2003 and 30th May 2010 at an exercise
price of 84p, and the remaining 2,479,027 options are exercisable between 19th
January 2001 and 19th January 2011 at an exercise price of 49.17p.
There are also 429,800 warrants in issue at 46.54p, exercisable at any time up
to and including the date which falls 28 days after the publication of the
Company's final results for the year ending 31st October 2005.
5. Reconciliation of operating loss to operating cash flows
# #
Operating loss (3,524,451) (1,911,989)
Write off intangibles 998,699 -
Depreciation 82,600 43,876
Amortisation 376,582 177,692
Loss on disposal fixed assets 5,990 -
Increase in debtors 805,891 (52,140)
(Decrease)/Increase in creditors 30,696 (592,799)
---------- ---------
Net cash outflow from operating activities (1,223,993) (2,335,360)
========== =========
6. Taxation
The tax charge represents the minimum payable by one of the group subsidiaries
Newsplayer International Limited, a Guernsey registered company.
ANNUAL REPORT
The Annual Report, which contains the audited financial statements, is available
to shareholders in and to members of the public from the Company's registered
office at 12 Gough Square, London EC4A 3DW and from the Company's website at
www.npg-plc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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