Motive Television Plc Regulatory News (MTV)

2 Mar 2006 07:00

2 MARCH 2006: FOR IMMEDIATE RELEASE MOTIVE TELEVISION PLC Results for the twelve months to 31 December 2005 Motive Television PLC ("Motive"), an AIM listed media investment companyspecialising in television rights owners, announces audited results for thetwelve months to 31 December 2005.Motive also today announces that it has acquired a 49.9% stake in UKindependent television producer Brown Eyed Boy. 12 months to 31/12/05 ‚£* Turnover 678,890 Group loss 182,812 Net cash 1,206,241 Net assets 1,358,649 Basic LPS .5p Diluted LPS .5p Dividend nil Notes:* The parent company was incorporated 22 December 2004. The subsidiary, MotiveTelevision Limited, was acquired on 11 May 2005, from which date tradingactivities commenced.Summary * These results are in line with management expectations. The loss for the year of ‚£182,812 reflects central administration and management costs incurred whilst the directors have been extremely active in pursuing a number of potential acquisitions. * Our Dublin-based Irish subsidiary, Motive Television Ltd, has traded profitably in its first period under our ownership. The series Park Live, Ernst & Young Entrepreneur of the Year and No Place Like Home have performed well and contracts for renewal are being negotiated with the Irish broadcaster, RTE. The prospects for the company for 2006 are excellent as the Irish market for programming is expanding. * Motive has also announced today that it is paying approximately ‚£250,000 for a 49.9% stake in Brown Eyed Boy. This is comprised of ‚£135,000 in cash, and ‚£115,000 in new Motive shares. The cash component will be financed from Motive's existing cash balances. * Brown Eyed Boy (www.browneyedboy.com) provides content for a range of broadcasters, including the BBC and Channel 4 and has a growing library of material that is available for exploitation. It has produced a number of successful shows including 3 Non Blondes, Killing Time and The Man Who Drank the Universe. Its upcoming productions include Little Miss Joycelyn, Storyman, Old Gits and God Loves Gays. * This is the first investment Motive has made since its AIM listing in May 2005. It is in line with its strategy of investing in profitable, cash generative independent television producers. In addition, Motive has put in place arrangements under which it may acquire the balance of the shares in Brown Eyed Boy at a future date. The total consideration has been capped at ‚£1.6 million. * The current year has started in line with management indications. Mick Pilsworth, Chairman, said: "Since Motive's flotation on the AIM in May,corporate activity in the independent television production sector hasincreased, reflecting the sector's potential for both consolidation and forfuture growth. Motive is undertaking a programme of taking strategic stakes inprofitable, cash generative independent television producers, across a range ofgenres that are leaders in their specialist sectors. These producers are ableto exploit their programmes through whichever distributor and in whateverterritory they choose. They also have a library of product that can provide anongoing income stream. They create programmes that have a high secondaryincome, most notably from overseas sales, such as drama series, formats andsome factual."The Board continues to review all investment opportunities carefully and willbe prudent in its use of Group assets. Motive will invest in high quality,creative and innovative businesses that have proven resilient in the face ofchanging market conditions. It is well positioned to benefit from increasingdemand for content across a range of platforms. Through these investments,management intends to take advantage of a consolidating industry, expand thebusiness rapidly and realise the long-term growth potential of the company forinvestors and other stakeholders. In the meantime, demand for our existingcontent remains strong and we are confident about the outlook for 2006."For further information, please contact:Brunswick +44 (0)207 404 5959James Hogan / Craig Breheny / Ash SpiegelbergNote to EditorsMotive Television (www.motivetelevision.co.uk) is a leading media investmentcompany, specialising in television rights owners. Based in London, it islisted on the AIM and is led by television industry experts Mick Pilsworth andIan Buckley.CHAIRMAN'S STATEMENTI am pleased to announce the results for the period ended 31 December 2005.Since your company's flotation on the AIM in May, merger and acquisitionactivity in the independent television production sector has increased,reflecting the sector's potential for both consolidation and for future growth.We have examined a number of opportunities and active discussions are in handwith companies that both fulfil our acquisition criteria and fit into ourstrategic vision.Accompanying the release of these accounts is an announcement concerning theacquisition of a 49.9% interest (with an option to acquire 100% for a maximumtotal further consideration of ‚£1.6 million, less the initial consideration) inBrown Eyed Boy, an independent television production company specialising incomedy with a commissioned series, Little Miss Jocelyn, on the BBC. Brown EyedBoy's previous successful productions include Three Non Blondes, also for theBBC. These titles are available on DVD and will now be made available forexploitation on mobile platforms. The managing director of Brown Eyed Boy, GaryReich, has taken part of his consideration in Motive shares which he willretain for at least 12 months. He has signed a new three-year serviceagreement.Our Irish acquisition, Motive Television Ltd, based in Dublin, has tradedprofitably in its first period under our ownership. All of its main programmeseries (Park Live, No Place Like Home and Ernst & Young Entrepreneur of theYear) have performed well and contracts for renewal of all three series are innegotiation with the Irish broadcaster, RTE. The company was nominated for twoof the coveted Irish Film and Television Awards (IFTA's) in December, and wonan IFTA for its sports documentary Marooned . The prospects for the company for2006 are excellent as the Irish market for programming is expanding.The loss for the year of ‚£182,812 reflects central administration andmanagement costs incurred whilst the directors have been extremely active inpursuing a number of potential acquisitions. Our Irish subsidiary has tradedsatisfactorily since its acquisition and has achieved a small operating profitof ‚£8,995 after absorbing head office management re-charges of ‚£30,000.However, early indications for the current period are encouraging. Cash at bankand in hand at the year-end was ‚£1.206 million. Interest on cash balances of ‚£21,338 has been received during the period.Motive is undertaking a programme of taking strategic stakes in profitable,cash generative independent television producers, across a range of genres thatare leaders in their specialist sectors. These producers are able to exploittheir programmes through whichever distributor and in whatever territory theychoose. They also have a library of product that can provide an ongoing incomestream. They create programmes that have a high secondary income, most notablyfrom overseas sales and increasingly from mobile platform operators. The Boardcontinues to review all investment opportunities carefully and will be prudentin its use of Group assets. Motive will invest in high quality, creative andinnovative businesses that have proven resilient in the face of changing marketconditions. It is well positioned to benefit from increasing demand for contentacross a range of platforms. Through these investments, management intends totake advantage of a consolidating industry, expand the business rapidly andrealise the long-term growth potential of the company for investors and otherstakeholders. In the meantime, demand for our existing content remains strongand we are confident about the outlook for 2006.M PILSWORTHChairman1 March 2006GROUP PROFIT AND LOSS ACCOUNTfor the period ended 31 December 2005 Note ‚£ Turnover 2 678,890 Cost of sales (517,911) _______ Gross profit 160,979 Administrative expenses (365,129) _______ Operating loss 3 (204,150) Interest receivable 21,338 _______ Loss on ordinary activities before (182,812) taxation Taxation 5 - _______ Loss for period attributable to members of parent company 6 (182,812) There are recognised gains and losses for the period, other than those includedin the profit and loss account.The results for the year all relate to the acquisition made on 11 May 2005,together with central costs.Loss per share 7 For the period 11 May 2005 to 31 December 2005 0.3p For the period 22 December 2004 to 31 December 2005 0.5p GROUP BALANCE SHEETat 31 December 2005 Note ‚£ Fixed assets Intangible assets 8 240,959 Tangible assets 9 10,815 _______ 251,774 _______ Current assets Stocks 11 3,185 Debtors 12 123,158 Cash at bank and in hand 1,206,241 ________ 1,332,584 Creditors: amounts falling due 13 (225,709) within one year ________ Net current assets 1,106,875 ________ Total assets less current 1,358,649 liabilities Capital and reserves Called up share capital 15 647,733 Share premium account 16 738,261 Merger reserve 16 155,467 Profit and loss account 16 (182,812) ________ Shareholders' funds - Equity interests 17 1,358,649 BALANCE SHEETat 31 December 2005 Note ‚£ Fixed assets Tangible assets 9 2,784 Investments 10 253,599 _______ 256,383 _______ Current assets Debtors 12 51,550 Cash at bank and in hand 1,167,846 ________ 1,219,396 Creditors: amounts falling due 13 (109,927) within one year ________ Net current assets 1,109,469 ________ Total assets less current 1,365,852 liabilities Capital and reserves Called up share capital 15 647,733 Share premium account 16 738,261 Merger reserve 16 155,467 Profit and loss account 16 (175,609) ________ Shareholders' funds - Equity interests 1,365,852 GROUP CASH FLOW STATEMENTfor the period ended 31 December 2005 Note ‚£ Net cash outflow from operating 18 (136,950) activities ________ Returns on investments and servicing of finance Net interest 21,338 received ________ Taxation (1,872) ________ Capital expenditure Payments to (12,986) acquire tangible fixed assets ________ Acquisitions Payments to (20,399) acquire subsidiary undertaking Net bank balance 48,849 acquired with subsidiary ________ Net cash inflow 28,450 for acquisitions ________ Net cash outflow (102,020) before financing ________ Financing Issue of shares 1,308,261 (net of costs) ________ Increase in cash 20 1,206,241 1 ACCOUNTING POLICIESBasis of preparationThe financial statements have been prepared under the historical costconvention, adopting the following accounting policies, all of which are inaccordance with applicable accounting standards.Basis of consolidationThe Group financial statements consolidate the financial statements of MotiveTelevision plc and its subsidiary undertakings as at 31 December 2005.The subsidiary, Motive Television Limited, was acquired on 11 May 2005 and itstrading results have been incorporated as of that date, applying theacquisition method of accounting.No company profit and loss account is presented as permitted by Section 230 ofthe Companies Act 1985.GoodwillGoodwill is the difference between the cost of an acquired entity and theaggregate of the fair value of the entity's identifiable assets andliabilities.Positive goodwill is capitalised, classified as an asset on the balance sheetand amortised on a straight line basis over its estimated economic life of tenyears.Goodwill is reviewed for impairment at the end of the first full financialperiod following the acquisition and in other periods if events or changes incircumstances indicate that the carrying value may not be recoverable.DepreciationDepreciation is provided on all tangible fixed assets at rates calculated towrite off the cost less estimated residual value of tangible fixed assets overtheir expected useful lives at the following rates:-Plant and equipment Over three to four yearsFixed asset investmentsFixed asset investments are stated at cost less provision for permanentdiminution in value.1 ACCOUNTING POLICIES (Continued)Income recognitionTurnover represents the fair value of services provided during the year ontelevision production assignments. Turnover is recognised as contract activityprogresses and the right to consideration is earned. Fair value reflects theamounts expected to be recoverable from customers and is based on time spentand costs incurred to date as a percentage of total anticipated productioncosts. Unbilled turnover is included as amounts recoverable under contractswithin debtors. Other turnover in respect of subsequent sales of completedproductions is recognised at the date the sale is agreed and the product isshipped.Foreign currenciesMonetary assets and liabilities denominated in foreign currencies aretranslated into sterling at the rates of exchange ruling at the balance sheetdate. Transactions denominated in foreign currencies are translated intosterling at the rate of exchange ruling at the date of the transaction. Allrevaluation differences and realised foreign exchange differences are taken tothe profit and loss account.Exchange differences arising when the profit and loss accounts of subsidiariesare translated at average rates compared with the rate ruling at the year endare taken to reserves.Deferred taxationIn accordance with Financial Reporting Standard (FRS) 19 Deferred Tax, fullprovision is made for deferred tax arising from timing differences between thediffering treatment of certain items for taxation and accounting purposes. Theprovision is calculated at the rates of taxation at which it is estimated theliability will arise and is not discounted. No provision is made in respect oftiming differences arising from the sale or revaluation of fixed assets unlessthere 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 directorsconsider there to be suitable taxable profits from which the underlying timingdifferences can be deducted.2 TURNOVERThe total turnover of the Group for the period has been derived from itsprincipal activities wholly undertaken in the Republic of Ireland. * OPERATING LOSS * 2005 ‚£ Operating loss is stated after charging: Auditors' remuneration - statutory 11,722 audit - other 4,500 Depreciation 3,797 of tangible assets Amortisation 16,355 of goodwill Operating 30,399 lease costs Other fees paid to auditors relate to advice in connection with tax andcompliance matters. The auditors also received a fee of ‚£25,000 in connectionwith their role as reporting accountants in relation to the AIM admission andplacing of shares.4 STAFF COSTS 2005 ‚£ Wages and salaries 161,635 Social security costs 17,557 ________ 179,192 The average monthly number of persons employed by the Group, includingdirectors, during the period was as follows: 2005 No. Production 4 Administration 3 7 Details of directors' emoluments, including details of share option schemes aregiven in the report of the Remuneration Committee. These disclosures form partof the audited financial statements of the Group.5 TAXATIONThere is no charge to corporation tax due to the loss for the year. The Grouphas tax losses available to carry forward against future taxable income andprofits arising in the parent company of approximately ‚£160,000 and losses of ¯¥60,000 which may be offset against future taxable profits of the Irishsubsidiary. This has not been recognised as a deferred tax asset as recovery isnot considered sufficiently certainFactors affecting the tax charge for the period 2005 ‚£ Loss on ordinary activities before taxation (182,812) Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 30% (54,844) Effects of: Losses brought forward offset (3,262) Expenses not deductible for tax purposes 4,348 Capital allowances in excess of depreciation (25) Unutilised tax losses arising in the year 48,924 Goodwill amortisation not deductible for tax 4,859 purposes ______ Current tax charge - 6 LOSS ATTRIBUTABLE TO PARENT COMPANYThe loss dealt with in the financial statements of the parent company was ‚£175,609.7 LOSS PER SHAREThe exercise of the outstanding warrants would reduce the loss per share andhence have an anti-dilutive effect.Two figures are shown for loss per share. Both calculations are based on a lossfor the period of ‚£182,812. The first figure is based on the weighted averageof ordinary shares in issue for the entire accounting period from 22 December2004 and on a weighted average number of shares in issue over the entire periodof 34,964,573. The second figure, which is more representative, is based on theweighted average number of shares in issue since 11 May 2005, being the date ofthe company's admission to AIM and completion of its first acquisition; thisbeing 54,496,737 shares.8 INTANGIBLE FIXED ASSETSGROUP Goodwill ‚£ Cost Additions during the period 257,314 Amortisation Charge for the period 16,355 _______ Net book value At 31 December 2005 240,959 Details of the acquisition giving rise to goodwill are set out in note 21.9 TANGIBLE FIXED ASSETSGROUP Plant and equipment ‚£ Cost On acquisition of subsidiary company 1,626 Additions 12,986 ______ 14,612 Depreciation Charge for the period 3,797 ______ Net book value At 31 December 2005 10,815 COMPANY Plant and equipment ‚£ Cost Additions 3,709 Depreciation Charge for period 925 _______ Net book value At 31 December 2005 2,784 10 INVESTMENTSCOMPANY Subsidiary undertakings ‚£ Cost and net book value and at 31 December 2005 253,599 In the opinion of the directors, the aggregate value of the investment insubsidiary undertakings is not less than the amount at which it is stated inthe balance sheet.Subsidiary undertakingsThe Company's subsidiary undertakings are as follows: Interest in Name of undertaking Principal Ordinary share capital activity Motive Television Limited Television 100% programme production The subsidiary is incorporated in the Republic of Ireland and its results havebeen consolidated in these financial statements.11 STOCKSStocks comprise goods for re-sale.12 DEBTORS Group Company ‚£ ‚£ Trade debtors 51,515 - Amounts owed by - 30,000 group undertakings Other debtors 2,080 1,770 Overseas 4,212 - corporation tax Prepayments 65,351 19,780 _______ ______ 123,158 51,550 13 CREDITORS - amounts falling due within one year Group Company ‚£ ‚£ Trade 20,327 - creditors Taxation and 4,317 - social security Other 32,140 - creditors Accruals 168,925 109,927 225,709 109,927 14 FINANCIAL INSTRUMENTSThe Group's financial instruments comprise cash, liquid resources and variousitems, such as debtors and creditors, that arise directly from its operations.It is, and has been throughout the period of review, the Group's policy thatfinancial derivatives shall not be used. As a result, the Group has not usedinterest rate hedges and currency swaps during the period.The main risk arising from the Group's financial instruments is interest raterisk. The Group seeks to maximise returns on surplus cash by placing this onmoney market term deposits.Short term and debtors and creditorsShort term debtors and creditors have been excluded from the followingdisclosures.Foreign currency riskThroughout the period the Group was exposed to a risk in the fluctuation of theEuro, in which nearly all transactions of its operating subsidiary aredenominated, against Sterling. No steps are currently taken to mitigate theserisks because the costs of entering into derivative or hedging arrangements isconsidered by the Board to be disproportionate to the risks involved at thispoint in time.There are no currency positions that would give rise to net currency gains andlosses recognised in the profit and loss account of the Group.14 FINANCIAL INSTRUMENTS (Continued)Interest rate risk profile of financial assets and liabilitiesThe interest rate profile of the Group's financial assets and liabilities were: Floating rate financial assets ‚£ Cash balances 1,206,241 Fair value of financial instrumentsThe Group's financial instruments, which comprise cash and short term depositsare carried at cost, which is also considered to be equivalent to their fairvalue.15 SHARE CAPITAL 2005 Authorised ‚£ 400,000,000 ordinary 4,000,000 shares of 1p each Allotted and fully paid: 64,773,333 ordinary shares 647,733 of 1p each WarrantsThe Company has issued the following warrants to subscribe for ordinary sharesin the Company at a price of 3p per share. Exercisable Exercisable Number from to Directors 15% of the issued share 4 May 2005 3 May 2015 capital Employees 3,000,000 4 May 2008 3 May 2015 16 RESERVESGROUP Share premium Merger Profit and account reserve loss account ‚£ ‚£ ‚£ Shares issued during period 948,750 155,467 - Cost relating to share issues (210,489) - - Loss for the period - - (182,812) ________ ________ ________ At 31 December 2005 738,261 155,467 (182,812) COMPANY Share premium Merger Profit and account reserve loss account ‚£ ‚£ ‚£ Shares issued during period 948,750 155,467 - Cost relating to share issues (210,489) - - Loss for the period - - (175,609) ________ ________ ________ At 31 December 2005 738,261 155,467 (175,609) In accordance with Sections 131 and 133 of the Companies Act 1985, the companyhas not transferred to a share premium account the premium arising on theordinary shares issued to effect the acquisition of Motive Television Limited.Instead the notional premium arising as a consequence of the application of theacquisition method of accounting has been transferred to a merger reserve.17 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSGROUP 2005 ‚£ Loss for the period (182,812) Issues of shares in the period 1,541,461 Closing shareholders' funds 1,358,649 18 RECONCILIATION OF OPERATING LOSS TONET CASH OUTFLOW FROM OPERATING ACTIVITIES ‚£ Operating loss (204,150) Amortisation of 16,355 goodwill Depreciation of 3,797 tangible fixed assets Decrease in stocks 1,010 Increase in (88,009) debtors Increase in 134,047 creditors _______ Net cash outflow (136,950) from operating activities 19 ANALYSIS OF NET FUNDS At 31 Cash flow Dec 2005 Net funds ‚£ ‚£ Cash in bank 1,206,241 1,206,241 and in hand 20 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 ‚£ Increase in 1,206,241 cash ________ Movement in 1,206,241 net funds in the period Opening net - funds ________ Closing net 1,206,241 funds 21 ACQUISITIONSThe Group acquired 100% of the issued share capital of Motive TelevisionLimited on 11 May 2005. The book values equate to the fair value at 11 May2005. The book and fair values at date of acquisition at the exchange ratesruling on that date were as follows:‚£ Tangible fixed assets 1,626 Stocks 4,195 Debtors 33,277 Bank balance 48,849 Creditors (91,662) _______ Net liabilities acquired (3,715) Goodwill 257,314 _______ Consideration 253,599 Consideration satisfied by: Shares issued 233,200 Cash outflow in respect of professional 20,399 fees _______ 253,599 Motive Television Limited earned a profit after taxation of ¢â€š¬121,611 in theyear ended 30 November 2004. The summarised profit and loss account for theperiod from 1 December 2004 to 10 May 2005 shown on the basis of accountingpolicies which applied both before and after acquisition and translated at thesame average rate of exchange applied in translating results for the periodsince acquisition were as follows. There were no other recognised gains andlosses apart from those reflected in the profit and loss account. ‚£ Turnover 128,154 ______ Operating loss (69,694) ______ Loss before taxation (70,644) Taxation 2,340 ______ Loss after taxation (68,304) 22 RELATED PARTY TRANSACTIONSThe Company has taken advantage of the exemption in Financial ReportingStandard Number 8 from the requirement to disclose transactions with groupcompanies on the grounds that consolidated financial statements are prepared.The company entered into the following transactions in which certain directorshad an interest:Martini Media Limited, a company associated with M J Pilsworth receivedpayments totalling ‚£8,079 in respect of offices facilities provided by him tothe company.Carysfort Limited, a company associated with I C Buckley received paymentstotalling ‚£10,250 in respect of the provision of office services andfacilities.I C Buckley is also a director of Dowgate plc, the ultimate holding company ofCFA Limited, the nominated adviser to Motive Television plc which received feesof ‚£70,223 during the period under review.M G O'Rourke and L J Ryan are shareholders and directors of Setanta Sport (Irl)Limited to which there is an outstanding creditor of ¢â€š¬42,202. No interest ispayable on this creditor and there is no date set for its repayment. SetantaSport (Irl) Limited were also the vendors of Motive Television Limited, theacquisition of which is described in note 21.A subsidiary company of Setanta Sport (Irl) Limited provides office facilitiesin London. The total rents paid for these facilities in the period was ‚£7,779.23 POST BALANCE SHEET EVENTSOn 1 March 2006 the company conditionally completed the acquisition of 49.9% ofthe issued share capital of Brown Eyed Boy Limited ("BEB") for a totalconsideration of ‚£250,000, of which ‚£135,000 is to be settled in cash and thebalance by the issue of new Motive shares to be valued at the greater of 3p pershare and the average middle market price of the shares in the five dayspreceding completion. Although this will initially result in a minority stake,the directors consider that they will have effective control through an optionto acquire the remaining shares in the company and will thereby effectivelyhave actual dominant influence of the Board. A balance sheet at 1 March 2006 isnot available, but the Board currently estimate that the acquisition will giverise to goodwill on consolidation of in the region of ‚£290,000, includingprofessional costs connected to the acquisition. This acquisition also triggersthe payment of directors' remuneration that was conditional upon the completionof the Company's first acquisition as explained in the Directors' RemunerationReport but not the success fee payable to I C Buckley which is payable only onthe completion of an acquisition introduced by him.Completion of the transaction is conditional upon the admission of theconsideration shares to trading on AIM taking place on or before 15 March 2006.The Company has a call option to acquire further shares at any time for thegreater of ‚£250,000 and the proportion of eight times the average earningsbefore interest and taxation of BEB for the three financial years preceding thenotice to exercise being given, attributable to the further shares acquired.The maximum price payable shall however be ‚£1.6 million The option price willbe satisfied by the issue of further shares in the company calculated on thesame basis as the original acquisition as referred to above. If the vendor ofthe shares would thereby acquire an interest of more than 29.9% in the Companythe balance will be settled by way of loan notes.The holder of the remaining BEB shares has a put option to sell the remainingshares on the same terms as set out above at any time within three months ofthe filing of the annual accounts of BEB, provided that in the month prior toexercise the total value of BEB's fixed and current assets exceeded itsliabilities.24 AVAILABILITY OF ACCOUNTSCopies of the Report and Accounts for the period ended 31 December 2004 arebeing sent to shareholders. Further copies will be available from the Company'sregistered office, which is Windsor House, Barnett Way, Barnwood, GloucesterGL4 3RT-18-ENDMOTIVE TELEVISION PLC