Zinc Media Regulatory News (ZIN)

9 Dec 2005 13:27

Ten Alps PLC09 December 2005 For immediate release 09 December 2005 Ten Alps plc Interim Results TV production group Ten Alps plc ('Ten Alps') announces its interim results forthe six-month period ended September 30, 2005. Financial results - strong organic profits and revenue growth • Revenues up 84.8% to £21.99m (same period in 2004: £11.9m) • EBITDA increased to £1.94m (2004: £421,000) • Adjusted pre-tax profit increased to £1.79m (2004: £320,000)* • EBIT up to £1.33m (2004: £57,000) • Net profit up to £649,000 (2004: £26,000) • Basic EPS up to 1.46p (2004: 0.06p) • Cash up by 61.5% to £7.46m (2004: £4.62m) * Definition of adjusted profit: profit excluding goodwill amortisation Current trading • Full year results to March 2006 should show continued profits growth, subject to unforeseen events. • TV production slate is strong (see details below in operational section), including a major docudrama for Discovery US about Hurricane Katrina is currently in pre-production, as well as other projects for American broadcasters. Operational headlines - strong growth in factual TV operations • US growth for production subsidiary Brook Lapping. 9/11 docudrama The Flight that Fought Back was the highest-rated programme on Discovery US for the past five years. • 24% of group TV revenues came from international clients (excluding the Teachers' TV channel.) • Launch of Ten Alps Midlands division in Derby with year-round BBC TV politics commission, and other regional productions. • Brook Lapping's Elusive Peace for BBC2/PBS in the US and other major broadcasters worldwide secured the front page lead in The Guardian and The Independent and major coverage in other papers for its revelations of remarks President Bush made about instructions he had received from God. • Other successful shows included Man United's Greatest Goals (Ten Alps TV) and Catherine the Great (Brook Lapping) which achieved high ratings on Sky One and BBC2 respectively. • Programmes coming soon from Ten Alps production companies include: Tsunami: Where was God? for Channel 4 (3BM), The Long War with Niall Fergusson for Channel 4 (Blakeway), Dust to Dust for Channel 4 (3BM), a 9/11 docudrama project for BBC1 (Blakeway co-production), Goering and the Nuremberg Jailer for Channel 4 (3BM), Enlightenment for More 4 (Blakeway), and Summers for BBC2 (Blakeway) • Digital growth. Teachers' TV is a market leader in online TV for teachers, having hundreds of hours of programmes downloadable through broadband. Teachers' TV is operated by an independent consortium, the principal member of which is Brook Lapping, a Ten Alps Company. • Growth in radio production with substantial increase in projects for BBC Radio 4, including the critically acclaimed Lennon - the Wenner Tapes, as well as re-commission of weekly Worricker current affairs programme for BBC Radio 5 Live and strong repeat business at Radio 2 including Classic Singles and the 14th series of The Smith Lectures. Corporate changes • Change of auditor (Oct 2005) to Grant Thornton UK LLP • Addition of broker Collins Stewart Limited as joint brokers with Canaccord Capital (Europe). See separate RNS statement today. • Reorganisation of subsidiaries for greater tax efficiency underway Press contact Peter Binns, Binns and Co. PR 0207 786 9600 Chief Executive : Alex Connock 0207 089 3686 Finance Director: Nitil Patel 07990 578356 www.tenalps.com Chairman Brian Walden "Our prospects for 2006 are exciting, with major new projects and expansionwithin a TV industry which itself is seeing growth, consolidation and newtechnologies. The key to success is pretty simple: making very good programmes. This is true whatever might be the broadcast delivery channel of the day,because you don't need to own the technology or even the channel to make moneyin a digital age. What matters is owning rights in the programmes that make thepublic want to use the technology or watch the channel. For us that can meanputting our programmes on podcast, Sky+, broadband TV, IPTV, digital radio orVideo on Demand. The mantra of 1990s media investment bankers - 'content isking' - is actually coming true, but just a bit late. We are therefore continuing to focus our efforts on editorial quality, fromdocumentaries and talks on BBC Radio 4 to multi-million pound programmes forBBC1 or Discovery US. All of this is down the creative excellence of our staff,to whom we are very grateful." Chief Executive Alex Connock "These results show the value of factual TV production coming through in ourmargins - really for the first time since Ten Alps joined the AIM market - andthe large turnover increases of the past few years converting into profits. Our first set of stock market results was in December 2001. In the four yearssince, the TV production market has expanded due to regulatory changes, andthere has been significant consolidation. During that time, we have also hadhealthy compound growth - in revenues annually of 54%, and in EBITDA of 86%. As we go into 2006 our production slate is strong, we have brought in a newproduction operation since the end of the interim financial period (namely TenAlps Midlands) and we are looking at investments outside the factual genre. We now have a five-year plan for the next stage of Ten Alps, the key points ofwhich are: Entertainment and Drama. We are now looking at going beyond factual TV intoother areas where formats and rights offer opportunities. Through Ten Alps TVwe are working on a number of factual entertainment commissions, which haveformat sales potential. And we are seriously considering drama, building on thesuccess that our companies, such as 3BM TV, have had in docudrama. International sales. Our companies have achieved significant success withEuropean and American customers, and we aim to build on that. There is everypossibility that in 2006 we will consider opening an American office, probablyin Washington, which is where some key customers are, and a good focus for thekind of political programming we make. There is an opportunity to build afactual TV production company of scale in the US. Acquisitions. We have done five deals in the past four years, all for cash. Wewill continue to examine similarly EPS-enhancing acquisition opportunities, bothwithin and beyond the factual TV genre. Rights exploitation - new platforms. We are also looking at DVD and mobilecontent opportunities and aim to firm one or more up in 2006. The goal is tomake the absolute most of the intellectual property we have developed andacquired, which includes some 350 past projects. Digital revolution. Teachers' TV is attracting interest from around the worldas a publicly-funded, quality, niche vocational TV channel, and we will exploreother opportunities in this digital space. Teachers' TV is also a world leaderin broadband TV, with hundreds of hours of material online at www.teachers.tvand the imminent launch of podcasting. We are looking at a number of ways toexploit this technology in other areas of our production business." Finance Director - Nitil Patel Financial analysis "This was a period in which we made progress on margins. Group turnover grew by 85% to £21.99m (2004: £11.9m) and gross profit increasedby 55% to £5.23m (2004: £3.38m) signifying that we were able to deliver greatlyimproved profitability. EBITDA or headline profit, a key measure used by the board, increased by 360.8%to £1.94m (2004: £421,000) reflecting improved conditions in the TV and Eventssectors and the inclusion of the Teachers' TV key performance indicator-relatedPerformance Management Fee ("KPI's".) Profit before tax (PBT) was therefore also very much improved at £1.394m (2004:£72,000), even after a goodwill amortisation charge of £397,000 (2004: £248,000)for the period, which was increased due to an exceptional writedown on our DrParty business. Gross margin has increased from 20.1% in March 2005 to 23.8% in September 2005(although it has decreased from 28.4% in September 2004 to 23.8% in September2005.) Shareholders' funds have increased from £6.80m to £7.73m, reflecting the resultsfor the period under review. The retained distributable profit and loss accountreserves are now at £839,000 (2004: £(16,000)). The Company continues to maintain a strong cash balance and held £7.46m (2004:£4.62m) as at 30 September 2005. The balance is £66,000 lower than at 31 March2005, reflecting cash outflows on deferred earnouts on previous acquisitions anda significant reduction in creditor balances. Profit Growth The interim results reflect the full impact of payments confirmed followingassessment of the KPI's relating to Education Digital Ltd. for the period August2004 to July 2005. Confirmation of this figure was received on December 9 2005. We had accrued for a conservative level of KPI fees as appropriate at 31 March2005. However, the KPI fees actually received exceeded this accrued income, sothere is an extra contribution relating back to the earlier financial period.Investors should bear this in mind when assessing our six-monthly profits goingforward. In future periods, the Company will continue to account for the management feeof 2.5%, which is guaranteed under the Teachers' TV contract. Ourannouncement of year end results next Summer will include a further accrual forTeachers' TV, which will be made on the basis of our internal assessment ofperformance on measurable parameters (such as audience figures, internet trafficand so forth) against the KPI's. This is because the external KPI assessmentfor Teachers' TV for the year to July 2006 will not be confirmed until muchlater that year. Looking at the wider picture across the group, trading is favourable and themarket is expanding. But whilst the results for the six months to 31 March 2006could see profits growth, the rate of growth will not be as radical as we havejust seen." Ten Alps plc Consolidated Profit and Loss AccountSix Months ended 30 September 2005 Six months ended Six months ended Year ended 30 Sept 2005 30 Sept 2004 31 March 2005 (000's) (000's) (000's) Turnover- continuing operations 21,988 11,900 34,753 Cost of sales (16,763) (8,522) (27,755) Gross profit 5,225 3,378 6,998 Amortization of goodwill (397) (248) (569) Administrative expenses (3,497) (3,073) (5,862) Operating profit 1,331 57 567 Profit on ordinary activitiesbefore interest and taxation 1,331 57 567 Net interest receivable 63 15 60 Profit on ordinary activities before tax 1,394 72 627 Taxation (475) (21) (252) Profit on ordinary activitiesafter taxation 919 51 375 Equity minority interest (270) (25) (143) Retained profit for the year 649 26 232 Basic earnings per share 1.46p 0.06p 0.52p Diluted earnings per share 1.43p 0.06p 0.51p Ten Alps plcConsolidated Balance SheetSix Months ended 30 September 2005 As at As at As at 30 Sept 2005 30 Sept 2004 31 Mar 2005 Unaudited Unaudited Audited £ '000 £ '000 £ '000Fixed Assets Intangible assets - goodwill 3,467 3,728 3,658 Intangible assets - investment in productions 171 - - Tangible assets 1,178 887 1,279 4,816 4,615 4,937 Current assets Work in progress 62 303 244 Debtors 7,585 3,961 7,233 Bank 7,456 4,617 7,522 15,103 8,881 14,999 Creditors Amounts falling due within one year (11,140) (6,371) (12,015) NET CURRENT ASSETS 3,963 2,510 2,984 Total assets less current liabilities 8,779 7,125 7,921 Creditors Amounts falling due after one year (636) (301) (737) Net assets 8,143 6,824 7,184 Capital and reserves Called up share capital 892 883 887 Share premium account 3,065 2,999 3,030 Merger reserve 2,930 2,930 2,930 Special reserve 2 - 2 Profit and loss account 839 (16) 190 Shareholders' funds 7,728 6,796 7,039 Minority interest 415 28 145 Equity shareholders 8,143 6,824 7,184 Ten Alps plcConsolidated Cash FlowSix Months ended 30 September 2005 As at As at As at 30 Sept 2005 30 Sept 2004 31 Mar 2005 Unaudited Unaudited Audited £ '000 £ '000 £ '000 Net Cash inflow from operating activities 433 1,102 5,338 Return on investments and servicing of finance 63 15 60 Taxation - (14) (151) Capital expenditure and financial (281) (395) (1,027)investment Acquisitions and disposals (315) (288) (518) Net cash (outflow)/inflow before (100) 420 3,702financing Financing Issue of ordinary share capital 40 - 35 Capital element of finance lease rentals (6) (16) (52) Media Loans net (decrease)/increase - (134) (134) Net cash inflow/(outflow) from financing 34 (150) (151) (Decrease)/Increase in cash (66) 270 3,551 Reconciliation of net cash flow movementto movement in net debt (Decrease)/Increase in cash in period (66) 270 3,551 Cash outflow from decrease in debt andlease financing 6 16 52 Change in net debt resulting from cashflows (60) 286 3,603 Movements in media loans - 134 134 Exchange adjustments 3 (8) (8) (57) 412 3,729 Net funds at beginning of period 7,131 3,402 3,402 Net funds at end of period 7,074 3,814 7,131 Notes to Cashflow: Analysis of cash flows for headings netted in cash flow statement Reconciliation of operating loss to net cash inflow/(outflow) from operating activities: Operating profit 1,331 57 567 Depreciation 212 116 330 Goodwill amortisation 397 248 569 Loss/ (gain) on sale of fixed assets - - (1) Foreign exchange (gain)/loss on media loans (3) 8 8 Change in work in progress 182 (148) (89) Change in debtors (352) (1,075) (4,383) Change in Creditors (1,334) 1,896 8,337 Net Cash inflow from operating activities 433 1,102 5,338 1. The financial information in this statement does not constitute statutory accounts. The financial information in respect of the year ended 31 March 2005 has beenextracted from the statutory Accounts, which received an unqualified auditors'report and have been delivered to the Registrar of Companies. ENDS -------------------------- This information is provided by RNS The company news service from the London Stock Exchange