Motive Television Plc Regulatory News (MTV)

RNS Number : 4747O

Motive Television PLC

30 June 2010

 

30 June 2010

 

Motive Television Plc

Preliminary results for the year ended 31 December 2009

 

 

Motive Television Plc, the digital television services and solutions group, announces its preliminary results for the year ended 31 December 2009.

 

Highlights

 

·; Following a strategic review in January 2009, the company exited the majority of its television production businesses and has moved into the supply of solutions for digital broadcasters.

 

·; Entered into global distribution agreement for BesTV® technology.

 

·; Group turnover fell by 19 per cent to £3,307,048 (2008: £4,074,480) compared with a 30 per cent fall across the industry.

 

·; Gross profit fell by 34 per cent. to £511,958 (2008: £777,137).

 

·; Loss for the year narrowed to £1,008,249, an improvement of 38 per cent. compared to the loss of £1,622,507 achieved in 2008.

 

·; Cash at bank and in hand at the year end was £220,123 (2008: £731,040 net of overdrafts).

 

Commenting on the results Motive's Chairman, Mick Pilsworth, said:

 

"Following the strategy review conducted in January 2009, and our decision to reducethe Group's exposure to the television production business, we are now focusing ourresources on the development of the digital technology business that weestablished midway through the year.

 

"Over the next 12 months we will be working to ensure the success of the BesTV® brand whilst seeking further opportunities to invest in new technologies that we believe will generate shareholder value as the broadcasting industry continues to come to terms with the new challenges it faces.

 

"It has been an extremely difficult period for the broadcast industry but with our new strategy and Board now in place we believe that Motive is well placed to take advantage of the opportunities that these challenging times offer."

 

Contact:

 

Motive Television plc	T:020 3086 9430
Mick Pilsworth
Merchant John East Securities Limited (Nomad)	T: 020 7628 2200
Simon Clements
Hybridan LLP (Broker)	T: 020 7947 4350
Claire Noyce
Bishopsgate Communications	T: 020 7562 3350
Gemma O’Hara/Siobhra Murphy

 

 

 

MOTIVE TELEVISION PLC

 

CHAIRMAN'S STATEMENT

 

I am pleased to announce the results for Motive Television PLC ("Motive" or "the Group") for the year ended 31 December 2009.

 

Business environment

 

The economic recession in the UK continued to severely impact the television industry in 2009, with advertising revenue down 30 per cent year on year. All of our main clients cut their budgets and asked us to limit expenditure. The BBC also continued to cut budgets as it executed its programme of downsizing. In the Board's opinion, this was undoubtedly the most difficult year ever faced by the television production industry in the UK.

 

Perhaps more importantly over the longer term the television industry faces difficulty as the impact of new media starts to have a financial impact on the sector. A combination of increased competition for advertising revenue and the need for investment in new technolgy creates what, in the Directors' opinion, will be the most challenging environment for the sector in the history of broadcasting.

 

Whilst the business enviroment is difficult, any period of change creates opportunities and whilst the risks are high, the rewards for those who are successful are likely to be high.

 

Business review and principal activities

 

Despite making cuts in the Company's overhead base of approximately 30 per cent at the beginning of the year, during the first quarter it became clear to the Board that the scale of the expected losses for the year was going to be too great to sustain and a strategic review was instigated. As a result of the strategic review it was decided to cease investment in the television production business and to seek to identify new business opportunities within the television broadcasting sector where the Board believed acceptable returns could be achieved.

 

As previously announced, the Board identified opportunities to move away from television production into digital terrestrial television ("DTT") technology. In June the Company appointed Leonard Fertig as CEO to lead this new initiative. Len brought a wealth of contacts and experience to the Group, as he was involved in subscription and video on demand ("VOD") channel launches in the USA (including A&E, Comedy Central, Request Television and DirecTV). Len was also the co-founder and CEO of Central European Media Enterprises Limited ("CME"). Len took CME from a start-up to a billion-dollar NASDAQ-listed broadcasting company with operations in eight countries covering 110 million viewers.

 

Trading in our legacy television production companies during the period under review was challenging, with commercial broadcasters experiencing falling advertising revenues. The Group's only production orders in the UK at that time were coming from the BBC.

 

Accordingly, the Group's two subsidiaries Rumble TV Productions Limited and Luminous Productions Limited were closed and in January of this year Scarlet Television Limited was placed into administration. Yesterday the sale of Brown Eyed Boy Limited to Shine Group Limited for £204,000 (before costs of sale) was announced. Motive Television Limited, the Dublin based subsidiary, benefits from long-term sports production contracts and it is intended that this company will be retained in the short to medium term.

 

Despite the difficult environment our production businesses enjoyed some success -

 

·; The second series of Brown Eyed Boy's sitcom, "How Not To Live Your Life", enjoyed a successful run on BBC3 and was recommissioned for a third series. In addition the BBC commissioned "Down and Out", starring Jocelyn Jee Esien.

 

·; Scarlet TV produced "Forty Years of Delia", "Delia Smith Christmas Special" and "When Loving Your Child is not Enough" for the BBC. The "Delia" series was very successful and rated one of top BBC2 series during the period it was transmitted and "When Loving Your Child is not Enough" has been nominated for a BAFTA.

 

·; Motive Television in Dublin produced 10 live GAA matches and signed a contract for the production of 39 Champion's League and Europa Cup matches, both for TV3. Since the year-end the company has been commisioned by RTE to produce a sports documentary on the history of Lansdowne Road, the home of Irish rugby, "on Hallowed Ground"; and by Setanta Sport to produce a sports documentary on the Irish racegoers at the Cheltenham Fesitval, "Pilgrims: The Irish at Cheltenham". Production is about to commence on the third year of live GAA coverage for TV3 and the outlook for the rest of the year is positive.

 

The Group's first transaction in the DTT sector was securing the global distribution rights, except for Spain and Italy, for a DTT software platform called BesTV®. BesTV®, was created by Adecq Digital S.L. and its patented software allows DTT broadcasters to offer VOD, pay-per-view ("PPV") and catch-up TV using their DTT bandwidth, with no return path required. Already in use in Spain and Italy, BesTV® is now well-placed to be rolled out globally, leveraging the extensive international contacts of the new management team. The Group has already commenced discussions with a number of major broadcasters in Central Europe and the USA. A technical pilot scheme is underway at Nova TV in Prague, Czech Republic. Nova TV is part of CME, the biggest broadcaster in Central Europe, and the contract for the pilot allows for the extension of the service to all of CME's 110 million TV homes. In the USA the group is planning technical pilot schemes for major broadcasters in two markets.

 

We have also identified a number of small, entrepreneurial digital technology companies that would benefit from being part of a larger group and we anticipate making further acquisitions in this space in the future.

 

Corporate strategy

 

Following the decision to reduce the Group's exposure to the television production business, the Group has focussed all of its resources on the development of the digital technology business established midway through the year.

 

The sales cycle for BesTV® is long (approximately six months), given the need for senior executives at broadcasters both to review the technical specifications and also to design, create and test the consumer proposition. For many broadcasters, this is their first venture into video on demand and whilst Motive provides support and services, the launch of VOD to consumers requires several months of planning. Accordingly we expect to start earning revenues from BesTV® implementations later this year.

 

The Board's focus over the next 12 months will be to work to ensure the success of the BesTV® brand whilst seeking further opportunities to invest in new technologies that we believe will generate shareholder value as the broadcasting industry continues to come to terms with the new challenges it faces.

 

M J Pilsworth

30 June 2010

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
		2009		2008
		£		£
Revenue		3,307,048		4,074,480
Cost of sales		(2,795,090)		(3,297,343)
Gross profit		511,958		777,137
Administrative expenses - normal		(1,458,159)		(2,035,706)
Administrative expenses - exceptional		(73,349)		-
Goodwill impairment		10,000		(258,394)
Operating loss		(1,009,550)		(1,516,963)
Financial income		784		29,188
Financial costs		(401)		(3,123)
Finance costs - net		383		26,065
Loss before tax		(1,009,167)		(1,490,898)
Tax expense		918		(131,609)
Loss and total comprehensive income for the year attributable to owners of the Parent company		(1,008,249)		(1,622,507)
Loss per share - basic and diluted	3	(0.29)p		(0.60)p

 

 

STATEMENT OF FINANCIAL POSITION
as at 31 December 2009
		2009		2008
		£		£
Non-current assets
Goodwill		380,000		401,789
Plant and equipment		22,278		41,336
Deferred tax asset		33,570		32,652
Total non-current assets		435,848		475,777
Current assets
Inventories		3,246		16,215
Trade and other receivables		464,667		379,644
Cash at bank		220,123		784,747
Total current assets		688,036		1,180,606
Total assets		1,123,884		1,656,383
Equity
Issued share capital		1,319,958		1,319,958
Share premium		2,110,217		2,110,217
Merger reserve		155,467		155,467
Retained earnings		(3,578,614)		(2,672,365)
Total equity		7,028		913,277
Current liabilities
Trade and other payables		1,116,856		689,399
Bank overdraft		-		53,707
Total current liabilities		1,116,856		743,106
Total equity and liabilities		1,123,884		1,656,383

 

STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
	Notes	2009		2008
		£		£
Cash flows from operating activities
Cash absorbed by operations	2	(502,586)		-(1,180,382)
Net interest received		383		26,065
Net cash absorbed by operating activities		(502,203)		(1,154,317)
Cash flows from investing activities:
Payments to acquire tangible fixed assets		(8,714)		(44,602)
Net cash used in investing activities		(8,714)		(44,602)
Cash flows from financing activities:
Proceeds from issue of shares		-		878,782
Proceeds from disposal of tangible fixed assets		-		10,516
Net cash generated from financing activities		-		889,298
Net decrease in cash and bank balances		(510,917)		(309,621)
Cash at bank and bank overdrafts
at beginning of year		731,040		1,040,661
Cash at bank and bank overdrafts at end of year		220,123		731,040

 

 

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
	Share	Share	Merger	Retained
	capital	premium	reserve	earnings	Total
	£	£	£	£	£
Balance at 1 January 2008	1,172,480	1,378,913	155,467	(1,113,858)	1,593,002
Loss for year	-	-	-	(1,622,507)	(1,622,507)
Cost of share based awards	-	-	-	64,000	64,000
Issue of shares for cash	147,478	731,304	-	-	878,782
Balance at 31 December 2008	1,319,958	2,110,217	155,467	(2,672,365)	913,277
Loss for year	-	-	-	(1,008,249)	(1,008,249)
Cost of share based awards	-	-	-	102,000	102,000
Balance at 31 December 2009	1,319,958	2,110,217	155,467	(3,578,614)	7,028

 

1 GENERAL INFORMATION

 

Motive Television plc and its subsidiaries provide services to the television industry.

 

This preliminary announcement is authorised for issue by the Board on 29 June 2010. The financial information has been prepared in accordance with International Financial Reporting Standards adopted by the European Union and applying the same accounting policies and bases of calculation and estimation as applied in the previous annual financial statements.

 

Going concern assumption

At 31 December 2009 the Group had very limited liquid resources available to it as a consequence of trading losses incurred during the year and would have been unable to continue trading had it not raised further cash resources of £400,000 from a Placing of its ordinary share capital on 11 February 2010. This provided sufficient funds to meet immediate ongoing operational liabilities and overheads. As set out below Company has incurred significant costs on investigating and pursuing certain investment opportunities, such costs absorbing most of the new cash resources. Prior to incurring such costs the directors received verbal assurances from certain investors and shareholders that if such investment opportunities were not concluded and the cost of investigating and pursing such opportunities resulted in a shortfall in required funding they would ensure that funding would be made available to enable the company to continue to trade. These assurances have subsequently been reconfirmed verbally and on the basis of the assurances this preliminary announcement of results has been prepared on the basis that the Company is a going concern.

 

The ability of the operating subsidiary company to continue trading will depend on whether it is successful in obtaining commissions on numerous proposed programmes that are currently with commissioning editors of a number of broadcasting companies. If the company is not successful in winning sufficient new commissions within various periods within the next twelve months then the company is likely to require the injection of further funds to finance operating overheads.

 

The directors have carefully considered the Group working capital position and concluded that unless new commissions are won in the short term there is a significant risk that it will have insufficient resources to finance the continuation of the activities of the currently active subsidiary company. The situation continues to be carefully monitored and a strategy has been put in place for the operating subsidiary such that operating activities will be terminated if sufficient new commissions are not won in order to meet ongoing operating overheads.

 

If it were necessary to close the operations of any of the subsidiary company or if the funding required to replace the shortfall in required funding is not received, provisions would be required for costs arising on discontinuance and closure, against the carrying value of goodwill in the Group financial statements, and the carrying value of investments and subsidiary company debt in the accounts of the Parent Company.

 

Post balance sheet events

On 2 February 2010 Scarlet Television Limited entered into Administration and has now entered into a Company Voluntary Arrangement ("CVA"). Once the conditions of the CVA have been satisfied, the directors intend to strike the company off; as a consequence the Parent Company ceased to exercise control of this subsidiary company. The net liabilities of Scarlet Television Limited calculated on a discontinuance basis (as explained in note 2) at 31 December 2009 were £483,802 (including indebtedness to group companies of £321,888). The Company incurred further trading losses subsequent to 31 December 2009 which will be reflected in the financial statements for the year ended 31 December 2010. As a consequence of the loss of control Scarlet Television Limited will not be consolidated in future financial statements and a notional profit on disposal equal to the total of the net liabilities at 31 December 2009, excluding debts owing to group companies which have become irrecoverable, and the trading loss subsequent to that date will be reflected in the financial statements for the year ending 31 December 2010. The net assets of the Group will consequently be enhanced by this amount.

 

On 11 February 2010 the Company issued 224,000,000 new shares at a price of 0.2p per share by way of a Placing which raised £448,000 of new equity capital for the Group. Of this £18,000 was applied in settling unpaid directors' remuneration and £30,000 by way of settlement of advisers' fees in the form of shares. The issue therefore generated a further £400,000 in new cash resources. Since that date the Company has incurred significant costs on investigating and pursuing certain investment opportunities, such costs absorbing most of the new cash resources. The company has not yet been able to conclude these opportunities.

 

On 29 June the sale of the Group's investment in its subsidiary company Brown Eyed Boy Limited was completed, sale proceeds before costs relating to the sale amounting to £204,000.

 

2 CASH ABSORBED BY OPERATIONS

 

		2009		2008
		£		£
Operating loss		(1,009,550)		(1,516,963)
Depreciation of plant and equipment		27,772		49,920
Goodwill impairment - ordinary		(10,000)		258,394
Goodwill impairment - exceptional		31,789		-
Decrease / (increase) in inventories		12,969		(16,215)
(Increase) / decrease in receivables		(85,023)		75,211
Increase / (decrease) in payables		427,457		(94,729)
Share based payments		102,000		64,000
Net cash outflow from operations		(502,586)		(1,180,382)

 

 

3 LOSS PER SHARE

 

The loss per share is based on a loss for the year attributable to equity holders of the Parent Company of £1,008,249 (2008: £1,622,507) and the weighted average number of ordinary shares in issue for the year of 342,499,463 (2008: 272,498,662).

 

The exercise of the outstanding options and warrants would reduce the loss per share and hence have an anti-dilutive effect.

 

There are 114,262,379 (2008: 70,874,919) shares that could potentially be issued under the terms of options and warrants that will potentially reduce future earnings per share.

 

4 STATUS OF THIS ANNOUNCEMENT

 

The financial information is unaudited and does not constitute statutory accounts, but has been extracted there from. The financial statements for the year ended 31 December 2009, on which the auditors gave an unqualified opinion, have not been filed with the Registrar of Companies. The auditors have reported their opinion on the financial statements for the year ended 31 December 2009 today. The auditors gave an unqualified opinion. Their report did not contain a statement under Section 498(2) (accounting records or returns inadequate or accounts or directors' remuneration report not agreeing with records and returns), or Section 498(3) (failure to obtain necessary information and explanations). The auditors report included the following paragraph by way of emphasis of matter -

 

"In forming our opinion on the financial statements we have considered the adequacy of the disclosures made in note 3 to the financial statements concerning the Company's and the Group's ability to continue as a going concern. The ability of the Group to continue trading is dependent upon it securing further funding from certain investors and shareholders. If such funding is not received in the very near future the Group will not have sufficient funds to enable it to continue trading. Furthermore in the case of the currently active subsidiary company; unless new commissions are won in the short term to generate revenues there is a significant risk that insufficient resources will be available to finance the continuation of its activities. These conditions, along with the other matters explained in note 3 to the financial statements, indicate the existence of material uncertainties which may cast significant doubt about the Company's and the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company and the Group are unable to continue as going concerns."

 

5. DIVIDEND NOTE

 

The Directors will not be recommending the payment of a dividend.

 

6. COPIES OF THE DOCUMENT

 

Copies of the Report and Accounts will be available from the Company's registered office, 21-25 St Anne's Court, London W1F 0BJ and the Company's website http:// www.motivetelevision.co.uk.

 

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