RNS Number : 7138E
Ludorum PLC
30 September 2008
30 September 2008
LUDORUM PLC INTERIM RESULTS
Ludorum plc, an AIM-listed media investment company, today announces its results for the half year ended 30 June 2008.
Highlights
* Broadcast of the first episodes of Chuggington brought forward by six months with commencement of broadcast on the BBC on 29
September 2008
* Major global broadcast partners in place including BBC, Super RTL (Germany), TF1 (France), ABC (Australia) and The Disney Channel
(Latin America & Asia) with broadcast to over 80 countries in place for 2009.
* A number of regional home entertainment partners secured.
* Extensive line-up of third party UK licensees now in place
* Multi-territory long term publishing joint venture signed with Parragon Books
* Ludorum appointed by D C Thomson & Co to represent all worldwide rights, excluding publishing, for Dennis and Gnasher and also
Marvo the Wonder Chicken
Rob Lawes, Ludorum's Chief Executive Officer said:
We are pleased with the progress we have continued to make in the first six months of 2008 and are on track for revenue generation in
the second half of 2008. The global reaction to Chuggington has been very strong, as evidenced by the significant number of agreements we
have concluded across broadcast, consumer products, home entertainment and publishing. We believe that we are well positioned in the current
market place to deliver real value for our shareholders.
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.
The Company continues to make substantial progress with the development, production and launch of its first in-house developed property
Chuggington, a new train-based series and interactive website for 2-6 year olds. As outlined in the Chuggington review below, we have been
pleased with the global response to the property and have already assembled a formidable line up of key strategic licensees on a global
basis across broadcast, home entertainment, consumer products and publishing. We are greatly encouraged by our early success, and have
confidence that our first property will create material value for our shareholders over the longer term.
The Company also announced at the start of the year 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 office.
Chuggington
Chuggington has been very 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 and have agreed terms with a
number of other broadcasters including The Disney Channel (Latin America) and Disney Channel (Asia), NRK (Norway), MTV (Finland), TV2
(Denmark) and Treehouse (Canada). Chuggington will commence broadcast in over 80 countries over the coming 12 months, with more territories
coming on stream all the time.
We are also seeing strong demand for the Chuggington home entertainment rights and have reached agreement with a number of leading
organisations including 2Entertain (UK), Roadshow Films (Australia) and AB Svensk (Scandinavia).
At the request of the BBC, we've agreed to bring the broadcast date for the first 26 episodes forward by six months, with first
broadcast in the United Kingdom started on the 29 September 2008 on the Cbeebies block on BBC2.
We have been focussed on building a strong line up of consumer products partners. Racing Champions International Ltd ("RCIL") 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. RCIL contribute
to production costs and will participate in the net profits of the property. RCIL will develop a substantial global line of new and
innovative toys with both on and off-line applications. To work alongside RCIL in the UK market we have already reached agreement with a
strong line up of other third party licensees including Aykroyds & TDP Licensing, Blues Clothing, Character World, David Halsall
International, Gemma International, Pyramid Posters and Roy Lowe & Sons and have a number of other licensing proposals under review.
In July we concluded a joint venture profit share publishing agreement with Parragon Books Limited. Parragon will be the master
publisher of Chuggington books in certain key markets including UK, Australia, Germany, Scandinavia and Benelux.
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 episodes have already been completed and delivered to the BBC with the balance of the episodes being completed by the end of
2008.
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 available at at www.chuggington.com.
Dennis and Gnasher
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-thetop, 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 which D C Thomson & Co. Ltd. has appointed Ludorum 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 visual,
providing 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.
Financial Review
Ludorum did not generate any revenues in first half of 2008. Revenues from Chuggington and Marvo are anticipated to commence in the
second half of this year. Ludorum generated an operating loss for the first six month of 2008 of �1.07m (�0.64m in the period to 30 June
2007). The underlying administrative expenses, excluding costs attributable to the Incentive Option Plan, were �0.86m an increase of �0.37m
over the �0.48m in the period to 30 June 2007. The increase in administrative expenses mainly relates to costs expensed on the Chuggington
on-line development, style guide, market attendance at Mip-TV and New York licensing show and increased headcount.
At the end of the period, the Company had cash resources of �0.57m (2007: �0.68m). In April 2008 the Company obtained banking facilities
of �1.5m compromising a variable interest rate overdraft facility and a fixed interest rate loan facility. Neither facility had been
utilised by 30 June 2008.
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. We have a formidable line up of partners already in place for
Chuggington (before any episode has been on-air) and this early success 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, fan 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 six months ended 30 June 2008
(see Note 5)
Restated
Six months Six months
ended ended
30-Jun 30-Jun
2008 2007
Notes �000 �000
Continuing operations
Revenue - -
Cost of sales - -
Gross loss - -
Other income - 61
Costs attributable to the Incentive Option (210) (214)
Plan
Other administrative expenses (857) (484)
Total administrative expenses (1,067) (698)
Operating loss (1,067) (637)
Finance cost - bank interest (4) (8)
Finance income - bank interest 26 57
Loss before taxation on continuing (1,045) (588)
operations
Taxation (3) (2)
Loss for the period on continuing operations (1,048) (590)
Loss on discontinued operations 5 - (1,648)
Loss for the period (1,048) (2,238)
Loss per share on continuing operations (12.9p) (11.8p)
(basic and diluted)
Loss per share on discontinued operations - (33.0p)
(basic and diluted)
Loss per share (basic and diluted) (12.9p) (44.8p)
Ludorum plc
Consolidated balance sheet as at 30 June 2008
30-Jun 31-Dec 30-Jun
2008 2007 2007
Notes �000 �000 �000
Assets
Non-current assets
Property, plant and equipment 14 6 14
Intangible assets 6 965 536 493
979 542 507
Current assets
Trade and other receivables 459 47 434
Cash and cash equivalents 565 1,750 680
1,024 2,297 1,114
Liabilities
Current liabilities
Income tax payable (4) (1) (1)
Trade and other liabilities (862) (864) (518)
(866) (865) (519)
Net current assets 158 1,432 595
Non-current liabilities
Provisions (85) (67) (46)
Net assets 1,051 1,907 1,056
Shareholders' equity
Ordinary shares 81 81 50
Deferred shares 50 50 50
Share premium 7,435 7,435 4,575
Other reserves 892 700 490
Retained losses (7,407) (6,359) (4,109)
Total shareholders' equity 1,051 1,907 1,056
Ludorum plc
Statement of changes in shareholders'
equity
for the six months ended 30
June 2008
Total
30-Jun-08 Share Share Retained Other shareholders'
capital premium earnings reserves equity
Jun-08 Jun-08 Jun-08 Jun-08 Jun-08
�000 �000 �000 �000 �000
At 1 January 2008 131 7,435 (6,359) 700 1,907
Loss for the period - - (1,048) - (1,048)
Charge relating to incentive - - - 192 192
option plan
New shares issued - - - - -
Costs relating to the issue of - - - - -
shares
At 30 June 2008 131 7,435 (7,407) 892 1,051
Total
30-Jun-07 Share Share Retained Other shareholders'
capital premium earnings reserves equity
Jun-07 Jun-07 Jun-07 Jun-07 Jun-07
�000 �000 �000 �000 �000
At 1 January 2007 100 4,575 (1,871) 294 3,098
Loss for the period - - (2,238) - (2,238)
Charge relating to incentive - - - 196 196
option plan
New shares issued - - - - -
Costs relating to the issue of - - - - -
shares
At 30 June 2007 100 4,575 (4,109) 490 1,056
Ludorum plc
Consolidated cash flow statement
for the six months ended 30 June 2008
Six months Six months
ended ended
30-Jun 30-Jun
2008 2007
�000 �000
Cash flows from operating activities
Cash used in operations (768) (2,355)
Interest received 26 57
Interest paid (4) (8)
Taxation paid - (2)
Net cash used in operating activities (746) (2,308)
Cash flows from investing activities
Purchase of property, plant and equipment (11) (3)
Investment in intangible assets (429) (479)
Net cash used in investing activities (440) (482)
Cash flows from financing activities
Net proceeds from issue of share capital - -
Net cash generated from financing activities - -
Net decrease in cash and cash equivalents (1,185) (2,790)
Cash and cash equivalents at 1 January 1,750 3,470
Cash and cash equivalents at 30 June 565 680
Ludorum plc
Notes to the consolidated interim financial statements
for the six months ended 30 June 2008
1 General information
The company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is
Building 3 Chiswick Park, 566 Chiswick High Road, London. The registered number is 5595899. The company is listed on AIM.
The condensed consolidated interim financial information was approved for issue on 30 September 2008.
2 Basis of preparation
The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year
ended 31 December 2007, which have been prepared in accordance with IFRSs.
The condensed consolidated interim financial information do not constitute statutory accounts. Statutory accounts for the year ended 31
December 2007 have been filed with Companies House. The auditors gave an unqualified opinion on those accounts.
3 Accounting policies
The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2007, as
described in those financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following standards, amendments to standards or interpretations are effective from 1 January 2008 but are not relevant for the
group:
IFRIC 11, 'IFRS 2 - Group and treasury share transactions'
IFRIC 12, 'Service concession arrangements'
IFRIC 14, 'IAS 19' - the limit on a defined benefit asset, minimum funding requirements and their interaction'.
The following standards, amendments to standards or interpretations have been issued but are not effective for the year commencing 1
January 2008 and have not been early adopted by the group.
IFRS 8, 'Operating segments'
IAS 23 (amendment), 'Borrowing costs'
IFRS 2 (amendment), 'Share based payment'
IFRS 3 (amendment), 'Business combinations'
IAS 1 (amendment), 'Presentation of financial statements'
IAS 32 (amendment), 'Financial instruments: presentation'
IFRIC 13, 'Customer loyalty programmes'
IFRIC 15, 'Agreements for the construction of real estate'
IFRIC 16, 'Hedges of a net investment in a foreign operation'
4 Segmental reporting
The following table presents information regarding the Group's geographical segments:
UK USA Total
�000 �000 �000
30-Jun-08
Continuing operations
Total segment revenue - 108 108
less inter-segmental revenue - (108) (108)
Revenue - - -
Operating profit/(loss) (1,077) 10 (1,067)
Net finance income 22 - 22
30-Jun-07
Continuing operations
Total segment revenue - 88 88
less inter-segmental revenue - (88) (88)
Revenue - - -
Operating profit/(loss) (641) 4 (637)
Net finance income 49 - 49
Discontinued operations
Revenue 15 - 15
Operating loss (1,648) - (1,648)
5 Discontinued operations
Discontinued operations comprised 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.
The loss on discontinued operations represented the loss incurred by GONG Limited for the six months ended 30 June 2007 and also included
the costs of aborted acquisitions and transactions which were incurred by the Group in the six months ended 30 June 2007 in respect of
developing the anime business.
In the interim accounts for the period ended 30 June 2007, these activities were included in continuing operations and have been
restated as discontinued operations in these interim accounts. In January 2008, GONG Limited changed its name to Ludorum Enterprises
Limited.
The loss on discontinued operations is analysed as follows:
Six months Six months
ended ended
30-Jun 30-Jun
2008 2007
�000 �000
Revenue - 1 5
Cost of sales - (147)
Administrative expenses - (484)
Costs of aborted acquisitions and transactions - (1,032)
Loss on discontinued operations - (1,648)
6 Intangible assets
Capitalised Regionalisation Acquired
development costs rights Total
30-Jun 30-Jun 30-Jun 30-Jun
2008 2008 2008 2008
30-Jun-08 �000 �000 �000 �000
Cost
At 1 January - - 536 536
Additions - - 429 429
At 30 June - - 965 965
Accumulated amortisation
At 1 January - - - -
Charge for the period - - - -
At 30 June - - - -
Net book value at 30 June 2008 - - 965 965
Capitalised Regionalisation Acquired
development costs rights Total
30-Jun 30-Jun 30-Jun 30-Jun
2008 2008 2008 2008
30-Jun-07 �000 �000 �000 �000
Cost
At 1 January - 16 48 64
Additions 269 - 210 479
At 30 June 269 16 258 543
Accumulated amortisation
At 1 January - 6 10 16
Charge for the period - 2 32 34
At 30 June - 8 42 50
Net book value at 30 June 2007 269 8 216 493
7 Banking facilities
In April 2008 the company obtained banking facilities comprising a variable interest rate overdraft facility of �300,000 and a fixed
interest rate loan facility of �1,200,000. The overdraft and loan are secured by a fixed and floating charge on the assets of the company.
Neither facility has been utilised by 30 June 2008.
8 Related party transactions
During the period, Ludorum Inc, a group company, rented an office from a company controlled by Richard Rothkopf, a director of the
company. The rent payable during the period was �5,750 (30 June 2007: �4,600).
Included in trade and other liabilities at 30 June 2008 is �95,908 in respect of unpaid remuneration owed to Robert Lawes and Charles
Caminada, directors of the company (30 June 2007: nil, 31 December 2007: �44,908). A further �9,588 has been included in trade and other
liabilities in respect of the employer's National Insurance payable on this remuneration (30 June 2007: nil, 31 December 2007: �5,748).
9 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 $6.3 million
(�3.15 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 (�1.38 million) in
instalments over the period of production. As at 30 June 2008 the company had paid RMB 8.75 million (�617,000), (30 June 2007 RMB 3.7
million (�0.25 million), 31 December 2007 RMB 5.7 million (�370,000)).As at 30 June 2008 RMB 10.15 million (� 763,000) 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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