Acquisition
September 27 2002 - 8:30AM
UK Regulatory
RNS Number:7573B
Ten Alps Communications PLC
27 September 2002
Ten Alps acquires TV animation company Red Welly
Ten Alps Communications PLC ('Ten Alps') announces the acquisition of 100% of
the issued share capital of Red Welly Studios Limited ("Red Welly"), a digital
effects and animation production company.
Since its formation in 1999, Red Welly has produced projects for some 30 clients
such as Lego, Warner Brothers, BAE Systems, Virgin, Bentley, Honda, BP,
Chrysler, Canon, Barclays, BT and Samsung - either contracted directly, or as
subcontractors.
Red Welly already supplies Ten Alps with TV graphics sequences and advertising
graphics. The Derby-based company will be renamed Ten Alps Red Welly and
continue its corporate work as well as focussing on new TV animation projects.
"This is vertical integration which makes sense from both the cost and revenue
sides," said Ten Alps Chief Executive Alex Connock.
"Red Welly produce excellent work on a very low cost base, plus we aim to use
our marketing network to drive more business their way. Almost every one of the
clients we have as a group, from Microsoft to The Boat Show to the BBC, sees
design as the critical component in the work we do. We see a lot of
opportunity."
Financial Terms
In the financial year to November 2001 Red Welly produced an after-tax profit of
#23,028 on turnover of #130,603. The balance sheet as at 30.11.01 showed net
assets of #28,442.
The initial payment will be #50,000 in cash, for assets valued at #50,000.
For the period to March 2003 a further consideration of 50% of after-tax profits
will be payable, half in shares at prevailing market price, and half in cash.
For the year end March 2004 and 2005, payments will be triggered only beyond
thresholds of #10,000 and #15,000 respectively.
"We have valued Red Welly conservatively, based on its financial actuals, and
excluding any synergy benefits. But this is also a future play for us, enabling
us to extract real synergies in events pitches, advertising and TV graphics,"
said Ten Alps Finance Director Nitil Patel.
"The company will retain its cost-effective offices in Derby, where the annual
rent is only #4000, but they will have a presence at our office in London, and
finance functions will be taken on by our team without additional resources."
Commercial opportunity
"Design, design, design - that's the focus of the communications business at the
moment," said Red Welly joint Creative Director James Harpham, 27.
"Having the chance to bring our design credentials through Ten Alps to prestige
customers such as Flextech, NCR and SONY is a huge opportunity for us."
Animation projects
Over a horizon of the next two years, Ten Alps also plans to develop animation
projects with Red Welly for broadcast, in which Ten Alps would hope to retain
significant rights.
"Creating a Bob the Builder project is clearly a Holy Grail in the broadcast
business," said Connock. "We are not necessarily modelling any business plans
on success like that, but nonetheless this is a game where we believe we have
all the editorial expertise, and which we very much want to play in. With Red
Welly we have the right excellence and an extremely competitive cost-base to
take the market on."
"We've always wanted to do animation projects and indeed games. We believe we
have some exciting properties in development, and are keen to use Ten Alps as a
route to financing them," said Paul Biver, 30, joint Creative Director.
More information
www.tenalps.com
www.redwellystudios.com
Contact
Press: Sheila Gunn
07884 437934
Alex Connock
Chief Executive
Ten Alps Communications PLC
0207 089 3686
This information is provided by RNS
The company news service from the London Stock Exchange
END
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