TIDMCFL
RNS Number : 6178W
Contentfilm PLC
31 July 2009
Date: 31 July 2009
On Behalf of: ContentFilm plc ('ContentFilm', 'the Company', 'the Group')
Embargoed until: 0700hrs
ContentFilm plc
Preliminary Results for the year ended 31 March 2009
The Board of ContentFilm plc (AIM: CFL), a pre-eminent owner of media rights
supported by strong film, TV and digital sales divisions, today announces its
unaudited preliminary results for the year ended 31 March 2009.
Financial Highlights
* Turnover of GBP21.1m (2008: GBP24.1m)
* Gross profit of GBP8.6m (2008: GBP10.5m)
* Normalised EBITDA¹ of GBP2.7m (2008: GBP4.1m)
* Normalised PBT¹ of GBP1.4m (2008: GBP3.1m)
* Normalised basic EPS¹ of 0.8p (2008: 1.8p)
* Reported loss before tax of GBP17.5m (2008: profit of GBP0.4m) predominantly due
to non-recurring and non-cash items related to restructuring of US home
entertainment operations
* The Group continues to benefit from significant carried forward tax losses with
no corporation taxes expected to be paid for the foreseeable future
* The Group's available liquidity under its loan facility has been stable and
provides significant ongoing liquidity
Operational Highlights
* Fireworks International, the Group's television division has had a positive year
with strong library sales generating Normalised EBITDA¹ of GBP4.5m (2008:
GBP5.7m) and continued strength expected
* ContentFilm International, the Group's film division has had a challenging year
generating Normalised EBITDA¹ of GBPNil (2008: GBP0.8m) but improved results
expected in FY10
* US home entertainment operations have been restructured such that the Group has
a minority investment in Phase 4 Films but no longer has any capital exposure to
the sector
* Group has emerged from the restructuring with a strong television operation,
including a new non fiction distribution division and an investment in a
non-fiction production company Collins Avenue, a growing and profitable digital
sales division and a film sales company, relocated to Los Angeles and committed
to returning to profitability
* Vigorous cost cutting has been undertaken over recent months to reduce corporate
costs and selected divisional costs
Post Balance Sheet Events
* The Group received redemption notices from 100% of its preference shareholders
and will carry the redemption amount as a liability to be met in the future when
it is able to do so
Commenting on the Group's results, Alton Irby, Non-Executive Chairman of
ContentFilm plc, said:
"Our television division has produced a robust performance, which is a testament
to the resilience of the operation we have built over recent years. In
contrast, the film division has had a challenging year, however, the move to LA
means we are well positioned for a significantly improved performance in 2010.
Finally, the restructuring of the US home entertainment division has been
completed and going forward is expected to deliver positive cash flow, without
further capital investment.
"We have undertaken cost cutting measures across the business, while continuing
to invest where we have seen opportunities for growth.
"We believe the Company will have a solid FY10 with results likely to be skewed
into the second half when most of our new television series will be delivered."
¹ - For details on definitions and calculations refer to the FY09 Financial
Review below
Enquiries:
+-----------------------------------------------------+------------------------------+
| John Schmidt/Geoff Webb | www.contentfilm.com |
+-----------------------------------------------------+------------------------------+
| ContentFilm PLC | Tel: 020 7851 6500 |
+-----------------------------------------------------+------------------------------+
+----------------------------------------------+----------------------------+
| Emma Kane/Samantha Robbins/Anna Dunkin | |
+----------------------------------------------+----------------------------+
| Redleaf Communications Ltd | Tel: 020 7566 6700 |
+----------------------------------------------+----------------------------+
+----------------------------------------------+----------------------------+
| Jeremy Read | |
+----------------------------------------------+----------------------------+
| Throgmorton Street Capital | Tel: 020 7070 0973 |
+----------------------------------------------+----------------------------+
+----------------------------------------------+----------------------------+
| Salmaan Khawaja/Colin Aaronson | |
+----------------------------------------------+----------------------------+
| Grant Thornton UK LLP | Tel: 020 7383 5100 |
+----------------------------------------------+----------------------------+
There will be an analyst conference call at 3:30 pm today to discuss these
results with the Group's CEO, John Schmidt and CFO, Geoff Webb. To participate
in the meeting, please contact Anna Dunkin at Redleaf Communications on the
number above or e-mail ad@redleafpr.com.
Chairman's Statement
Introduction and Results
For the year ended 31 March 2009, ContentFilm plc reports revenue of GBP21.1m
(2008: GBP24.1m). The operating loss was GBP14.5m (2008: profit of GBP2.0m) and
the loss before taxation was GBP17.5m (2008: profit of GBP0.4m). This resulted
in basic losses per share of 9.8p (2008: earnings of 0.2p).
The Normalised EBITDA¹ for the year was GBP2.6m (2008: GBP4.1m) and the
Normalised PBT¹ was GBP1.4m (2006: GBP3.1m). Normalised basic EPS¹ was 0.8p
(2008: 1.8p)
The Board does not propose a dividend.
These financial results have been achieved through a positive performance within
the Group's television operations offset by a disappointing performance from the
Group's film division. Additionally, the Group restructured its home US
entertainment operations during the year and the Directors undertook an
impairment review that included a fundamental reassessment of the economic and
market conditions in which the Group is operating to take account of the current
global recession.These two issues gave rise to non-recurring exceptional expense
items, mostly related to the Group's goodwill and intangible assets and
the assets of its US home entertainment division.
Notwithstanding the heavy restructuring costs and asset write-downs, the
Directors believe that the ongoing business - particularly the television
division - has shown steady and robust results over several years and taking
account of the difficult market conditions, the overall normalised results are
satisfactory.
The strength of the ongoing business is built on the foundations of a
significant and growing library of film, television and digital entertainment
rights valued, most recently valued at $US 75 million. Further, the Group has
developed and acquired strong sales, marketing and back office skills necessary
to exploit and maximise the revenue and cash flow potential of our library.
Within the spectrum of the entertainment industry, the Group seeks to avoid
those areas which are capital intensive with high risk-reward profiles (such as
film production activities or theatrical film distribution), preferring areas
with lower risk profiles and more predictable earnings and cash flows (for
example television distribution, film sales agency and non-fiction television
production).
This marriage of quality content ownership and strong distribution capabilities
within a managed risk environment will remain the foundation behind the Group's
ongoing operations.
¹ - For details on definitions and calculations refer to the FY09 Financial
Review below
US Home Entertainment Restructuring
On 24 June 2008, the Group announced it had reached agreement to restructure its
Allumination operations with the US home entertainment operations of Peace Arch
Home Entertainment (PAHE) and that the restructured operations would be owned
50% by the Group and managed by the PAHE management team.
The effect for ContentFilm was to cut - by more than half - the Group's exposure
and financial commitment to the US home entertainment market, whilst at the same
time participating in a jointly owned operation with a strong management team
and a cost efficient infrastructure.This restructuring proved a success for the
Group, and PAHE on a stand alone basis, generated profits from inception through
to the year end.
Nevertheless, it became apparent that our joint venture partner (Peace Arch
Entertainment Inc. - PAE) wanted to dispose of its entire home entertainment
operation to Phase 4, a new company established by PAHE's
management. Additionally, whilst the JV structure was working well, it still
left ContentFilm exposed to the capital contributions required to grow PAHE.
Additionally it was considered unwieldy to have separate ownership of the PAE
Canadian home entertainment assets and PAHE, for example, in relation to the
possible collateralisation of the assets of PAHE in any bank financing
arrangement and the centralised overhead allocation issues between the Canadian
operations and PAHE.
Taking the above issues into account, ContentFilm agreed to swap its 50%
interest in the US joint venture (PAHE) for a 22.5% minority stake in Phase 4;
the new combined and enlarged US and Canadian business effective 31 March 2009.
In addition, ContentFilm was relieved of any obligation to make ongoing capital
contributions to PAHE or Phase 4.
The restructuring during the year gave rise to certain impairment charges,
predominantly non-cash in nature, which are included in the accompanying
financial statements.
The Group has assessed that it does not have significant influence over Phase 4
as its power to participate in the financial and operating policies is
restricted and limited by the make up of the Board which is controlled by the
management group. Additionally, convertible debt instruments exist that may
lower the Company's equity interest below a 20% voting interest. Consequently
the Company does not utilise the equity accounting method in relation to its
investment in Phase 4 Films.
The restructuring of our US home entertainment division has been an extended
process, but we are pleased to have accomplished it, and we believe that it will
now deliver positive cash flow going forward. We also look forward to working
with Phase 4 to build a successful company that will create value in our
minority stake.
FY09 Financial Review
The Group sets out below the detailed calculations and measures of Normalised
PBT and EBITDA. Normalised EBITDA is defined as operating profit less
intangible library amortization, depreciation, share based payments and
non-recurring exceptional items. These items are removed to provide a further
understanding of the Group's financial performance and assist in enabling
comparison of financial performance between periods. Normalised PBT is defined
as Normalised EBITDA less net financing costs (excluding finance costs
attributable to preference shares and fixed interest rate swaps) and
depreciation. Normalised basic EPS is defined as Normalised PBT divided by the
weighted average of ordinary shares.
The Group believes that the best performance measures are Normalised EBITDA,
Normalised PBT and Normalised EPS.
+----------------------------------------------------+---------------+---------------+
| | GBPm | GBPm |
+----------------------------------------------------+---------------+---------------+
| | 2009 | 2008 |
+----------------------------------------------------+---------------+---------------+
| | | |
+----------------------------------------------------+---------------+---------------+
| Operating profit/(loss) | (14.5) | 2.0 |
+----------------------------------------------------+---------------+---------------+
| Add back: | | |
+----------------------------------------------------+---------------+---------------+
| Intangible library amortization | 1.2 | 1.4 |
+----------------------------------------------------+---------------+---------------+
| Depreciation | 0.1 | 0.1 |
+----------------------------------------------------+---------------+---------------+
| Share based payments | 0.4 | 0.3 |
+----------------------------------------------------+---------------+---------------+
| Non recurring exceptional items | 15.5 | 0.3 |
+----------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------------------+---------------+---------------+
| Normalised EBITDA | 2.7 | 4.1 |
+----------------------------------------------------+---------------+---------------+
| | | |
+----------------------------------------------------+---------------+---------------+
| Less: | | |
+----------------------------------------------------+---------------+---------------+
| Net finance costs excluding finance costs related | 1.2 | 0.9 |
| to preference shares | | |
+----------------------------------------------------+---------------+---------------+
| Depreciation | 0.1 | 0.1 |
+----------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------------------+---------------+---------------+
| Normalised PBT | 1.4 | 3.1 |
+----------------------------------------------------+---------------+---------------+
| | ======== | ======== |
+----------------------------------------------------+---------------+---------------+
Normalised basic earnings per share can then be calculated:
+----------------------------------------------------+---------------+---------------+
| | 2009 | 2008 |
+----------------------------------------------------+---------------+---------------+
| | | |
+----------------------------------------------------+---------------+---------------+
| Normalised PBT - GBPm | 1.4 | 3.1 |
+----------------------------------------------------+---------------+---------------+
| | | |
+----------------------------------------------------+---------------+---------------+
| Divided by: weighted average number of ordinary | 174,578,570 | 173,990,212 |
| shares | | |
+----------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------------------+---------------+---------------+
| Normalised basic EPS - pence | 0.8p | 1.8p |
+----------------------------------------------------+---------------+---------------+
| | ======== | ======== |
+----------------------------------------------------+---------------+---------------+
Divisional Review
Going forward, the Group comprises three operating divisions, Fireworks
International (TV), ContentFilm International (Film) and Allumination FilmWorks
(DVD) comprising its US home entertainment assets and libraries, with a
centralised overhead division.
The business monitors its performance on a day to day basis in accordance with
the segmental analysis included in the full financial statements, and the
divisional analysis below is designed to provide more information to
shareholders.
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | TV | TV | Film | Film | DVD | DVD | Corp | Corp | Total | Total |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | 09 | 08 | 09 | 08 | 09 | 08 | 09 | 08 | 09 | 08 |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Revenue | 13.6 | 13.8 | 1.8 | 3.0 | 5.7 | 7.2 | 0.0 | 0.1 | 21.1 | 24.1 |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Less: cost of | (7.3) | (7.3) | (0.9) | (1.6) | (4.3) | (4.7) | 0.0 | 0.0 | (12.5) | (13.6) |
| sales | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Gross margin | 6.3 | 6.5 | 0.9 | 1.4 | 1.4 | 2.5 | 0.0 | 0.1 | 8.6 | 10.5 |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Gross margin % | 46% | 47% | 50% | 47% | 25% | 35% | 100% | 100% | 41% | 44% |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Less: overhead | (2.4) | (1.6) | (1.0) | (0.9) | (1.5) | (3.0) | (2.6) | (2.7) | (7.5) | (8.2) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Add: library | 0.6 | 0.8 | 0.1 | 0.3 | 0.4 | 0.3 | 0.0 | 0.0 | 1.1 | 1.4 |
| amortis'n | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Add: | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 |
| depreciation | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Add: share | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.4 | 0.3 | 0.4 | 0.3 |
| based | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Normalised | 4.5 | 5.7 | 0.0 | 0.8 | 0.3 | (0.2) | (2.1) | (2.2) | 2.7 | 4.1 |
| EBITDA | | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | ==== | ==== | ==== | ==== | ==== | ==== | ==== | ==== | ==== | ==== |
+-----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
TV Division: Fireworks International
The television division has had another solid year and the highlights have been:
* Revenues were split GBP5.6m (2008: GBP6.0m) to the library and GBP8.0m (2008:
GBP7.8m) to newly acquired product. Newly acquired product is predominantly new
television series but also includes library acquisitions like Harmony Gold
* In relation to the Group's third party managed libraries, the Harmony Gold
library had a particularly strong year
* Margins have remained stable
* Overhead has increased during the year, due predominantly to the recruitment of
more staff to service the establishment of the division's new factual division
and growing digital division. Increases in revenues and margins related to these
growing divisions are expected in FY10
The outlook for the division is solid:
* Library sales for FY10 are expected to be robust
* In relation to new series sales, the Group will benefit from known sales of 'The
Border', 'Heartland' and new series 'The Republic of Doyle'.
* The newly established Factual Entertainment division is expected to grow
significantly in FY10
* The digital division within Fireworks continues to develop positively
Film Division: ContentFilm International
The film division has had a challenging year, the key features to note are:
* The independent film sector is experiencing difficult market conditions. Home
entertainment and television sales numbers for films have lowered in FY09 and
these have yet to be offset by new digital alternatives. Additionally, financing
for independent films has been slow
* The delivery of several of the division's titles was delayed and will now fall
in FY10
* Nevertheless, acquisition of high quality US product has advanced significantly
and is expected to continue
* Improved sales are expected of titles including 'The Killing Room', 'Extract' to
be released in the US by Miramamx, the Academy Award winning 'Departures', the
Berlin Silver Bear winner 'The Messenger', Cannes Jury Prize winner 'Fish Tank'
and Sundance entry 'The Winning Season' to be released by Lion's Gate in the US
* Film library sales have been a bright light having maintained their momentum
under our current sales structure
* Recent Library Acquisitions include, 'Sirens' starring Hugh Grant, the Nick
Broomfield Library comprising 20 films, cult documentary 'I Knew It Was You:
Rediscovering John Cazale', the acclaimed documentary 'Living Goddess', UK cult
comedy 'Leon The Pig Farmer', acclaimed New York comedy 'Metropolitan', and the
Bafta winning 'Poppy Shakespeare'. Further library acquisitions are expected in
the months to come.
* Overhead stabilised in FY09 but will fall in FY10 due to head count reductions
The outlook for the division is improving:
* The division has recently announced a high level of acquisitions, most of which
have been procured for no capital commitment on a sales agency basis
* Post the US move, the first of its higher budgeted commercial films goes into
production, namely 'Ironclad', a medieval action thriller drama starring James
Purefoy, Paul Giamatti and Bob Hoskins
* Further acquisitions include, 'World's Greatest Dad', a comedy starring Robin
Williams, 'When You're Strange' a documentary about the Doors and narrated by
Johnny Depp, 'Last Ride' starring Hugo Weaving, the highly acclaimed 'Balibo'
starring Anthony LaPaglia, and 'Love The Beast' starring Eric Bana. Two more
acquisitions to be announced shortly
* The opportunity to acquire finished films of value is increasing
* The award winning nature of the films acquired will add long term value to the
library
* This increased activity will be achieved with lower levels of divisional
overhead
DVD Division: Allumination Filmworks
We are pleased with the initial performance of our restructured US home
entertainment operations which should deliver positive cash flow over the coming
years. The highlights have included:
* Family films have performed well
* Domestic television sales have included the soon to be released 'Christmas Town'
to the ABC Family channel
* International sales responsibilities have been reallocated to the ContentFilm
library sales division and Fireworks television sales division, and have been
improving
* The library is showing signs of stability, with continuing orders being achieved
for our library product into Wal-Mart
Corporate Division
Overheads in the corporate division has remained stable during FY09. There have
been some increases in office costs due to the establishment of a Toronto
office, together with an expansion of our Los Angeles office to facilitate the
move of our film sales function to that city. Against that, some savings have
been made in staffing costs and further cost savings are expected in FY10.
The Group has undertaken a rigorous cost cutting exercise during the period and
continues to monitor its corporate overhead and review possible areas of future
saving.
Other Financial Highlights
Debt, Cash Flow and Liquidity
The Group's senior loan facility is managed by its long term banker JPMorgan
Chase Bank, the world's largest media bank. Other banks included in our
syndicate include Bank of America, IDB Bank and Manufacturers Bank. The Group
has a $US 45m five year revolving loan facility in place that commenced in July
2008.
The Group started the year with GBP13.6m ($US 27.2m) of borrowings (before
capitalised financing costs of GBP0.0m). At the end of FY09, the Group had
GBP24.6m ($US 35m) of borrowings (before capitalised financing costs of
GBP0.9m). One of the main reasons for the increase in debt was the continued
increase in acquisition costs for film and television product of GBP6.1m (2008:
GBP5.2m). The increase in the GBPGBP debt (relative to the $US debt) was
exacerbated by the deterioration in the GBPGBP/$US exchange rate which saw a
nearly 30% devaluation.
The Group's availability under its revolving loan facility has remained stable
for the last year and based on current internal forecasts, we expect to continue
to have significant ongoing availability under the facility which will provide
adequate working capital for the Group to execute its strategy including product
acquisitions.
Library Valuations
We do not revalue our intangible assets related to our film and television
intangible assets because we utilise the amortised cost method. In line with
this policy, we do not take account of the underlying value of the assets, nor
do we take account of rights that we acquire at nil cost.
However, for the purposes of determining the bank borrowing collateral behind
these rights, an independent valuation is undertaken of our library, based on
historical revenues and discounted projected cash flows. These valuations are
traditionally conservative in nature due to their bank collateral purpose.
The most current library valuation, values our library at $75m, significantly
above the amortised cost value we recognise in our financial statements. A
library valuation update is expected shortly and is not expected to vary
materially from the last valuation.
Carried Forward Tax Losses
The Group has not recorded a tax charge for several years due to the Group's
significant carried forward tax losses in both the UK and the US. As at 31 March
2009 the Group's carried forward tax losses are estimated at GBP48m (2008:
GBP37m).
Under relevant accounting standards, the Group has assessed that it is probable
that at least GBP12.5m of these tax losses will be utilised in the foreseeable
future, 26% of the total estimated losses. Consequently, it has continued to
recognise a deferred tax asset and a tax credit of GBP3.5m.
It is possible in the longer term and therefore not yet foreseeable that the
Group will be able to utilise significantly more than GBP12.5m of its deferred
tax losses.
Corporate Strategy
ContentFilm's corporate strategy is based upon:
* Continued growth by asset acquisition or corporate activity
* Internal organic growth and maintenance of a strong distribution infrastructure
* Risk management
We have a skilled and professional corporate acquisition capability, headed by
our CEO John Schmidt, who has many years of experience in the entertainment
industry and over the years we have undertaken several corporate transactions.
We have grown organically and built our distribution capabilities over recent
years in the following ways:
* Invested heavily in new product acquisition over the last two years,
particularly in our television division. Total product acquisition has been
GBP6.2m this year (2008: GBP5.2m)
* Acquired two new libraries of predominantly television product, Harmony Gold and
CBC, and are actively looking for new libraries to manage
* Continued to invest in sales talent and have grown our distribution teams in
both the film and television areas, particularly in the last year where we have
bolted on a non-fiction distribution capability
* Continuing to build our digital distribution team and have seen this division
grow strongly in FY09
Combining these operations means we have a powerful distribution platform which
is able to exploit our growing library of entertainment content.
Our dual strategy of asset acquisition and internal organic growth has
successfully built up a valuable entertainment rights library. We manage risk
by avoiding the capital intensive segments of our industry, such as film
production or theatrical distribution where significant up-front investments
need to be made.
We expect to continue our strategy of building our combined library and
distribution capabilities whilst operating in a contained risk environment.
Trading Outlook
The general economic climate is challenging. Nevertheless, the Group is well
placed to face the upcoming challenges including the following matters:
* Strong sales of our television library. The Group owns most of its television
library outright and into perpetuity. This portion of our library continues to
perform robustly
* The third series of two major television series - 'The Border' and 'Heartland' -
will be released this year, for which significant sales have already been
achieved and will be booked when the series have been delivered in the second
half of this year
* The addition of revenues related to the Fireworks Factual Entertainment division
are expected this year
* The digital division continues to expand and we expect it to have another year
of significant growth
* Visibility in our film division is much improved with several films currently
being delivered and other significant films expected to be delivered in the
financial year
* We are experiencing pleasing levels of new product acquisition across the film
and television divisions and expect some of the revenues related to the product
to be recognised in FY10
* We believe the restructuring of Allumination will lead to positive cash flow
going forward
Taken as a whole, we believe the Group will have a solid FY10 with results
likely to be skewed into the second half when most of our new television series
will be delivered.
Conclusion
FY09 has seen continued positive performance from our television division within
the context of generally difficult market conditions and a major restructuring
within our business. Going forward we are focused on building upon the
strengths within our television division, whilst improving the results in our
film division in order to grow the value of the Company for the benefit of
shareholders.
Alton Irby
Chairman
31 July 2009
Consolidated Income Statement
for the year ended 31 March 2009
+-----------------------------------------------+------+----------+----------+
| | Note | 2009 | 2008 |
+-----------------------------------------------+------+----------+----------+
| | | GBP000 | GBP000 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Revenue | | 21,106 | 24,093 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Cost of sales | | (12,489) | (13,605) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Gross profit | | 8,617 | 10,488 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Operating expenses | | (23,075) | (8,491) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Operating (loss)/profit | | (14,458) | 1,997 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Analysed as: | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Normalised EBITDA | | 2,683 | 4,143 |
+-----------------------------------------------+------+----------+----------+
| Intangible library amortisation | | (1,124) | (1,423) |
+-----------------------------------------------+------+----------+----------+
| Depreciation | | (141) | (107) |
+-----------------------------------------------+------+----------+----------+
| Share-based payments | | (345) | (347) |
+-----------------------------------------------+------+----------+----------+
| Non-recurring exceptional items | 2 | (15,531) | (269) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | (14,458) | 1,997 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Finance income | | 64 | 119 |
+-----------------------------------------------+------+----------+----------+
| Finance cost | | (1,264) | (1,031) |
+-----------------------------------------------+------+----------+----------+
| Finance cost - preference shares | | (760) | (697) |
+-----------------------------------------------+------+----------+----------+
| Loss on interest rate swap | | (1,057) | - |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Net finance cost | | (3,017) | (1,609) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| (Loss)/profit before taxation | | (17,475) | 388 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Income tax charge related to deferred tax | | (423) | - |
| asset | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Loss/(profit) for the period | | (17,898) | 388 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Basic (loss)/earnings per ordinary share | 3 | (9.8p) | 0.2p |
+-----------------------------------------------+------+----------+----------+
| Diluted (loss)/earnings per share | 3 | (9.8p) | 0.5p |
+-----------------------------------------------+------+----------+----------+
Consolidated balance sheet
at 31 March 2009
+-----------------------------------------------+------+----------+----------+
| | | 2009 | 2008 |
+-----------------------------------------------+------+----------+----------+
| | | GBP000 | GBP000 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| ASSETS | | | |
+-----------------------------------------------+------+----------+----------+
| Non current assets | | | |
+-----------------------------------------------+------+----------+----------+
| Property, plant and equipment | | 123 | 331 |
+-----------------------------------------------+------+----------+----------+
| Goodwill | | 10,776 | 15,697 |
+-----------------------------------------------+------+----------+----------+
| Intangible assets | | 7,628 | 8,815 |
+-----------------------------------------------+------+----------+----------+
| Investments | | 1,333 | 2 |
+-----------------------------------------------+------+----------+----------+
| Deferred tax | | 3,477 | 3,900 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | 23,337 | 28,745 |
+-----------------------------------------------+------+----------+----------+
| Current assets | | | |
+-----------------------------------------------+------+----------+----------+
| Inventory | | 152 | 603 |
+-----------------------------------------------+------+----------+----------+
| Trade and other receivables | | 15,739 | 14,013 |
+-----------------------------------------------+------+----------+----------+
| Cash and cash equivalents | | 731 | 359 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | 16,622 | 14,975 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Total Assets | | 39,959 | 43,720 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| LIABILITIES | | | |
+-----------------------------------------------+------+----------+----------+
| Current liabilities | | | |
+-----------------------------------------------+------+----------+----------+
| Trade and other payables | | (12,080) | (8,704) |
+-----------------------------------------------+------+----------+----------+
| Short term borrowings | | - | (13,625) |
+-----------------------------------------------+------+----------+----------+
| Preference shares classed as financial | | (9,176) | - |
| liabilities | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | (21,256) | (22,329) |
+-----------------------------------------------+------+----------+----------+
| Non current liabilities | | | |
+-----------------------------------------------+------+----------+----------+
| Other non current liabilities | | (1,057) | (593) |
+-----------------------------------------------+------+----------+----------+
| Long term borrowings | | (23,736) | - |
+-----------------------------------------------+------+----------+----------+
| Preference shares classed as financial | | - | (8,416) |
| liabilities | | | |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | (24,793) | (9,009) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| Total Liabilities | | (46,049) | (31,338) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| NET (LIABILITIES)/ASSETS | | (6,090) | 12,382 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| EQUITY | | | |
+-----------------------------------------------+------+----------+----------+
| Share capital | | 4,282 | 4,276 |
+-----------------------------------------------+------+----------+----------+
| Share premium account | | 37,438 | 37,407 |
+-----------------------------------------------+------+----------+----------+
| Equity element on convertible debt | | 3,100 | 3,100 |
+-----------------------------------------------+------+----------+----------+
| Share option reserve | | 1,025 | 680 |
+-----------------------------------------------+------+----------+----------+
| Merger reserve | | 506 | 506 |
+-----------------------------------------------+------+----------+----------+
| Warrant reserve | | 61 | 61 |
+-----------------------------------------------+------+----------+----------+
| Foreign currency reserve | | (6,945) | 551 |
+-----------------------------------------------+------+----------+----------+
| Translation Reserve | | 6,111 | (429) |
+-----------------------------------------------+------+----------+----------+
| Profit and loss account | | (51,668) | (33,770) |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
| | | (6,090) | 12,382 |
+-----------------------------------------------+------+----------+----------+
| | | | |
+-----------------------------------------------+------+----------+----------+
Consolidated statement of changes in equity
for the year ended 31 March 2009
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | Share | Share | Equity | Share | Merger | Foreign | Trans. | Retained | Total |
| | Capital | Premium | on | Option | and | currency | reserve | earnings | Equity |
| | | | Con. | reserve | Warrant | reserve | | | |
| | | | Debt | | reserve | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Balance at | 4,275 | 37,376 | 3,101 | 333 | 567 | 463 | (981) | (33,505) | 11,629 |
| 1 April | | | | | | | | | |
| 2007 | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Changes in | | | | | | | | | |
| equity for | | | | | | | | | |
| 2008 | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Exchange | - | - | - | - | - | - | 732 | (653) | 79 |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translation | | | | | | | | | |
| of foreign | | | | | | | | | |
| operations | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Foreign | - | - | - | - | - | 88 | - | - | 88 |
| currency | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Exchange | - | - | - | - | - | - | (180) | - | (180) |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translation | | | | | | | | | |
| of goodwill | | | | | | | | | |
| on | | | | | | | | | |
| consolidation | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Profit for | - | - | - | - | - | | - | 388 | 388 |
| the year | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Total | - | - | - | - | - | 88 | 552 | (265) | 375 |
| recognised | | | | | | | | | |
| gains and | | | | | | | | | |
| losses for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Shares to | - | - | - | 347 | - | - | - | - | 347 |
| be issued | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Shares | 1 | 28 | - | - | - | - | - | - | 29 |
| issued | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Preference | | 3 | (1) | - | - | - | - | - | 2 |
| share | | | | | | | | | |
| conversion | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Balance at | 4,276 | 37,407 | 3,100 | 680 | 567 | 551 | (429) | (33,770) | 12,382 |
| 31 March | | | | | | | | | |
| 2008 | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Changes in | | | | | | | | | |
| equity for | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Exchange | - | - | - | - | - | - | 5,916 | - | 5,916 |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translation | | | | | | | | | |
| of foreign | | | | | | | | | |
| operations | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Foreign | - | - | - | - | - | (7,496) | - | - | (7,496) |
| currency | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Exchange | - | - | - | - | - | - | 624 | - | 624 |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translation | | | | | | | | | |
| of goodwill | | | | | | | | | |
| on | | | | | | | | | |
| consolidation | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Profit for | - | - | - | - | - | - | - | (17,898) | (17,898) |
| the year | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Total | - | - | - | - | - | (7,496) | 6,540 | (17,898) | (18,854) |
| recognised | | | | | | | | | |
| gains and | | | | | | | | | |
| losses for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Shares to | - | - | - | 345 | - | - | - | - | 345 |
| be issued | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Shares | 6 | 31 | - | - | - | - | - | - | 37 |
| issued | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| Balance at | 4,282 | 37,438 | 3,100 | 1,025 | 567 | (6,945) | 6,111 | (51,668) | (6,090) |
| 31 March | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
| | | | | | | | | | |
+---------------+---------+---------+--------+---------+---------+----------+---------+----------+----------+
Consolidated cash flow statement
for the year ended 31 March 2009
+-------------------------------------------+------+----------+-----------+
| | | 2009 | 2008 |
+-------------------------------------------+------+----------+-----------+
| | | GBP000 | GBP000 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Cash flows from operating activities: | | | |
+-------------------------------------------+------+----------+-----------+
| Profit for the period after tax | | (17,898) | 388 |
+-------------------------------------------+------+----------+-----------+
| Adjustments for: | | | |
+-------------------------------------------+------+----------+-----------+
| Deferred tax asset | | 423 | - |
+-------------------------------------------+------+----------+-----------+
| Depreciation | | 141 | 107 |
+-------------------------------------------+------+----------+-----------+
| Amortisation of intangible film and | | 4,510 | 4,810 |
| television rights | | | |
+-------------------------------------------+------+----------+-----------+
| Impairment of intangible film and | | 5,512 | - |
| television rights | | | |
+-------------------------------------------+------+----------+-----------+
| Impairment of goodwill | | 6,609 | - |
+-------------------------------------------+------+----------+-----------+
| (Increase) in trade receivables | | (1,726) | (7,543) |
+-------------------------------------------+------+----------+-----------+
| (Increase)/decrease in inventory | | 451 | (349) |
+-------------------------------------------+------+----------+-----------+
| Increase in trade payables | | 948 | 2,852 |
+-------------------------------------------+------+----------+-----------+
| Equity settled share based payments | | 345 | 347 |
+-------------------------------------------+------+----------+-----------+
| Exchange differences | | (4,518) | 195 |
+-------------------------------------------+------+----------+-----------+
| Finance cost | | 3,017 | 1,609 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| | | (2,186) | 2,416 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Interest paid | | (1,137) | (1,031) |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Net cash from operating activities | | (3,323) | 1,385 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Cash flows from investing activities: | | | |
+-------------------------------------------+------+----------+-----------+
| Purchase of intangible film and | | (6,106) | (5,170) |
| television rights | | | |
+-------------------------------------------+------+----------+-----------+
| Purchase of property, plant and equipment | | (105) | (161) |
+-------------------------------------------+------+----------+-----------+
| Purchase of joint venture investment | | (206) | - |
+-------------------------------------------+------+----------+-----------+
| Interest received | | 1 | 2 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Net cash used in investing activities | | (6,416) | (5,329) |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Cash flows from financing activities: | | | |
+-------------------------------------------+------+----------+-----------+
| Proceeds from borrowings | | 24,082 | 16,377 |
+-------------------------------------------+------+----------+-----------+
| Repayment of borrowings | | (13,971) | (12,189) |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Net cash from financing activities | | 10,111 | 4,188 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Net increase in cash | | 372 | 244 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Cash at beginning of period | | 359 | 115 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
| Cash at end of period | | 731 | 359 |
+-------------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------------+------+----------+-----------+
1. Basis of preparation and general information
The financial statements have been prepared under the historical cost convention
and on a going concern basis. The measurement bases and principal accounting
policies of the Group are set out below.
These consolidated financial statements are presented in Pounds Sterling (GBP),
the functional currency of the parent company is US Dollars ($). Foreign
operations are included in accordance with the policies set out in Note 2.
These consolidated financial statements have been prepared in accordance with
the accounting policies set out below which are based on IFRS as adopted by the
European Union (EU) and are effective at 31 March 2009.
At the date of authorisation of these financial statements, the following
standards and interpretations which have not been applied in these financial
statements were in issue but not yet effective:
* IFRS 1 First Time Adoption of International Financial Reporting Standards
(Amendments)
* IFRS 3 Business Combinations (Revised)
* IFRS 2 Share Based Payment: Vesting Conditions and Cancellations (Amendments)
* IFRS 8 Operating Segments
* IAS 1 Presentation of Financial Statements (Revised)
* IAS 23 Borrowing Costs (Amendments)
* IAS 27 Consolidated and Separate Financial Statements (Revised)
* IAS 27 Consolidated and Separate Financial Statements (Amendments)
* IAS 32 Financial Instruments (Amendments)
* IFRIC 12 Service Concession Arrangements
* IFRIC 13 Customer Loyalty Programmes
* IFRIC 14 An Interpretation of IAS 19
* IFRSs (Improvements)
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the
consolidated financial statements of the Group except for additional
disclosures. The only standard expected to have a material impact on the
financial statements is IAS 1 Presentation of Financial Statements (Revised),
under which a statement of changes in equity will no longer be required and
IFRS8 Operating Segments will require additional disclosures.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparing these consolidated financial statements.
Going Concern
The directors acknowledge the latest guidance issued by the Financial Reporting
Council in November 2008: 'An Update for Directors of Listed Companies: Going
Concern and Liquidity Risk'.
The Group meets its day to day working capital requirements and funds its
investment in content through a revolving credit facility ("Facility") which
matures in July 2013 and is secured on assets held in the Group. The Facility is
subject to a series of covenants including fixed charges cover and limitations
on capital expenditure and overhead expenditure. The Group is in full compliance
with its existing bank facility covenant arrangements.
The Group is exposed to uncertainties arising from the economic climate and also
in the markets in which it operates. Market conditions could lead to lower than
anticipated demand for the Group's products and services and exchange rate
volatility could also impact reported performance. The directors have considered
the impact of these and other uncertainties and factored them into their
financial forecasts and assessment of covenant headroom. The Group's forecasts
and projections, taking account of the reasonable possible changes in trading
performance (and available mitigating actions), show that the Group will be able
to operate within the expected limits of the Facility and provide headroom
against the covenants for the foreseeable future.
In the directors' view, the Group and the Company have adequate resources to
continue in operational existence for the foreseeable future. For this reason
the directors continue to adopt the going concern basis in preparing the
financial statements.
2. Non-recurring exceptional items
The Group separately discloses items which it determines are non-recurring
exceptional items. These are non-recurring items or annual items that are
material and unrelated to the principal operating activities of the Group and
the normal working capital financing of the Group. Such items include expenses
related to a fundamental reassessment of the economic or market conditions in
which the Group is operating, expenses related to the restructuring of a
division and expenses related to unsuccessful or aborted corporate finance
activities. All non-recurring exceptional items are recognised in operating
expenses. A breakdown of non-recurring exceptional items is:
+---------------------------------------------------+---------+----------+
| | 2009 | 2008 |
+---------------------------------------------------+---------+----------+
| | GBP000 | GBP000 |
+---------------------------------------------------+---------+----------+
| | | |
+---------------------------------------------------+---------+----------+
| Goodwill impairment | 6,609 | - |
+---------------------------------------------------+---------+----------+
| Intangible film and television rights impairment | 5,512 | - |
+---------------------------------------------------+---------+----------+
| Restructuring costs and related losses | 1,325 | - |
+---------------------------------------------------+---------+----------+
| Provision for other asset write-downs | 1,107 | - |
+---------------------------------------------------+---------+----------+
| Inventory write-downs | 894 | - |
+---------------------------------------------------+---------+----------+
| Aborted corporate transaction costs | 84 | 269 |
+---------------------------------------------------+---------+----------+
| | | |
+---------------------------------------------------+---------+----------+
| | 15,531 | 269 |
+---------------------------------------------------+---------+----------+
| | | |
+---------------------------------------------------+---------+----------+
Goodwill impairment
This expense relates to the impairment of goodwill attributable to our US home
entertainment, UK film distribution and film financing cash generating units. In
all cases the Group has reorganised its operations such that it has restructured
or terminated the assets which supported the goodwill attributable to the
acquired cash generating unit, including key personnel responsible for operating
the cash generating unit.
Intangible film and television rights impairment
This expense relates predominantly to impairment of the libraries and film
rights related to our US home entertainment unit. It also includes non-recurring
impairment related to the Group's film and television rights and library. The
Group has judged that the current deep economic recession and the consequent
effects on the media and entertainment sector is a significant change in the
market and economic environment in which the Group operates. Further the
restructuring of its US home entertainment operations and the difficult market
conditions for US DVD sales has had a significant adverse affect on those
operations. This fundamental reassessment of the economic or market conditions
in which the Group is operating has given rise to impairment charges related to
the Group's intangible film and television rights.
Restructuring costs and related losses
The expense relates to restructuring and related losses in relation to our
Allumination operation. They predominantly relate to employment costs incurred
during the restructuring phase when normal operations and trading was
necessarily adversely affected. They also include contractual employment costs
required to be paid after the restructuring to terminated employees and
Allumination property rental costs paid during the restructuring and a provision
for losses related to future lease rental obligations, net of expected sub-let
income.
Provision for other asset write downs
This expense predominantly relates to exceptional provisions or write-downs
attributable to Allumination trade receivables that occurred during the
restructuring period. Additionally, as part of the impairment test undertaken on
the Group's intangible film and television rights, a provision was made for long
outstanding marketing expenses that are contractually recoupable from the
proceeds of film and television rights but where the recoverability was
considered doubtful.
Inventory write downs
The expense relates to a write down in the carrying value of the physical
inventory at Allumination following an assessment of the net realisable value of
the inventory. For each title, the write down took account of the quantity of
inventory on hand, prior sales of the title and the expected future sales of
each title. It was concluded that Allumination has large over-stocks of
inventory with limited expected liquidation value.
Aborted corporate transaction costs
This expense relates to aborted corporate transaction costs and is primarily
associated with legal expenses.
3. Earnings per ordinary share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the average number of shares in
issue during the year.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
+---------------------------------------------------+--------------+-------------+
| | 2009 | 2008 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| (Loss)/profit for the period (GBP) | (17,898,000) | 388,000 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| Add back: Finance cost on preference shares (GBP) | 760,000 | 697,000 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| (Loss)/profit attributable to ordinary | (17,138,000) | 1,085,000 |
| shareholders (GBP) | | |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| Weighted average number of ordinary shares | 174,578,570 | 173,990,212 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| Add: | | |
+---------------------------------------------------+--------------+-------------+
| Weighted average preference shares | 34,840,269 | 34,840,269 |
+---------------------------------------------------+--------------+-------------+
| Dilutive share options and warrants | - | 10,212,250 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| Weighted average number of fully diluted shares | 209,418,839 | 219,042,731 |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
| Basic (loss)/earnings per share (pence) | (9.8p) | 0.2p |
+---------------------------------------------------+--------------+-------------+
| Diluted (loss)/earnings per share (pence) | (9.8p) | 0.5p |
+---------------------------------------------------+--------------+-------------+
| | | |
+---------------------------------------------------+--------------+-------------+
Adjusted earnings per share
+---------------------------------------------------+--------------+-----------+
| | 2009 | 2008 |
+---------------------------------------------------+--------------+-----------+
| | | |
+---------------------------------------------------+--------------+-----------+
| (Loss)/profit after tax attributable to Equity | (17,898,000) | 388,000 |
| share holders of the parent (GBP) | | |
+---------------------------------------------------+--------------+-----------+
| Add back: | | |
+---------------------------------------------------+--------------+-----------+
| Income tax charge related to deferred tax asset | 423,000 | - |
+---------------------------------------------------+--------------+-----------+
| Amortisation of intangibles - library | 1,124,000 | 1,423,000 |
| amortisation | | |
+---------------------------------------------------+--------------+-----------+
| Share option expense | 345,000 | 347,000 |
+---------------------------------------------------+--------------+-----------+
| Loss on interest rate swap | 1,057,000 | - |
+---------------------------------------------------+--------------+-----------+
| Finance cost on preference shares | 760,000 | 697,000 |
+---------------------------------------------------+--------------+-----------+
| Non-recurring exceptional items | 15,531,000 | 269,000 |
+---------------------------------------------------+--------------+-----------+
| | | |
+---------------------------------------------------+--------------+-----------+
| Adjusted profit after tax | 1,342,000 | 3,124,000 |
+---------------------------------------------------+--------------+-----------+
| | | |
+---------------------------------------------------+--------------+-----------+
| Adjusted basic earnings per share (pence) | 0.8p | 1.8p |
+---------------------------------------------------+--------------+-----------+
| | | |
+---------------------------------------------------+--------------+-----------+
| Adjusted fully diluted earnings per share (pence) | 0.6p | 1.4p |
+---------------------------------------------------+--------------+-----------+
| | | |
+---------------------------------------------------+--------------+-----------+
4. Post balance sheet events
Receipt of Preference Share Redemption Notices
On 15 July 2009, the Company announced that the 90 day period during which a
holder of Preference Shares (a 'Preference Shareholder') could serve a
redemption notice on the Company had ended on 27 June 2009. As at 27 June 2009,
the Company had received valid redemption notices in respect of 34,840,269
Preference Shares, constituting 100% of the Preference Shares in issue. On
receipt of the redemption notices, the Company became obliged to redeem the
Preference Shares which are the subject of the notices, at such time as it is
able to do so.
The announcement noted that the Company is not currently able lawfully to redeem
the Preference Shares. The obligation of the Company to redeem the Preference
Shares is subject to the provisions of the Companies Act 1985 (the 'Act'). Under
the Act, shares may only be redeemed out of distributable profits or out of the
proceeds of a fresh issue of shares made for the purposes of the redemption. The
Company does not have sufficient distributable profits to allow for the
redemption of any Preference Shares as it has a significant accumulated deficit
on its profit and loss account. Further, the Company is not obliged to undertake
a fresh issue of shares, nor, given current market conditions, did it believe
that it was currently economically viable, or in the best interests of all
shareholders, to do so.
Taking account of the matters above, the directors believe that the redemption
monies in respect of the preference shares cannot, in all likelihood, be paid
during the 12 month period following the end of the most recent financial year
because the Company is extremely unlikely to have distributable reserves in that
time and the Company will continue to not be obliged to undertake a fresh issue
of shares. Nevertheless, under relevant accounting standards, the redemption
amount now needs to be classified as a short term liability.
The Preference Shareholders will continue to hold the Preference Shares, and
will continue to benefit from the rights attaching to the Preference Shares as
set out in Article 6 of the Company's articles of association including priority
over the other classes of the Company's share capital on a return of capital and
the right to receive notice of all general meetings of the Company. In addition,
simple interest shall accrue for the benefit of Preference Shareholders on the
outstanding balance of un-redeemed Preference Shares at the rate of 2 per cent
per annum above the base rate from time to time of Barclays Bank Plc. Interest
will be rolled up with the outstanding amounts on such Preference Shares and
shall be paid to the relevant Preference Shareholder along with such outstanding
amounts upon redemption of those Preference Shares.
On a winding up the Preference shares would rank ahead of any other class of
shares and shareholders would be entitled to an amount up to the aggregate
redemption amount plus interest on the redemption amount at 2 per cent above the
base rate from time to time of Barclays Bank plc.
5. Disposal of JV interest in Peace Arch Home Entertainment LLC (PAHE)
Effective 23 June 2008, the Group jointly established a new joint venture
vehicle called Peace Arch Home Entertainment LLC, jointly owned by the Group and
Peace Arch Entertainment. The Group owned 50% of this entity from inception and
through to 31 March 2009. The Group disposed of its 50% equity interest in PAHE
effective 31 March 2009. The Group also disposed of certain other Group fixed
assets. The equity interest and other assets were sold to a newly created
company called P4 Holdings (USA) Inc, part of the newly created Phase 4 Films
group (Phase 4).
The consideration for the disposed assets was a 22.5% equity interest in Phase
4. The carrying amount of the net assets of PAHE recognised at the date of
disposal were as follows:
+--------------------------------------------------+-------------+
| | 31 March |
| | 2009 |
+--------------------------------------------------+-------------+
| | GBP000 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Property, plant and equipment | 279 |
+--------------------------------------------------+-------------+
| Intangible assets | 950 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Total non-current assets | 1,229 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Inventory | 241 |
+--------------------------------------------------+-------------+
| Trade and other receivables | 1,946 |
+--------------------------------------------------+-------------+
| Cash at bank and on hand | 320 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Total current assets | 2,507 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Trade and other payable | (2,510) |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Total current liabilities | (2,510) |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Total net assets | 1,226 |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Total consideration received in financial assets | (1,226) |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
| Profit on disposal | - |
+--------------------------------------------------+-------------+
| | |
+--------------------------------------------------+-------------+
6. Financial information
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 31 March 2009 and the summarised profit and loss
account, summarised cash flow statement and associated notes for the year then
ended have been extracted from the Group's financial statements. Those financial
statements have not yet been delivered to the Registrar, nor have the auditors
reported on them.
7. Annual Report
The Annual Report will be circulated by post to all shareholders and copies will
be available to members of the public from the Group's registered offices at
19-21 Heddon Street, London, W1B 4BG and will it be available on the Company's
web-site.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ILFFTDAIIVIA
Contentfilm (LSE:CFL)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Contentfilm (LSE:CFL)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
