29 Mar 2007 07:00
MOTIVE TELEVISION PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Motive Television Plc, the television production group, announces its preliminary results for the year ended 31 December 2006.
Financial Highlights
* Group turnover has increased from ‚£678,890 to ‚£1,327,224. The turnover in the prior period represents an eight month trading period and the turnover in the current year includes ‚£362,280 in respect of acquisitions in the year. * Gross profit increased from ‚£160,979 to ‚£354,851 (of which ‚£83,306 is in respect of acquisitions in the year). * The loss on ordinary activities before tax was ‚£(521,063) (2005: ‚£ (182,812)). * Cash at bank and in hand net of overdrafts at the year end was ‚£1,059,694 (2005: ‚£1,206,241). * The loss for the year reflects a combination of the new investment made into Brown Eyed Boy, aborted transaction costs and un-recovered central overhead. * Interest on cash balances of ‚£29,400 (2005: ‚£21,338) has been received during the period. Contact:Motive Television plc 020 7766 8445 Michael Pilsworth City Financial Associates Limited 020 7090 7800 James Caithie CHAIRMAN'S STATEMENT
As we expected, following the change in the independent television production terms of trade in the UK, the sector underwent continuing extensive consolidation in 2006. Valuations rose sharply as a number of buyers competed for transactions. As a result of this we withdrew from a number of transactions.
Because of this "over-heating" in the sector we have reviewed our original strategy and have broadened our plans to include financing start-up television production companies led by established producers with strong track records and ambitious plans for growth. By establishing these as joint-ventures we believe we can lower the cost of any future investments.
Our existing production companies performed to plan in 2006.
Our Irish-based production company, Motive Television Ltd, based in Dublin had an excellent year. Renewals for all of its main programme strands were achieved in 2006. Park Live, No Place Like Home and the Ernst & Young Entrepreneur of the Year, all for Irish broadcaster RTE, were produced and transmitted during the year. In addition, Motive developed and delivered two new programmes for RTE: The Ernst & Young GOAL Challenge; and a documentary film, The Sound of Sunday, which won an Irish Film and Television Award (IFTA) for Best Sports Feature programme of 2006. This was the company's fourth IFTA, which is a testament to the programme production skills and creative flair of our Dublin-based executive team, Cormac Hargaden and Trisha Canning. In addition, and very significantly, Motive sold a re-versioned series based on its format of No Place Like Home, to BBC Northern Ireland. This series, entitled
Home From Home, is the company's first UK commission. With RTE having just commissioned a third series of No Place Like Home, the outlook for 2007 is good.
Our first UK acquisition, the comedy production company Brown Eyed Boy Ltd, led by managing director Gary Reich, was not in production during the period of our ownership in 2006, and as expected, recorded an operating loss for the period, partly as a result of this inactivity, but also because of investing in a number of speculative comedy pilots with new talent, (which are now in production), and new comedy scripts, any fruits from which will not appear until later in 2007. Little Miss Jocelyn, starring Jocelyn Jee Esien, was a big hit on BBC3 and on DVD, and as a result the second series has now been commissioned by BBC2, with BBC2 also running repeats of the first series during 2007. The second series will go into production shortly. In addition, the company produced two series with Dan Clark, 10 Things¢â‚¬¦.,for The Comedy Channel. The company continued to receive revenue from its first hit series, Three Non Blondes. Brown Eyed Boy is forecast to make a contribution in 2007.
We will continue to try to identify and complete a transformative transaction in the UK independent television production sector. We will also seek strategic stakes in small and medium-sized television production and distribution companies, whilst at the same time attempting to establish start-up companies with successful television producers. These production companies now retain the intellectual property rights in their content, which can be exploited across multiple platforms and multiple territories. It is expected that programme libraries will generate cashflows for longer periods and that the "long-tail" effect will increasingly apply to television content, enhancing long-term value.
Our existing production companies are very well-placed to deliver on their budgets this year with most of their budgeted productions now delivered or contracted. We expect a positive contribution from both of our operating companies in the current year. Little Miss Jocelyn, series 1, is to be repeated on BBC2 in the Spring with series 2 to be transmitted in by BBC2 in the Autumn. With 12 episodes available for international sales in the Autumn we expect significant additional returns from overseas licensing and from DVD sales.
MOTIVE TELEVISION PLC GROUP PROFIT AND LOSS ACCOUNT For the year ended 31 December 2006 Note 2006 2005 ‚£ ‚£ Turnover Continuing operations 964,944 678,890 Acquired operations 362,280 - 2 1,327,224 678,890 Cost of sales (972,373) (517,911) Gross profit 354,851 160,979 Administrative expenses (905,314) (365,129) Operating loss - Continuing operations (383,704) (204,150) Acquired operations (166,759) - (550,463) (204,150) Net Interest receivable 29,400 21,338 Loss on ordinary activities before (521,063) (182,812)taxation Taxation - - Retained loss for the period (521,063) (182,812) Minority interest 83,695 - (437,368) (182,812) Loss per share (in pence) 3 .56p 0.33p
Comparative amounts are for the period 22 December 2004 to 31 December 2005, though the Group did not commence trading activities until 11 May 2005.
MOTIVE TELEVISION PLC GROUP BALANCE SHEET As at 31 December 2006 2006 2005 Notes ‚£ ‚£ Fixed assets Intangible fixed assets 550,888 240,959 Tangible fixed assets 27,368 10,815 578,256 251,774 Current assets Stocks - 3,185 Debtors 80,611 123,158 Cash at bank and in hand 1,133,813 1,206,241 1,214,424 1,332,584 Creditors- amounts falling due within (336,060) (225,709)one year Net current assets 878,364 1,106,875
Total assets less current liabilities 2 1,456,620 1,358,649
Capital and reserves Called up share capital 1,086,066 647,733 Share premium account 895,428 738,261 Merger reserve 155,467 155,467 Profit and loss account (572,668) (182,812) Shareholders' funds 4 1,564,293 1,358,649 Minority interests (107,673) - Capital employed 1,456,620 1,358,649 MOTIVE TELEVISION PLC GROUP CASH FLOW STATEMENT For the Year ended 30th June 2006 2006 2005 Notes ‚£ ‚£ Net cash outflow from Operating Activities 5 (656,515) (136,950) Returns on Investments and Servicing of Finance Net interest received 29,400 21,338 Taxation 4,212 (1,872) Capital Expenditure Payments to acquire tangible fixed (19,862) (12,986)assets Acquisitions
Purchase of subsidiary undertakings 7 (227,196) (20,399)
Cash acquired with subsidiary 7 242,914 48,849 15,718 28,450 Net cash outflow before financing (627,047) (102,020) Financing Issue of ordinary share capital (net 480,500 1,308,261of costs) (Decrease) / Increase in Cash 6 (146,547) 1,206,241 MOTIVE TELEVISION PLCNOTES
for the year ended 31 December 2006
1 ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared under the historical cost convention, adopting the following accounting policies, all of which are in accordance with applicable UK accounting standards.
Basis of consolidation
The Group financial statements consolidate the financial statements of Motive Television plc and its subsidiary undertakings as at 31 December 2006.
The subsidiary acquired during the year, Brown Eyed Boy Limited was acquired on 1 March 2006 and its trading results have been incorporated as of that date, applying the acquisition method of accounting. The Group's shareholding in Brown Eyed Boy Limited amounts to 49.9% of the issued share capital of that company, but has the power to exercise dominant influence through the power to exercise call options to acquire the remaining shares.
Goodwill
Goodwill is the difference between the cost of an acquired entity and the aggregate of the fair value of the entity's identifiable assets and liabilities.
Positive goodwill is capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its estimated economic life of ten years.
Goodwill is reviewed for impairment at the end of the first full financial year following the acquisition and in other years if events or changes in circumstances indicate that the carrying value may not be recoverable.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost less estimated residual value of tangible fixed assets over their expected useful lives at the following rates:-
Plant and equipment Over three to four years
Fixed asset investments
Fixed asset investments are stated at cost less provision for permanent diminution in value.
Income recognition
Turnover represents the fair value of services provided during the year on television production assignments. Turnover is recognised as contract activity progresses and the right to consideration is earned. Fair value reflects the amounts expected to be recoverable from customers and is based on time spent and costs incurred to date as a percentage of total anticipated production costs. Unbilled turnover is included as amounts recoverable under contracts within debtors. Other turnover in respect of subsequent sales of completed productions is recognised at the date the sale is agreed and the product is shipped.
Where the Group receives non-refundable advances for the sale of distribution rights of a production, the Company recognises the amount that is non-refundable as income in the year. The Group also accrues the cost of any royalties that are payable to writers and performers of the production.
The Group recognises income from existing royalty agreements as they accrue.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. All revaluation differences and realised foreign exchange differences are taken to the profit and loss account.
Exchange differences arising when the profit and loss accounts of subsidiaries are translated at average rates compared with the rate ruling at the year end are taken to reserves.
Deferred taxation
In accordance with Financial Reporting Standard (FRS) 19 Deferred Tax, full provision is made for deferred tax arising from timing differences between the differing treatment of certain items for taxation and accounting purposes. The provision is calculated at the rates of taxation at which it is estimated the liability will arise and is not discounted. No provision is made in respect of timing differences arising from the sale or revaluation of fixed assets unless there is a commitment to the disposal of the assets at the balance sheet date. Deferred tax assets are recognised only to the extent that the directors consider there to be suitable taxable profits from which the underlying timing differences can be deducted.
Share based awards
The Group has applied the requirements of FRS 20 Share based payment. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2006.
The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
Fair value is measured by use of the Binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Leases
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
Stock
Stock is valued at the lower of cost and net realisable value after making due allowance for any obsolete or slow moving items.
Cost is based on normal levels of cost and comprises cost of purchase, together with the addition of charges such as freight or duty where appropriate.
Net realisable value comprises the actual or estimated selling price, net of trade discounts, less all costs to be incurred in marketing, selling and distribution.
Pensions
The Group operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
2 SEGMENTAL ANALYSIS
All turnover was derived from the Group's principal activity. Analysis of by geographical market is as follows:
2006 2005 ‚£ ‚£ Turnover United Kingdom 362,280 - Republic of Ireland 964,944 678,890 1,327,224 678,890 (Loss) profit before taxation United Kingdom (169,826) - Republic of Ireland 6,356 9,152 Common costs - Parent company (301,349) (175,609) Goodwill amortisation (56,244) (16,355) (521,063) (182,812) Net assets United Kingdom (208,035) - Republic of Ireland 18,734 5,437 Not allocated - Parent Company 1,095,033 1,112,253 Goodwill amortisation 550,888 240,959 1,456,620 1,358,6493 LOSS PER SHARE
The loss per share is based on a loss for the year of ‚£437,368 (2005: ‚£182,812) and the weighted average of ordinary shares in issue for the year of 78,606,666. The comparative figure is based on the weighted average number of shares in issue since 11 May 2005, being the date of the Company's admission to AIM and completion of its first acquisition, this being 54,496,737 shares.
4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2006 2005 ‚£ ‚£ Opening shareholders funds 1,358,649 - Loss for the year (437,368) (182,812) Adjustment in respect of share based 47,512 -payments Shares issued during period 595,500 1,541,461 Closing shareholders funds 1,564,293 1,358,649
5 RECONCILIATION OF OPERAING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2006 2005 ‚£ ‚£ Operating loss for the period (550,463) (204,150) Amortisation of goodwill 56,244 16,355 Depreciation of tangible fixed assets 10,185 3,797 Decrease in stocks 3,185 1,010 Decrease/ (Increase) in debtors 80,228 (88,009) (Decrease) / Increase in creditors (303,406) 134,047 Adjustment in respect of share based 47,512 -payments Net cash outflow from operating (656,515) (136,950)activities
6 RECONCILIATION OF NET CASH FLOW
2006 2005 ‚£ ‚£ Net cash flow during year (146,547) 1,206,241 Opening net funds 1,206,241 - Closing net funds 1,059,694 1,206,2417 ACQUISITIONS
The Group acquired 49.9% of Brown Eyed Boy Limited on 1 March 2006. The book value equates to fair value at 1 March 2006. The book and fair values at date of acquisition were as follows:
‚£ Tangible fixed assets 6,876 Debtors 41,893 Bank balance 242,914 Creditors (339,638) Net liabilities acquired (47,955) Share of net liabilities acquired (23,977) Goodwill 366,173 Consideration 342,196 Consideration satisfied by: Shares issued 115,000 Cash consideration 135,000 Cash outflow in respect of professional fees and directors' bonuses associated with the acquisition 92,196 342,196 * STATUS OF THIS ANNOUNCEMENT
The financial information is unaudited and does not constitute statutory accounts within the meaning of Section 240(5) of the Companies Act 1985 ('the Act'), but have been extracted therefrom. The financial statements for the year ended 31 December 2005, on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies and contain no statement under Sections 237(2) or (3) of the Act. The auditors have reported their opinion on the financial statements for the year ended 31 December 2006 today. The auditors gave an unqualified opinion, and contain no statement under Sections 237(2) or (3) of the Act, the financial statements have not yet been filed with the Registrar of Companies.
Copies of the Report and Financial Statements for the year ended 31 December 2006 will be sent to shareholders by 5 April, and will be available for collection from 8 Waterloo Place, London SW1Y 4BE after 5 April.
MOTIVE TELEVISION PLC