RNS Number:9333N
Medal Entertainment & Media PLC
23 June 2005
23 June 2005
MEDAL ENTERTAINMENT & MEDIA PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005
Announcing results for Medal Entertainment & Media plc ("MEM" or "Company") for
the year ended 31 March 2005, Brook Land, Chairman, commented: "Our strategy
remains to develop a group of companies owning, licensing, creating and
marketing audio visual products, rights and facilities.
"Whilst we would have wished to report a higher level of profitability, the
Board feels that the Company has performed well operationally and progress has
been made in laying the foundations for future growth. Particularly encouraging
has been the creation of a Television Production Division which has been
achieved organically and at relatively low cost. The number of commissions
achieved in the start up phase has exceeded the Board's expectations."
Financial highlights:
* Group turnover #15.0m (2004: #12.1m) +23%
* Gross profit #9.4m (2004: #7.7m) +22%
* Profit before taxation and exceptional items #0.77m (2004: #0.93m) -17%
* Profit before taxation #0.62m (2004: #0.93m) -33%
* Basic earnings per share 2.45p (2004: 9.47p) -74%
Investment highlights:
* Continuing growth in DD Home Entertainment with profit before tax
increasing to #1.25m. (2004: #1.02m)
* An encouraging start for the newly formed Television Production Division.
This included the creation of Scarlet Television and DD Television which
have to date secured 8 commissions from broadcasters including C4, C5, Sky
One, The History Channel and others. A number of formats are also in
paid-for development.
Brook Land added "Since the start of the current year trading is ahead of the
same period last year. Fountain has benefited from a higher level of sales and
the Group is also poised to benefit from increased revenues from the Television
Production Division. DD Home Entertainment is continuing to show sales growth
and with its broader catalogue and larger database should make further progress
this year through both e-commerce and traditional sources.
"Whilst MEM continues to pursue its organic growth strategy we will also look at
strategic opportunities where the Board firmly believes that shareholder value
will be enhanced."
For further information, please contact:
Steve Ayres, Chief Executive
MEM plc
Tel: 020 7851 0550
Chairman's Statement
Our strategy remains to develop a group of companies owning, licensing, creating
and marketing audio visual products, rights and facilities.
Financial Overview
During the year, turnover again increased to #15.0 million (2004: #12.1 million)
and group operating profit was #1.09 million (2004: #1.23 million). The profit
before tax and exceptional items was #0.77m (2004: #0.93m) and the profit before
tax was #0.62m (2004: #0.93m). The tax charge for the year was #0.26m (2004: tax
credit #0.1m) which arose principally as a result of a deferred tax charge. The
Company's basic earnings per share for the year was 2.45p (2004: 9.47p) and
diluted earnings per share was 2.26 p (2004: 9.47p basic and diluted).
At 31 March 2005, total funding provided by bank loans, net of bank fees stood
at #3.33 million (2004: #3.37 million), #2.99m million of which is repayable
after more than one year (2004: #2.40 million) and leased asset funding stood at
#0.15 million (2004: #0.27million). Trading operations absorbed #0.84million
(2004: #0.45 million absorbed) in cash in the period, which included #0.55
million (2004: #1.2 million) of advance royalty payments. #2.09 million (2004:
#0.94 million) was used to purchase tangible and intangible fixed assets. The
Company had a net bank overdraft of #2.14 million (2004: #1.49 million in funds)
at the year end. During the year, the Group changed its bankers to HSBC from
Barclays and thereby incurred an exceptional charge of #0.16m relating to the
accelerated amortisation of bank fees.
Operating review
The Company operates in three main areas. These are audio visual rights
exploitation, TV production and studio facilities.
Rights
DD Home Entertainment ("DDHE") saw another year of sales growth as the Company
benefited from having a larger database of customers and a stronger catalogue of
titles. In the past few years, DDHE has entered into significant licensing
relationships with some of the UK's biggest producers of programmes and now
markets titles from the BBC, Channel Four, National Geographic, Carlton, and
others.
We have also announced the signing of a new 5 year agreement with Granada
Ventures that gives DD Home Entertainment direct marketing rights to the entire
existing and future catalogue of ITV for that period.
With the retail environment continuing to prove difficult for many, DDHE has
been better placed as a direct marketing business particularly given that its
specialist programming and classic entertainment catalogue is generally not
price sensitive and there are few competitors offering the range of product.
The company has worked hard to further improve customer service and new call
handling procedures and faster order turnaround have been implemented.
The Company is also developing plans to grow its e-commerce capabilities and
will shortly commission an upgraded web site with the ability to offer streaming
of programming to customers in the near future. This will enable DDHE to open up
new revenue streams and to broaden its geographical reach. Orders for DVD
products received via the web site attract an improved margin through reduced
order processing and marketing costs.
Facilities
MEM owns Fountain Television, the largest fully equipped TV Studio in the UK. As
previously reported, this division had a disappointing year to March 2005
principally as a result of a first half in which the large number of sporting
events of summer 2004 adversely affected demand for studio capacity. Whilst the
second half traded profitably, it was not sufficient to deliver a profit for the
year as a whole.
Notable shows at Fountain during the period included 'The X Factor' (Talkback
Thames/Syco), 'Test the Nation' (Talent Television Ltd), 'Bremner, Bird and
Fortune' (Vera Productions), 'National Lottery Winning Lines' (Celador), "
Madonna Mania" and "Queen Mania" (Granada).
The studio is popular with major production companies and broadcasters and has a
high rate of returning clients as a result of its excellent service levels. The
rate of bookings and prospects for the current year is encouraging.
TV Production
Two new subsidiaries were formed in November 2004.
* Scarlet Television, based in Manchester, specialises in popular factual
entertainment and has so far secured six commissions. These include '
Celebrity Chavs' for E4, 'Sex, Lies and Politics' for Sky One and 'Real
Desperate Housewives' for Five which have already been screened. With three
more productions under way and a number of formats in paid-for development,
Scarlet Television has started well and remains an exciting prospect.
* DD Television secured two major commissions namely 'Private Lives' for
History Channel International and 'Ancient Worlds' for Readers Digest.
MEM TV has also produced three pilot entertainment shows which are actively
being marketed including one specifically for BBC TV for which the prospects of
a commission are encouraging.
In most cases, MEM retains international and commercial rights in the programmes
it produces and owns or co-owns format rights. These are exploited via MEM
subsidiary Strawberry Entertainment which receives a commission on sales.
Dividend
The Company wishes to use available cash to continue to grow the business and,
therefore, the Directors are not recommending the payment of a dividend.
Prospects
Whilst the year to March 2005 was disappointing, the investment in the DDHE
infrastructure and audio visual rights portfolio, the new production entities
and higher levels of activity at Fountain should enable the Company to move
forward in the current year in which trading so far is ahead of the same period
last year.
Whilst MEM continues to pursue its organic growth strategy we will also look at
strategic opportunities where the Board firmly believes that shareholder value
will be enhanced.
Brook Land
Chairman
22 June 2005
Consolidated Profit and Loss Account for the year ended 31 March 2005
Note Unaudited Audited
Year ended Year ended
31 March 31 March
2005 2004
#000 #000
Turnover
- Continuing operations 14,744 12,141
- Acquisitions 206 -
14,950 12,141
Cost of sales (5,577) (4,469)
_______ _______
Gross profit 9,373 7,672
Net operating expenses (8,288) (6,442)
_______ _______
Operating profit
- Continuing operations 1,040 1,230
- Acquisitions 45 -
Group operating profit 1,085 1,230
Gain on disposal of fixed assets 4 76 -
Interest receivable 7 -
Impairment loss on investment 4 (66) -
Interest payable and similar charges (318) (302)
Bank facility fee written off 4 (161) -
_______ _______
Profit on ordinary activities
before taxation 623 928
Taxation on profit from ordinary
activities (263) 91
_______ _______
Profit on ordinary activities
after taxation 360 1,019
Minority interest 6 -
_______ _______
Profit for the financial year 366 1,019
======= =======
Pence Pence
Earnings per share
Basic 2.45 9.47
Diluted 2.26 9.47
_______ _______
All amounts relate to continuing activities.
The Group has no recognised gains and losses other than as disclosed above and
hence no separate statement of total gains and losses is presented.
Consolidated Balance Sheet at 31 March 2005
Unaudited Audited
2005 2004
#000 #000 #000 #000
Fixed assets
Intangible assets 2,823 1,465
Tangible assets 7,166 6,972
Investment 114 180
_______ _______
10,103 8,617
Current assets
Stock 1,136 827
Investment in programmes 390 -
Debtors
- due within one year 7,133 4,241
- due after more than one year 991 1,429
Cash at bank and in hand 1,618 1,993
_______ _______
11,268 8,490
Creditors: amounts falling due within one
year
(7,683) (4,273)
_______ _______
Net current assets 3,585 4,217
_______ _______
Total assets less current liabilities
13,688 12,834
Creditors: amounts falling due after more
than one year (3,026) (2,547)
_______ _______
Net assets 10,662 10,287
_______ _______
Capital and reserves
Called up share capital 1,496 1,496
Share premium account 7,501 7,479
Profit and loss account 1,678 1,312
_______ _______
Equity shareholders' funds 10,675 10,287
Equity minority interest (13) -
_______ _______
10,662 10,287
_______ _______
Consolidated Cash Flow Statement for the year ended 31 March 2005
Unaudited Audited
2005 2004
#000 #000 #000 #000
Net cash outflow from operating (844) (452)
activities
Returns on investments and
Servicing of finance
Interest received 7 -
Interest paid (289) (245)
Bank loan arrangement fees (126) (49)
Interest element of finance lease
and hire purchase rental payments (9) (8)
_______ _______
Net cash outflow from returns on
investment and servicing of finance (417) (302)
Taxation
UK corporation tax paid (118) -
Capital expenditure and financial investment
Purchase of intangible fixed assets (1,586) (537)
Purchase of tangible fixed assets (505) (400)
Proceeds from sale of tangible fixed assets 100 -
_______ _______
Net cash outflow from capital expenditure
and financial investment (1,991) (937)
Acquisitions
Purchase of subsidiary undertakings (38) (34)
Purchase of investment - (180)
_______ _______
Net cash outflow from acquisitions
(38) (214)
_______ _______
Net cash outflow before use
of liquid resources and financing (3,443) (1,905)
Financing
Issue of ordinary shares - 3,377
Share issue costs - (208)
Net VAT recovery on flotation costs 22
Capital element of lease purchase rental payments (123) (80)
Bank loans advanced 3,500 500
Bank loans repaid (3,588) (400)
_______ _______
Net cash (outflow)/inflow from financing (189) 3,189
_______ _______
(Decrease)/ increase in cash in the year (3,632) 1,284
_______ _______
NOTES TO THE PRELIMINARY STATEMENT
1. This announcement was approved by the Directors on 22 June 2005. The
preliminary results for the year ended 31 March 2005 are unaudited. The
financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 31 March 2005 or 31 March
2004. The financial information for the year ended 31 March 2004 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.
2. The taxation charge for the year is #263,000 (2004: tax credit #91,000)
which comprises a #63,000 corporation tax charge in respect of the current
period and an overprovision in the prior period of #43,000. The balance is
in respect of a net deferred tax charge of #243,000.
3. Basic earnings per ordinary share has been calculated using the weighted
average number of shares in issue during the relevant financial periods.
The weighted average number of equity shares in issue was 14,964,034
(2004: 10,764,481) and the earnings, being profit after tax, were #366,000
(2004: #1,019,000).
The diluted earnings per share has been calculated as the share options in
issue are above their exercise price at 31 March 2005 and therefore
dilutive. It has been calculated using the number of shares in issue plus
those that would be issued were they exercised. The adjusted shares in
issue is 16,174,884.
4. Profit on ordinary activities before taxation of #623,000 (2004: #928,000)
are stated after the impact of a number of exceptional non-recurring items
(2004: #Nil).
Following the change in the Group's bankers, bank fees previously being
amortised in accordance with FRS 4 of #161,000 were written off. Also, in
the year a flood at the studio facilities led to a gain on disposal of the
affected assets of #76,000. The Group's investment in Maximum
Entertainment Limited was written down by #66,000 to its expected
recoverable amount.
5. During the year the group undertook a review of the economic lives of film
rights held as intangible fixed assets in DD Home Entertainment. These were
extended to better reflect the estimated useful economic lives of the
product acquisitions made since the business was acquired, the impact of
which was to reduce film rights amortisation by #112,000 in the year ended
31 March 2005.
6. Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Audited
2005 2004
#000 #000
Operating profit 1,085 1,230
Amortisation of goodwill & film rights 332 415
Depreciation of tangible fixed assets 286 364
Increase in stocks (309) (400)
Increase in investment in programmes (390) -
Increase in debtors (2,656) (2,422)
Increase in creditors 808 361
_______ _______
Net cash outflow from operating activities (844) (452)
_______ _______
Of the increase in debtors, #0.55m (2004: #1.19m) of this balance represents
investment in royalty advances paid for new products
Reconciliation of net cash (outflow)/inflow to movement in net debt
Unaudited Audited
2005 2004
#000 #000
(Decrease)/ increase in cash in the year (3,632) 1,284
Cash outflow/(inflow) from decrease/(increase) in
debt and lease financing 172 (319)
_______ _______
Change in net debt resulting from cash flows being
movement in net debt (3,460) 965
Net debt at start of year (2,155) (3,120)
_______ _______
Net debt at end of year (5,615) (2,155)
_______ _______
8. Analysis of net debt
Audited Unaudited
At At
1 April Cash 31 March
2004 flow 2005
#000 #000 #000
Cash at bank and in hand 1,993 (375) 1,618
Overdrafts (501) (3,257) (3,758)
Cash 1,492 (3,632) (2,140)
Debt due after one year (2,396) (589) (2,985)
Debt due within one year (978) 638 (340)
Finance leases (273) 123 (150)
Financing (3,647) 172 (3,475)
_______ _______ _______
Total (2,155) (3,460) (5,615)
_______ _______ _______
Copies of this announcement are available from the Company's registered office
at Lacon House, 84 Theobald's Road, London, WC1X 8RW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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