Zinc Media Regulatory News (ZIN)

18 Jun 2007 07:01

Ten Alps PLC18 June 2007 Press Release 18 June 2007 Ten Alps Plc ("Ten Alps" or the "Group") Preliminary Results Ten Alps Plc, the factual media company, announces its preliminary results forthe year to 31 March 2007. Ten Alps produces factual content for TV, radio, print and online TV and managesrelated commercial opportunities. After a year of internal investment, expansion and acquisition, Ten Alpscontinues to move its factual portfolio towards online TV. Financial highlights - Revenues up 63.5% at £69.0m (2006: £42.2m), of which £67.6m was from continuing operations- EBITDA up 46% at £3.94m (2006: £2.69m)- Profit before tax up 36% to £2.26m (2006: £1.66m), after substantial investment in online TV, as highlighted in June 2006- Retained profit after tax up 200% to £1.43m (2006: £0.48m)- Basic EPS up 157% to 2.75p (2006: 1.07p)- Digital revenues up 123.2% at £1.65m (2006: £0.74m)- Net assets up 11% at £13.8m (2006: £12.4m) Operational highlights - Creation of divisional structure: Digital, Broadcast, Communications- Launch of Public TV online TV aggregator, with 12 B2B channels- Winning of Kent TV contract, pioneering local government internet TV- Expansion in trade media by 43% to 505 titles produced or represented (excluding today's acquisition)- Expansion in commercial websites by 176% to 152 managed websites- Production of scores of highly acclaimed factual TV and Radio programmes- Acquisition of factual content business DBDA Commenting on the Results, Alex Connock, Chief Executive of Ten Alps, said: "We have invested £715,000 internally, made acquisitions and maintained ourrapid growth. For the financial year to March 2008 we are planning for furthergrowth. "Ten Alps is a factual media company producing content for television, radio,print, online TV and conferences. Advertisers, audiences and other clientsincreasingly demand content and reach across all media, and we believe that ourmulti-media approach satisfies that demand. We have also added online TV thisyear, launching 12 new channels making significant sales and generating excitingleads for 2007-8 and beyond. "Today we have acquired another factual content company, bringing pro formarevenues of around £3m to the Group, and we have other acquisition and organicinvestment projects for the near term. Meanwhile we continue to increase ourclient base, now at 52,000 which means we are continually adding stability tothe business. "We therefore believe that we have laid the foundations to keep growing for aseventh consecutive year." - Ends - For further information, please contact:Ten Alps plcAlex Connock, CEO Tel: +44 (0) 20 7878 2311 c/o Moira McManus www.tenalps.comCollins Stewart, Nominated AdviserChris Wells / Mark Connelly Tel: +44 (0) 20 7523 8350 www.collins-stewart.com Media enquiries:Abchurch CommunicationsHeather Salmond / Gareth Mead / Joanne Shears Tel: +44 (0) 20 7398 7700Joanne.shears@abchurch-group.com www.abchurch-group.com Chairman's Statement Ten Alps has successfully completed the first year of a long-term plan, as setout in March 2006, to become a factual content company which simultaneouslytargets every outlet customers and advertisers engage with - TV, radio, print,online TV and conferences. Whenever our customers choose to convert their content from print to online, wewill be there to grow with them - since in any given editorial niche, we now siton both sides of the online-offline divide. In 2007 we are building hundreds ofnew websites to make this happen, largely funded by clients and advertisers.Meanwhile the financial value and relative stability of our multi-platformapproach has been confirmed to us by the volatility seen elsewhere in broadcastcommissioning during the last financial year. Turnover increased from £42.2m to £69.0m, while EBITDA was £3.94m (2006:£2.69m). Profit before tax was £2.26m (2006: £1.66m), even after investmenttotalling £0.62m into digital development, which will continue but at a lowerlevel, not least because of sales now being made, such as Kent TV. As a resultof this investment, Ten Alps has Public TV, a working proof of concept forspecialist media online TV which in itself represents 12 new digital TVchannels. Ten Alps also has nearly three times as many client websites than ayear ago - ranging from the restoration of 10 Downing St to Institute ofExports. The specialist content portfolio is being boosted through acquisition and newclient wins. The more trade media and advertising we have, the more content wecan migrate. Cameron Publishing (now rebranded along with the rest of Ten AlpsPublishing) and Atalink were acquired on 6 November 2006 and 30 March 2007respectively, with a combined 41 publications. We believe that, at well below 5times pre-tax profits, the multiples we have paid for acquisitions areattractive. Meanwhile, including the acquisition announced separately today, the Company nowhas 550 staff in three clear divisions:- Communications - targeted publishing and conferences- Digital - pioneering the convergence of traditional media with content-rich online sector-specific internet TV sites- Broadcast - producing award-winning factual television and radio programmes Tim Hoare joined the board as a Non- Executive Director in March. As aninvestment banker and Chief Executive of Canaccord Europe, he has brought awealth of strategic and City experience to the Company. We aim to continue our expansion and thank all our teams for their hard work inmaking it happen. Brian WaldenChairman18 June 2007 Chief Executive's Review We firmly believe that factual content provides growth opportunities asaudiences and advertisers increasingly demand specialist material - frommedicine to defence - in all media. Recognising the unpredictable nature of theentertainment market, we built our business around factual output, whetherthat's BAFTA award-winning television documentaries such as Nuremberg orprofitable publications like Freight Industry Times. This was our sixth consecutive year of rapid expansion since Ten Alps floated onAiM, during which time we have grown from £9m of revenue (2001) to £69m (2007).Our plan for 2007-8 is more expansionary than 2006-7, targeting growthorganically and through selective acquisition and increased focus on margins. Last year, thinking for the long term, we prioritised internal investment aheadof short term profits growth. And we used internally generated cash flow anddebt, rather than equity finance, to fund our expansion plans. In fact we havetaken a non-dilutive approach to creating additional shareholder value whereverpossible and this is illustrated by the fact that we have only raised a total ofonly £4.3m by way of new equity in the past five and a half years. Meanwhile, from a risk management perspective, we have targeted a balancebetween the substantial low volatility, cash-generative trade media businesses,the medium-risk TV production companies and the high risk/high upside internetinvestment. Growth plans These are the ways in which we are seeking to expand the scale of our factualcontent: (1) Organic growth within particular divisions. We are seeing contract wins in specialist publishing and, in contrast to last year, TV commissions (both here and in the US). We are also seeing sustainable growth in the bespoke conferences we create to match our specialist titles, like Public Sector Procurement and T-Government.(2) Acquisitions. We are selectively acquiring bolt-on businesses which fit into our existing structure and factual output. In addition to the acquisition announced separately today, we have a number of other prospects under review.(3) Digital growth. We continue to invest in digital migration and internet TV. Revenues are now being generated and the opportunities are exciting. The digital strategy is designed to put Ten Alps into a leadership position in an industry that is evolving rapidly. Taking Kent TV, for instance, we have current media production for 216 other councils (representing 52% of the total), so we see a notable opportunity to offer local government communication through internet TV.(4) Cross-platform growth. We are cross-selling group-wide. For instance, we are working on a Vets TV project, having produced the British Veterinary Association's publications for 17 years. In June 2007 we produced a re-make of the Sergeant Pepper's Lonely Hearts Club Band album for BBC Radio and TV. We also produced Visionaries for BBC Worldwide and online. We are cross selling many events and websites based on titles we publish, such as Transport Security. Our compound average revenue growth rate over the last six years since we havebeen listed has been 45.8% per year. We aim to continue to grow, adding morerevenues for 2008-9 than those generated by the largest single contract thatpotentially expires that year (see Broadcast section below). Should ourobjectives be achieved, we will have decreased any individual contract risk. Weare also applying a similarly proactive approach to business development and theretention of talent. Divisions Communications Ten Alps produces, manages and/or sells advertising on hundreds of B2B, tradeand public sector publications, events and web sites, as well as providingcommunications services to commercial clients. The Communications division operates out of offices in London (two offices),Manchester, Macclesfield, Edinburgh, Gateshead, Portsmouth and now Wigan.During the year, McMillan Scott (purchased March 2006) was re-branded as TenAlps Publishing. In 2006/2007, the Communications Division generated revenuesof £39m, up 264% from the previous year. Gross profit from this division was£11.6m. In the last year Ten Alps Communications published 505 unique print titles,staged 60 events and managed 83 client communication programmes. Revenue growth drove incremental gross profit and was mainly delivered throughclient acquisition and the roll out of bespoke events and web services Clients are primarily derived from stable public & private sectors, includinginstitutes, Royal Colleges, staff communications, trades unions andassociations, central and local government. The division prides itself onclient retention and development, meeting the demands of a rapidly changingmedia market. For instance, we now run conferences linked to publications whichare recorded and available on Public TV, thus uniquely maximising all mediaoutlets. Repeatable events created by Ten Alps include Public Sector ProjectManagement, Rail 2007, Transport Security and Transformational Government. The Communications Division has added a net 31 new clients in the past twelvemonths. Client publications include: Rail Freight Group Directory, LocalAuthority Building Control Sitelines Magazine, IQ Education Newspaper, SussexSafety In Action Book, Accounting Technician Magazine, The Vet Record Magazine(Advertising Sales), BBC Aerial Newspaper (Advertising Sales) BCC Link 2 ExportWebsite, British Wind Energy Conference, Public Sector Procurement Event.Scottish Qualifications Authority Communications and Ramblers Worldwide HolidaysCommunications. We believe that the Communications Division has become a major business tobusiness content provider, with a substantial volume of trade media. Ten Alpsuses a range of media to reach audiences - print, events, web, internet TV andpublishing - and this multi channel approach opens up new routes to market anddevelops incremental revenue streams. This 'long tail' (a term which refers to the huge range of niche interest groupsfinding their own content and advertisers) represents value and relativesecurity in the changing media world. We also think there is potential forarbitrage of offline communications businesses online, to higher valuationmultiples and profitability. Our strategy is to be offline and online in anygiven niche, so that whatever the speed of migration, we can still capture theaudience and therefore the advertising market. Digital Ten Alps produces, manages and/or sells advertising on hundreds of factualwebsites and now is running online TV channels. This year, as planned, was about taking a loss on a fast-growing division whichgives the group sustainability in the evolving world of internet video. Digitalrevenues are occurring across the group, particularly in Communications, but forthematic clarity, are counted in this section and excluded elsewhere. In the financial year being reported on, the Digital Division generated revenuesof £1.7m, up 123.2% from the previous year. Gross profit from this division was£0.5m. In the year, we launched 84 web-hosted titles and entered into agreementto commercially manage 68 websites including British Institute for Learning andDevelopment and Institute of Exports. Investment was made in technology for the video aggregator Public TV, which camein on time and under budget. It brings together thousands of videos from over200 partners across the public sector, business and government, ranging fromDowning St. to NASA. Whilst digital spending comprises a major element of ourfinances, compared to peer group spending in the private sector on thedevelopment of similar web video propositions, we believe it to have beenextremely cost-effective. We believe that we need to invest more in trafficgeneration and other channels such that individual channels can then be streamedfrom the same database, providing specific material to cater to given interests. Kent TV, the contract which Ten Alps won in May 2007, presents new andinteresting opportunities for local and central government communications. Weare pleased to be at the forefront of this development and recognise that suchstations depend on the considerable expertise and editorial reputation of our TVproducers. Broadcast Through its Broadcast Division, Ten Alps produces factual TV and Radioprogrammes for broadcast and digital markets in the UK, Europe and US. In the financial year, the Broadcast Division generated revenues of £28.3m, down7.8% from the previous year. Gross profit from this division was £6.8m. This was an excellent year for creative production with titles produced by thegroup including Nuremberg (C4) (BAFTA for best docudrama), Panorama - Litvenenko(BBC1), Teachers TV Channel, Dispatches - Gordon Brown (C4), Sergeant Peppers'Lonely Hearts Club Band (BBC2 and Radio 2), Supergrass (BBC2). Despite this,revenue for this division was disappointing with the period September toDecember 2006 being a poor time for commissioning, as many of the broadcasterclients appeared to be in a state of flux. It confirmed to us that the pureindependent TV production model comprises too many uncertain elements to be astable standalone business. This is one of the underlying reasons for our focuson other forms of factual content. However, in 2007, thanks to some world class talent at our factual TV companiesBrook Lapping and Blakeway/3BM, we have a strong slate of commissions goingforward. Forthcoming Tel Alps' productions include: Blair (Channel 4), Summits(BBC4), Art Rocks (Sky HD), Iran and the West (BBC), Triplets (ITV), Ocean ofFear & Forged in Fire (Discovery US) and Top Dog Series 2 (Discovery AnimalPlanet). There are particular opportunities in the US for docudramas and in theUK for current affairs TV, where the arrival at Ten Alps of Fiona Stourton fromthe BBC, has moved us forward in current affairs work from Dispatches forChannel 4 to Panorama for the BBC. Separately Teachers' TV, (which Brook Lapping, a Ten Alps-owned company,launched for the Department for Education and Skills), continues to be asuccessful broadcast channel as well as a market leader in internet TVdistribution, with over 1700 programmes databased online. The current contractwith the Department for Education and Skills, c.£15m of revenue per year,expires in August 2008 and is being re-tendered, as per the original contract.With partner companies as minority shareholders, the Group is submitting atender for contract renewal, for which process it has allocated appropriateGroup funds and key talent. The result is expected at turn of the year. One of our production units, Brook Lapping Education, with its 25-strong team,is successfully making quality editorial TV for lower prices than traditionalbroadcast budgets. As well as making many programmes for Teachers' TV, thisunit, which is a seed bed of new young production talent for the rapidlychanging media market, is also producing programmes for the Royal Society andBBC World. Such new production methods are vital in a cross-platform futurewith very different budgetary approaches. Online is the here and now. That makes factual media a dynamic, multi-platformenvironment - a world away from the old days of pure TV or pure publishingcompanies. We changed radically over the past 15 months to meet that challenge.Because of that, we have the capability to keep growing. Alex ConnockChief Executive Officer18 June 2007 Finance Director's ReviewTrading Analysis Group turnover grew by 63.5% to £69.0m (2006: £42.2m) with acquisitionscontributing £1.44m. Gross profit increased by 100% to £18.9m (2006: £9.5m). Gross margins rose from 22.4% in 2006 to 27.4% in 2007, reflecting the change inthe product mix after the acquisition of McMillan Scott and Camerons. As aconsequence, total administrative expenses now represent 23.5% of turnover(2006: 18.7%). Group EBITDA increased by 46.4% to £3.94m (2006: £2.69m) reflecting the impactof both acquisitions and organic growth. Profit before tax was £2.26m (2006:£1.66m) after a goodwill amortisation charge of £588,000 (2006: £658,000) forthe year. As mentioned in our interims statement of December 2006, our Key PerformanceIndicator (KPI) bonus on the Teachers' TV contract was lower compared to theprevious year, which had included two years' performance due to the contract'sphasing in its startup period. This effect is illustrated by the fact that theminority interest was £209,000 for 2007 (2006: £365,000). Basic earnings per share (EPS) increased from 1.07p in 2006 to 2.75p in 2007with a fully diluted EPS of 2.69p (2006: 1.04p). Adjusted basic EPS (beforegoodwill amortisation) was 3.88p in 2007 compared to 2.54p in 2006. Group Balance Sheet The Group's Balance Sheet reflects the results for the year and illustrates thefinancial strength of the Group with net funds as at the year end of £3.8million (2006: £3.5m). In reference to deferred consideration on previous acquisitions, the estimatespayable on the McMillan Scott acquisition has been lowered as earnoutperformance against the theoretical maximum is clarified. The payment due toBlakeway Productions was paid in full during the year. Shareholders' funds have increased from £12.1m to £13.6m, reflecting theacquisitions and the results for the year. The profit and loss account nowshows a surplus of £2.5m (2006: £1m). The long-term debt at the year-end reflects loans from the Bank of Scotland plc. The amount outstanding as at 31 March 2007 was £9.15m (2006: £9.35m). Alsoincluded in long term debt are loans from the European Union for development ofprogrammes of £270,000 (2006: £280,000) finance leases of £52,000 (2006:£39,000) and deferred income in relation to fixed assets purchased byEducational Digital Limited of £235,000 (2006: £409,000). Net Assets as at 31 March 2007 were £13.8m, of which £14.4m was held in cash(including £7.3m in Teachers' TV). Nitil PatelFinance Director18 June 2007 TEN ALPS PLC Preliminary Announcement of ResultsFor the year ended 31 March 2007 Consolidated Profit and Loss 2007 2006 (restated) Notes £'000's £'000's Turnover continuing operations 67,604 41,805 acquisitions 1,441 406 1 69,045 42,211 Cost of sales (50,125) (32,749) Gross profit 18,920 9,462 Administrative expenses - other (15,666) (7,236) Amortisation of goodwill (588) (658) Total administrative expenses (16,254) (7,894)Operating profit continuing operations 2,467 1,609 acquisitions 199 (41) 2,666 1,568 Net interest (payable)/receivable (403) 91 Profit on ordinary activities before 2,263 1,659tax Taxation (627) (819) Profit on ordinary activities after tax 1,636 840 Minority interest (209) (365) Retained profit for the year 1,427 475 Basic earnings per share 2 2.75 p 1.07 p Diluted earnings per share 2 2.69 p 1.04 p A statement of recognised gains and losses is not included as thereare no recognised gains or losses other than those disclosed above TEN ALPS PLC Preliminary Announcement of ResultsFor the year ended 31 March 2007 Consolidated Balance Sheet 2007 2006 £ '000 £ '000Fixed assets Intangible assets 16,577 15,718 Tangible assets 1,754 1,611 18,331 17,329Current assets Work in progress 2,762 2,662 Debtors 11,666 12,978 Cash at bank 14,368 14,515 28,796 30,155Creditors Amounts falling due within one year (23,593) (25,005) Net current assets 5,203 5,150 Total assets less current liabilities 23,534 22,479Creditors Amounts falling due after more than one year (9,707) (10,078) Net assets 13,827 12,401Capital and reserves Called up share capital 1,041 1,035 Share premium account 7,188 7,127 Merger reserve 2,930 2,930 Other reserve 2 2 Profit and loss account 2,456 1,006 Equity shareholders' funds 13,617 12,100 Equity minority interest 210 301 13,827 12,401 TEN ALPS PLC Preliminary Announcement of ResultsFor the year ended 31 March 2007Consolidated Cash Flow Statement 2007 2006 (restated) Note £ '000 £ '000 Net Cash inflow from operating activities 3 4,939 3,644 Return on investments and servicing of finance (703) (119) Taxation (711) (429) Capital expenditure and financial investment (725) (387) Acquisitions and disposals (2,505) (10,497) Net cash inflow/(outflow) before financing 295 (7,788)Financing Issue of ordinary share capital 67 3,863 Expenses paid in connection with share issues - 382 Capital element of finance lease rentals (45) (14) Increase/(decrease) in bank and other loans (464) 10,550 Net cash (outflow)/inflow from financing (442) 14,781(Decrease)/Increase in cash (147) 6,993 Reconciliation of net cash flow movement tomovement in net debt (Decrease)/Increase in cash in period (147) 6,993 Cash outflow/(inflow) from change in debt and lease Financing 509 (10,536) Change in net debt resulting from cash flows 362 (3,543) Finance leases acquired with subsidiaries (16) (116) Exchange adjustments (5) (4) 341 (3,663) Net funds at 1 April 2006 3,468 7,131Net funds at 31 March 2007 3,809 3,468 TEN ALPS PLC Notes to the Preliminary Statements for the year ended 31 March 2007 1. Basis of Preparation The financial statements are prepared in accordance with applicable UnitedKingdom accounting standards (UK GAAP) other than for the application of a trueand fair override from the Companies Act 1985 with respect to the carrying valueof intangible assets where the directors are of the opinion the intangibleassets have an indefinite economic life. See note (a) below. The policies have remained unchanged from the previous year, apart from theadoption of FRS 20 "Share Based Payment". See note (b) below. (a) Acquisitions and disposals On the acquisition of a business, fair values are ascribed to the Group's shareof net tangible assets. Where the costs of acquisition exceed the valueattributable to such net assets, the difference is treated as consolidatedgoodwill. The directors assess each acquisition to determine the appropriate treatment ofany related goodwill and select from one of two accounting policies: Where the directors are of the opinion that intangible assets of the Group havean indefinite economic life given the acquired business' historic ability tosustain long term profitability, their position within their market sector andthe Group's commitment to continue to invest in the long-term development ofthat business then, in accordance with FRS10 and FRS11, the carrying value ofthese intangible assets is reviewed annually for impairment on the basisstipulated in FRS11 and adjusted to the recoverable amount should this berequired. This policy departs from the requirement of companies' legislation toamortise goodwill over a finite period in order to give a true and fair view,for the reasons outlined above. The impact of the departure from the CompaniesAct was to not charge amortisation of goodwill of £525,088 (2006: nil). Where the directors are of the opinion that intangible assets of the Group donot have an indefinite economic life then the goodwill on each acquisition isconsidered by the directors and amortised on a straight line basis over itsuseful economic life (which is generally estimated to be ten years). (b) Share Based Payments All share-based payment arrangements granted after 7 November 2002 that had notvested prior to 1 April 2006 are recognised in the financial statements. All goods and services received in exchange for the grant of any share-basedpayment are measured at their fair values. Where employees are rewarded usingshare-based payments, the fair values of employees' services are determinedindirectly by reference to the fair value of the instrument granted to theemployee. This fair value is appraised at the grant date and excludes the impactof non-market vesting conditions (for example, profitability and sales growthtargets). All equity-settled share-based payments are ultimately recognised as an expensein the profit and loss account with a corresponding credit to "other reserve". If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Estimates are revised subsequently ifthere is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options that have vested are not exercised. Upon exercise of share options, the proceeds received net of attributabletransaction costs are credited to share capital, and where appropriate sharepremium. 2. Earnings Per Share Weighted Basic per Adjusted per Earnings average share amount share amount2007 £'000 no. of shares Pence penceAttributable to ordinaryshareholders:Retained profit 1,427Amortisation of goodwill 588Adjusted earnings 2,015 Basic EPS 51,943,330 2.75 3.88Dilutive effect ofsecurities:Options 1,088,555 Diluted EPS 53,031,885 2.69 3.80 2006 (restated)Attributable to ordinaryshareholders:Retained profit 475Amortisation of goodwill 658Adjusted earnings 1,133 Basic EPS 44,554,163 1.07 2.54Dilutive effect ofsecurities:Options 1,082,198 Diluted EPS 45,636,361 1.04 2.48 TEN ALPS PLC Notes to the Preliminary Statements for the year ended 31 March 2007 3. Reconciliation of operating profit to net cash inflow from operating activities: 31 March 2007 31 March 2006 (restated) £'000 £'000Operating profit 2,666 1,568Depreciation 685 464Goodwill amortisation 588 658FRS 20 share based payment charge 23 341Loss on sale of fixed assets 2 8Increase in work in progress 590 (25)Decrease/(Increase) in debtors 2,632 (1,546)(Decrease)/Increase in creditors (2,252) 2,172Foreign exchange loss on media loans 5 4Net cash inflow from operating activities 4,939 3,644 4. No final dividend is being proposed. 5. Publication of Non-Statutory Accounts The financial information relating to the year ended 31 March 2007 set out abovedoes not constitute the Company's statutory accounts for that year, but havebeen extracted from the statutory accounts, which received an unqualifiedauditors' report and which have not yet been filed with the Registrar ofCompanies. The financial information relating to the year ended 31 March 2006,has been extracted from the 2006 Annual Report and Accounts which received anunqualified auditors' report and have been delivered to the Registrar ofCompanies. Copies of the Company's Annual Report and Accounts for 2007 will be sent toshareholders as soon as is practicable. Copies of this announcement areavailable at the Company's head office at 9 Savoy Street, London WC2 7ER andcopies of the Annual Report and Accounts will also be available on request. ENDS This information is provided by RNS The company news service from the London Stock Exchange