TIDMHMF
RNS Number : 2662B
Handmade PLC
23 October 2009
23 October 2009
HandMade plc
("HandMade" or "the Group")
Final Results
For the year ended 31 December 2008
HandMade plc (AIM: HMF), the UK and US based film entertainment company
that owns, acquires, produces and exploits intellectual property rights,
announces its Final Results for the year ended 31 December 2008.
SUMMARY OF FINANCIAL RESULTS
+------------------------------------------+---+-----------+-----------+-----------+
| | | 2008 | 2007 | |
+------------------------------------------+---+-----------+-----------+-----------+
| | | GBPm | GBPm | |
+------------------------------------------+---+-----------+-----------+-----------+
| Revenue | | 4.85 | 1.93 | |
+------------------------------------------+---+-----------+-----------+-----------+
| EBITDA (loss) | | (0.99) | (2.95) | |
+------------------------------------------+---+-----------+-----------+-----------+
| Retained loss for the year | | 5.72 | 6.48 | |
+------------------------------------------+---+-----------+-----------+-----------+
| Loss per share (p) | | 4.6p | 5.5p | |
+------------------------------------------+---+-----------+-----------+-----------+
OPERATING HIGHLIGHTS
* The $70m budget "Planet 51" CGI animation film has secured a US release date
with Sony Pictures for 'Thanksgiving Holiday Week' November 2009
* Merchandising agreement signed with SEGA to develop the "Planet 51" Video Game
* "Fifty Dead Men Walking" feature film, starring Jim Sturgess and Sir Ben
Kingsley, completed and premiered at Toronto Film Festival in September 2008 to
excellent reviews
* Worldwide distribution agreements signed for "Manolete". The film is to be
released Q4 2009.
* The animated feature film, "The Adventures of Eloise, Africa", commenced
production with scheduled completion Q1 2010
POST PERIOD HIGHLIGHTS
* Theatrical distribution deals signed for "50 Dead Men Walking" with Metrodome
for UK territory, and additional distributors for territories in Europe, Asia
and South America
* "50 Dead Men Walking" cinema premiered in 80 UK cinemas in April 2009
* The feature films, "Cracks" starring Eva Green and "Manolete" starring Penelope
Cruz and Adrien Brody, were completed and scheduled for release Q4 2009
The Company is also pleased to announce that it has now published its
outstanding financial accounts, copies of the annual report and financial
statements for the year ended 31 December 2008 will be sent to shareholders
during the course of today and will be available on the Company's website
www.handmadeplc.com shortly. Accordingly, trading in the Company's securities on
the AIM Market of the London Stock Exchange is expected to resume at 8.00am on
Monday 26 October 2009.
The Company's annual general meeting will be held at the offices of Field Fisher
Waterhouse, 35 Vine Street, London, EC3N 2AA at 9.45am on Monday 16 November
2009.
David Ravden, CEO of HandMade plc, commented: "2008 saw HandMade's efforts begin
to come to fruition with the completion of our co-produced film "50 Dead Men
Walking" which was theatrically released in the UK earlier this year with a DVD
release in September. In 2008, our sales and marketing division secured the
coveted "Thanksgiving Holiday Week" in November 2009 for the theatrical release
of our CGI animation film "Planet 51". This is the key week in the US cinema
family calendar and further endorses the potential of this film."
Copies of the Company's Final Results for the year ended 31 December 2008 have
been posted to shareholders and will shortly be available on the Company's
website www.handmadeplc.com .
For further information please contact:
HandMade plc 020 7518 8230
David Ravden, CEO
Conduit PR 020 7429 6603
Jos Simson, Charlie Geller
Canaccord Adams 020 7050 6500
Mark Williams, Andrew Chubb
About HandMade
HandMade Plc, which encompasses HandMade Films International and HandMade Film
Productions, is an international rights and film production company with one of
the UK's largest independent film libraries. The HandMade Group owns, acquires,
produces and exploits intellectual property rights, comprising film, TV and
theatrical productions, book and music rights and merchandising. They are the
sole owners of all ancillary and merchandising rights to the iconic children's
book character 'Eloise' and specialise in the marketing and branding of all
'Eloise' merchandise plus production and marketing of remakes of all films in
their library. HandMade Plc was re-admitted to trading on AIM in May 2006 and
has offices in both London and Los Angeles.
Under the original ownership of George Harrison, HandMade was responsible for
producing some of the great British films of the 70's and 80's: The Long Good
Friday, Mona Lisa and Time Bandits to name but a few. More detail, together with
the Company's AIM Rule 26 information is available on the Company's website
www.handmadeplc.com
Chairman's statement
In 2008 HandMade has started to deliver on our business plans and we have
generated activity across the group's four core divisions - Library Rights and
Content, Eloise Rights Exploitation, Film Production, Film Sales Marketing and
Structured Film Finance - which the directors believe will lead to future income
streams and profits.
The financial results for the year reflect the progress that is being made with
revenue increasing, from GBP1.93m to GBP4.85m, and EBITDA improving from a loss
of GBP2.95m to a loss of GBP0.99m. These improved results are discussed in more
detail in the Business Review below.
Despite the global crisis in the financing and economic market, the
entertainment industry has demonstrated strong resilience. Cinema attendance has
increased in the US 16% so far in 2009 and this trend is being seen in the UK
and other major territories. Fewer films are being made as availability of
project finance from hedge funds and the banking sector has declined. However,
there is an increased interest from private individuals looking to invest in
film productions as an alternative investment to the traditional equity or
property markets.
We had a successful Cannes in 2008, with our sales division, HandMade Films
International ('HFI') negotiating distribution agreements for our slate of
films. The market is showing us that there is a demand for larger budget films
with highly recognised actors and directors such as our film re-makes of "The
Long Good Friday" and "Time Bandits". "The Long Good Friday" is written and
directed by Paul W.S. Anderson ("AVP: Alien vs. Predator", "Resident Evil", and
"Death Race"). There is an agreement with Sony to release "The Long Good Friday"
in the U.S. and a further agreement with Studio Canal to release the film in the
major European territories.
Our co-produced feature film, "Fifty Dead Men Walking" which stars Ben Kingsley
and Jim Sturgess was completed in 2008 and theatrically released in the UK in
April 2009. The film opened to excellent reviews and performed steadily in
cinemas across the UK. Looking forwards we anticipate substantial DVD sales
income from the UK and foreign territories.
Autumn 2009 will also see the theatrical release of "Manolete" starring Penelope
Cruz and Adrien Brody. "Cracks" starring Eva Green, has also been completed and
will be released in Q4 2009. Both of these films will generate sales commissions
for the group.
"Planet 51", our $70m CGI animation feature film, co-produced with our Spanish
partners Ilion, has completed its post production and has been delivered to
distributors, to a very favourable response. With the voices of Dwayne "The
Rock" Johnson, Gary Oldman, Jessica Biel and John Cleese playing the lead
characters, the film is to be released in the US by Sony in 3,500 cinemas..I am
delighted that we have secured the coveted 'Thanksgiving Holiday Week' in
November for the film's theatrical release. This is the most prized week to
release a film in the US and has proved very successful in the past,
particularly for animated and other family films from the major studios. With a
marketing spend exceeding $70 million already committed prior to its release, we
believe "Planet 51" will be one of the great family film successes of 2009.
We have three films in various stages of development that are currently
scheduled to commence shooting in 2010, "Mona Lisa", "Long Good Friday" and
"Eloise in Paris". With these films in the pipeline we are optimistic that our
film production division will deliver financial success in 2010 and beyond.
HandMade Films International, our sales and finance division, will also earn
sales commissions for the group from these films.
Our library and content division of over 100 films continues to create annual
income especially from rights fees generated by our remakes. In the US our
existing licensing agreements for distribution of our video and television
rights have expired and we are in the process of negotiating new distribution
deals which are forecast to generate additional income for 2009. Video
downloading and video on-demand offer potential new income streams for us, and
we are looking to exploit these opportunities.
There has been a delay to the filming of our first Eloise feature film, "Eloise
in Paris", which is now scheduled to commence pre-production in Q4 2009. The
film stars Uma Thurman and is written and directed by Charles Shyer who
previously made "Parent Trap", "Private Benjamin" and "The Father of The Bride"
films. The film is to be released in 2010 .This will be the first of the Eloise
feature films from the franchise, with the follow up "Eloise Goes to Hollywood"
in development. An animated film "The Adventures of Eloise, Africa" is in
production for television and DVD, and is scheduled for release in 2010. We plan
to produce one of these animated films every 18 months, with the next film being
"The Adventures of Eloise, Japan". The Eloise franchise is now starting to gain
pace, with these film projects, as well as a Broadway musical that is currently
in development, all serving to increase the licensing and merchandising
opportunities from Eloise that are available to exploit. Eloise is one of the
most iconic and well known children's characters in the US and we believe this
franchise will be very profitable to HandMade for many years to come.
In 2008 we were in negotiations to acquire several opportunities in the
children's entertainment sector, both in the US and UK. These transactions have
now been finalised and full details are included in a circular that will be sent
to shareholders with the Company's Final Results, and will also be available on
the Company's website. These transactions will allow us to add new content and
key talent to our group as well as complement the development of our iconic
Eloise brand. This acquisitive growth will entail opening an office in New York
to position our children's operations in the world's biggest entertainment
market.
With the progress made to date and with further films in development and
pre-production, Handmade plc is well positioned to execute its business plan for
growth and profitability in the future.
Patrick Meehan
Chairman
22 October 2009
Operational Review
Library Rights and Content
HandMade's library contains over 100 feature films that are exploited through
the licensing of theatrical, television, DVD and other home entertainment rights
in various territories around the world. The Group also generates revenue from
licensing the rights to produce re-makes, prequels and sequels of certain films
in its library. In the year to 31 December 2008, library revenue was GBP2.4 m
this figure being bolstered by two large Rights Fees generated from the remakes
of "The Long Good Friday" and "Mona Lisa". The "Time Bandits" franchise is
forecast to produce substantial rights fees in 2010.
The Group is currently in the process of securing new distribution deals for our
video and television rights in the US, as our previous deals have now expired.
These new agreements are forecast to bring in advances and royalties for the
2009 financial year. We also anticipate income starting to flow from video
downloading and video on demand, which will increase in the coming years as
these formats gain popularity.
Eloise Rights Exploitation
Eloise is one of the most iconic and well known children's book characters in
the US. HandMade owns the world wide non-publishing rights to Eloise and the
Group's strategy is to exploit this brand across a range of platforms including
film, animation and a Broadway show.
As previously announced we are developing our first Eloise feature film, "Eloise
in Paris". The film is expected to have a $30m budget and in 2008 we announced
the casting of Uma Thurman as the lead role. Due to unforeseen delays,
pre-production is now scheduled to commence Q4 2009. The sequel "Eloise Goes to
Hollywood" is scheduled to commence production 12 months following the
completion of "Eloise in Paris".
As well as the feature film, a $2.5m animated film, "The Adventures of Eloise,
Africa" is in production with delivery scheduled for the first half of 2010.
This will be shown on television later that year with further revenue generated
from the following DVD sales. HandMade's strategy is to produce an Eloise
animated film every 18 months, with "The Adventures of Eloise, Japan" scheduled
to commence in 2010.
Development of the Eloise Broadway play and additional merchandising
opportunities are progressing well. With the first Eloise feature film, animated
productions and merchandising coming on stream, we are optimistic that 2010 and
2011 will be lucrative years for the Eloise franchise.
Film production
For "Eloise in Paris" and the re-makes of films in its own library, HandMade
expect to receive significant producer fees and also overhead contribution
income.
The Group's feature film, "50 Dead Men Walking" was completed in 2008 with a
budget of $12m and premiered in the UK in April 2009 to excellent reviews. The
film was distributed by Metrodome in the UK as well as in several territories in
Europe, Asia and South America.
We are in pre-production of the re-make of "Mona Lisa" which is to be directed
by Larry Clark of "Kids" fame and filmed in New York and Toronto and is expected
to be released in 2010, the film has a budget of $13m.
The screenplay for the $40m budget "The Long Good Friday" is complete, and
location scouting and casting are in progress. The film will start
pre-production in 2010 for release in 2011. The film is to be released in the US
by Sony and in major European territories by Studio Canal. The film is written
and directed by Paul WS Anderson who's most recent project was "Death Race" for
Universal Films and previously made the "Resident Evil" films and "AVP: Alien
vs. Predator". The film is to be shot in Florida.
Films:
Completed
Fifty Dead Men Walking - Director: Kari Skogland. A fast paced action thriller
starring Jim Sturgess and Sir Ben Kingsley. The film premiered in the UK on 10
April 2009.
Cracks - Director: Jordan Scott. A drama set in an all-girls boarding school
starring Eva Green. Release anticipated in Q4 2009.
Manolete - Director: Menno Meyjes. A film based on the legendary matador Manuel
Rodriguez Sanchez and his love affair with actress Lupe Sino, starring Penelope
Cruz and Adrien Brody. Release anticipated in Q4 2009.
Planet 51 - Director: Jorge Blanco. An animated adventure film written by Joe
Stillman with the voices of Dwayne "The Rock" Johnson, Justin Long, Jessica
Biel, John Cleese, Seann William Scott and Gary Oldman. Release anticipated 20
November 2009.
In Production
The Adventures of Eloise, Africa - Animated feature film of the iconic US
children's character "Eloise."
In Pre-production
Eloise in Paris - Director and writer: Charles Shyer. A classic children's story
starring Uma Thurman, and Jordana Beatty.
Long Good Friday - Written and directed by Paul WS Anderson. A US remake of the
classic British film.
Mona Lisa - Director: Larry Clark. A US remake of the classic British film.
In Development
Dali & I - Director: Andrew Niccol. The story of the Spanish painter, Salvador
Dali.
The Job - Director: Brad Mirman. The story of career criminals who plan to rob a
Casino vault containing EUR60m.
The Originals - Written by Rupert Walters, The story of the creation of the SAS
by Colonel David Stirling starting in 1941 during the desert campaign in Africa.
Time Bandits - A large budget remake of the original Terry Gilliam classic film
which should become a franchise
Film Sales, Marketing and Structured Film Financing - HandMade Films
International ('HFI')
HFI is now fully integrated into the HandMade Group following its acquisition in
2006. This division secured a number of distribution deals in 2008 for our slate
of films, most notably securing the highly coveted 'Thanksgiving Holiday Week'
in November 2009 for the theatrical release our CGI animation film "Planet 51".
HFI also secured global distribution deals for "50 Dead Men Walking", "Manolete"
and "Eloise in Paris".
Outlook
The Group's hard work to date is now beginning to bear fruit. The release of our
co-produced film "50 Dead Men Walking" was in April this year, and we anticipate
additional income from DVD sales of the film later in 2009 and in 2010.
Our CGI animation film, "Planet 51" is complete and we are very excited about
the "Thanksgiving" release date in November and the subsequent revenue from the
Box Office and merchandising agreements. We have a further two feature films,
"Cracks" and "Manolete", scheduled for release later this year from which we
will earn sales commissions.
Our film library continues to generate consistent annual income and we are
currently negotiating new video and television rights deals in the US which will
bring in additional revenues when secured. This division will also generate
substantial rights fees in the future as we develop remakes such as "Time
Bandits".
Our Eloise franchise is at an exciting stage with our first Eloise feature film,
"Eloise in Paris" starring Uma Thurman, commencing pre-production later this
year and the animated film "The Adventures of Eloise, Africa" on schedule for
release in 2010.
We have an exciting pipeline of income generating projects for release in
2009/10 and beyond and, as referred to in the Chairman's statement above, we
have recently concluded transactions in the children's entertainment sector to
complement this growth. HandMade remains on track for growth and profitability
in the coming years and I look forward to the future with confidence.
D Ravden
Chief Executive Officer
22 October 2009
Business review
Financial review of the year ended 31 December 2008
The results for 2008 reflect the second full year's trading for the HandMade
group following the acquisition of HandMade Holdings Limited by Equator Group
plc (and subsequent name change to HandMade plc) in June 2006, and following the
acquisition of Sequence Film Limited (subsequently re-named HandMade Films
International "HFI") by HandMade plc in November 2006.
The results for the year reflect the progress that is being made with income
showing an increase of GBP2.92m, from GBP1.93m to GBP4.85m, and adjusted EBITDA
improving from a loss of GBP2.66m to a loss of GBP0.99m. Although still
reporting an operating loss, the improved results outlined below are in line
with the expectations of the Board.
Income statement
The reason for the GBP2.92m increase in revenue is twofold.
Firstly the Group received two rights fees totalling GBP1.77m during the year,
compared to just one of GBP0.49m in 2007. Rights fees are received when the
Group grants a one-picture licence allowing the intellectual property it owns,
the film library and Eloise media rights, to be exploited through the production
of a new film, and represent 100% gross profit. Rights fees of $2.5m (GBP1.26m)
and $1.0m (GBP0.51m) were earned this year relating to re-makes of the films
Long Good Friday and Mona Lisa - in 2007 $1.0m (GBP0.49m) was earned for Eloise
in Paris.
Secondly HFI achieved an increase of GBP1.49m, from GBP0.55m to GBP2.04m, in the
sales they made to distributors in their role as sales agents for new films that
were delivered during the year. HFI generate profit by taking a sales commission
of between 10% and 20% on these sales.
HFI's contribution to the Group's revenue is expected to increase significantly
in 2009 and 2010 as the work it has done over the last two years helping to
develop and sell key films in the HandMade portfolio - Planet 51, Eloise in
Paris, and the re-makes of Long Good Friday and Mona Lisa - comes to fruition
when the films are completed and delivered.
The existing film library performed consistently again in 2008 generating
GBP0.63m of income (2007 - GBP0.58m).
The Group's cash administrative expenses (before impairments, amortisation,
depreciation and non cash items) increased by GBP0.48m from GBP3.52m to
GBP4.00m. This 13% increase in costs is due to a number of reasons including the
increase in staff numbers across the group from 16 to 19, an increase in
professional fees relating to the securing of finance for the group, a number of
other one off professional fees incurred during the year, and an increase in
property rental costs in 2008 after the group enjoyed a period of rental
holidays in London and Los Angeles in 2007. Cash administrative expenses are
forecast to increase further in 2009 as the full impact of the additional staff,
and the increased costs associated with securing finance for the group, in the
current difficult financial climate, are felt.
Administrative expenses as disclosed in the consolidated income statement, also
include non cash items such as amortisation and impairment charges relating to
intangible fixed assets.
Adjusted EBITDA is calculated by adjusting the operating loss for all of the
non-cash items described above, and essentially reflects gross profit less cash
administrative expenses. It is one of the measures the Board uses to monitor
financial performance. As the table below shows, adjusted EBITDA showed a loss
of GBP0.99m for the year (2007 - GBP2.66m loss).
+----------------------------------+--------+--------+
| ADJUSTED EBITDA | 2008 | 2007 |
+----------------------------------+--------+--------+
| | GBPm | GBPm |
+----------------------------------+--------+--------+
| Operating loss per income | (3.44) | (6.60) |
| statement | | |
+----------------------------------+--------+--------+
| Amortisation | 2.44 | 3.05 |
+----------------------------------+--------+--------+
| Impairment of intangible assets | - | 0.57 |
+----------------------------------+--------+--------+
| Release negative goodwill to | (0.02) | - |
| income statement | | |
+----------------------------------+--------+--------+
| Depreciation | 0.03 | 0.03 |
+----------------------------------+--------+--------+
| Adjustment - share based | - | 0.29 |
| payment | | |
+----------------------------------+--------+--------+
| | | |
+----------------------------------+--------+--------+
| Adjusted (loss) BITDA | (0.99) | (2.66) |
+----------------------------------+--------+--------+
| | | |
+----------------------------------+--------+--------+
| Gross profit | 3.01 | 0.86 |
+----------------------------------+--------+--------+
| Cash administrative expenses | (4.00) | (3.52) |
+----------------------------------+--------+--------+
| | | |
+----------------------------------+--------+--------+
| Adjusted (loss) BITDA | (0.99) | (2.66) |
+----------------------------------+--------+--------+
Amortisation and impairment of intangible assets decreased from a combined total
of GBP3.62m in 2007 to GBP2.44m this year. This is due to the one off impairment
charge of GBP0.57m that was required last year against the sales agency
agreements acquired with Sequence Films Limited. The effect of this impairment
charge in 2007 was to reduce the amortisation charge required against this asset
in 2008 in order to write its net book value down to GBPnil as at 31 December
2008 (the end of its useful economic life).
As described below impairment tests were performed on the Group's remaining
intangible assets. The tests satisfactorily supported the value of these assets
in the accounts and a GBPnil impairment charge was required (2007 - GBP567,000).
Net finance costs in the income statement have increased by GBP1.34m from
GBP1.62m to GBP2.96m. This increase is entirely due to a foreign exchange loss
of GBP1.37m (2007 - GBP0.03m loss) suffered in 2008 when EUR7.1m worth of loans
taken on by the Group to fund its investment in Planet 51 are re-converted to a
very weak GBP sterling, using the prevailing exchange rate of GBP1 = EUR1.027 at
31 December 2008.
It should be noted, however, that the foreign exchange risk to which the group
is exposed to from EUR6.1m of these loans is GBPnil. This is because they are
non-recourse loans (see below) and as such are only repayable from the net
profits of the film Planet 51.
As last year, the income tax credit of GBP0.68m (2007 - GBP1.74m) is a result of
the release to the income statement of the deferred tax liability recognised in
respect of the intangible assets acquired with Handmade Holdings and Sequence
Films in 2006, over the same period these assets are amortised.
The retained loss for the year of GBP5.72m (2007 - GBP6.48m) will be transferred
to reserves.
Balance sheet
The Group's main assets are the Equator and HandMade film libraries and the
Eloise intellectual property which have a combined value in the balance sheet of
GBP30.87m (2007 - GBP33.31m). In accordance with IAS 36 impairment tests have
been performed, via the use of discounted future cash flows, to support the
values attributed to these assets, with the result that no impairment of these
assets was required.
Goodwill of GBP10.32m (2007 - GBP11.75m) is held as an asset in the balance
sheet at the year end. This balance arose as a result of the deferred tax
liability that is recognised under IFRS in respect of the intangible assets
acquired with HandMade and Sequence in 2006. GBP7.80m of the total deferred tax
liability of GBP8.64m relates to the intangible assets acquired in 2006, and
shelters all but GBP2.52m of the goodwill asset.
At 31 December 2007, goodwill arising from the acquisition of Sequence Film
Limited made up the GBP1.43m of the asset that did not arise as a result of the
deferred tax liability. During 2008 this element of the goodwill was eliminated
because GBP1.45m of contingent consideration relating to the acquisition did not
crystallise as expected. The GBP0.02m negative goodwill generated by the
reversal of the contingent consideration was credited to the income statement
during the year.
Under IFRS, goodwill is not amortised, but is subject to an annual impairment
test. Following analysis of the goodwill balance, no impairment was required.
Current assets (excluding cash) have increased from GBP5.63m to GBP8.91m largely
due to the level of development costs that the Group has expended on current
film projects, particularly Planet 51, all of which are expected to be recouped
once the projects get underway in the future.
At the balance sheet date, the Group had a cash balance of GBP2.33m (2007 -
overdraft of GBP0.26m). The increase in cash is a result of a EUR3.59m Planet 51
related loan being drawn down in mid December 2008, and not all being invested
in the film before the balance sheet date - the majority of the loan balance has
been invested in 2009.
Short term financial liabilities have increased from GBP5.76m to GBP7.87m as a
short term measure to meet the working capital and development cost requirements
of the Group whilst the different income generating streams are being developed.
It should be noted that GBP2.16m of the above figure relates to loans used to
fund the group's investment in Planet 51. GBP1.26m of these loans have now been
repaid from revenues generated in the second half of 2009 when Planet 51 was
delivered to distributors.
During the year, the group managed to secure GBP5.95m of long term non-recourse
loans to help fund its investment in Planet 51, indeed GBP1.07m of the GBP5.76m
2007 short term financial liabilities balance was replaced by this more
advantageous facility. The loans will only be repaid from the net profits
generated by Planet 51. If the film is unsuccessful for any reason, the Handmade
Group will not have to repay the liability. Securing funding of this nature was
a real achievement effectively allowing the group risk free investment into this
film.
Share capital and share premium increased by an aggregate of GBP4.75m as a
result of an issue of 23,456,790 ordinary shares during the year at 20.25p each.
The shares were issued to settle part of the deferred consideration due to
Cartier for the acquisition of the Handmade Group in 2006.
Consolidated Income Statement for the year ended 31 December 2008
+---------------------------------------+--------+------------+--+------------+
| | Notes | 2008 | | 2007 |
+---------------------------------------+--------+------------+--+------------+
| | | GBP000 | | GBP000 |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Continuing operations | | | | |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Revenue | | 4,855 | | 1,936 |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Cost of sales | | (1,841) | | (1,072) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Gross profit | | 3,014 | | 864 |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Administrative expenses | | (6,455) | | (7,464) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Operating loss | | (3,441) | | (6,600) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Finance income | | 7 | | 3 |
+---------------------------------------+--------+------------+--+------------+
| Finance costs | | (2,967) | | (1,621) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Loss before tax | | (6,401) | | (8,218) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Income tax | 2 | 683 | | 1,738 |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Loss for the year attributable to | | (5,718) | | (6,480) |
| equity holders | | | | |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Loss per share - basic and diluted | 3 | 4.6p | | 5.5p |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
All the Group's activities are derived from continuing operations.
Consolidated Statement of Recognised Income and Expenditure for the year ended
31 December 2008
+---------------------------------------+--------+------------+--+------------+
| | Notes | 2008 | | 2007 |
+---------------------------------------+--------+------------+--+------------+
| | | GBP000 | | GBP000 |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Loss for the year | | (5,718) | | (6,480) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Total recognised income and expense | | (5,718) | | (6,480) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
| Attributable to equity holders | | (5,718) | | (6,480) |
+---------------------------------------+--------+------------+--+------------+
| | | | | |
+---------------------------------------+--------+------------+--+------------+
Consolidated Balance Sheet as at 31 December 2008
+------------------------------------+--------+-------------+--+-------------+
| | Notes | 2008 | | 2007 |
+------------------------------------+--------+-------------+--+-------------+
| | | GBP000 | | GBP000 |
+------------------------------------+--------+-------------+--+-------------+
| ASSETS | | | | |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Non-current assets | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Goodwill | | 10,320 | | 11,748 |
+------------------------------------+--------+-------------+--+-------------+
| Intangible assets | | 30,871 | | 33,310 |
+------------------------------------+--------+-------------+--+-------------+
| Property, plant and equipment | | 85 | | 111 |
+------------------------------------+--------+-------------+--+-------------+
| Investment in associate | | - | | - |
+------------------------------------+--------+-------------+--+-------------+
| | | 41,276 | | 45,169 |
+------------------------------------+--------+-------------+--+-------------+
| Current assets | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Development costs - (recoverable | | 6,105 | | 2,926 |
| after 1 year) | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Trade and other receivables | | 2,804 | | 2,699 |
+------------------------------------+--------+-------------+--+-------------+
| Cash and cash equivalents | | 2,332 | | - |
+------------------------------------+--------+-------------+--+-------------+
| | | 11,241 | | 5,625 |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Total assets | | 52,517 | | 50,794 |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| LIABILITIES | | | | |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Current liabilities | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Financial liabilities | | 7,873 | | 5,758 |
+------------------------------------+--------+-------------+--+-------------+
| Trade and other payables | | 11,470 | | 14,274 |
+------------------------------------+--------+-------------+--+-------------+
| Current tax liabilities | | - | | - |
+------------------------------------+--------+-------------+--+-------------+
| | | 19,343 | | 20,032 |
+------------------------------------+--------+-------------+--+-------------+
| Non-current liabilities | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Financial liabilities - non | | 5,948 | | - |
| recourse loans | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Financial liabilities - other | | 1,284 | | 585 |
+------------------------------------+--------+-------------+--+-------------+
| Trade and other payables | | - | | 2,065 |
+------------------------------------+--------+-------------+--+-------------+
| Deferred tax liabilities | | 8,644 | | 9,327 |
+------------------------------------+--------+-------------+--+-------------+
| | | 15,876 | | 11,977 |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Total liabilities | | 35,219 | | 32,009 |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| EQUITY | | | | |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Capital and reserves | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Share capital | 4 | 7,116 | | 5,943 |
+------------------------------------+--------+-------------+--+-------------+
| Share premium | 4 | 12,753 | | 9,176 |
+------------------------------------+--------+-------------+--+-------------+
| Merger reserve | 4 | 21,832 | | 21,832 |
+------------------------------------+--------+-------------+--+-------------+
| Shares to be issued | 4 | - | | 519 |
+------------------------------------+--------+-------------+--+-------------+
| Retained earnings | 4 | (24,403) | | (18,685) |
+------------------------------------+--------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Equity attributable to equity holders of | 17,298 | | 18,785 |
| the parent | | | |
+---------------------------------------------+-------------+--+-------------+
| | | | | |
+------------------------------------+--------+-------------+--+-------------+
| Total equity and liabilities | | 52,517 | | 50,794 |
+------------------------------------+--------+-------------+--+-------------+
The consolidated financial statements were approved by the board of directors
and authorised for issue on 22 October 2009 and signed on their behalf by:
D Ravden
Director
Consolidated Cash Flow Statement for the year ended 31 December 2008
+-------------------------------------+----------+-----+-------------+--+-------------+
| | Notes | 2008 | | 2007 |
+-------------------------------------+----------------+-------------+--+-------------+
| | | GBP000 | | GBP000 |
+-------------------------------------+----------------+-------------+--+-------------+
| | | | | |
+-------------------------------------+----------------+-------------+--+-------------+
| Cash flows from operating | | | | |
| activities | | | | |
+-------------------------------------+----------------+-------------+--+-------------+
| Loss before tax for the year | (6,401) | | (8,218) |
+------------------------------------------------------+-------------+--+-------------+
| | | | |
+------------------------------------------------------+-------------+--+-------------+
| Adjustment to reconcile loss before tax to net cash | | | |
| flows: | | | |
+------------------------------------------------------+-------------+--+-------------+
| - finance income | | (7) | | (3) |
+------------------------------------------------+-----+-------------+--+-------------+
| - finance costs - excl currency translation | | 1,594 | | 1596 |
| differences | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| - currency translation differences | | 1,373 | | 25 |
+------------------------------------------------+-----+-------------+--+-------------+
| - depreciation of property, plant and | | 30 | | 28 |
| equipment | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| - amortisation of intangible assets | | 2,439 | | 3,055 |
+------------------------------------------------+-----+-------------+--+-------------+
| - release of negative goodwill to income | | (23) | | - |
| statement | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| - impairment of intangible assets | | - | | 567 |
+------------------------------------------------+-----+-------------+--+-------------+
| - share based payment expense | | - | | 291 |
+------------------------------------------------+-----+-------------+--+-------------+
| Operating cash flows before movements in working | (995) | | (2,659) |
| capital | | | |
+------------------------------------------------------+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Changes in working capital: | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| - increase in development costs | | (3,193) | | (2,748) |
+------------------------------------------------+-----+-------------+--+-------------+
| - increase in trade and other receivables | (105) | | (73) |
+------------------------------------------------------+-------------+--+-------------+
| - increase / (decrease) in trade and other | | 1,042 | | (925) |
| payables | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Income tax paid | | - | | - |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Net cash used in operating activities | | (3,251) | | (6,405) |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Cash flows from investing activities | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Purchases of property, plant and equipment | | (4) | | (59) |
+------------------------------------------------+-----+-------------+--+-------------+
| Interest received | | 7 | | 3 |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Net cash used in investing activities | | 3 | | (56) |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Cash flows from financing activities | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Proceeds on issue of ordinary shares | | - | | 540 |
+------------------------------------------------+-----+-------------+--+-------------+
| Proceeds from new loans raised | | 9,274 | | 3,175 |
+------------------------------------------------+-----+-------------+--+-------------+
| Repayment of loans | | (2,925) | | - |
+------------------------------------------------+-----+-------------+--+-------------+
| Repayment of convertible loan note | | (50) | | - |
+------------------------------------------------+-----+-------------+--+-------------+
| Interest paid on convertible loan note | | (143) | | (120) |
+------------------------------------------------+-----+-------------+--+-------------+
| Other interest paid | | (316) | | (331) |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Net cash generated from financing activities | | 5,840 | | 3,264 |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Net increase / (decrease) in cash and cash | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| equivalents | 2,592 | | (3,197) |
+------------------------------------------------------+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Cash and cash equivalents at the beginning of the | (260) | | 2,937 |
| year | | | |
+------------------------------------------------------+-------------+--+-------------+
| | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| Cash and cash equivalents at the end of the | | 2,332 | | (260) |
| year | | | | |
+------------------------------------------------+-----+-------------+--+-------------+
| | | | | |
+-------------------------------------+----------+-----+-------------+--+-------------+
Notes to the Accounts for the year ended 31 December 2008
1. The financial information set out on the attached pages does not
constitute statutory accounts, within the meaning of sections 434(3) and 435(3)
of the Companies Act 2006, for the years ended 31 December 2008 or 31 December
2007 but is derived from those accounts. Statutory Accounts for the year ended
31 December 2007 have been delivered to the Registrar of Companies and those for
the year ended 31 December 2008 will be delivered following this announcement.
The auditors reported on those accounts; their report in respect of the year
ended 31 December 2007 was unqualified and did not contain a statement under
s237 (2) or (3) Companies Act 1985. Their report for the year ended 31 December
2008 was also unqualified, but referred to a matter concerning the going concern
status of the Group to which the auditors drew attention by way of emphasis
without qualifying their report. This report did not contain a statement under
s237(2) or (3) Companies Act 1985.
2. Taxation
+-----------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+-----------------------------------------------+------------+--+------------+
| | GBP000 | | GBP000 |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Current tax | - | | - |
+-----------------------------------------------+------------+--+------------+
| Deferred tax | (683) | | (1,738) |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Income tax credit | (683) | | (1,738) |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
The tax rate used for the reconciliations is the corporate tax rate of 28%
(2007: 30%) payable by the corporate entities in the UK on taxable profits under
tax law in that jurisdiction. Taxation for other jurisdictions is calculated at
the rates prevailing in the respective jurisdictions.
The credit for the year can be reconciled to the loss per the income statement
as follows:
+-----------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+-----------------------------------------------+------------+--+------------+
| | GBP000 | | GBP000 |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Loss before taxation | (6,401) | | (8,218) |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Income tax calculated at 28% (2007: 30%) | (1,792) | | (2,465) |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Effect of expenses that are not deductible | 966 | | 1,476 |
+-----------------------------------------------+------------+--+------------+
| Effect of unused tax losses not recognised as | 826 | | 966 |
| deferred tax assets | | | |
+-----------------------------------------------+------------+--+------------+
| Adjustments in relation to the current tax of | - | | 23 |
| prior years | | | |
+-----------------------------------------------+------------+--+------------+
| Effect of non deductible expenses on deferred | (683) | | (1,072) |
| tax | | | |
+-----------------------------------------------+------------+--+------------+
| Effect of change in rate at which deferred | - | | (666) |
| tax is recognised | | | |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Income tax credit | (683) | | (1,738) |
+-----------------------------------------------+------------+--+------------+
| |
+-----------------------------------------------+------------+--+------------+
A deferred taxation asset of approximately GBP2,589,000 (2007: GBP1,763,000) has
not been recognised on losses available to carry forward as the recoverability
of any asset is dependent on sufficient profits being achieved in certain
subsidiaries. The timings of any such profits are uncertain.
Notes to the Accounts for the year ended 31 December 2008
3.Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
+-----------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+-----------------------------------------------+------------+--+------------+
| Loss | GBP000 | | GBP000 |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
| Loss for the year attributable to equity | 5,718 | | 6,480 |
| holders | | | |
+-----------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------+------------+--+------------+
+-----------------------------------------------+-------------+--+-------------+
| Weighted average number of shares | Number | | Number |
+-----------------------------------------------+-------------+--+-------------+
| | | | |
+-----------------------------------------------+-------------+--+-------------+
| Weighted average number of shares in issue | 124,637,270 | | 117,891,125 |
+-----------------------------------------------+-------------+--+-------------+
| | | | |
+-----------------------------------------------+-------------+--+-------------+
| | | | |
+-----------------------------------------------+-------------+--+-------------+
| Basic and diluted loss per share | 4.6p | | 5.5p |
+-----------------------------------------------+-------------+--+-------------+
| | | | |
+-----------------------------------------------+-------------+--+-------------+
As the Group has made a loss for the year the loss per share has not been
diluted.
The number of potentially dilutive shares and share options in issue at the
balance sheet date was 6,925,000 (2007 - 6,925,000).
4. Statement of changes in equity
+----------------------------------+---------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+----------------------------------+---------+---------+---------+----------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Balance at 1 January 2007 | 14,579 | 21,832 | 819 | (12,496) | 24,734 |
+----------------------------------+---------+---------+---------+----------+---------+
| Changes in equity for 2007 | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Loss for the year | - | - | - | (6,480) | (6,480) |
+----------------------------------+---------+---------+---------+----------+---------+
| Total recognised income and | | | | | |
| expense for the | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| period | - | - | - | (6,480) | (6,480) |
+----------------------------------+---------+---------+---------+----------+---------+
| Issue of share capital | 540 | - | - | - | 540 |
+----------------------------------+---------+---------+---------+----------+---------+
| Reversal - contingent | - | - | (300) | - | (300) |
| consideration not crystallised | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Recognition of share based | - | - | - | 291 | 291 |
| payments | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Balance at 31 December 2007 | 15,119 | 21,832 | 519 | (18,685) | 18,785 |
+----------------------------------+---------+---------+---------+----------+---------+
| Changes in equity for 2008 | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Loss for the year | - | - | - | (5,718) | (5,718) |
+----------------------------------+---------+---------+---------+----------+---------+
| Total recognised income and | | | | | |
| expense for the | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| period | - | - | - | (5,718) | (5,718) |
+----------------------------------+---------+---------+---------+----------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Issue of new shares | 4,750 | - | - | - | 4,750 |
+----------------------------------+---------+---------+---------+----------+---------+
| Convertible loan note not a | - | - | (519) | - | (519) |
| compound instrument under | | | | | |
| revised terms | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
| Balance at 31 December 2008 | 19,869 | 21,832 | - | (24,403) | 17.298 |
+----------------------------------+---------+---------+---------+----------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+----------+---------+
5 This financial information was approved for release by the board of HandMade
plc on 22 October 2009.
The 2008 accounts will be posted to all shareholders on 23 October 2009. Further
copies can be obtained from the registered office of the Company at 1 Westferry
Circus, Canary Wharf, London E14 4HD. They may also be accessed via the investor
relations section of the Company's website www.handmadeplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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