RNS Number:0888A
Medal Entertainment & Media PLC
24 June 2004
Embargoed until: 07.00 Thursday 24 June 2004
MEDAL ENTERTAINMENT & MEDIA PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2004
Announcing results for Medal Entertainment & Media plc ("MEM") for the year
ended 31 March 2004, Brook Land, Chairman, commented: "The reported period was
an important phase in the initial development of the Group which has performed
well in developing new sales channels, acquiring new rights and putting in place
the building blocks for the next stage of growth."
Financial highlights:
* Group turnover increased by 83% to #12.1m (2003: #6.6m)
* Gross profit increased by 88% to #7.7m (2003: #4.1m)
* Profit before taxation increased by 52% to #0.93m (2003: #0.61m)
* Earnings per share increased by 74% to 9.47p (2003: 5.44p)
* Placing to raise #3m (net) successfully completed
Investment highlights:
*Formation of MEM tv - first pilot featuring Ricky Tomlinson recorded in
June 2004
*Investment in Maximum Entertainment in February 2004 - initial 30% stake
with option to take control
*Acquisition of Strawberry Entertainment in April 2004 - to create new
distribution channel and increase geographical reach
Brook Land added "Overall trading since the year end has been in line with
expectations and particularly encouraging within DD Video which continues to
experience substantial growth. We intend to acquire more rights to a wider range
of programmes in order to exploit our newly developed distribution channels.
"We continue to develop the business via organic growth in line with our stated
strategy. We will also continue to look at appropriate acquisitions, but only
where the Board believes they will enhance shareholder value. Since the
Company's flotation in October 2001 substantial progress has been made and the
Directors view the prospects for 2004 and beyond with optimism."
For further information, please contact:
Steve Ayres, Chief Executive John West / Claire Melly
MEM plc Tavistock Communications Limited
Tel: 020 8427 2277 Tel: 020 7920 3150
Chairman's Statement
Our stated strategy is to develop a group of companies owning, licensing,
creating and marketing entertainment products, rights and facilities. I am
pleased to update shareholders on the progress that we have made in the year
ended 31 March 2004. The reported period was an important phase in the
development of the Group which has performed well in developing new sales
channels, acquiring new rights and putting in place the building blocks for the
next stage of growth. To complement a solid first year the Company announced in
March 2004 that it had successfully raised #3 million (net) via a Placing of
4,307,488 New Ordinary Shares at 75 pence per Ordinary Share with institutional
and other investors.
Financial Overview
The results contain comparatives for the year ended 31 March 2003, which
comprise twelve months of central overhead costs, but only a seven month
(seasonally the busiest period for Leisureview) contribution to turnover from
the Group's first acquisitions, Leisureview and Fountain, in August 2002.
Turnover almost doubled to #12.1 million (2003: #6.6 million), mainly due to a
significant increase in sales from audio visual publishing as well as a
satisfactory level of demand for the provision of studio facilities by Fountain
Television. The Group profit before interest and tax was #1.23 million (2003:
#0.73 million). The profit before tax was #0.93m (2003: #0.61m) and the
Company's basic and diluted earnings per share for the year were 9.47p (2003:
5.44p).
During the year the Company drew some #0.50 million (2003: #3.60 million) of its
existing banking facilities to fund rights acquisitions whilst paying down #0.40
million (2003: #0.20 million) of mortgage finance. At 31 March 2004 total
funding provided by bank loans stood at #3.40 million (2003: #3.20 million),
#2.40 million of which is repayable after more than one year (2003: #2.90
million) and leased asset funding of #0.30 million (2003: #0.10 million). Trading
operations absorbed #0.50 million (2003: #0.30 million generated) in cash in the
period, which included #1.2 million (#0.70 million) of advance royalty payments
and a further net #3.20 million (2003: #2.90 million) was raised by way of an
issue of new shares. #0.20 million (2003: #nil) was used to purchase
investments, principally a 30% holding in Maximum Entertainment and a further
#0.92 million (2003: #0.40 million) was used to purchase fixed assets and
royalty intangible assets. The Company had net cash at bank of #1.49 million
(2003: #0.21 million) at the year end.
During the period an aggregate of 5.82 million Ordinary Shares were issued,
including 1.47 million on conversion to Ordinary Shares of the outstanding
warrants in April 2003 and 4.31 million being placed on AIM on 11 March 2004,
the balance of 0.04 million being the issue of shares as the final payment of
deferred consideration for the purchase of Leisureview Limited.
Dividend
As outlined in the Company's prospectus issued in August 2002, 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.
Operating review
The Company's two main operating subsidiaries performed well during the period.
Leisureview benefited from an improved product range and new operational
systems, contributing to a significant growth in sales and Fountain Television
continued to maintain customer service levels at a high standard, an important
factor in sustaining studio occupancy.
Rights
Leisureview, our home entertainment distribution arm, which trades as DD Video,
saw strong sales growth from its core specialist product base. The division also
benefited from new publishing and programming relationships with industry
partners and broadcasters including Channel 4, BBC, Carlton Home Entertainment
and National Geographic. Levels of sales to the retail trade increased and
benefiting from an active marketing programme Leisureview also grew its direct
sales operations.
In March 2004, MEM announced an investment in Maximum Entertainment, a new DVD
publishing business that will specialise in entertainment products sold via
retailers, initially based on the Fox Kids catalogue. Maximum will provide an
opportunity for MEM to distribute entertainment programming on DVD to supplement
its existing specialist and factual publishing activity.
In addition the Company announced its intention to acquire a majority
shareholding in Strawberry Entertainment, which focuses on selling programme
rights internationally, predominantly to broadcasters and DVD publishers
worldwide, giving the Group wider geographical reach. This was completed at the
beginning of April 2004.
Facilities
Fountain Televison, which owns the UK's largest fully equipped independent TV
studio, enjoyed another good year with occupancy levels high and many well
established shows returning. Notable shows at Fountain during the period
included the return of 'Test the Nation' (Talent TV), 'The Kumars at No 42' (Hat
Trick Productions), 'Pop Idol' (Thames TV/19TV), 'National Lottery Winning
Lines' (Celador Productions) and Bremner, Bird and Fortune (Vera Productions).
The studio is popular with the producers of TV shows that require a large
audience, as it is one of the few studios capable of servicing the production
needs of such shows. It continued to benefit from its reputation for excellent
customer service and the quality of facilities provided, as evidenced by the
recent award of Self Operated Staff Restaurant of the Year to the studio's
restaurant.
Outlook and Future Strategy
At the time of the Placing in March 2004, the Directors outlined their plans for
the growth of the business; these include the development of DD Video and
Strawberry Entertainment, the creation of a new DVD imprint, the creation of a
TV production arm and the re-organisation of the Leisureview fulfilment centre
in Chester. Progress has already been made in all of these areas and the
business is well placed to increase value for shareholders.
Overall trading since the year end has been in line with expectations and
particularly encouraging within DD Video which continues to experience
substantial growth. We intend to acquire more rights to a wider range of
programmes in order to exploit our newly developed distribution channels.
We expect sales at Fountain to be maintained at the same level year on year
although with an order book that is concentrated in the second half, largely
as a direct result of non studio based sporting events over the summer months,
particularly Euro 2004 and the Olympics. MEM tv has been formed to participate
in the creation of television shows and formats. The company is adopting a low
risk approach to production by collaborating with existing producers in order
to minimise fixed overhead costs. MEM tv will utilise the Group's studio and
distribution facilities together with a small amount of development funding
per project to assist producers make their formats successful. The first pilot
featuring Ricky Tomlinson was recorded on 18 June 2004 and two further formats
are in development.
We continue to develop the business via organic growth in line with stated
strategy. We will also continue to look at appropriate acquisitions, but only
where the Board believes they will enhance shareholder value. Since the
Company's flotation in October 2001 substantial progress has been made and the
Directors view the prospects for 2004 and beyond with optimism.
Brook Land
Chairman
24 June 2004
Consolidated Profit and Loss Account for the year ended 31 March 2004
Unaudited Audited
Year ended Year ended
31 March 31 March
2004 2003
#000 #000
Turnover 12,141 6,562
Cost of sales (4,469) (2,464)
---------- ------------
Gross profit 7,672 4,098
Net operating expenses (6,442) (3,364)
---------- ------------
Operating profit 1,230 734
Interest receivable - 21
Interest payable and similar charges (302) (150)
---------- ------------
Profit on ordinary activities
before taxation 928 605
Taxation on profit from ordinary
activities 91 (191)
---------- ------------
Profit on ordinary activities
after taxation 1,019 414
---------- ------------
Pence Pence
Earnings per share
Basic 9.47 5.44
Diluted 9.47 5.44
---------- ------------
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 2004
Unaudited Audited
2004 2003 (Restated)
#000 #000 #000 #000
Fixed assets
Intangible assets 1,465 1,631
Tangible assets 6,972 6,686
Investments in associate 180 -
-------- --------
8,617 8,317
Current assets
Stock 827 427
Debtors
- due within one year 4,241 2,664
- due after more than one year 1,429 174
Cash at bank and in hand 1,993 208
-------- --------
8,490 3,473
Creditors: amounts falling
due within one year (4,273) (2,804)
-------- --------
Net current assets 4,217 669
-------- --------
Total assets less current
liabilities 12,834 8,986
Creditors: amounts falling due
after more than one year (2,547) (2,918)
-------- --------
Net assets 10,287 6,068
-------- --------
Capital and reserves
Called up share capital 1,496 914
Share premium account 7,479 4,861
Profit and loss account 1,312 293
-------- --------
Equity shareholders' funds 10,287 6,068
-------- --------
Consolidated Cash Flow Statement for the year ended 31 March 2004
Unaudited Audited
2004 2003 (Restated)
#000 #000 #000 #000
Net cash (outflow)/inflow from
operating activities (452) 260
Returns on investments and
servicing of finance
Interest received - 21
Interest paid (245) (119)
Bank loan arrangement fees (49) (29)
Interest element of finance lease
and hire purchase rental payments (8) (2)
-------- --------
Net cash outflow from returns on
investment and servicing of finance (302) (129)
Taxation
UK corporation tax paid - -
Capital expenditure and financial
investment
Purchase of intangible fixed assets (537) (369)
Purchase of tangible fixed assets (400) (70)
Sale of tangible fixed assets - 8
-------- --------
Net cash outflow from capital
expenditure and financial investment (937) (431)
Acquisitions
Purchase of subsidiary undertakings (34) (6,678)
Cash acquired with subsidiaries - 13
Overdraft acquired with subsidiaries - (342)
Purchase of investment in associate (180) -
-------- --------
Net cash outflow from acquisitions (214) (7,007)
-------- --------
Net cash outflow before use
of liquid resources and financing
(carried forward) (1,905) (7,307)
Consolidated Cash Flow Statement for the year ended 31 March 2004 continued
Unaudited Audited
2004 2003 (Restated)
#000 #000 #000 #000
Net Cash outflow before use
of liquid resources and financing
(brought forward) (1,905) (7,307)
Financing
Issue of ordinary shares 3,377 3,400
Share issue costs (208) (483)
Capital element of lease purchase
rental payments (80) (51)
Bank loans received 500 3,600
Bank loans repaid (400) (200)
-------- -------
Net cash inflow from financing 3,189 6,266
-------- --------
Increase/(Decrease) in cash
in the year 1,284 (1,041)
-------- --------
NOTES TO THE PRELIMINARY STATEMENT
1. This announcement was approved by the Directors on 23 June
2004. The preliminary results for the year ended 31 March 2004 are unaudited.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 31 March 2004 or 31 March 2003.
The financial information for the year ended 31 March 2003 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 Corporation tax credit for the year is #91,000 (2003:
tax charge #191,000) which comprises #155,000 charge in respect of the current
period plus #246,000 credit in respect of the utilisation of deferred tax assets
recognised.
3. Following a review by the Directors work in progress has been restated as
an intangible asset, the prior year has been restated to reflect this.
4. 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 10,764,481
(2003: 7,617,166) and the earnings, being profit after tax, were #1,019,000
(2003: #414,000).
The diluted earnings per share is the same as the basic earnings per share for
both years as the share options issued are not above their exercise price and
therefore not dilutive. In 2003 the outstanding warrants and options were
anti-dilutive.
5. Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Audited
Restated
2004 2003
#000 #000
Operating profit 1,230 734
Amortisation of goodwill & film rights 415 209
Depreciation of tangible fixed assets 364 291
Profit on disposal of tangible fixed assets - (3)
Increase in stocks (400) (231)
Increase in debtors (2,422) (907)
Increase in creditors 361 167
---------- ----------
Net cash (outflow)/inflow from operating activities (452) 260
---------- ----------
Of the increase in debtors, #1.19m (2003: #0.68m) of this balance represents
investment in royalty advances paid for new products by the Group.
6. Reconciliation of net cash inflow to movement in net debt
Unaudited Audited
2004 2003
#000 #000
Increase/(decrease) in cash in the year 1,284 (1,041)
Cash inflow from increase in
debt and lease financing (319) (3,328)
----------- ----------
Change in net debt resulting from cash flows 965 (4,369)
Net (debt)/funds at start of year (3,120) 1,249
----------- ----------
Net (debt) at end of year (2,155) (3,120)
----------- ----------
7. Analysis of net debt
Audited Unaudited
At Other non- At
1 April Cash Cash 31 March
2003 flow changes 2004
#000 #000 #000 #000
Cash at bank and in hand 556 1,437 - 1,993
Overdrafts (348) (153) - (501)
--------- --------- --------- ---------
Cash 208 1,284 - 1,492
--------- --------- --------- ---------
Debt due after one year (2,874) 478 - (2,396)
Debt due within one year (351) (627) - (978)
Finance leases (103) 80 (250) (273)
--------- --------- --------- ---------
Financing (3,328) (69) (250) (3,647)
--------- --------- --------- ---------
Total (3,120) 1,215 (250) (2,155)
--------- --------- --------- ---------
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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