30 Mar 2009 08:00
30 March 2009 Talent Group plc ("Talent" or the "Company") Final results for the year ended 30 September 2008
Chairman's Statement
I am pleased to report your Company's results for the year ended 30th September 2008.
This has been another difficult year for the television industry and your company has not been immune from these difficulties. Turnover for the period has fallen to £1,841,000 against £3,333,000 last year. With continuing tight control of administrative expenses, (down by 15 per cent. compared with the same period last year, even after including the costs of moving office and the acquisition of a regional production company) the loss before taxation for the period was £449,000 against £320,000 last year. Cash at the year end was £ 178,000, which appears to be a substantial reduction when compared to last year's figure. However, the cash balance as at 30 September 2007 included substantial sums paid to us by broadcasters to provide funding for their productions. There was only one production in progress at the end of the financial year under review and, at that date, we were financing all the production costs ourselves and did not receive a contribution from the broadcaster until after the year end. Cash continues to be managed carefully and cash flow was assisted by loans to the company earlier in the year, which are more fully detailed in note 6 to the accounts.
Since my interim statement, the television industry has continued to go through a period of budget cuts and personnel changes particularly at senior and commissioning level. This has been compounded by the uncertain economic conditions worldwide and the consequent effect on broadcasters and advertisers. We are therefore cautious for the immediate future, hence our recent office move and personnel changes which will further reduce our annual overheads considerably. Notwithstanding the difficult market, we still believe that these conditions will offer unexpected business and production opportunities which we will seek out and exploit.
Following the departure of John Kaye Cooper (to take up a major commissioning role at ITV) in April, our new Director of Entertainment, Jonathan Glazier has quickly built up an extensive development slate across a wide range of genres. In August he executive produced `Everybody Dance Now' for primetime Saturday night ITV 1 which performed very well (the format is now being distributed worldwide by Digital Rights distribution) and we currently have a new series of ten one hour programmes entitled `How Clean is Your Crime Scene?' in production with US co-producer Steel Spyda. This series is being shot entirely in California and reflects our continuing efforts to widen our market in the USA. Jonathan's arrival has also enabled our Managing Director Tony Humphreys to focus on diversifying our development slate to include the more high value area of scripted comedy both here and in the US. We currently have scripts in development and are making steady progress in this area. We hope to report further on these activities in the near future.
In September 2008 we acquired kmb Productions Ltd., a regional production company and re-named the company Talent Television South Ltd. I am pleased to report that since the acquisition the new division is making good progress. Since the acquisition, Talent Television South Ltd has been named as one of the BBC's `special' regional companies under its XM25 scheme, set up to promote and nurture regional production and already has a number of projects under consideration with broadcasters. I would like to take this opportunity to welcome Talent Television South Ltd's Managing Director Kate Beal and her team to the group.
With our new staff we remain confident in our ability to become a major force in television production both in the UK and internationally. I would like to thank the entire team at Talent, and our advisers and shareholders who have supported us through these difficult market conditions.
The current year will undoubtedly be challenging but we believe we have the personnel, the expertise and the development slate to make us well placed to benefit from any opportunity that arises.
Terry BateChairman30 March 2009
Business Review and Principle Activities
As the Chairman has reported, the television industry continues to go through difficult times and broadcasters and advertisers have clearly not been immune to the uncertain economic conditions worldwide. This has resulted in fewer commissions generally and lower budgets, the impact of which has been to slow down the progress of your company.
Mindful of these continuing difficulties, your Board maintained its focus on operational efficiencies and also took the opportunity of a break in the company's property lease to find more suitable accommodation at a lower rent in order to further reduce annual overheads in future years. We also invested in our own editing facilities which will enable us to produce promotional tapes for our new projects at a reduced cost. It offers the opportunity for us to be more competitive in our pricing of productions going forward.
Reviewing our main production activity over the last year, we delivered our fourth and fifth series of Best of Friends for CBBC, which has continued to perform well for the broadcaster. We further developed our relationship with ITV with two productions, An Audience Without Jeremy Beadle, a tribute to the deceased entertainer and presenter and Everybody Dance Now, a one hour prime time Saturday night special. The latter performed very well against The Last Night of the Proms on BBC One and options over the show's format have recently been taken in several overseas territories. At the moment, we are currently in production for a new ten part series entitled How Clean is Your Crime Scene? which is being co-produced with US based Steel Spyda and shot entirely on location in and around San Francisco Bay.
How Clean is Your Crime Scene? reflects our continued efforts to produce shows in and for the US and international markets. We have made progress in the US in our diversification into scripted comedy, where we have developed a comedy project with an established US producer based in Los Angeles and also have a comedy drama series in development with a New Zealand co-producer and a scripted kid's animation with an established French animation house. We have recently acquired the rights on a novel which we are developing as our first "theatrical" film project under Talent Films. We hope to be able to give further information on these projects in the near future.
Continuing on the international front, we anticipate a sixth Test the Nation in Japan in May 2009. The Environment Test that the Japanese produced in 2008 performed very well and pleased both the broadcaster, TV Asahi and programme sponsors.
The digital media project we announced at this time last year is also still very much alive. After vigorous development we now have an exciting proposition which we are about to pitch to potentially interested parties and broadcasters.
Finally, I am pleased to report that Talent Television South has integratedinto the Talent Group with speed and efficiency. We are confident that thecompany's acceptance on to the BBC's exclusive regional production initiativeXM25 will result in opportunities that in turn will help your company return toprofitability.Tony HumphreysManaging Director30 March 2009Further EnquiriesTalent Group plc Tony Humphreys Tel: 020 7822 3900 John East & Partners Limited John East Tel: 020 7628 2200
Audited consolidated income statement for the year ended 30 September 2008
2008 2007 Notes £'000 £'000 Revenue 1,841 3,333 Cost of sales (1,271) (2,312) Gross profit 570 1,021 Administrative expenses (1,008) (1,200) Finance income 7 21 Finance costs (10) - Loss before taxation and exceptional costs (441) (158) Exceptional costs - (162) Loss before taxation (441) (320) Income tax expense - Prior year 2 13 (10) - Current tax - 7 Loss for the year (428) (323) Loss per share (pence) 3 (2.63p) (1.99p) Diluted loss per share (pence) 3 (2.53p) (1.94p)
The income statement has been prepared on the basis that all operations are continuing operations.
The accounting policies and the notes, which are set out in the Company's report and accounts, form an integral part of these financial statements.
There are no recognised gains or losses other than those passing through the income statement.
Audited consolidated balance sheet as at 30 September 2008
2008 2007 Notes £'000 £'000 £'000 £'000 Assets Non-current assets Goodwill 1,082 987 Other intangible assets 37 43 Property, plant & equipment 49 62 1,168 1,092 Current assets Inventories 68 54 Trade receivables 548 411 Cash & cash equivalents 5 178 943 794 1,408 Total assets 1,962 2,500 Equity and liabilities Equity Share capital 6,315 6,310 Share premium 11,675 11,634 Share option reserve 120 117 Retained earnings (17,162) (16,734) Total equity 948 1,327 Current liabilities Borrowings 6 600 - Trade & other payables 7 414 1,173 Total Liabilities 1,014 1,173 Total equity & liabilities 1,962 2,500
Audited consolidated cash flow statement from the year ended 30 September 2008
2008 2007 Notes £'000 £'000 £'000 £'000 Cash flows from operating activities Loss before taxation (441) (320) Adjustments for: Depreciation of tangible assets 20 19 Amortisation of intangible assets 6 6 Loss on disposal of tangible 3 - assets Interest received (7) (21) Interest paid 10 - (409) (316) Increase in trade and other (140) (42) receivables Increase in inventories (14) (15) (Decrease)/increase in other (777) 139 payables (1,340) (234) Tax refund received 21 - Tax paid (1) (45) Net cash from operating activities (1,320) (279) Cash flows from investing activities Purchase of property, plant and (8) (15) equipment Interest received 7 21 Acquisition of subsidiary net of 2 - cash acquired Net cash used in investing 1 6activities Cash flows from financing a ctivities Proceeds from borrowing 600 - Repayments of borrowings (36) - Interest paid (10) - Net cash used in financing 554 - Net decrease in cash and cash 8 (765) (273)equivalents Cash and cash equivalents at the beginning of the year 8 943 1,216 Cash and cash equivalents at the 8 178 943end of the year
Audited consolidated statement of changes in equity from the year ended 30 September 2008
At 1 October 20066,31011,634112(16,411)1,645
Share Share Share Retained Total Option Capital Premium Earnings £'000 Reserve £'000 £'000 £'000 £'000 Changes in equity Loss for the year - - - (323) (323) Equity share option - - 5 - 5 recognised At 1 October 2007 6,310 11,634 117 (16,734) 1,327 Changes in equity Loss for the year - - - (428) (428) Equity share option - - 3 - 3 recognised New shares issued 5 41 - - 46 At 30 September 2008 6,315 11,675 120 (17,162) 948
Notes to the preliminary results for the year ended 30 September 2008
1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2007 and 2008, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain statements under the Companies Act 1985, sections 237(2) or (3).
2. Taxation 2008 2007 £'000 £'000 Domestic current year tax UK corporation tax - (7) Domestic prior year tax UK corporation tax (13) 10 (13) 3 Factors affecting the tax charge for the period: Loss on ordinary activities before taxation (449) (320) Loss on ordinary activities multiplied by the standard rate of
Corporation tax in the UK of 21 per cent. (2007: 20 (94) (64) per cent.)
Expenses not deductible for tax purposes 5 2 Depreciation in excess of capital allowances for the 5 (1)year Unutilised tax losses 84 56 Prior year tax (13) 10 Current tax charge for the year (13) 33. Loss per share 2008 2007 £'000 £'000 Numerator Basic/Diluted: Net loss (428) (323) Denominator Basic: Weighted average shares 16,241,791 16,210,284 Effect of diluted securities: stock options 643,439 454,667 Diluted: Adjusted weighted average shares 16,885,230 16,664,951
Basic loss per share is calculated by dividing the net loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share is computed using the weighted average number of shares outstanding during the period adjusted for the dilutive effect of stock options outstanding for the period.
4. Business combinations
On 1 September 2008, Talent Group Plc acquired 100 per cent. of the voting equity share capital of KMB Productions Limited for a cash consideration of £ 1,100. Goodwill arising on acquisition amounted to £95,197.
The net assets of the business acquired during the year, as extracted from theacquiree's accounting records, and the fair value adjustments ascribed thereto,are set out below: Book Fair value Accounting Fair values alignments policy values acquired £'000 alignments acquired £'000 £'000 £'000 Property, plant and equipment 1 - - 1 Trade and other receivables 1 - - 1 Cash and cash equivalents - - - - Long-term borrowings (82) - - (82) Short-term borrowings (9) - - (9) Trade and other payables (5) - - (5) Total fair value of net assets (94)acquired Goodwill (95) Total consideration 1
Total consideration comprised of cash only.
The net cash inflow arising from this business combination is £873, which comprises of the cash and cash equivalents acquired of £227 less the cash consideration paid of £1,100.
The goodwill arising on acquisition is attributable to future operating synergies from the combination and cross-selling opportunities.
On 12 September 2008, the company's name was changed to Talent Television South Ltd.
In the period following acquisition, Talent Television South Ltd. has contributed £10,220 to the Group's loss.
If the acquisition of Talent Television South Ltd. had been completed on the first day of the period, the revenue of the Group would have been £1,882,000 and the loss of the Group would have been £475,000.
5. Cash and cash equivalents 2008 2007 £'000 £'000 General office 178 918 Controlled productions - 25 178 9436. Borrowings 2008 2007 £'000 £'000 Borrowings 600 -
The above borrowings are a loan from Terry Bate, Non-Executive Chairman. Interest is payable monthly at the rate of a minimum of 1.5 per cent. above base rate. The loan is unsecured and no guarantees were given.
a) AgeingThe loan is due on demand.b) Fair valuesCash and cash equivalents
The carrying value approximates to fair value.
Other assets and liabilities
No disclosure of fair value has been made as the carrying value is a reasonable approximation of the fair value.
7. Trade and other payables: amounts falling due within one year
2008 2007 £'000 £'000 Social security and other taxes 25 147 Other payables 293 553 Controlled productions 35 392 Accruals and deferred income 61 81 414 1,173
8. Reconciliation of net cash flow to movement in cash and cash equivalents
2008 2007 £'000 £'000 Net decrease in cash and cash equivalents (765) (273) Cash and cash equivalents at beginning of year 943 1,216 Cash and cash equivalents at end of year 178 943 9. Financial commitments Office Office Land and Land and equipment equipment buildings buildings 2008 2007 2008 2007 £'000 £'000 £'000 £'000 At 30 September 2008, the Group had commitments under non - cancellable operating leases as follows: Expiry date: Between two and five years 6 8 160 92
At 30 September 2008 there are no terms of renewal or purchase options and escalation clauses. There are also no restrictions imposed by lease arrangements concerning dividends, additional debt and further leasing.
10. Dividend
The Directors do not proposed a dividend payment.
11. Copies of report and accounts
Copies of the Report and Accounts will be posted to shareholders shortly, will be available from the Company's registered office Lion House, Red Lion Street, London WC1R 4GB and will be available from the Company's website www.talenttv.com.
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