RNS Number:9016S
Ludorum PLC
23 April 2008
23rd April 2008
LUDORUM PLC PRELIMINARY RESULTS
Ludorum plc, an AIM-listed media investment company, today announces its results
for the financial year ended 31 December 2007.
Highlights
* Chuggington - currently in production for delivery in Autumn 2008.
Broadcast agreements in place with the BBC, SuperRTL, TF1 and ABC, Australia
* Learning Curve Brands named as global toy partner for Chuggington
* Dennis the Menace - Global agreement to represent Dennis and Gnasher
* Marvo, the Wonder Chicken - Ludorum appointed by D C Thomson & Co Ltd to
represent all worldwide rights, excluding publishing, for this comic
character
* Successful capital raising in October 2007. At 31 December 2007 the
company had �1.7m of cash
* Operating loss for year ended 2007 of �1.68m (2006: �1.54m)
* Disposal of Gong Anime Assets in December 2007
Rob Lawes, Ludorum's Chief Executive Officer said:
"We are delighted with the progress we have made in 2007 and are on track for
revenue generation in fiscal year 2008. We will continue to use our depth of
expertise to develop and manage children's intellectual property assets which we
believe will have global appeal. By creating Chuggington organically, we believe
that we are now well positioned to grow the business. Chuggington seamlessly
integrates television, books and interactive view and play. We believe we are
well positioned in the current market place to deliver real value for our
shareholders."
For further information, contact
Rob Lawes - Chief Executive Officer, Ludorum plc 020 8849 8735
Charlie Caminada - Chief Operating Officer, Ludorum plc
Brunswick 020 7404 5959
Ash Spiegelberg
Claire Gore
Chief Executive's Review
Overview
Ludorum plc is an AIM-listed media investment company. The Group is focused on
creating or acquiring and subsequently exploiting the rights for children's
entertainment properties through both conventional media and new media channels.
In the financial year ended 31 December 2007, the Company has made substantial
progress with the development and launch of its first in-house developed
property Chuggington, a new train-based series and interactive website for 2-6
year olds. The series is in production and has been very well received by
broadcasters and potential partners worldwide. We believe Chuggington has global
appeal and the level of interest received to date gives us confidence that this
property will create material value for our shareholders over the longer term.
The Company also recently announced, subsequent to the year end, our appointment
as global distributor to the iconic DC Thomson & Co Ltd property, Dennis the
Menace, as well as the rights to their Dandy comic character Marvo. To manage
and drive these properties forward we have recently recruited and hired a small,
skilled team based in our London and Chicago offices.
Chuggington
We believe Chuggington represents a new and innovative entertainment property
and provides an opportunity to create substantial long term value for the
Company. We believe Chuggington will be the first global train property to be
launched since Thomas the Tank Engine, which was first published in 1948. The
first series consists of a high quality computer-generated 3D animated series of
52 x 10 minute episodes, 26 x 3 minute interstitials and an interactive on-line
web site. Production is underway, and delivery of the first series is due in the
in autumn of 2008. The total production spend for both Series one and the
on-line site is �4.4m.
The Chuggington series follows the adventures of Wilson, Brewster and Koko,
trainee engines called "Chuggers", each with his own unique personality and
learning style. The series is set in a contemporary world much like our own with
cities, villages and diverse cultures and geography. Entertainment, learning,
sharing and enjoyment are at the heart of Chuggington, and embedded within each
story are important developmental messages centred on social-emotional
development including the appropriate expression of various of life's emotions.
The series deals with an extensive range of destinations to explore and
adventures though which children can benefit from the underlying value of
positive life-learning lessons.
Chuggington is directed by Sarah Ball, who won a BAFTA award for her work as a
director and writer of Bob the Builder. The series has been designed by a team
led by Don Toht who has, in the past, been instrumental in the design and
creation of the Thomas & Friends and Bob the Builder toy and play systems.
Chuggington was conceived to seamlessly integrate television, books and
interactive view-and-play. We believe that the on-line component is a crucial
platform for building awareness and interaction as well as offering an enhanced
source of entertainment in the franchise.
Chuggington.com, the interactive site, will allow parents to prioritise the
developmental and learning issues that they believe are important to their
children. The site's Virtual World features will present an immersive and
entertaining world of Chuggington which is both graphically and textually
consistent with the television series. Through quest-based play, users will be
able to enjoy activities based on plot lines and settings taken directly from
the television series. These activities will be created in a modular fashion to
allow us to offer assets to our commercial partners and on the site. Further
information and progress updates are avaialbe at the Chuggington production blog
at www.chuggington.com.
Chuggington was introduced to the international marketplace at the MIPCOM
festival in October 2007 and has been well received by a large number of
broadcasters around the world as evidenced by pre-sale commitments for the
series from leading broadcasters in their respective territories, including the
BBC (UK), Super RTL (Germany), TF1 (France), and ABC (Australia). Following the
April 2008 MIP festival, we continue to see positive global demand for
Chuggington with a number of broadcast deals in Europe, Asia and the Americas
actively under negotiation. Global broadcast is anticipated to commence in
spring 2009 with some regional broadcasts scheduled for earlier dates..
Learning Curve Brands, Inc, a division of RC2 and a leading global toy
manufacturer based in the US, has been granted the master toy licence on a
worldwide basis. Learning Curve plans to develop a substantial global line of
new and innovative toys with both on and off-line applications. Learning Curve
contributes to production costs and will participate in the net profits of the
property.
The Company is currently in the process of concluding key strategic agreements
across home entertainment and publishing revenues and has just started to
receive proposals from other third party licensees across interactive, hard- and
soft-good lines. The Company intends to announce its line up of key strategic
partners at the New York Licensing Show in June 2008.
Dennis the Menace
In January 2008, Ludorum agreed a long-term agency agreement with D C Thomson &
Co. Ltd. to represent global broadcast, home entertainment, consumer product and
new media rights to Dennis and Gnasher, the iconic characters from the Beano
comics which will also be the name given to the television series.
The new series of 52 x 11 minute episodes propels Dennis and Gnasher into the
21st century with a new modern-day look and contemporary storylines. The series,
aimed at five to ten year olds, promises to deliver fun, over-the-top, high
spirited, seat-of-the-pants humour while retaining Dennis's classic
characteristics and it is currently in production for delivery in autumn 2009.
Production is fully funded by D C Thomson & Co. Ltd.
Dennis & Gnasher has thus far been pre-sold to the BBC (who intend to launch the
series in the autumn of 2009) and to the Nine Network in Australia.
Marvo
Marvo the Wonder Chicken is the second property to which Ludorum has been
appointed by D C Thomson & Co. Ltd. to represent all rights, excluding
publishing, worldwide.
Marvo is a series of comedy shorts in the tradition of Looney Tunes and he is
the ultimate "show" chicken. Together with his faithful assistant, Henry, Marvo
attempts to put on the "Greatest Shows on Earth" but everything that can go
wrong does go wrong in a very spectacular way.
52 x 2 minute interstitials are in production for delivery in the autumn of
2008. The shows carry no dialogue as the humour is very visual and this provides
the series with further global appeal. Marvo was launched at MIP in April this
year and was well received. We are engaged in advanced discussions with a number
of major broadcast partners. We believe, due in part to its short running times
and the absence of any language barriers, that Marvo offers several potential
global "new media" opportunities including mobile phone and internet
applications.
Gong Limited
As we explained at the time of Interim Results, we continued during 2007 to
invest in Gong Limited, a subsidiary that was formed in 2006 to distribute anime
content over new media platforms. We believed that the anime genre is
ideally-suited to a variety of new media platforms, but have concluded that Gong
required substantial scale through the acquisition of content and distribution.
Our plan to develop Gong included several acquisitions and joint venture
opportunities in Continental Europe and the USA. However, due to a number of
circumstances, we were unable to complete these transactions and we concluded,
late in the year, that our shareholders' best interests would be served by
Ludorum focusing its management and capital resources on the development and
exploitation of our children's intellectual properties. As a result, an
agreement was reached in December 2007 to sell the anime assets of Gong Limited
for a total cash consideration of Euro190,000. The assets consisted principally
of a number of content agreements and distribution licences for anime content
for exploitation across digital distribution platforms and consequently this
activity is presented as a discontinued operation in the Group's preliminary
results.
Financial Review
Ludorum did not generate any revenues in 2007. Revenues from Chuggington and
Marvo are anticipated to commence in fiscal year 2008 and Dennis the Menace in
2009. Ludorum generated an operating loss in 2007 of �1.68m (�1.54m in the
period to 31 December 2006). The results for 2007 were impacted by a loss on
discontinued operations of �2.88m (�0.456m in the period to 31 December 2006)
from the disposal of the Gong assets and for costs related to aborted
acquisitions and transactions. The total loss for the year, including
discountinued operations, was �4.49m (�1.87m in the period to 31 December 2006).
The underlying administrative expenses, excluding costs attributable to the
Incentive Option Plan, were �1.3m (�1.22m in the period to 31 December 2006).
In October 2007 we completed a capital raising by means of a placing of new
Ordinary Shares at an issue price of 100p per share to raise �3.1 million
(before expenses). The net proceeds of the Placing will be used to fund our
continued growth, including the completion of the production of the first series
of Chuggington and the accompanying on-line program. At the end of the year, the
Company had cash resources of �1.75m (2006: �3.47m). In addition, the Company
has agreed, subject to contract, banking facilities that will help fund future
plans.
Summary
We believe that we can create material capital value for our shareholders by
focussing on the creation, acquisition and representation of children's
intellectual property assets that have global appeal. Our early success with
Chuggington is encouraging and serves to illustrate our strategic aims. We are
looking to be as selective as possible in our investments and are looking to
engage market leading creative teams aligned with a small and dynamic sales and
marketing capability to operate with minimal internal overheads.
The company is placing the appropriate emphasis on being at the forefront of new
media exploitation for its intellectual property assets. Our on-line activities
are an important part of our long-term strategic planning for our properties.
The on-line world of Chuggington.com will have an increasingly important role in
building brand awareness and in delivering enhanced interaction and
entertainment value. Moreover, we believe that it has the potential to unlock
further value in subscription models, fans clubs, download to own and digital
streaming opportunities and that it will serve to link the traditional
activities in broadcast, consumer products, publishing and home entertainment.
Ludorum will continue to develop its own new properties and to explore corporate
acquisition opportunities which we believe will create value for our
shareholders.
Our strong management team has many years' experience of managing and creating
iconic children's properties. With the early success of Chuggington, we are well
positioned in the marketplace and look forward to the future with confidence.
Ludorum plc
Consolidated income statement
for the year ended 31 December 2007 UNAUDITED AUDITED
for the year for the period
ended from 18 October
2005 to
31 December 31 December
2007 2006
Notes �000 �000
Continuing operations
Revenue - -
Cost of sales - -
Gross profit - -
Other income 60 -
Costs attributable to ( 445 ) ( 322 )
Incentive Option Plan
Other administrative expenses ( 1,297 ) ( 1,215 )
Total administrative expenses ( 1,742 ) ( 1,537 )
Operating loss ( 1,682 ) ( 1,537 )
Finance costs - bank interest - ( 4 )
Finance income - bank interest 79 130
Net finance income 79 126
Loss before taxation on continuing operations ( 1,603 ) ( 1,411 )
Taxation 7 ( 1 ) ( 3 )
Loss for the year on continuing operations ( 1,604 ) ( 1,414 )
Loss on discontinued operations 3 ( 2,884 ) ( 457 )
Loss for the year 4 ( 4,488 ) ( 1,871 )
Loss per share on continuing operations 8 (29.1p) ( 45.4p )
(basic and diluted)
Loss per share on discontinued operations 8 (52.3p) ( 14.7p )
(basic and diluted)
Loss per share (basic and diluted) 8 (81.4p) ( 60.1p )
Ludorum plc UNAUDITED AUDITED UNAUDITED AUDITED
Consolidated balance sheet as at 31 Group Company
December 2007
2007 2006 2007 2006
Notes �000 �000 �000 �000
Assets
Non-current assets
Investment in 9 - - 1,810 399
subsidiaries
Property, plant and 10 6 14 5 8
equipment
Intangible 11 536 48 536 -
assets
542 62 2,351 407
Current assets
Trade and other 12 547 59 310 26
receivables
Cash and cash 13 1,750 3,470 1,722 3,466
equivalents
2,297 3,529 2,032 3,492
Liabilities
Current liabilities
Income tax 14 ( 1 ) ( 3 ) - -
payable
Trade and other 14 ( 864 ) ( 462 ) ( 792 ) ( 302 )
liabilities
( 865 ) ( 465 ) ( 792 ) ( 302 )
Net current assets 1,432 3,064 1,240 3,190
Non-current
liabilities
Provisions for 15 ( 67 ) ( 28 ) ( 67 ) ( 28 )
liabilities and
charges
Net assets 1,907 3,098 3,524 3,569
Shareholders' equity
Ordinary 16 81 50 81 50
shares
Deferred 16 50 50 50 50
shares
Share premium 17 7,435 4,575 7,435 4,575
Other 18 700 294 700 294
reserves
Retained 19 ( 6,359 ) ( 1,871 ) ( 4,742 ) ( 1,400 )
losses
Total shareholders' 1,907 3,098 3,524 3,569
equity
Ludorum plc
Statement of changes in shareholders' equity
UNAUDITED UNAUDITED UNAUDITED UNAUDITED UNAUDITED
Total
2007 Share Share Retained Other shareholders'
capital premium earnings reserves equity
�000 �000 �000 �000 �000
At 1 January 2007 100 4,575 ( 1,871 ) 294 3,098
Loss for the year - - ( 4,488 ) - ( 4,488 )
Charge relating to incentive - - - 406 406
option plan
New shares issued 31 3,069 - - 3,100
Costs relating to the issue of - ( 209 ) - - ( 209 )
shares
At 31 December 2007 131 7,435 ( 6,359 ) 700 1,907
AUDITED AUDITED AUDITED AUDITED AUDITED
Total
2006 Share Share Retained Other shareholders'
capital premium earnings reserves equity
�000 �000 �000 �000 �000
At 18 October 2005 - - - - -
Loss for the period - - ( 1,871 ) - ( 1,871 )
Charge relating to incentive - - - 294 294
option plan
New shares issued 100 4,901 - - 5,001
Costs relating to the issue of - ( 326 ) - - ( 326 )
shares
At 31 December 2006 100 4,575 ( 1,871 ) 294 3,098
Ludorum plc
Consolidated cash flow statement UNAUDITED AUDITED UNAUDITED AUDITED
for the year ended 31 December 2007 Group Company
for the year for the period for the year for the period
ended from 18 October ended from 18 October
2005 to 2005 to
31 December 31 December 31 December 31 December
2007 2006 2007 2006
Notes �000 �000 �000 �000
Cash flows from operating
activities
Cash used in operations 20 ( 4,116 ) ( 1,247 ) ( 2,805 ) ( 927 )
Interest received 79 130 79 130
Interest paid - ( 6 ) - ( 2 )
Taxation paid ( 3 ) - - -
Net cash used in operating ( 4,040 ) ( 1,123 ) ( 2,726 ) ( 799 )
activities
Cash flows from investing
activities
Investment in subsidiaries - - ( 1,411 ) ( 399 )
Purchase of property, plant and 10 - ( 18 ) - ( 11 )
equipment
Proceeds of disposal of property, plant 3 - - -
and equipment
Investment in 11 ( 746 ) ( 64 ) ( 536 ) -
intangible assets
Proceeds of disposal of 11 134 - - -
intangible assets
Net cash used in investing ( 609 ) ( 82 ) ( 1,947 ) ( 410 )
activities
Cash flows from financing
activities
Net proceeds from issue of 16,17 2,891 4,675 2,891 4,675
share capital
Net cash generated from 2,891 4,675 2,891 4,675
financing activities
Net (decrease) / increase in cash and cash ( 1,758 ) 3,470 ( 1,782 ) 3,466
equivalents
Cash and cash equivalents at 1 13 3,470 - 3,466 -
January 2007
Cash and cash equivalents at 31 13 1,712 3,470 1,684 3,466
December 2007
Ludorum plc
Notes to the preliminary results for the year ended 31 December 2007
1. Accounting policies
The principal accounting policies adopted in the preparation of these
preliminary results are set out below. These policies have been consistently
applied to the whole period presented.
Basis of Preparation
This announcement was approved by the Board of directors on 22 April 2008. The
preliminary results for the year ended 31 December 2007 are unaudited. The
financial information in this announcement does not constitute the Company's
statutory accounts for the year ended 31 December 2006 or 31 December 2007. The
financial information set out in the announcement has been prepared on the basis
of the accounting policies set out below. The financial information for the year
ended 31 December 2006 is derived from the statutory accounts for that year,
which have been delivered to the Registrar of Companies. The auditors reported
on those accounts and their report was unqualified.
Critical accounting estimates and judgments
The Directors consider that the key areas of judgement are the estimation of the
fair value of options granted under the Incentive Option Plan (as explained in
more detail below) as well as the carrying value of intangible assets (in
respect of which no impairment issues have been identified to date).
Basis of consolidation
These preliminary results include the results of the Company and its
subsidiaries.
Foreign currency translation
(1) Functional and presentation currency - Items included in the preliminary
results of each of the Group's entities are measured using the currency of the
primary economic environment in which the entity operates (the 'functional
currency'). The preliminary results are presented in Sterling, which is the
Company's functional and presentation currency.
(2) Transactions and balances - Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period end exchange
rates of monetary assets and liabilities denominated in foreign currencies, are
recognised in the income statement.
(3) Group companies - The results and financial position of Group entities that
have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
* assets and liabilities are translated at the closing rate at the date of the
balance sheet;
* income and expenses are translated at average exchange rates.
All resulting exchange differences are recognised as a separate component of
equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign entities are taken to shareholders' equity. The Group
treats specific inter-company loan balances, which are not intended to be repaid
for the foreseeable future, as part of its net investment.
The principal overseas currencies for the Group are the US Dollar and the Euro.
The average rate for the period against Sterling and the rate at 31 December
2007 for each of these currencies were:
Average Rate at 31 December
2007
US Dollar 2.0018 1.9909
Euro 1.4619 1.3619
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any provision for
impairment.
Property, plant & equipment
Property, plant and equipment comprises office equipment which is recorded at
purchase cost less depreciation and, when appropriate, provision for impairment.
Depreciation is calculated so as to write off the cost of the assets, less their
estimated residual values, over their expected useful economic lives. Office
equipment is depreciated on a straight-line basis over its estimated useful life
of three years.
Intangible assets
(1) Development Projects
Costs comprise direct programme costs, which are capitalised up to the date of
first release of the programme, and programme development costs. Costs for
developing programmes are expensed until such time as a pilot is produced and
decision is made to exploit the programme further. Development costs are
transferred to work in progress once a decision is made to proceed with the
programme.
A charge is made to write down the cost of completed programmes over their
useful lives. Completed programmes are expensed based on the ratio of the
current period's net revenues to estimated total net revenues from all sources
on an individual production basis. This charge is included in the income
statement as part of cost of sales.
(2) Acquired intangible assets
Acquired intangible assets comprise distribution rights and regionalisation
costs. These assets are capitalised on acquisition and amortised over their
estimated useful lives. Distribution rights are amortised on a straight-line
basis over the relevant licence period. Regionalisation costs are amortised on a
straight-line basis over their estimated useful economic lives, generally
estimated to be three years, or, if shorter, over the length of the licence
period of the relevant property.
The carrying value of intangible assets is subject to an impairment review where
there are indicators that impairment may exist. An impairment loss is calculated
by reference to the expected future revenues of the underlying property, taking
account of the cost of such sales, from which the discounted value of future
cash flows relating to the intangible asset is determined and compared to the
carrying value. Any impairment charge is included in the income statement as
part of cost of sales.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances held in current (checking) or
deposit accounts with recognised UK and US banks.
Tax and deferred tax
Taxation is recognised on profits at the weighted-average rate of corporation
tax applicable to small companies of 19.75 per cent (2006: 19 per cent.).
Deferred tax is provided, using the liability method, on all temporary
differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences,
carry-forward of unused tax assets and unused tax losses, to the extent that it
is probable that a taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax
losses can be utilised. The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date. Deferred tax relating to items
recognised directly in equity is recognised in equity and not in the income
statement.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest rate method.
Operating leases
Payments relating to operating leases are recognised in the income statement on
a straight-line basis over the lease term. Initial rent deposits are shown as a
debtor in the balance sheet.
Incentive option plan
The Company has granted share options under the Incentive Option Plan which will
result in sharebased payments to optionholders on exercise of the options. The
fair value of these options, which the Company has estimated at the award date
using a Monte Carlo valuation model, is estimated to be �1,500 per option and is
expensed through the income statement over the vesting period of the options.
The principal assumptions used in the valuation are as follows: initial share
price - �1; expected volatility - 40 per cent.; term of option - 5 years; and
risk-free interest rate - 4.75 per cent. As the Company does not have a trading
history, expected volatility has been based on the volatility of a range of
comparable companies over periods equal to the option term. The main feature of
the options taken into account in the valuation is the facility for the number
of shares under option to be enlarged in accordance with the rules of the
Incentive Option Plan.
Share capital
The Company's share capital consists of ordinary shares with a nominal value of
1p each and deferred shares with a nominal value of 99p each. No dividends have
been declared or paid on the ordinary shares. The rights of the deferred shares
to receive dividends or participate in distributions of capital on a winding-up
are so limited as to render the deferred shares of negligible value. The costs
of issuing shares are charged directly to the share premium account.
Pension costs
The Group contributes to defined-contribution (money purchase) private pension
schemes in the UK for the benefit of the executive Directors (with the exception
of Richard Rothkopf). The Group also provides for a defined-contribution pension
scheme for the benefit of its employee in the US.
Contributions are charged to the income statement on the basis of the
contributions payable during the year.
Segmental reporting
The Group's primary reporting format is geographical segments. At this early
stage in its development it does not have a meaningful secondary segment. The
Group's geographical segments are determined by the location of its assets and
operations.
Financial risk
The main risk arising from the Group's financial activities is liquidity risk.
The Group manages this by financing its activities through its cash resources
which are maintained on short-term deposit.
2 Segmental reporting
The following table presents information regarding the
Group's geographical segments:
UNAUDITED UNAUDITED UNAUDITED
UK USA Total
2007 �000 �000 �000
Continuing operations
Total segment revenue - 217 217
less inter-segmental revenue - ( 217 ) ( 217 )
Revenue - - -
Operating profit / ( 1,696 ) 14 ( 1,682 )
(loss)
Net finance income 79 - 79
Gross assets 2,582 21 2,603
Gross liabilities 630 22 652
Discontinued operations
Revenue 15 - 15
Operating loss ( 2,884 ) - ( 2,884 )
Gross assets 236 - 236
Gross liabilities 280 - 280
AUDITED AUDITED AUDITED
UK USA Total
2006 �000 �000 �000
Continuing operations
Total segment revenue - 100 100
less inter-segmental revenue - ( 100 ) ( 100 )
Revenue - - -
Operating profit /(loss) ( 1,537 ) - ( 1,537 )
Net finance income 126 - 126
Gross assets 3,498 4 3,502
Gross liabilities 328 18 346
Discontinued operations
Revenue - - -
Operating loss ( 455 ) - ( 455 )
Finance costs ( 2 ) - ( 2 )
Gross assets 89 - 89
Gross liabilities 147 - 147
All material capital expenditure, depreciation and amortisation is within the UK
3 Discontinued operations
Discontinued operations comprise the business of the acquisition and exploitation of rights in Japanese anime which was
operated by GONG Limited, a Group subsidiary. In 2007 it was decided to withdraw from this business and, in December
2007, the anime assets were sold for Euro 190,000. The loss on the sale of �51,000 is included below in administrative
expenses in 2007. The loss on discontinued operations also includes the costs of aborted acquisitions and transactions
which were incurred by the Group in 2007 in respect of developing the anime business, prior to the decision to
withdraw from the business.
The loss on discontinued operations is analysed as follows: UNAUDITED AUDITED
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
Revenue 15 -
Cost of sales ( 285 ) ( 149 )
Administrative expenses ( 888 ) ( 306 )
Interest payable - ( 2 )
Costs of aborted acquisitions and ( 1,726 ) -
transactions
Loss on discontinued operations ( 2,884 ) ( 457 )
The cash flows on discontinued operations are summarised below:
Net cash used in operating activities ( 2,803 ) ( 329 )
Net cash used in investing activities ( 73 ) ( 68 )
Net cash generated from financing activities 1,282 399
4 Loss for the year UNAUDITED AUDITED
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
The following items have been included in arriving at the loss for the year:
Staff costs - see Note 6 1,585 1,048
Depreciation of property, plant and equipment 5 4
Amortisation of intangible assets 73 16
Loss on disposal of intangible assets 51 -
Operating lease rentals - property, plant and equipment 73 53
5 Auditors' remuneration UNAUDITED AUDITED
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
Audit services
Fees payable to the Company's auditor for the audit of parent 37 34
Company and consolidated accounts
Fees payable to the Company's auditor for the 2 1
audit of subsidiary companies
Non-audit services
As reporting accountant on acquisitions 636 -
As reporting accountant on admission to AIM - 72
All other services 49 25
724 132
6 Employees and directors UNAUDITED AUDITED UNAUDITED AUDITED
Group Company
for the period for the period
Staff costs for the group during the year for the year from 18 October for the year from 18 October
ended 2005 to ended 2005 to
31 December 31 December 31 December 31 December
2007 2006 2007 2006
�000 �000 �000 �000
Wages and salaries 914 603 380 498
Social security 162 70 39 61
costs
Other pension costs 64 53 50 43
1,140 726 469 602
Costs attributable to the Incentive 445 322 421 305
Option Plan
1,585 1,048 890 907
Average number of employees (including 9 4 4 3
executive directors)
UNAUDITED AUDITED
Group and Group and
Company Company
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
Aggregate directors' emoluments 527 456
Emoluments of highest paid director 164 157
7 Taxation UNAUDITED AUDITED
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
Current tax
UK taxation - -
Overseas taxation 4 3
Adjustment to prior years ( 3 ) -
1 3
Deferred tax - -
Taxation 1 3
The tax assessed for the year differs from the standard rate of corporation tax in the UK. The
differences are explained below:
UNAUDITED AUDITED
for the year for the period from
ended 18 October 2005 to
31 December 31 December
2007 2006
�000 �000
Loss before taxation on continuing operations ( 1,603 ) ( 1,411 )
Loss on discontinued operations ( 2,884 ) ( 457 )
Total loss before taxation ( 4,487 ) ( 1,868 )
Loss before taxation multiplied by the weighted-average rate
of UK corporation tax applicable to small companies of ( 886 ) ( 355 )
19.75% (2006: 19%)
Effect of:
Overseas taxation 1 3
Expenses not deductible for tax purposes 341 2
Losses available to carry forward and other timing 545 353
differences
Taxation 1 3
The unprovided deferred tax asset at 31 December 2007 is estimated to be �898,000 (2006 �353,000) and is in respect of
trading losses incurred and other timing differences.
8 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year. Because basic EPS results in a loss per share the
diluted EPS is calculated using the undilutive weighted average number of
shares.
UNAUDITED UNAUDITED UNAUDITED
Loss Weighted Per-share
attributable average number amount
to ordinary of shares
shareholders
Basic and diluted EPS �000 pence
2007
Loss per share on continuing ( 1,604 ) 5,516,667 (29.1)p
operations
Loss per share on discontinued ( 2,884 ) 5,516,667 (52.3)p
operations
Loss per share ( 4,488 ) 5,516,667 (81.4)p
2006 AUDITED AUDITED AUDITED
Loss per share on continuing ( 1,414 ) 3,111,706 (45.4)p
operations
Loss per share on discontinued ( 457 ) 3,111,706 (14.7)p
operations
Loss per share ( 1,871 ) 3,111,706 (60.1)p
9 Investments UNAUDITED AUDITED
31 December 31 December
Company 2007 2006
At 1 January / date of 399 -
incorporation
Additions 1,411 399
At 31 December 1,810 399
The investments represent long term interest free loans made to
subsidiary companies.
The following subsidiaries are directly owned by Ludorum plc:
Subsidiary Date of Country of Type of Holding Activity
incorporation incorporation shares
Ludorum Inc. 12 April 2006 USA Ordinary 100% Service company
GONG Limited 17 May 2006 England & Ordinary 100% Rights exploitation
Wales
In January 2008, GONG Limited changed its name to Ludorum Enterprises
Limited.
10 Property, plant and equipment
Group Company
Office Office
equipment equipment
2007 2006
�000 �000
Cost
At 18 October 2005 - -
Additions 18 11
At 31 December 2006 - audited 18 11
Additions - -
Disposals (4) -
At 31 December 2007 - unaudited 14 11
Accumulated depreciation
At 18 October 2005 - -
Charge for the period 4 3
At 31 December 2006 -audited 4 3
Charge for the year 5 3
Released on disposal (1) -
At 31 December 2007 - unaudited 8 6
Net book value
At 31 December 2006 - 14 8
audited
At 31 December 2007 - 6 5
unaudited
The Company considers at each reporting date whether there is any indication of
impairment of its assets. In the event that impairment is identified, the
carrying amount of the assets is written down immediately to its estimated
recoverable amount.
11 Intangible assets
Group Capitalised Regionalisation Acquired Total
development costs rights
�000 �000 �000 �000
Cost
At 18 October 2005 - - - -
Additions - 16 48 64
At 31 December 2006 - audited - 16 48 64
Additions 536 - 210 746
Disposals - ( 16 ) ( 258 ) ( 274 )
At 31 December 2007 - unaudited 536 - - 536
Accumulated amortisation
At 18 October 2005 - - - -
Charge for the period - 6 10 16
At 31 December 2006 - audited - 6 10 16
Charge for the year - 3 70 73
Released on disposal - ( 9 ) ( 80 ) ( 89 )
At 31 December 2007 - unaudited - - - -
Net book value
At 31 December 2006 - audited - 10 38 48
At 31 December 2007 - unaudited 536 - - 536
Company
Capitalised
development
�000
Cost
At 18 October 2005 -
At 31 December 2006 - audited -
Additions 536
At 31 December 2007 - unaudited 536
Accumulated amortisation
At 18 October 2005 -
Charge for the period -
At 31 December 2006 - audited -
Charge for the year -
At 31 December 2007 - unaudited -
Net book value
At 31 December 2006 - audited -
At 31 December 2007 - unaudited 536
12 Trade and other UNAUDITED AUDITED UNAUDITED AUDITED
receivables
Group Company
2007 2006 2007 2006
�000 �000 �000 �000
Amounts falling due within one
year:
Trade receivables 237 - 127 -
Prepayments and accrued income 70 32 54 16
UK VAT recoverable 59 - 59 -
French TVA 104 - - -
recoverable
Other receivables 77 27 70 10
At 31 December 547 59 310 26
UNAUDITED AUDITED UNAUDITED AUDITED
13 Cash and cash Group Company
equivalents
2007 2006 2007 2006
�000 �000 �000 �000
Cash and cash
equivalents
Cash at bank and in 21 4 - -
hand
Short-term bank 1,729 3,466 1,722 3,466
deposits
At 31 December 1,750 3,470 1,722 3,466
Short-term bank deposits are invested with banks and earn interest at prevailing short-term deposit rates.
The fair value of cash and cash deposits is the same as the carrying value.
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
UNAUDITED AUDITED UNAUDITED AUDITED
Group Company
2007 2006 2007 2006
�000 �000 �000 �000
Cash and cash 1,750 3,470 1,722 3,466
equivalents
Bank overdraft included in trade and other ( 38 ) - ( 38 ) -
liabilities
1,712 3,470 1,684 3,466
14 Trade and other UNAUDITED AUDITED UNAUDITED AUDITED
liabilities
Group Company
31 December 31 December 31 December 31 December
2007 2006 2007 2006
�000 �000 �000 �000
Bank overdraft 38 - 38 -
Trade payables 199 104 170 42
Payable to subsidiary - - 128 -
company
Overseas tax payable 1 3 - -
Social security and 118 27 17 20
other taxes
Deferred income 32 - 32 -
Accruals 373 317 316 239
Unpaid directors' 51 - 51 -
remuneration
Other liabilities 53 14 40 1
At 31 December 865 465 792 302
15 Provisions for liabilities and UNAUDITED AUDITED UNAUDITED AUDITED
charges
Group Company
Social Security Social Social Security Social Security
Security
Costs Costs Costs Costs
2007 2006 2007 2006
�000 �000 �000 �000
At 1 January / date of 28 - 28 -
incorporation
Charge 39 28 39 28
At 31 December 67 28 67 28
Social security
costs
The Company is providing for the anticipated employer's National Insurance contribution that will arise on
the exercise of awards granted under the 2006 Incentive Option Plan.
16 Called up share capital
UNAUDITED AUDITED UNAUDITED AUDITED
Group and company 2007 2006 2007 2006
Number Number �000 �000
Authorised
Ordinary shares of 1 pence each 15,000,000 7,666,667 150 77
Deferred shares of 99 pence each 50,001 50,001 50 50
At 31 December 200 127
Issued and
fully-paid
Ordinary shares of 1 pence each 8,100,001 5,000,001 81 50
Deferred shares of 99 pence each 50,001 50,001 50 50
At 31 December 131 100
On 6 November 2007, 3,100,000 ordinary shares of 1 pence each were issued at a price of �1 per share.
17 Share premium account UNAUDITED AUDITED
Group and company 2007 2006
�000 �000
At 1 January / date of 4,575 -
incorporation
Premium on shares issued during 3,069 4,901
the year
Costs relating to the issue of ( 209 ) ( 326 )
shares
At 31 December 7,435 4,575
18 Other reserves UNAUDITED AUDITED
Incentive Plan Incentive Plan
Group and company valuation valuation
reserve reserve
2007 2006
�000 �000
At 1 January / date of 294 -
incorporation
Charge relating to the 406 294
incentive option plan
At 31 December 700 294
UNAUDITED AUDITED UNAUDITED AUDITED
19 Retained losses Group Company
2007 2006 2007 2006
�000 �000 �000 �000
At 1 January / date of ( 1,871 ) - ( 1,400 ) -
incorporation
Loss for the year ( 4,488 ) ( 1,871 ) ( 3,342 ) ( 1,400 )
At 31 December ( 6,359 ) ( 1,871 ) ( 4,742 ) ( 1,400 )
20 Cash flow from operating activities UNAUDITED AUDITED UNAUDITED AUDITED
Group Company
for the year for the for the year for the period
ended period from ended from 18 October
18 October 2005 to
2005 to
31 December 31 December 31 December 31 December
2007 2006 2007 2006
�000 �000 �000 �000
Continuing
operations
Loss before taxation ( 1,603 ) ( 1,411 ) ( 3,342 ) ( 1,400 )
Adjustments for:
Interest payable - 4 - 2
Interest receivable ( 79 ) ( 130 ) ( 79 ) ( 130 )
Depreciation of property, 4 4 3 3
plant and equipment
Amortisation of intangible - - - -
assets
Charge relating to the 406 294 406 294
incentive option plan
Increase in 39 28 39 28
provisions
Changes in working - - -
capital:
Increase in trade and other ( 287 ) ( 24 ) ( 284 ) ( 26 )
receivables
Increase in payables 207 315 452 302
Cash used in continuing ( 1,313 ) ( 920 ) ( 2,805 ) ( 927 )
operations
Discontinued
operations
Loss on discontinued ( 2,884 ) ( 457 ) - -
operations
Interest payable 2
Depreciation of property, 1 - - -
plant and equipment
Amortisation of intangible 73 16 - -
assets
Loss on disposal of intangible 51 - - -
assets
Increase in trade and other ( 201 ) ( 35 ) - -
receivables
Increase in payables 157 147 - -
Cash used in discontinued ( 2,803 ) ( 327 )
operations
Total cash used in operations ( 4,116 ) ( 1,247 ) ( 2,805 ) ( 927 )
21 Operating lease
commitments
UNAUDITED AUDITED
Group and Company 2007 2006
�000 �000
Commitments under non-cancellable operating leases expiring:
Commitments under non-cancellable operating
leases expiring:
Within one year 5 33
The Company has entered into a short-term non-cancellable operating lease on its head
office in Chiswick, London and an office in Paris.
22 Related party transactions
During the year, a group company rented an office from a company controlled by a director of the company.
The rent paid during the year was �6,000 (2006: �4,500).
Included in other liabilities at the year end is �44,908 owed equally to Robert Lawes and Charles
Caminada, directors of the Company, in respect of unpaid remuneration (2006 �nil). A further �5,748 has
been included in other liabilities in respect of the employer's National
Insurance payable on this remuneration (2006 �nil).
23 Commitments
The Company has entered into an agreement with a toy manufacturer under the terms of which the toy
manufacturer will fund 50% of the production cost of the Company's animated series "Chuggington" in
return for which it has a global master toy licence and the right to participate in the net profit of
the property. The agreed budget for the production of the first series of 52 episodes is $6.6 million
(�3.3 million) and it is expected that all the episodes will be completed by the end of 2008.
The Company has entered into an agreement with Shanghai Motion Magic Digital Entertainment Inc ("Motion
Magic") under the terms of which Motion Magic will provide animation and editing services for the
production of Chuggington. Under the terms of the agreement, Motion Magic is to deliver 52 episodes
prior to 31 October 2008 for which the Company is committed to pay a total of RMB 18.9 million (�1.24
million) in instalments over the period of production. As at 31 December 2007, the Company had paid
�370,000 and �870,000 remained outstanding. Under the terms of the agreement with the toy manufacturer
described above, 50% of the amounts paid and payable to Motion Magic has been or will be refunded to the
Company by the toy manufacturer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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