DCD.L Regulatory News (DCD)

DCD Media Plc

("DCD Media" or the "Company")

Audited results for the year ended 31 December 2015

DCD Media and its subsidiaries, the independent TV production and distribution group (the "Group"), today report results for the year ended 31 December 2015.

Financial Summary

Continuing operations:

Discontinued operations:

Group results:

Please refer to the table within the Performance section below for an explanation of the profit adjustments.

Business highlights

· Continued focus on our rights business yields positive adjusted EBITDA of £0.2m and provides a platform for further growth

· DCD Rights acquired the Electric Sky Library

· September Films produced a second series of Celebrity Squares for ITV

· DCD Rights secured the co-production of Penn & Teller: Fool Us in Vegas for September Films in the USA

· Rize USA won a commission to produce ten part series Got What it Takes? for CBBC

· Sequence Post continued to expand its client base and improve its facilities

The Company continued the transformational work which began in 2013, to stabilise and rationalise DCD Media and we can report that the Board is confident there is a stable and sustainable business going forward. The focus of activity has been on the continued development of the rights and distribution business, while minimising the risk of losses in the production businesses and assessing the future potential for these entities.

Following an assessment and review of the production businesses, and against the significant headwind of tough trading conditions which has led to poor uptake of production commissions, the Board of DCD Media recently announced that it would immediately cease development activity within its production division. As a consequence, the Group unfortunately had to make a number of redundancies. The Group will, however, continue to focus on its two key production franchises, September Films' Penn and Teller: Fool Us in Vegas currently delivering season two to the CW Network in America, and Rize USA's Got What it Takes?, produced for CBBC in the UK.

The Board believes the business now has a solid platform for growth with a more focussed approach to rights and distribution.

During the year, the rights division saw its third consecutive year of turnover growth and the Board expects this to continue to drive the financial performance of the Group.

The rights division is already seeing encouraging trading and growth, resulting from a strong catalogue and unique mix of content ranging from observational documentaries to award-winning dramas. Specifically, we were delighted to make the acquisition of the Electric Sky library, which further added to the diverse range of content and also brought with it a viable IT platform which will assist with the further upscaling of the business planned in the short-term.

Notwithstanding the clear strategic shift to the rights and distribution model, the Board was delighted to record two notable commissions for production franchises in the year. DCD Rights secured the co-production of hit network show Penn & Teller: Fool Us for September Films in the USA with partners 1/17 Productions. And in the UK market, Rize USA won a commission to produce a ten part series of the hugely popular talent show for teenagers Got What it Takes? for CBBC.

David Craven, Executive Chairman and Chief Executive Officer, commented: "This has been another tough year for the production division, and we have reflected and analysed the commercial challenges which face small independent TV production companies in the UK. DCD Media has never benefitted from the large-scale operations which thrive in the marketplace due to their economies of scale that enable large groups of creatives to focus on what the broadcaster wants.

"The business reports a relatively modest adjusted EBITDA profit of £0.2m compared to £0.2m loss in 2014. This is a consequence of continued consolidation work undertaken in the last 18 months, the growth in rights and the two production franchises. The valuable intellectual property and back-catalogue, other format ownership and exploitation will continue to be a key strategic plank and cash-flow driver for the rights and distribution business going forward. The Board believes that it now has the platform for a sustainable rights and distribution business largely through a strong and experienced management team, solid funding sources and a creditable reputation in the marketplace.

"The financial performance therefore reflects a more cohesive business at a revenue level, with adjusted EBITDA losses eliminated and the reasonable expectation that the Group will report another adjusted EBITDA positive year in 2016.

"The Board is very confident we can see further expansion from the rights division in the new financial year. There is a great deal of work to be done, not least of which involves the continued engagement of new funding sources to support the buying process. However, we look forward to the rights business driving sustained growth in the coming years.''

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Executive Chairman's review

The business delivered a good underlying performance in the financial year to 31 December 2015.

Last year, the ambition once again for the Group was to focus on the future growth for the rights business and the Board is pleased to report the expansion plan has succeeded with an impressive 20% growth in rights and licensing turnover from the previous year with further expansion planned in the next financial year.

DCD Rights further consolidated its position as one of the world's top independent TV rights distributors in 2015 with considerable success in award-winning new dramas and factual programming as well as building its music library. The company, once again, delivered a profit and is poised for further growth in the next financial year.

The DCD Rights team enjoy continued support from the Group's major shareholder, Timeweave, which provides funding for the acquisition of third-party distribution rights. Timeweave made this fund available to support the development of the DCD Rights business whilst the restructuring of the Group was ongoing. Having demonstrated that such a fund is commercially viable, the future development of DCD Rights will be augmented with third party funding from the wider financial markets and significant progress has been made on this in 2016.

The Board now believes that we are well placed for the rights division to drive forward and deliver on the target of consistent double digit sales growth in the forthcoming years.

DCD Rights' drama library continues to go from strength to strength: Six-part political thriller series The Code scooped six awards at the prestigious annual AACTA Awards in Sydney, including "Best Television Drama Series" and "Best Direction in a Television Drama or Comedy". Kiwi telemovie How To Murder Your Wife won the award for "Best TV Movie" at the C21 Drama Awards, coming off the back of a triple win at the NYC International Film Festival earlier this year. Office comedy Dreamland won "Most Outstanding Comedy Program" at the Logies - Australia's annual television awards.

In the production businesses, the output of which is overseen by DCD Media and complimented by the Group's post-production and rights divisions, the team delivered some creditable productions.

Following the success of the first series of Celebrity Squares in 2014, September Films produced a second eight-part series of the Warwick Davis-fronted comedy game show in 2015 which premiered in April on primetime ITV. However, following two successive commissions for this primetime comedy game show, DCD Media was informed by ITV in November 2015 that a third series would not be commissioned for 2016, although Celebrity Squares may be re-commissioned again at a future date.

The CW Network in the US commissioned a second 13 part series of Penn & Teller: Fool Us in Vegas, a co-production between 1/17 Productions and September Films.  The first series was fronted by Jonathan Ross, and aired on primetime on The CW securing the network's highest Monday night ratings in six years. In the UK, it successfully aired on primetime on Sunday nights on Channel 5, with ratings 30% up on the slot average.

Production hit a high note at the start of 2016, with the transmission of episode one of Got What it Takes? airing on CBBC in the first week of January. The 10-episode talent series had children competing for the chance to perform at Radio 1's Big Weekend festival. The show was received extremely well both in the press and on social media, and regularly made the top 25 on BBC's iPlayer chart.

Over the last year, Sequence, the London based post-production house, continued to develop relationships with independent music producers working for JA Digital and Globe/Universal Productions, as well as forging new relationships with local commercial producers.

Finally, the Board would like to thank members of the outgoing production team for their help and dedication to the Group over the years and wish them well for the future.

D Craven

Executive Chairman and Chief Executive Officer

2 June 2016

Group strategic report

Strategic outlook

We are greatly disappointed that the production entities have not proved capable of scaling nor reaching sustainable commercial levels of output. We have invested heavily in the production division over the years but have taken the difficult decision to curtail development work in the production companies.

We remain committed to two key franchises which remain part of the rights team focus. In this rapidly evolving TV and convergent content market; the highly-regarded rights management team and business forms the basis for an optimistic outlook for the forthcoming year.

If DCD Media acquires third party rights successfully and attracts further third party funders, the Board believes the market will remain highly attractive in the coming years.

The digital marketplace features in almost all of our transactions and we do anticipate significant opportunities as the convergent platforms continue to aggregate content in competition with traditional broadcasters. As ever, the secret to success lies in acquiring quality content and DCD Rights has a strong reputation in the marketplace for delivering on this measure.

Review of divisions for the year to 31 December 2015

Rights and Licensing

DCD Rights

The business remained profitable and delivered an increase in turnover of approximately 20% over the previous year; having benefited from some large sales to major international cable and SVOD platforms, which are expected to continue throughout 2016.

DCD Rights added to their extensive catalogue by acquiring a library from the administrators of Electric Sales Limited and Electric Sky Productions Limited (together the "Electric Sky Library").The Electric Sky Library comprises approximately 253 hours across 50 titles of owned productions, including, The Fat Doctor multiple series, How Cities Work and Amazing Lives.

DCD Rights' drama library continues to go from strength to strength: Six-part political thriller series The Code scooped six awards at the prestigious annual AACTA Awards in Sydney, including "Best Television Drama Series" and "Best Direction in a Television Drama or Comedy". Kiwi telemovie How To Murder Your Wife won the award for "Best TV Movie" at the C21 Drama Awards, coming off the back of a triple win at the NYC International Film Festival earlier this year. Office comedy Dreamland won "Most Outstanding Comedy Program" at the Logies - Australia's annual television awards.

At MIPTV 2015, DCD Rights launched the highly-anticipated US version of Penn & Teller: Fool Us. Commissioned by The CW and produced by 1/17 Productions and September Films, Penn & Teller: Fool Us in Vegas was hosted by Jonathan Ross and filmed at the Penn & Teller Theatre at the Rio Hotel in Las Vegas.

DCD Rights also secured a sale to Showtime in the USA of a 90' film marking the 45th anniversary of Jimi Hendrix' passing, Jimi Hendrix: Electric Church, which premiered exclusively on Showtime in September. The film, produced by Experience Hendrix, features explosive, never-before-seen footage of one of the world's greatest rock musicians. Jimi Hendrix: Electric Church joins a raft of music acquisitions including David Gilmour: Wider Horizons, Miley Cyrus' Bangerz Tour and Depeche Mode Live in Berlin.

DCD Rights expanded its cookery library due to increased demand in the genre for the talent represented. Following on from the success of Bitten: Sarah Graham Cooks Cape Town, produced by Okhule Media, the new series Sarah Graham's Food Safari, explored some of Southern Africa's most interesting and exciting food, travelling from the open savannahs to beautiful cityscapes. DCD Rights secured a pre-sale acquisition for the series to The Cooking Channel in the US. In addition, DCDR acquired the rights to BBC Productions' prestigious series A Cook Abroad, 6 x 60', featuring some of the world's best known chefs including John Turode, Rick Stein and Rachel Koo, embarking on a tour of the world's most inspiring food cultures. A second series of Sicily with Aldo & Enzo was launched in the second half of the year, in which Sicilian chef, Enzo Oliveri, takes Italian mainland chef, Aldo Zilli, to ten uniquely different locations around Sicily, uncovering the secrets of the island's diverse culinary culture.

This year, there were two new appointments made to DCD Rights' sales team: James Anderson, previously Sales Manager at IMG Media, joined the company as Senior Sales Executive, responsible for Japan, Asia, Eastern Europe, Benelux, Africa and the Middle East. Lenneke de Jong has also been appointed as Sales Executive, responsible for Latin America, Spain, Portugal, Inflight, Non-Theatric and Clip sales.

DCD Publishing

DCD Publishing represented a range of properties and talent across all media, including television, book publishing, DVD, licensed consumer products, product endorsement and monetised social media.

The division saw through the publication of three books in 2015: Sarah Shaw's account of her affair with a lift attendant as she worked at Bush House in the Seventies (Little Brown Book Group); the Porridge Pop-Up entrepreneur Nik Williamson's Book of Grains (Phaidon Art Books) and Made In The Office by Rachel Maylor (Frances Lincoln Publishers), which has also been accompanied by the development of a short YouTube food series.

Revenues were boosted by re-prints of The Shard visitors' guide and royalties from Jack Monroe's A Girl Called Jack cookery book, however, there was little expansion during the year, and due to limited new business it was concluded that the division would be best absorbed within the enlarged Rights division, rather than operating as a stand-alone entity.

Productions

The DCD Media productions division comprised the following UK and US-based brands:

The output of each organisation is overseen by DCD Media and complimented by the Group's Post-Production and Rights and Licensing divisions.

September Films

Following the success of the first series of Celebrity Squares in 2014, September Films produced a second eight-part series of the Warwick Davis-fronted comedy game show in 2015 which premiered in April on primetime ITV.

September Films co-produced with US based 1/17 Productions the 13x60' series, Penn & Teller: Fool Us in Vegas, fronted by Jonathan Ross, which aired in primetime on The CW in the US. Here it secured the network's highest Monday night ratings in six years, and is currently being shown on Sunday night primetime on Channel 5 in the UK, with ratings 30% up on the slot average.

September Films will continue to be involved in the production of future series of Penn & Teller: Fool Us in Vegas.

Rize USA

Rize USA kicked off 2015 with The Billion Pound Hotel, a behind-the-scenes documentary exploring the ins and outs of one of Dubai's most luxurious hotels, the Burj Al Arab Jumeirah. Premiering in March on Channel 4, the documentary was highly successful, drawing in a 10.5% audience share, and trending 2nd in the UK, and 6th in the world on social media.

This was followed by cutting edge documentary Love at First Swipe, another Channel 4 commission which aired in May 2015. The film explored the rise of techno-erotic interactions, and the role of dating apps in facilitating modern relationships.

November saw the transmission of yet another Channel 4, 60-minute documentary, which followed the famous journey of the Venice-Simplon Orient Express in The World's Most Famous Train. The programme drew in over 2 million viewers and an 8.7% audience share, as well as a very successful social media response.

Productions hit a high note at the start of 2016, with the transmission of episode one of Got What it Takes? airing on CBBC in the first week of January. The 10-episode talent series saw children competing for the chance to perform at Radio 1's Big Weekend in May. The show was received extremely well, has regularly made the top 25 on BBC's iPlayer chart, and has continued to attract attention both in the press and on social media.

Rize USA will continue to be involved in the production of future series of Got What it Takes?.

Post - Production

Sequence Post

Over the last year, Sequence has continued to develop its relationships with independent music producers working for JA Digital and Globe/Universal Productions, as well as forging new relationships with local commercial producers.

Major music projects included a feature length Concert for The Rolling Stones, the Ed Sheeran film Jumpers for Goalposts (shown in Cinemas across the country), PJ Harvey's The Hollow of the Hand, Eric Clapton Live at the Royal Albert Hall and Adele: The Church Sessions.

These projects have contributed to a positive 12 months, despite a decline in the quantity of documentary work contracted to Sequence from the Group. We have also secured another two promising projects which follow The Rolling Stones around their current tour of South America. Between now and August, the team will also be completing full picture post production on two feature films which are due for theatrical release. The first is a documentary, and the second, a concert film based on The Rolling Stones' historic night in Cuba.

Sequence has continued to expand its facilities with the addition of an extra offline suite and an equipment upgrade to include a new 4K suite. This addition is a pivotal investment, primarily in aiding the company to secure more features work in the future.

Performance

At a turnover level, the Group delivered £11.1m in revenue all from continuing operations compared with £11.0m in 2014, of which only £9.7m related to continuing operations.

The Group made an operating loss for the year of £2.2m (2014: loss of £0.6m), which is stated after impairment and amortisation of intangible assets, including goodwill and trade names.

Adjusted EBITDA and Adjusted LBT are the key performance measures that are used by the Board, as they more fairly reflect the underlying business performance by excluding the significant non-cash impacts of goodwill, trade name and programme rights amortisation and impairments.

The headline Adjusted EBITDA in the year ended 31 December 2015 was a profit of £0.2m (2014: loss of £0.2m).

Adjusted loss before tax for the Group was £0.1m in 2015 against an adjusted loss of £0.5m for the year to 31 December 2014.

The following table represents the reconciliation between the operating loss per the consolidated income statement and adjusted Loss Before Tax (LBT) and adjusted Earnings Before Interest Tax Depreciation and Amortisation (EBITDA):

Intangible assets

The Group's consolidated income statement and consolidated statement of financial position has again this year been impacted by the amortisation and impairment of intangible assets, see note 11.

The Group has seen amortisation and impairment of goodwill and trade names for the year of £2.2m (2014: £0.4m) and a net amortisation and impairment of programme rights of £0.8m (2014: £1.0m).

The accounting implications, in terms of the effect of reporting impaired intangible assets under International Financial Standards, are explained below.

Goodwill

As a result of the decision to stop new development activity, the Directors have assessed the carrying value of goodwill attributable to September Films and have booked an impairment of £1.8m (2014: £nil).

Trade names

Trade names are amortised over ten years on a straight line basis and a non-cash expense of £0.4m was expensed in the year relating to trade names. The carrying value of trade names after the amortisation was £0.6m (2014: £1.0m).

Restructuring costs

Restructuring income of £0.1m has been disclosed in the consolidated statement of comprehensive income and relates to net income from the Group's operations in the USA.

Earnings per share

Basic loss per share in the year was 254p (year ended 31 December 2014: 177p loss per share) and was calculated on the loss after taxation of £2.3m (year ended 31 December 2014: loss £0.7m) divided by the weighted average number of shares in issue during the year being 915,470 (2014: 414,281).

Balance sheet

The Group's net cash balances have decreased to £1.2m at 31 December 2015 from £1.3m at 31 December 2014. A substantial part of the Group cash balances represent working capital commitment in relation to its rights business and is not considered free cash. The decrease in the year is largely due to temporary movements in receivables and payables in working capital.

During the year, the 2013 and 2014 Convertible Loan Notes, which together with accrued interest totalled £2.1m, were converted into ordinary shares.

During the year, the Group accrued £0.4m of recharges for director, management and financial services from Timeweave Ltd, its major shareholder that remain unpaid. In addition, £0.2m of input VAT recovered by the Group and due to Timeweave on these recharges was also not paid.

At the year end, the Group had an available gross overdraft facility of £0.5m and a net facility of £0.25m.

Shareholders' equity

Retained earnings as at 31 December 2015 were £(60.8m) (2014: £(58.5m)) and total shareholders' equity at that date was £2.5m (2014: £2.6m).

Amounts attributable to non-controlling interests

At the year end, the Group held an 80% stake in Rize Television Ltd. An amount of £0.0m (2014: (£0.1m)) as equity representing the non-controlling interest of the Group is reported as at the year end.

Current trading

2016 has begun well for the Group's rights and distribution arm. However, as previously mentioned, the Board felt that the production entities had not reached a sustainable commercial level of output and the division has been reduced to continuing with two key franchises, ceasing all other production activity.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Group, its cash position and borrowings are set out in the Performance section of the statement. In addition, note 18 sets out the Group's objectives, policies and processes for managing its financial instruments and risk.

The Group's day-to-day operations are funded from cash generated from trading and the use of an overdraft facility with other activities funded from a combination of equity and short and medium term debt instruments. The overdraft facility reduced by £0.25m throughout 2015 to £0.25m and is scheduled for review by the Group's principal bankers, Coutts & Co ("Coutts"), on 31 July 2016. The Directors have a reasonable expectation that an overdraft facility will continue to be available to the Group for a period in excess of 12 months from the date of approval of these financial statements.

In considering the going concern basis of preparation of the Group's financial statements, the Board has prepared profit and cash flow projections which incorporate reasonably foreseeable impacts of the ongoing challenging trading environment. These projections reflect the management of the day to day cash flows of the Group which includes assumptions on the profile of payment of certain existing liabilities of the Group. They show that the day to day operations will continue to be cash generative. The forecasts show that the Group will continue to utilise its overdraft facility provided by its principal bankers for the foreseeable future.

In addition, the Group is in discussion with Timeweave Ltd, its major shareholder, to formalise the debt that has built-up on management charges which have not been cash-settled.

The Directors' forecasts and projections, which make allowance for potential changes in its trading performance, show that with the ongoing support of its shareholders, lenders and its bank; the Group can continue to generate cash to meet its obligations as they fall due.

The Directors have regular discussions with the Group's main shareholders and its principal bankers and have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

Key Performance Indicators (KPIs)

Principal risks and uncertainties

General commercial risks

The Group's management aims to minimise risk of over-reliance on individual business segments, members of staff, productions or customers by developing a broad, balanced stable of production and distribution activities and intellectual property. Clear risk assessment and strong financial and operational management is essential to control and manage the Group's existing business, retain key staff and balance current development with future growth plans. As the Group operates in overseas markets, it is also subject to exposures on transactions undertaken in foreign currencies.

Production and distribution revenue

Production revenue will fall as the Group has ceased to pursue productions in development and is due to focus on its two current franchises. Distribution revenue is forecast to rise as this division is the prime focus of the Group going forward.

Funding and liquidity

Costs incurred during production are not always funded by the commissioning broadcaster. The Group policy is to maintain its production cash balances to ensure there is no financial shortfall in the ability to produce a programme. It is inherent in the production process that the short-term cash flows on productions can sometimes be negative initially. This is due to costs incurred before contracted payments have been received, in order to meet delivery and transmission dates. The Group funds these initial outflows, when they occur, in three ways: internally, ensuring that overall exposure is minimised; through a short term advance from a bank or other finance house; or through a short term loan from Timeweave Ltd, its main shareholder, which will be underwritten by the contracted sale. The Group regularly reviews the cost/benefit of such decisions in order to obtain the optimum use from its working capital.

The Group's cash and cash equivalents net of overdraft at the end of the period was £1.2m (2014: £1.3m) including certain production related cash held to maintain the Group policy. The Group debt consists primarily of an overdraft,

some convertible debt and accrued management recharges due to Timeweave. Details of interest payable, funding and risk mitigation are disclosed in notes 7, 16 and 18 to the consolidated financial statements.

Exchange rate risk

The Group's exposure to exchange rate fluctuations has historically been small. Management review expected cash inflows and outflows in source currency and when required, take out forward options to protect against any short term fluctuations.

D Craven

Executive Chairman and Chief Executive Officer

2 June 2016

Group report of the Directors for the year ended 31 December 2015

The Directors present their report together with the audited financial statements for the year ended 31 December 2015.

Principal activities

The main activities of the Group in the year continued to be distribution and rights exploitation and content production. The main activity of the Company continued to be that of a holding company, providing support services to its subsidiaries.

Business review

A detailed review of the Group's business including key performance indicators and likely future developments is contained in the Executive Chairman's Review and Group Strategic Report, which should be read in conjunction with this report.

Results

The Group's loss before taxation for the year ended 31 December 2015 was £2.4m (2014: £0.9m). The loss for the year post-taxation was £2.2m (2014: £0.7m) and has been carried forward in reserves.

The Directors do not propose to recommend the payment of a dividend (2014: £nil).

Directors and their interests

Mr Lindley, Mr McMyn and Mr Green are Non-Executive Directors. Biographies of the Company's Directors can be found later in the announcement.

Other than as disclosed in note 22 to the consolidated financial statements, none of the Directors had a material interest in any other contract of any significance with the Company and its subsidiaries during or at the end of the financial year.

Substantial shareholdings

The Company has been notified, as at 1 June 2016, of the following material interests in the voting rights of the Company under the provisions of the Disclosure and Transparency Rules:

\* Timeweave Ltd and Colter Ltd are under common ownership (see note 27).

Share capital

Details of share capital are disclosed in note 19 to the consolidated financial statements.

Employment involvement

The Group's policy is to encourage employee involvement at all levels as it believes this is essential for the success of the business. There is significant competition for experienced and skilled creative staff and administrators. The Directors are aware of this and have looked to encourage and develop internal resources and to put in place succession plans. In addition, the Group has adopted an open management style to encourage communication and give employees the opportunity to contribute to future strategy discussions and decisions on business issues.

The Group does not discriminate against anyone on any grounds. Criteria for selection and promotion are based on suitability of an applicant for the job. Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes of the applicants concerned. In the event of members of staff becoming disabled, every effort will be made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be at least comparable with that of other employees.

Financial instruments

Details of the use of financial instruments by the Company are contained in note 18 of the consolidated financial statements.

CORPORATE GOVERNANCE

Statement of compliance

The Group has adopted a framework for corporate governance which it believes is suitable for a company of its size with reference to the key points within the UK Corporate Governance Code issued by the Financial Reporting Council ("the Combined Code").

DCD Media Plc's shares are quoted on AIM, a market operated by the London Stock Exchange Plc and as such there is no requirement to publish a detailed Corporate Governance Statement nor comply with all the requirements of the Combined Code. However, the Directors are committed to ensuring appropriate standards of Corporate Governance are maintained by the Group and this statement sets out how the Board has applied the principles of good Corporate Governance in its management of the business in the year ended 31 December 2015.

The Board recognises its collective responsibility for the long-term success of the Group. It assesses business opportunities and seeks to ensure that appropriate controls are in place to assess and manage risk.

During a normal year, there are a number of scheduled Board meetings with other meetings being arranged at shorter notice as necessary. The Board agenda is set by the Chairman in consultation with the other Directors and Company Secretary.

The Board has a formal schedule of matters reserved to it for decision which is reviewed on an annual basis.

Under the provisions of the Company's Articles of Association all Directors are required to offer themselves for re-election at least once every three years. In addition, under the Articles, any Director appointed during the year will stand for election at the next annual general meeting, ensuring that each Board member faces re-election at regular intervals.

The Directors are entitled to take independent professional advice at the expense of the Company and all have access to the advice and services of the Company Secretary.

Board committees

The Board has established an Audit, Nomination and Remuneration Committee. All are formally constituted with written terms of reference. The terms of reference are available on request from the Company Secretary.

Relations with shareholders

The Company communicates with its shareholders through the Annual and Interim Reports and maintains an on-going dialogue with its principal institutional investors from time to time. The Board welcomes all shareholders at the annual general meeting where they are able to put questions to the Board. This assists in ensuring that the members of the Board, in particular the Non-Executive Directors, develop a balanced understanding of the views of major investors of the Company.

The Group uses the website www.dcdmedia.co.uk to communicate with its shareholders.

Internal control

The Board has overall responsibility for ensuring that the Group maintains a sound system of internal control to provide it with reasonable assurance that all information used within the business and for external publication is adequate, including financial, operational and compliance control and risk management.

It should be recognised that any system of control can provide only reasonable and not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminate those risks that may affect the Group achieving its business objectives.

Going concern

For the reasons set out in the Executive Chairman's Review, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing the annual report and financial statements.

Statement of Directors' responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether IFRSs as adopted by the European Union and applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Group and parent company financial statements respectively; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Supplier payment policy

The Company and Group's policy is to agree terms of payment with suppliers when agreeing the overall terms of each transaction, to ensure that suppliers are aware of the terms of payment and that Group companies abide by the terms of the payment.

Share Capital

Details of the Company's share capital and changes to the share capital are shown in note 19 to the Consolidated Financial Statements.

Resolutions at the Annual General Meeting

The Company's AGM will be held on Thursday 30 June 2016. Accompanying this Report is the Notice of AGM which sets out the resolutions to be considered and approved at the meeting together with some explanatory notes. The resolutions cover such routine matters as the renewal of authority to allot shares, to disapply pre-emption rights and to purchase own shares. In addition, the Notice of AGM also describes the resolutions that are required to authorise the Board to issue shares related to the new convertible loan notes and the proposed capital reorganisation.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website (www.dcdmedia.co.uk) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the on-going integrity of the financial statements contained therein.

Charitable and political donations

Group donations to charities worldwide were £nil (2014: £nil). No donations were made to any political party in either year.

Auditors

A resolution to re-appoint SRLV as the Company's auditors will be put forward at the AGM to be held on 30 June 2016.

Disclosure of information to the Auditors

In the case of each of the persons who are Directors at the time when the annual report is approved, the following applies:

· so far as that Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

· that Director has taken all the steps that they ought to have taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

Directors' Report approved by the Board on 2 June 2016 and signed on its behalf by:

D Craven

Executive Chairman and Chief Executive Officer

2 June 2016

Board of Directors

David Craven (Executive Chairman & CEO)

David Craven was appointed CEO of DCD Media in October 2012 and Executive Chairman in January 2014. He is also CEO and a Director of Timeweave Ltd, which he joined in April 2011. David brings significant sector-specific and broad commercial experience to the Group, having held senior roles with News Corporation, UPC Media and Trinity Newspapers. He was also joint MD of the Tote for six years and was closely involved in its privatisation, and has held senior executive roles at UK Betting Plc and Wembley Plc. David was also a co-founder of broadband and interactive TV media group, UPC Chello, and is a co-founder of the Gaming Media Group.

Nicky Davies Williams (Executive Director)

Nicky Davies Williams was appointed CEO of DCD Rights, DCD Media's Distribution Division, in December 2005 when she sold NBD TV, a company she founded and ran successfully for over 22 years, to the Group. An English Literature graduate from Leeds University, she began her career in the music business, moving into film and television distribution at Island Pictures, where she rose to the post of Sales Director, prior to founding her own company in 1983. She has managed DCD Rights' growth into one of the world's leading independent distributors. Her experience includes

non-executive directorships on the Board of The Channel Television Group from 1991-1998, and as a founding

non-executive of the Women in Film and Television in the UK.

Neil McMyn (Non-Executive Director)

Neil McMyn is a chartered accountant and Chief Financial Officer for the European Investment Portfolio of Tavistock Group, an international private investment organisation. Previously Neil spent nine years with Arthur Andersen Corporate Finance in Edinburgh and six years in advisory and funds management roles at Westpac Institutional Bank in Sydney, Australia. He became a Non-Executive Director of DCD Media in September 2012.

Andrew Lindley (Non-Executive Director)

Andrew Lindley joined the Board of DCD Media in September 2012. He is a practicing solicitor and holds another non-executive role with Turf TV as well as being an executive director of Lightbulb. Andrew was Director of the Tote for the six years up to its sale in 2011 and before that spent five years at Northern Foods Plc, where he focused on M&A and complex contracts.

David Green (Non-Executive Director)

David Green joined the group in 2007 when London and LA-based TV and film production company September Films, of which he was Chairman and Founder, was acquired by DCD Media. He took on the role of Group Chief Creative Officer before becoming CEO in 2009 and Executive Chairman in 2012. In October 2012, he relinquished his corporate role to return to production while remaining a Non-Executive Director of the Group.Consolidated income statement for the year ended 31 December 2015

Consolidated statement of comprehensive income for the year ended 31 December 2015

Consolidated statement of financial position as at 31 December 2015

Company number 03393610

The financial statements were approved and authorised for issue by the Board of Directors on 2 June 2016.

DCM Craven

Director

Consolidated statement of cash flows for the year ended 31 December 2015

Consolidated statement of changes in equity for the year ended 31 December 2015

Notes to the consolidated financial statements for the year ended 31 December 2015

During the year, the principal activity of DCD Media Plc and subsidiaries (the Group) was the production of television programmes in the United Kingdom, and the worldwide distribution of those programmes for television and other media; the Group also distributes programmes on behalf of other independent producers. On 27 May 2016, the Group announced the cessation of development in its TV production divisions and the continued focus is primarily on the distribution division.

DCD Media Plc is the Group's ultimate parent company, and it is incorporated and domiciled in Great Britain. The address of DCD Media Plc's registered office is 9th Floor, Winchester House, 259 - 269 Old Marylebone Road, London, NW1 5RA, and its principal place of business is London. DCD Media Plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.

DCD Media Plc's consolidated financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company. The accounts have been drawn up to the date of 31 December 2015.

1 Principal accounting policies

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The Group financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("Adopted IFRSs"), and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under Adopted IFRSs.

Basis of preparation - going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Executive Chairman's Review and the Strategic Report. The financial position of the Group, its cash position and borrowings are set out in the financial review section of the Strategic Report. In addition, note 18 to the Consolidated Financial Statements sets out the Group's objectives, policies and processes for managing its financial instruments and risk.

The Group's day-to-day operations are funded from cash generated from trading and the use of an overdraft facility of £0.25m, with other activities funded from a combination of equity and short and medium term debt instruments.

The Group's overdraft facility has been extended by its principal bankers until 31 July 2016. The facility has reduced by regular instalments from £0.5m. The term loan facility was fully repaid in 2014. The Directors have a reasonable expectation that an overdraft facility will continue to be available to the Group for the foreseeable future.

During the year, the Group converted the 2013 and 2014 convertible loan notes into ordinary share capital.

In considering the going concern basis of preparation of the Group's financial statements, the Board have prepared profit and cash flow projections which incorporate reasonably foreseeable impacts of the ongoing challenging market environment.

The Directors' forecasts and projections, which make allowance for reasonably possible changes in its trading performance, show that, with the ongoing support of its lenders and its bank, the Group can continue to generate cash to meet its obligations as they fall due.

Through the recent negotiations with its major shareholder and its principal bankers, the Directors, after making enquiries, have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

The financial statements do not include the adjustments that would result if the Group or Company were unable to continue as a going concern.

Changes in accounting policies

A number of amendments to standards issued by IASB become effective from 1 January 2015. These have been reviewed and no adjustments deemed necessary. Those becoming effective from 1 January 2016 have not been adopted early by the Group. Management have reviewed these standards and believe none are expected to have a material effect on the Group's future financial statements.

Revenue and attributable profit

Production revenue represents amounts receivable from producing programme/production content, and is recognised over the period of the production in accordance with the milestones within the underlying signed contract. Profit attributable to the period is calculated by capitalising all appropriate costs up to the stage of production completion, and amortising production costs in the proportion that the revenue recognised in the year bears to estimated total revenue from the programme. The carrying value of programme costs in the statement of financial position is subject to an annual impairment review.

Where productions are in progress at the year end and where billing is in advance of the completed work per the contract, the excess is classified as deferred income and is shown within trade and other payables.

Distribution revenue arises from the licensing of programme rights which have been obtained under distribution agreements with either external parties or Group companies. Distribution revenue is recognised in the statement of comprehensive income on signature of the licence agreement, and represents amounts receivable from such contracts.

Revenue from sales of DVDs and other sales is the amounts receivable from invoiced sales during the year.

All revenue excludes value added tax.

Basis of consolidation

The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31 December 2015. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Non-controlling interests

For business combinations completed prior to 1 July 2009, the Group initially recognised any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the acquiree's net assets. For business combinations completed on or after 1 July 2009 the Group has the choice, on a transaction by transaction basis, to initially recognise any non-controlling interest in the acquiree which is a present ownership interest and entitles its holders to a proportionate share of the entity's net assets in the event of liquidation at either acquisition date fair value or, at the present ownership instruments' proportionate share in the recognised amounts of the acquiree's identifiable net assets. Other components of non-controlling interest such as outstanding share options are generally measured at fair value. The Group has not elected to take the option to use fair value in acquisitions completed to date.

From 1 July 2009, the total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests. Before this date, unfunded losses in

such subsidiaries were attributed entirely to the Group. In accordance with the transitional requirements of IAS 27 (2008), the carrying value of non-controlling interests at the effective date of the amendment has not been restated.

Goodwill

Goodwill represents the excess of the cost of a business combination over, in the case of business combinations completed prior to 1 January 2010, the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired and, in the case of business combinations completed on or after 1 July 2009, the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. For business combinations completed prior to 1 July 2009, cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition. Changes in the estimated value of contingent consideration arising on business combinations completed by this date are treated as an adjustment to cost and, in consequence, result in a change in the carrying value of goodwill.

For business combinations completed on or after 1 July 2009, cost comprised the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re-measured subsequently through profit or loss. For business combinations completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as an expense.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

Property, plant and equipment

Property, plant and equipment are stated at cost net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost less estimated residual value by equal annual instalments over their expected useful lives. The rates generally applicable are:

Motor vehicles 25% on cost

Office and technical equipment 25%-33% on cost

The assets' residual values and useful lives are reviewed at each statement of financial position date and adjusted if appropriate.

Other intangible assets

Trade names

Trade names acquired through business combinations are stated at their fair value at the date of acquisition. They are amortised through the statement of comprehensive income, following a periodic impairment review, on a straight line basis over their useful economic lives, such periods not to exceed 10 years.

Programme rights

Internally developed programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount. Cost comprises the cost of all productions and all other directly attributable costs incurred up to completion of the programme and all programme development costs. Where programme development is not expected to proceed, the related costs are written off to the statement of comprehensive income. Amortisation of programme costs is charged in the ratio that actual revenue recognised in the current year bears to estimated ultimate revenue. At each statement of financial position date, the Directors review the carrying value of programme rights and consider whether a provision is required to reduce the carrying value of the investment in programmes to the recoverable amount. The expected life of these assets is not expected to exceed 7 years.

Purchased programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount. Purchased programme rights are amortised over a period in-line with expected useful life, not exceeding 7 years.

Amortisation and any charge in respect of writing down to recoverable amount during the year are included in the statement of comprehensive income within cost of sales.

Leased assets

Property, plant and equipment acquired under finance leases or hire purchase contracts are capitalised and depreciated in the same manner as other property, plant and equipment, and the interest element of the lease is charged to the statement of comprehensive income over the period of the finance lease. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability by using an effective interest rate. The related obligations, net of future finance charges, are included in liabilities.

Rentals payable under operating leases are charged to the statement of comprehensive income on a straight line basis over the period of the lease.

Inventories

Inventories comprise pre-production costs incurred in respect of programmes deemed probable to be commissioned, and finished stock of DVDs available for resale. Where it is virtually certain production will occur, pre-production costs are capitalised in inventories and transferred to intangibles on commencement of production. Finished stock of DVDs available for re-sale is also included within inventories. Inventories are valued at the lower of cost or recoverable amount.

Programme distribution advances

Advances paid in order to secure distribution rights on third party catalogues or programmes are included within current assets. Distribution rights entitle the Company to license the programmes to broadcasters and DVD labels for a sales commission, whilst the underlying rights continue to be held by the programme owner. The advances are stated at the lower of the amounts advanced to the rights' owners less actual amounts due to rights owners based on sales to date.

Impairment of non-current assets

For the purposes of assessing impairment, assets are grouped into separately identifiable cash-generating units. Goodwill is allocated to those cash-generating units that have arisen from business combinations.

At each statement of financial position date, the Group reviews the carrying amounts of its non-current assets, to determine whether there is any indication those assets have suffered an impairment loss. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Goodwill is tested for impairment annually. Goodwill impairment charges are not reversed.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value and value in use based on an internal discounted cash flow evaluation.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and demand deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents. Bank overdrafts are shown in current liabilities on the statement of financial position. Overdrafts are included in cash and cash equivalents for the purpose of the cash flow statement.

Assets held for sale

Non-current assets and disposal groups are classified as held for sale when:

· they are available for immediate sale;

· management is committed to a plan to sell;

· it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;

· an active programme to locate a buyer has been initiated;

· the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and

· a sale is expected to complete within 12 months from the date of classification.

Non-current assets and disposal groups classified as held for sale are measured at the lower of:

· their carrying amount immediately prior to being classified as held for sale in accordance with the Group's accounting policy; and

· fair value less costs to sell.

Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated.

Discontinued operations

The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal.

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations.

Equity

Equity comprises the following:

· Share capital represents the nominal value of issued Ordinary shares and Deferred shares;

· Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

· Equity element of convertible loan represents the part of the loan classified as equity rather than liability;

· Translation reserve represents the exchange rate differences on the translation of subsidiaries from a functional currency to Sterling at the year end;

· Own shares held represents shares in employee benefit trust;

· Retained earnings represents retained profits and losses; and

· Non-controlling interest represents net assets owed to non-controlling interests.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on:

· the initial recognition of goodwill;

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

· investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

· the same taxable Group company; or

· different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Foreign currency

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the statement of financial position date. Exchange differences arising on the settlement and retranslation of monetary items are taken to the statement of comprehensive income.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at the exchange rate ruling at the statement of financial position date. Income and expense items are translated at the average exchange rates for the year. Exchange differences arising are classified as equity and transferred to the Group's retained earnings reserve.

Financial instruments

Financial assets and financial liabilities are initially recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument at their fair value and thereafter at amortised cost.

Trade receivables

Trade receivables are recorded at their amortised cost less any provision for doubtful debts. Trade receivables due in more than one year are discounted to their present value.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are reported in a separate allowance account with the loss being

recognised within administrative expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Convertible loans

Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan note and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.

Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense of the liability component is calculated by applying the effective interest rate to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.

Bank borrowings

Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the year to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Finance charges are accounted for on an effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the year in which they arise.

Trade payables

Trade payables are stated at their amortised cost.

Equity instruments

Equity instruments issued by the Group are recorded as the proceeds received, net of direct costs.

Retirement benefits

The Group contributes to the personal pension plans for the benefit of a number of its employees. Contributions are charged against profits as they accrue.

2 Segment information

Under IFRS 8 the accounting policy for identifying segments is based on the internal management reporting information that is regularly reviewed by the senior management team.

The Group has three main reportable segments:

· Rights and Licensing - This division is involved with the sale of distribution rights, DVDs, music and publishing deals through the aggregate of the following reporting lines: DCD Rights, DC DVD, DCD Music and DCD Publishing.

· Production - This division is involved in the production of television content.

· Post-Production - This division is involved in post-production and contains Sequence Post.

The Group's reportable segments are strategic business divisions that offer different products to different markets, while its Other division is its head office function which manages activities that cannot be reported within the other reportable segments. They are managed separately because each business requires different management and marketing strategies.

Uniform accounting policies are applied across the entire Group. These are described in note 1 of the Consolidated Financial Statements.

The Group evaluates performance of the basis of profit or loss from operations but excluding exceptional items such as goodwill impairments. The Board considers the most important KPIs within its business segments to be revenue, segmental adjusted EBITDA and adjusted profit before tax.

Inter-segmental trading occurs between the Rights and Licensing division and the production divisions where sales are made of distribution rights. Royalties and commissions paid are governed by an umbrella agreement covering the Group that applies an appropriate rate that is acceptable to the local tax authorities.

Segment assets include all trading assets held and used by the segments for their day to day operations. Goodwill and trade-names are allocated to their respective segments. Segment liabilities include all trading liabilities incurred by the segments. Loans and borrowings incurred by the Group are not allocated to segments. Details of these balances are provided in the reconciliations below:

2015 Segmental Analysis - income statement

2015 Segmental analysis - financial position

2014 Segmental analysis - income statement

2014 Segmental analysis - financial position

3 Discontinued operations

On 9 October 2014, the Group announced that it had sold its interest in Matchlight Limited. 

The entity had net liabilities of £470,000 at the date of sale. The entity did not have any significant non-current assets at the date of disposal. The profit on disposal amounted to £334,000.

As mentioned in note 4 below, diluted earnings per share has not been considered for either the 2015 or 2014 figures as, due to the overall loss position of the group, this effect would be anti-dilutive.

4 Earnings per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted loss per share is based on the basic loss per share, adjusted to allow for the issue of shares and the post tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.

If convertible loan balances held at the year-end were converted at their respective conversion prices the number of shares issued would be 2,603,880 (2014: 2,495,234 shares if all the convertible loan balances held at the prior year end had been converted at their respective conversion prices).

The consequence of this transaction has not been considered for either the 2015 or 2014 figures as the effect would be anti-dilutive.

5 Goodwill and intangible assets