Zinc Media Regulatory News (ZIN)

5 Dec 2006 07:01

Ten Alps PLC05 December 2006 Ten Alps Plc Interim results Ten Alps Plc ('Ten Alps' or the 'Group') announces its interim results for thesix-month period to 30 September 2006. Ten Alps produces TV, internet video andspecialist media. Financial • Revenues of £33.6m, up 53% on same period (2005: £22.0m) • Cash up 77% to £13.2m year-on-year (2005: £7.5m) • EBITDA up 22.3% to £2.2m (2005: £1.8m) • Basic EPS up 20.4% to 1.30p (2005: 1.09p) • PBT stable at £1.23m, after £283k goodwill amortisation and interest charge of £300k • Significant Internet TV development costs were fully written off to P&L, and matched targets set out in June 2006 (see separate RNS re launch of Public TV) • Underlying PBT growth of 99%. (Comparative 2005 figures included a one-off £608k public sector KPI bonus relating to 2004-5.) • See finance director section for further details. Current Trading • On track for full year to 31 March 2007; revenue growth of at least 40% • Ten Alps is now factoring advertising revenues from Public TV for the first time into its outlook for 2007-8 • Ten Alps Publishing, specialist media division (acquired as McMillan Scott, March 2006) is integrated and on track to exceed our expectations. • 300-fold increase in number of clients to 47,000, with the Group's largest client's share of revenue dropping from 45% to 25% Operational Progress Ten Alps now has 507 staff, in three divisions. Broadcast (TV and Radio production) • Entry into formatted entertainment TV through Channel 4 series 'Harvey Goldsmith Project', on air from Feb 2007 • Continuing factual output with 33 TV and 21 Radio productions during period (some of them series) • Current highlights include various Channel 4 'Dispatches' and docudramas for Discovery US such as 'USS Indianapolis' and 'Sago Mine'. • Teachers' TV has reached 1400 programmes online Digital (Internet TV and commercial websites) • Public TV launched today at www.public.tv. (See separate RNS) • Specialist internet TV channel projects under discussion around Ten Alps client publications • 65 commercial websites currently managed, and growing • Group-wide internet advertising server nearing completion Communications (Commercial and specialist media) • Ten Alps Publishing now produces around 400 specialist titles, with a net increase of 12 in clients during period). • Ten Alps Live producing Ten Alps branded conferences and other events, around the same commercial client base • Acquisition of specialist media company Cameron Publishing (November 2006.) For further information please contact: Paul McManus020 7493 3716 or 07980 541 893paul.mcmanus@parkgreenmedia.com Alex Connock (CEO) & Nitil Patel (Finance Director)C/o Moira McManus020 7878 2311moira@tenalps.com www.public.tv www.tenalps.com TEN ALPS PLCINTERIM RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2006 Chairman - Brian Walden Ten Alps has a five-year plan to create a large media business migrating TV andniche media ('the long tail') to internet video - a plan we put in place in June2006 at the end of our successful first five years on AiM. The rest of 2006 has therefore been about growth, investment and change, in theimplementation of which we have been impressed by the enthusiasm of our staff. Chief Executive - Alex Connock Ten Alps has invested in internet video and other digital projects within thefinancial and delivery targets we planned . We believe that writing off thesedevelopment costs as they are incurred may affect short-term profitability butis prudent. Compared to last year, Ten Alps is significantly larger and more integrated,with around double the staff (including 250 advertising sales people), some47,000 customers, and new ventures from entertainment TV to internet videoaggregation. Ten Alps has focussed on its branding, with a view to create more impact, and ithas strengthened management and enhanced its financial and IT systems. Financially, our track record demonstrates unbroken growth at an average,compound, annual rate over six years of 53% in revenues and 22% in EBITDA. Aiming to maintain that, we will keep making calculated investments. Some willbe internal, which will at times mean worthwhile trade-offs against short-termprofits growth. And some will be acquisitions, on which we are havingdiscussions. Operational detail Ten Alps' 507 staff are located in London (217), Manchester & Macclesfield(204), Gateshead (48), Fareham (20), Edinburgh (14) and Derby (4). Ten Alps is bigger in specialist and digital media than it is in TV production(even without including Teachers' TV in the specialist category). Within thesector of TV producers that it was defined by historically, Ten Alps has aunique business model: to produce and most importantly, own content across thefull spectrum of media, and migrate everything it does ultimately towardsinternet video. Ten Alps now spans high end television (mostly factual, but also developingentertainment formats), through digital television (perhaps best described as 'mass niche', catering to large constituencies, such as those in the teachingprofession) into specialist internet, publishing and TV ('niche niche', such asanaesthetists.) The more diversified Ten Alps can be along that spectrum, the less vulnerable itwill be to the changing fashions which have traditionally made TV productionhigh risk. Significant progress has been made this year. The number of clientsserved is over 300 times. bigger and the largest client now represents 25% ofturnover, compared to 45% in 2005-6. Digital Division Ten Alps' overall digital strategy is to create a scaleable network of videointernet sites around the wide customer base it already has in specialist mediasectors such as health, transport and business. The principle is that there is a vast amount of video entertainment on theinternet, but fewer propositions bringing together professional training,government and public sector video - all attractive markets. Public TV, a video aggregator which has today gone online (in beta version)provides the launchpad to successfully implement Ten Alps' digital strategy.Ten Alps plans to fund these sites through advertising sales on the samebusiness model that sustains Ten Alps' 400 specialist publishing titles. Ten Alps incurred significant development costs in this period to create PublicTV, which can now be cost-effectively replicated and rolled out for other nichesectors. Those development costs are in line with budgets and were written offin full to the profit and loss account. Commercial discussions with a number oforganisations about niche internet TV work have good potential to deliver viableprojects in the next six months. Meanwhile Ten Alps has three commercial website production operations, currentlymanaging around 65 websites, with more under discussion. In addition, theCommunications Division is implementing the creation of online versions of itspublications. Broadcast TV & Radio Ten Alps has made a breakthrough into formatted entertainment TV with sixepisodes of the in-production 'Harvey Goldsmith Project' for Channel 4,accompanied by an E4 series to go out concurrently. Ten Alps has already hadinternational format sale discussions around this and other properties, and aimsto make a significant push in entertainment in 2007. Ten Alps' core TV activity remains factual. For the US market, significantdocudramas are in production on 'USS Indianapolis' and 'Sago Mine', and in theUK a series on Tony Blair for Channel 4 is nearing delivery, whilst a major BBCseries on Iran is in development (all from Brook Lapping.) Ten Alps has puttogether two of its factual companies (Blakeway and 3BM) under the single brandof Ten Alps Blakeway/3BM . and they are producing various Channel 4 Dispatchesprogrammes, documentaries for Channel 4 (eg 'Gordon Brown', 'God is Green') andBBC4 ('Buchan') plus existing and new docudrama projects ('Zero Hour') forDiscovery Europe. There is increasing demand for factual formats, and Ten Alpsis reacting accordingly. By contrast, Ten Alps' Drama has not been successful thus far, and investmenthas been written off on an ongoing basis. An appealing slate of projects withbroadcaster interest has been developed and the project is continuing for atleast the next six months, with no revenues factored into group projections.The board is aware, from the experience of other independent producers, that adrama business can take time to bring fully on stream, and will continue tomonitor the situation closely. Meanwhile in Radio, Ten Alps continues to produce programmes for BBC Radio 5Live, Radio 2 and Radio 4, with revenues in this area just slightly ahead oflast year, though still only around 1.5% of the group as a whole. Digital TV Teachers' TV continues to establish itself with its educational stakeholders andthe wider media landscape. The autumn launch showcased a varied and high profile slate of new programmesincluding a three part series featuring Cherie Blair, a major series followingthe building of a school over one year, celebrity interviews including BorisJohnson, David Blunkett teaching poetry, a late night satirical talk show and astrand of programmes shot in schools around the world. A new and variedpeak-time schedule was introduced and is published in the Guardian everyTuesday. From the end of September the channel secured a daily two hour slot from 11am to1pm on Freeview. Daytime exposure to the growing Freeview audience should helpto extend the channel's reach. In October the website was re-launched with a radical new look and majorinfrastructure improvement maximising navigation and access to the 1400programmes now permanently available on broadband. The Guardian continues to podcast Teachers' TV programmes to a growing audienceand the channel's own news podcasts are growing in popularity. In the next monththe channel will launch a Video on Demand service via the ntl cable network. Ten Alps' wholly owned subsidiary, Brook Lapping, owns 70% of Education DigitalLimited, which together with Educational Digital Management Limited, providesthe Teachers' TV Channel. Under the current contract, which runs to mid 2008,a retender process may take place during 2007. Communications Ten Alps Communications brings together Ten Alps' commercial client-facingactivities. Within this division, renaming McMillan-Scott as Ten AlpsPublishing brings an increase in the commercial traction the Ten Alps brand canachieve. (The implementation process of rebranding the three offices as TenAlps Publishing is well underway and is expected to complete in January 2007.) The 250 sales staff will be rebranding on publications and events which willenable Ten Alps to put its name out into the commercial economy from January2007. This was a major undertaking. The Ten Alps team has been greatlyenhanced with a number of new talented managers, and both teams consider theacquisition of McMillan-Scott to have been an operational success. Under the unified brand, the Communications operations will now work together tooffer increased services - a joined-up approach which will potentially deliverincremental margin opportunities and expansion. Ten Alps Publishing As well as being the platform from which to build niche, web-based media, there-branded McMillan-Scott business is a solid specialist publishing andadvertising sales operation which has delivered growth in the period. Revenue growth has been delivered through increased trade event activity, and bystrong business development success, with a net 12 new contract publishingclients coming on board in the period. Client wins include new publishingservices to The Royal Yachting Association, The Association Of Optometrists andadvertising sales services for the BBC staff publication, Aerial. Ten AlpsPublishing - as it will be known from January - now publishes circa 400 titlesper annum. These positive trends and initiatives combined with underlying advertisingrevenues helped to deliver an annual growth in revenues of 7.8% year on year.Meanwhile the shift to fee based publishing income and improved product costcontrols saw margins strengthen in the Publishing operation to 31.5%. Ten Alps Publishing will increasingly bring its titles online over the comingmonths, facilitating incremental sales growth and product cost savings. Inaddition Public TV can allow increased marketing of publications and theopportunity to sell wider communication packages to its clients and advertisers. As announced on 7 November 2006, Ten Alps acquired the Gateshead-basedspecialist media company Camerons Publishing for an initial consideration of£400,000. Camerons Publishing will be fully integrated and rebranded as part ofTen Alps Publishing in April 2007, and we will use this Gateshead operation toexpand the existing Manchester office to provide increased advertising salesopportunities. Ten Alps Live The event management business now spans music (Metro Weekender) as well ascorporate events (BP, EMI) and live TV coverage (including Scottish PartyConferences for the BBC). Having moved into the London offices of Ten Alps Publishing, the events team areworking to produce new trade events, of which ten new shows are planned over thenext year, focussed on infrastructure, urban regeneration, security andtransport. There is a synergy here with Public TV. The aim is for repeatablesponsorship and exhibitor revenues from these shows. Ten Alps RMA / Ten Alps MTD The marketing agency businesses have seen revenues flatten during this periodwith the loss of the creative aspect of Stannah (though we have retained itsmedia buying operations) partially offset by new client wins. Reductions inthe cost base in both operations have left projected performance collectivelyabout £0.1m down against the prior year. However it is envisaged that positiveoverlap with the digital, publishing and events operations will complement theexisting business development initiatives within these operations in the comingmonths. Finance Director - Nitil Patel Financial analysis The six months to 30 September 2006 was a period of investment and profitsstability. Group turnover grew by 52.7% to £33.6m (2005: £21.99m) and gross profitsincreased by 83.7% to £9.6m (2005: £5.23m). Gross margins increased from 23.8% in the prior interim period to 28.6% for theperiod under review, primarily due to the addition of Ten Alps Publishing. As aconsequence administrative expenses have increased as a percentage and nowrepresent 23.1% of turnover (2005: 15.9%). EBITDA or headline profit, a key measure used by the board, increased by 22.3%to £2.17m (2005: £1.77m) even after a significantly increased level ofinvestment, relating to the strategic development of Ten Alps Digital, Public TVand (less successfully) Ten Alps Drama. The development costs relating to theseactivities were written off in full directly to the profit and loss account.EBIT was also up to £1.53m (2005: £1.16m) illustrating strong growth inunderlying earnings. The amortisation charge for the period was £283,000 (2005: £397,000) and wascalculated on acquisitions with a useful economic life of 10 years. The goodwillassociated with Ten Alps Publishing (McMillan-Scott) has been assessed on anindefinite useful economic life and therefore no amortisation has been providedfor in that respect. A full explanatory note will be included in the statutoryaccounts for the year to 31 March 2007. The profit before tax was stable at £1.23m (2005: £1.23m), reflecting theinterest charge of £ (300,000) (2005: £63,000) on the debt outstanding as at 30September 2006. The retained distributable profit and loss account reserves are now at £1.69m(2005: £0.84m). The Group continues to maintain a strong balance sheet and as at 30 September2006 had cash at bank of £13.18m (2005: £7.46m). The cash balance is £1.33mlower than the 31 March 2006, reflecting cash outflows on acquisitions andreduction of loans due to the bank by £1.2m (2005: Nil). As at the period end the Group had outstanding loans of £9.65m (2005: £0.71m) ofwhich £8m (2005: £0.64m) is due after more than one year. Profit Growth The Group's profitability before tax was stable, with only 0.4% growth, however, when adjusting for development costs written off during the period, and the one-off bonus of £608,000 relating to the previous year (2004-5), Group profit before tax grew by 99%. (In the year ended 31 March 2006, a Key Performance Indicator bonus was received relating to a period which included nine months from the 2004-5 financial year. Removing the effect of this bonus gives a more appropriate comparative purely for 2005-6. This is also illustrated by the minority interest line, which is substantially reduced in this half year (£112k) compared to last (£270k).) Taxation The tax charge for the period is £447,000 (2005: £475,000) at an effective rateof 29.1% (2005: 26.5%) reflecting the fact that Ten Alps plc has now utilisedmost of its tax losses. Earning per share Basic earnings per share in the period was 1.30p (2005: 1.09p), an increase of18.9%, and was calculated on profits after taxation of £672,000 (2005: £485,000)divided by the weighted average number of shares in issue during the period of51,830,413 (2005: 44,458,330). The number of shares in issue increased as a result of the placing carried outat the time of the acquisition of McMillan-Scott, when 7 million new shareswhere issued. The remaining changes are due to employees exercising shareoptions during the period. Diluted basic earnings per share in the year was 1.26p (2005: 1.07p), anincrease of 17.8%, and is based on the basic earnings per share calculationabove, except that the weighted average number of shares includes all dilutiveshare options granted as if those options had been exercised on the first day ofthe accounting year or the date of the grant, if later. This gives a weighted average number of shares in issue of 53,198,587(2005:45,256,618) reflecting the impact of the outstanding share options as at 30September 2006. The Group has adopted FRS20, which has been reflected in the interims and prioryear in accordance with requirements of the standard. The amounts in questionare shown separately on the face of the profit and loss account. International Financial Reporting Standards (IFRS) The Group will report under IFRS for the year ending 31 March 2008 and has setup a committee to assess the impact of the new standards on the annual report. TEN ALPS PLC CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the period ended 30 September 2006 Six months ended Six months ended Year ended 30 Sept 2006 30 Sept 2005 31 March 2006 Unaudited Unaudited Audited Notes £ '000 £ '000 £ '000 Turnover- continuing operations 33,578 21,988 41,805- acquisitions 406 33,578 21,988 42,211Cost of sales (23,979) (16,763) (32,749)Gross profit 9,599 5,225 9,462 Amortization of goodwill (283) (397) (658)FRS 20 Share-based payment (14) (164) (341)Administrative expenses (7,771) (3,497) (6,895)Total administrative expenses (8,068) (4,058) (7,894) Operating profit- continuing operations 1,531 1,167 1,609- acquisitions (41)Profit on ordinary activitiesbefore interest 1,531 1,167 1,568 Net interest (300) 63 91(payable) /receivableProfit on ordinary activitiesbefore tax 1,231 1,230 1,659 Taxation (447) (475) (819)Profit on ordinary activitiesafter taxation 784 755 840 Equity minority interest (112) (270) (365) Retained profit for the year 672 485 475Basic earnings per share 2 1.30p 1.09p 1.08pDiluted earnings per share 2 1.26p 1.07p 1.06p TEN ALPS PLC CONSOLIDATED SUMMARISED BALANCE SHEET AS AT 30 September 2006 As at As at As at 30 Sept 2006 30 Sept 2005 31 Mar 2006 Unaudited Unaudited Audited £ '000 £ '000 £ '000Fixed AssetsIntangible assets 15,172 3,467 15,718Tangible assets 1,583 1,178 1,611Intangible assets- Investments inProductions - 171 - 16,755 4,816 17,329Current assetsWork in progress 2,190 62 2,662Debtors 11,411 7,585 12,978Bank 13,183 7,456 14,515 26,784 15,103 30,155 CreditorsAmounts falling due within one (22,317) (11,140) (25,005)year NET CURRENT ASSETS 4,467 3,963 5,150 Total assets less current 21,222 8,779 22,479liabilities CreditorsAmounts falling due after one year (7,997) (636) (10,078) Net assets 13,225 8,143 12,401 Capital and reservesCalled up share capital 1,037 892 1,035Share premium account 7,152 3,065 7,127Merger reserve 2,930 2,930 2,930Special reserve 2 2 2Profit and loss account 1,691 839 1,006Shareholders' funds 12,812 7,728 12,100Minority interest 413 415 301 Equity shareholders 13,225 8,143 12,401 TEN ALPS PLC CONSOLIDATED SUMMARISED CASH FLOW STATEMENT For the period ended 30 September 2006 As at As at As at 30 Sept 2006 30 Sept 2005 31 Mar 2006 Unaudited Unaudited Audited £ '000 £ '000 £ '000 Net Cash inflow from operating activities 3 2,037 433 3,644 Return on investments and servicing of (300) 63 (119) finance Taxation (390) - (429) Capital expenditure and financial (326) (281) (387) investment Acquisitions and disposals (1,113) (315) (10,497) Net cash (outflow) before financing (92) (100) (7,788) Financing Issue of ordinary share capital 27 40 3,863 Expenses paid in connections with share 382 issues Capital element of finance lease rentals (67) (6) (14) Loans net (decrease)/increase (1,200) - 10,550 Net cash (outflow)/inflow from financing (1,240) 34 14,781 (Decrease)/Increase in cash (1,332) (66) 6,993 Reconciliation of net cash flow movement to movement in net debt (Decrease)/Increase in cash in period (1,332) (66) 6,993 Change in debt and finance leases 1,267 6 (10,536) Change in net debt resulting from cash (65) (60) (3,543) flows Finance Leases acquired with subsidiaries - (116) Movements in media loans - Exchange adjustments 11 3 (4) (54) (57) (3,663) Net funds at beginning of period 3,468 7,131 7,131 Net funds at end of period 3,414 7,074 3,468 NOTES TO THE FINANCIAL STATEMENTS 1 Basis of Preparation The financial information in this statement does not constitute statutoryaccounts but have been prepared in accordance with the principal accountingpolicies set out in the statutory accounts of 31 March 2006, which remainunchanged other than the adoption of FRS20 Share based payments. The financial information in respect of the year ended 31 March 2006 has beenextracted from the statutory accounts, which received an unqualified auditors'report and have been delivered to the Registrar of Companies. 2 Earnings per share Basic earnings per share in the period was 1.30p (2005:1.09p) based on theprofit on ordinary activities after taxation of £672,000 divided by the weightedaverage number of shares in issue during the period of 51,830,413 (2005:44,458,330). Diluted earnings per share in the year was 1.26p (2005:1.07p) based on the basicearnings per share calculation above, except that the weighted average number ofshares includes all dilutive options granted by the balance sheet date as ifthose options had been exercised on the first day of the accounting year or thedate of the grant, if later. This gives a weighted average number of shares inissue of 53,198,587 (2005: 45,256,618). As at As at As at 30 Sept 2006 30 Sept 2005 31 Mar 2006 Unaudited Unaudited Audited £ '000 £ '000 £ '000For basic earnings per share Profit for the financial period 672,000 485,000 475,000 For adjusted earnings per share Profit for the financial period 672,000 485,000 475,000Add Back: Goodwill Amortisation 283,000 397,000 658,000FRS 20 Share-based payment 14,000 164,000 341,000 Adjusted profit for the financial 969,000 1,046,000 1,474,000period Number of Number of Number of Shares Shares Shares For basic earnings per share 51,830,413 44,458,330 44,554,163Share Options 1,368,174 798,288 1,082,198 For diluted earnings per share 53,198,587 45,256,618 45,636,361 3 Reconciliation of operating profit to net cash inflow/ (outflow)from operating activities As at As at As at 30 Sept 2006 30 Sept 2005 31 Mar 2006 Unaudited Unaudited Audited £ '000 £ '000 £ '000 Operating profit 1,531 1,167 1,568Depreciation 354 212 464Goodwill amortisation 283 397 658Loss/ (gain) on sale of fixed assets (2) - 8Foreign exchange loss/ (gain) on medialoans (11) (3) 4Change in work in progress 472 182 (25)Change in debtors 1,623 (352) (1,546)Change in Creditors (2,227) (1,334) 2,172FRS 20 payments 14 164 341 Net Cash inflow from operating 2,037 433 3,644activities ENDS This information is provided by RNS The company news service from the London Stock Exchange