RNS Number:8488I
Entertainment Rights PLC
18 March 2003
18 March 2003
Entertainment Rights Plc
Preliminary Announcement of Results for the year ended
Dec 31st 2002
Entertainment Rights Plc, one of the leading UK media groups specialising in the
ownership of high quality children's and family programming, characters and
brands, announces today its results for the year ended 31 December 2002.
* Turnover up 85% to #25.6m (2001: #13.8m), despite challenging economic
environment
* EBITDA increased 121% to #5.0m, (2001: #2.3m)
* Operating profit improved from a loss in 2001 of #0.7m to a profit of
#0.1m.
* Operating profit (excluding goodwill) improved by 236% to #2.1m, (2001:
#0.6m)
* Loss after tax of #0.9m (2001: #1.6m loss)
* Underlying EPS improved to 0.42p (2001: loss of 0.11p)
* Net cash inflow from operating activities was #4.3m (2001: #1.5m
outflow)
* Cash outflow attributable to investment in new programming was #5.0m
(2001: #5.5m)
* Portfolio Highlights
* A further 26 episodes of Basil Brush commissioned by the BBC, ensuring
broadcast and product profile
* 26 new episodes of Postman Pat and four half-hour specials
commissioned by the BBC for transmission in 2004/2005
* 26 ten-minute episodes of The Little Red Tractor commissioned by the
BBC for transmission in 2004
* Launch of licensing and merchandising for Basil Brush in Autumn 2003
* Rights to third successive Barbie movie, Barbie of Swan Lake, secured
from Mattel
* Current trading remains in line with Board's expectations
Commenting on the results, Entertainment Rights' Chairman, Rod Bransgrove said:
"This set of results reflects our fourth consecutive year of growth across the
Group's operations. 2002 was also our third consecutive year of record trading
results despite challenging economic conditions.
With our well balanced portfolio of fully owned and third party rights, a strong
release schedule, good cash flow and an experienced management team, we envisage
growth for all our operations in 2003. We will continue to invest in new
opportunities as and when they emerge."
Notes to Editors:
Photographs for the media are available at Visual Media online -
www.vismedia.co.uk
Tel: 020 7436 9595
Enquiries
Mike Heap,
Chief Executive
Elizabeth Gaines,
Finance Director
Victoria Charles PR
Entertainment Rights PLC Tel: 020 8762 6200
Tim Spratt/Michelle Morton
Financial Dynamics Tel: 020 7831 3113
CHAIRMAN'S STATEMENT
Overview of Trading
I am delighted to report that, despite a challenging trading environment, the
results for 2002 reflect our fourth consecutive year of exceptional growth and
our third consecutive year of record trading results. The Group achieved
substantial increases in revenue and underlying profit in all its operating
divisions. Turnover increased by 85% to #25.6m (2001: #13.8m), EBITDA grew by
121% to #5.0m (2001: #2.3m), and operating profit improved from a loss in 2001
of #0.7m to a profit of #0.1m. Operating profit excluding goodwill improved by
236% to #2.1m (2001: #0.6m). Underlying earnings per share increased to 0.42p
(2001: loss of 0.11p)
Net cash inflow from operating activities was #4.3m (2001: #1.5m outflow).
Reflecting the Group's ongoing commitment to developing and broadening its
programming portfolio, investment in new programming was #5.0m (2001: #5.5m).
The Directors are not recommending a dividend (2001:nil).
Group Development
During 2002 the Group concentrated on consolidating the acquisitions made in
2001 and maximising the trading performance of each of its core operating
divisions. The Group's strategy of building a broad portfolio of children's and
family programme rights and acquiring well-known brands with further
exploitation potential has continued to be successful in a challenging and
rapidly changing economic environment.
Supported by the strong cash flow from our third-party portfolio, we continue to
focus on investment in our key higher margin brands such as Basil Brush, Postman
Pat and The Little Red Tractor. The benefits from investment in these
wholly-owned properties are already beginning to be realised.
The Group acquired a worldwide licence (excluding North America) for the
television and home entertainment rights to distribute the second Barbie feature
film, Barbie as Rapunzel. The film was released in September 2002, debuting at
No.1 in the UK charts and selling some 500,000 units before the year end in the
UK alone. This follows the exceptional success of the first ever feature length
animated film starring Barbie - Barbie in the Nutcracker, which has to date sold
some 3 million copies internationally (excluding North America).
Accounting Policies
In accordance with FRS18, our policy is to review annually our accounting
policies and update them as and when considered appropriate.
In relation to significant long-term contracts for rights not held in
perpetuity, the Company has revised its policy in relation to the recognition of
advances. In addition, the Company adopted FRS19 Deferred Taxation.
The Group continues to adopt a conservative approach to amortisation and
depreciation for programming assets, writing these assets off over an average
life of less than 10 years. This has resulted in the amortisation charge for
investment in programmes increasing by 100% to #2.1m (2001: #1.0m).
Board Changes
As highlighted at the half year, the Board has been further strengthened by the
appointment of Elizabeth Gaines (CA) as Finance Director. David Glick, a
non-executive director since 1995, will not offer himself for re-election at the
Annual General Meeting. We thank David for all his endeavours and wish him
continued success.
Employees
I would like to take this opportunity to thank all our staff for their diligence
and hard work in ensuring we delivered another year of record growth in what has
been an exceptionally challenging business environment.
Current Trading and Future Prospects
Current trading remains in line with our expectations. We continue to invest in
our owned characters and brands to support further growth in consumer products
and home entertainment, and have secured strong broadcast commissions for 2003
and beyond to underpin this investment.
Following the successful execution in recent years of a clear business plan,
Entertainment Rights is positioned to develop further. We have a balanced
portfolio of fully owned and third party rights, a strong release schedule, good
cash flow before programme investment and a highly talented and experienced
management team. Current investment in our key owned brands is expected to
produce clear benefits for shareholders in future years. Consequently, we
believe the Group is extremely well placed to consolidate its position as one of
the leading children's and family media companies.
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
2002 was an excellent year for the Group. We achieved our fourth consecutive
year of growth across the Group's operations. These achievements reflect our
focused approach to building a broad portfolio of rights under ownership or
control and our strategy of acquiring high profile under-exploited brands such
as Basil Brush and Postman Pat.
BRAND HIGHLIGHTS
BASIL BRUSH
Since its UK debut on Children's BBC (CBBC) in September 2002, The Basil Brush
Show has secured weekly audiences of up to 1.4 million viewers. Week on week
Basil's popularity grew, particularly amongst his key audience, children aged
4-9 years, where he achieved an outstanding 42% share. Viewers of CBBC voted
The Basil Brush Show, Best Comedy of the Year for 2002's "It's Up To You"
Awards. Continuing this success, the nation's favourite fox has joined the Blue
Peter team as its first ever regular guest presenter.
Entertainment Rights has appointed Golden Bear, Toy Company of the Year in 2002,
as Basil's new master toy licensee. Entertainment Rights is launching a
comprehensive licensing and merchandising campaign for Basil which will
accompany the broadcast of the second 13 episodes on the BBC this Autumn.
The BBC has commissioned a further 26 episodes of The Basil Brush Show,
increasing its programming commitment to 52 x half hour episodes. This will
ensure that Basil's high profile, both on and off screen, will continue.
POSTMAN PAT
Following Entertainment Right's acquisition of Woodland Animations in November
2001, the classic pre-school character Postman Pat, along with Jess the Cat,
joined the Group's family of global characters. We are delighted to confirm
that ER has successfully secured a substantial commission from the BBC for a
further 26 new 15-minute episodes and 4 half-hour Specials for transmission in
2004. This commission will be the first new Postman Pat programming produced
since 1995 and will coincide with a concerted marketing campaign to re-launch
Postman Pat licensing and home entertainment products.
Since its creation in 1981, Postman Pat, with his faithful companion Jess the
Cat, has been a cornerstone of the BBC schedule as well as a children's
favourite around the world, having been seen in over 60 countries over the past
20 years. With new television and video programming, Entertainment Rights will
be looking to build Postman Pat as a global brand with worldwide television and
video exposure supported by a coordinated international licensing programme.
Demonstrating ER's ability to maximize the potential of its characters and
brands, an animated series starring Jess the Cat is in development with Siriol,
our Cardiff based animation studio. This new programming will create additional
opportunities for licensing, merchandising and home entertainment for Jess and
his friends.
THE LITTLE RED TRACTOR
This new 26 x 10-minute pre-school series, targeted at an international
audience, has been commissioned by the BBC for terrestrial and digital airing on
the BBC in 2004.
Entertainment Rights owns in perpetuity, the global television, home
entertainment, and licensing and merchandising rights for The Little Red
Tractor. We have prioritised this property for international roll out.
OPERATIONAL REVIEW
Television Sales
Notwithstanding the downturn in the global broadcast market, we have been
successful in selling our library of programmes in over 100 countries worldwide,
increasing year on year sales by some 5%. One of our key strengths is our
ability to deal first hand with all major UK and international broadcasters
through our own in-house specialist sales team. Notable highlights for the year
have been: winning the prime time children's broadcast slot on the BBC for the
new Basil Brush series; the commission of 26 episodes and 4 specials of Postman
Pat; the commission of 26 10-minute episodes of The Little Red Tractor; the
securing of a major broadcast deal for Hamilton Mattress with HBO in North
America; and the successful placing of Barbie as Rapunzel with key broadcasters
worldwide.
Importantly in November 2002, we announced a partnership with Hasbro to
represent the global boys' brand Transformers-Armada for all international
television rights (excluding North America) and all worldwide video rights
(including North America). ER has already secured prime UK broadcast
commitments on Sky One and GMTV for 2003 and placement in key European markets.
Licensing and Merchandising
Significant licensing and merchandising awareness has been created during the
year for our owned properties, Basil Brush, Postman Pat and The Little Red
Tractor. As we invest in new programming, we believe the Group will reap
significant downstream benefits from these higher margin properties.
ER has demonstrated strong growth in this division with year on year sales
rising by some 61%. Barbie, for whom we are the UK licensing agent on behalf of
Mattel, won the 2002 Licensing Industry Brand of the Year Award for the second
year running. Clifford the Big Red Dog, which ER represents on behalf of
Scholastic in the UK, has continued to build strong year on year licensing
sales, with Clifford's first range of toys proving to be one of the top ten best
sellers at retail for Christmas 2002.
Home Entertainment (DVD/Video)
Following the successful release of Barbie in the Nutcracker, Right
Entertainment has been established as a branded Home Entertainment division,
focusing upon both owned and third party properties.
During the year we enjoyed sales success from a variety of children's and family
entertainment titles including; Clifford, Arthur, Tangerine Bear and Merlin the
Magical Puppy. As a consequence, the division increased year on year sales by
some 474%.
Right Entertainment released the second Barbie animated feature length film,
Barbie as Rapunzel in September 2002. The film debuted at No.1 in the video
charts and has sold some 500,000 units in the UK alone. We fully expect Barbie
as Rapunzel to match the enormous international success of Barbie in the
Nutcracker. Total units sold across both films under Entertainment Rights'
management exceed 5 million. Following on from this success, we are delighted
to announce that we will continue to work with Mattel on this hugely successful
global franchise. Against strong competition Entertainment Rights has secured
worldwide (excluding North America) television and video rights to the third
successive Barbie movie, Barbie of Swan Lake. Swan Lake is currently scheduled
for release in October 2003.
Creative and Production
We continue to capitalise on our investment in the long-term development of our
owned higher margin properties. The ability to protect these properties through
creative and production controls, as well as through brand management, allows us
to create maximum exploitation opportunities.
The enormous critical and audience success of Basil Brush is testament to the
merits of our strategy of carefully developing the creative aspects of these
owned brands. Our in-house development team is charged with identifying new
programme opportunities with potential for global appeal.
Siriol, the Group's wholly owned animation studio is currently producing in its
new stop-motion animation facility, a new series of Fireman Sam for Welsh
broadcaster S4C International and HIT Entertainment. Siriol improved its year
on year sales by 85%.
CONCLUSION
The hallmark of the past four years has been the building of an infrastructure
to enable us to capitalise on the investments we have made in our characters and
brands. Future years will see a focus on consolidating the fruits of this
investment and we will continue to invest in new opportunities as and when they
emerge. We envisage growth for all divisions of the Group during 2003.
Prospects for our company remain excellent.
Consolidated profit and loss account - for the year ended 31 December
Restated
2002 2001
Notes #'000 #'000
Turnover 1,2 25,560 13,784
Cost of sales (17,266) (9,112)
Gross profit 8,294 4,672
Administrative expenses (8,194) (5,407)
Operating profit/(loss)
Operating profit (pre goodwill) 2,084 621
Goodwill amortisation (1,984) (1,356)
100 (735)
Interest receivable and similar income 49 180
Interest payable and similar charges 4 (1,070) (272)
Loss on ordinary activities before taxation 3 (921) (827)
Tax on loss on ordinary activities 5,6 31 (795)
Loss on ordinary activities after taxation (890) (1,622)
Dividends payable - -
Retained loss for the year transferred to reserves (890) (1,622)
(Loss)/earnings per ordinary share (pence)
Basic loss per ordinary share 13 (0.34p) (0.66p)
Goodwill amortisation per ordinary share 13 0.76p 0.55p
Underlying earnings/(loss) per ordinary share* 13 0.42p (0.11p)
* Underlying earnings per share is calculated on earnings excluding goodwill.
There is no difference between the retained profit for the years stated above
and their historical cost equivalents.
Statement of total recognised gains and losses
Notes Restated
2002 2001
#'000 #'000
Loss for the financial period (890) (1,622)
Total recognised gains and losses relating to the financial (890) (1,622)
period
Prior period adjustment 1 (1,824)
Total gains and losses recognised since last annual
report (2,714)
Consolidated balance sheet - as at 31 December
Restated
2002 2001
Notes #'000 #'000
Fixed assets
Intangible assets 7 47,659 45,045
Tangible assets 1,977 1,888
49,636 46,933
Current assets
Programme development costs 2,166 1,506
Debtors 8 9,233 8,020
Cash at bank and in hand 861 2,105
12,260 11,631
Creditors: amounts falling due within one year 9 (13,319) (14,943)
Net current liabilities (1,059) (3,312)
Total assets less current liabilities 48,577 43,621
Creditors: amounts falling due after more than one year 10 (10,334) (4,488)
Net assets 38,243 39,133
Capital and reserves
Called up share capital 12 13,117 13,117
Share premium account 12 24,355 24,355
Merger reserve 12 16,470 16,470
Profit and loss account 12 (15,699) (14,809)
Equity shareholders' funds 38,243 39,133
Consolidated cash flow statement - for the year ended 31 December
Restated
2002 2001
Notes #'000 #'000
Net cash inflow/(outflow) from operating activities 14 4,333 (1,528)
Returns on investments and servicing of finance
Interest received 49 194
Interest paid (736) (183)
Net cash (outflow)/inflow from investments and servicing
of finance (687) 11
Taxation
UK corporation tax received/(paid) 31 (39)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (5,001) (5,518)
Payments to acquire tangible fixed assets (223) (336)
Receipts from sale of tangible fixed assets 18 -
Net cash outflow from investing activities (5,206) (5,854)
Acquisitions and disposals
Acquisitions of subsidiary undertakings - (6,702)
Cash acquired with subsidiary undertakings - 1,929
Net cash outflow from acquisitions and disposals - (4,773)
Net cash outflow before management of liquid
resources and financing (1,529) (12,183)
Management of liquid resources
Cash withdrawn from 90 day deposit - 5,165
Financing
Issue of shares - 8,453
Cost of share issue - (317)
Term Loan draw down falling due within the year 812 -
Term Loan draw down falling due after more than one year 8,652 -
Loan Note redemption (9,361) -
New finance leases 269 -
Capital element of finance lease rental payments (103) (34)
Repayment of borrowings (43) (22)
Net cash inflow from financing 226 8,080
(Decrease)/increase in cash in the year 16 (1,303) 1,062
Notes to the financial statements
1. Accounting policies
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2002 or 2001. The financial
information for 2001 is derived from the statutory accounts for 2001 which have
been delivered to the Registrar of Companies. The auditors have reported on the
2001 accounts; their report was unqualified and did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985. The comparative
financial information for the year ended 31 December 2001 has been prepared on a
consistent basis to this year, restated for the changes in accounting policies
set out below. The statutory accounts for the year ended 31 December 2002, will
be delivered following the Company's AGM. The auditors have reported on those
accounts, their reports were unqualified and did not contain statements under
section 237 (2) or (3) of the Companies Act 1985. Further copies of the
Statutory Accounts may be obtained from the Company's Registered Office, 58-60
Berners Street, London W1T 3JS.
Basis of accounting
These financial statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom accounting
standards. A summary of significant accounting policies applied is set out
below, together with an explanation of where changes to previous policies have
been made in the year.
Basis of consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiary undertakings, from the date of acquisition, all of which are
prepared to 31 December 2002. No profit and loss account is presented for the
Company as permitted by Section 230 of the Companies Act.
Change in accounting policies
In accordance with the principles of FRS18 Accounting Policies, the Directors
have reviewed their accounting policies and implemented those most appropriate
to the Group's operations. In relation to significant long-term contracts for
rights not held in perpetuity, the Company has revised its policy in relation to
the recognition of advances. As a result, for the year ended 31 December 2001,
cost of sales is #1,029,000 higher and profit for the financial period is
#1,029,000 lower than previously reported. At 31 December 2001 accrued
liabilities have increased by #1,029,000.
The Company has adopted Financial Reporting Standard 19 "Deferred Tax"
("FRS19"). Under FRS19, deferred tax is provided for on the full provision
basis, whereas previously it had been provided for using the partial provision
method. The application of this change in accounting policy has been treated as
a prior period adjustment to the year ended 31 December 2001. As a result, for
the year ended 31 December 2001, taxation on profit on ordinary activities is
#795,000 higher and profit for the financial period is #795,000 lower than
previously reported. At 31 December 2001 deferred tax liabilities have
increased by #793,000.
Turnover
Television distribution
Income recognised represents the invoiced value of licence fees including
withholding tax but excluding value added tax. The Group's policy is to
recognise the income and associated royalty payable when all of the following
criteria are met:
(a) A licence agreement has been signed by both parties;
(b) The arrangement is fixed or determinable; and
(c) Collection of the arrangement fee is reasonably assured.
Where the licence is for an owned series in production, but not completed at the
year end, it is recognised in the proportion that costs to date bear to the
total estimated programme production costs.
Any licence fees received in advance, which do not meet all of the above
criteria, are included in deferred income until the above criteria are met.
Consumer products: licensing and video
Revenue from license and video sales, including advances, are recognised on the
date that the license revenue is contracted or declared. This excludes future
guarantees or income generated but not due.
Intangible fixed assets
Goodwill
Goodwill arising on the acquisition of subsidiary undertakings represents the
difference between the fair value of the consideration given and the fair value
of the net assets acquired. Such goodwill is capitalised and amortised on a
straight-line basis over its estimated useful life, not exceeding 20 years.
Where circumstances indicate that the carrying value may not be recoverable,
provision is made for impairment and charged against profit in the period
concerned.
Trademarks and copyrights
Publishing rights, titles, trademarks and other intangible assets are stated at
fair value on acquisition. Any development costs, which are incurred by the
Company and are associated with an acquired right, title or trademark are
capitalised and amortised over their estimated useful lives, but no longer than
20 years. The estimated useful lives for determining the amortisation charge is
reviewed annually and any further provision for permanent impairment is charged
against profit in the year concerned. In respect of internally generated
publishing rights, titles and trademarks, only the external costs of securing
the rights are capitalised. All other internal costs are written off to the
profit and loss account when incurred.
Investment in programmes
Investment in programmes, including acquired programme rights and distribution
advances, is stated at the lower of cost directly incurred on the project less
amortisation, and net realisable value.
Investments in programmes that are in development and for which the realisation
of expenditure can be reasonably determined, are classified as programme
development costs under current assets. Completed investments in programmes are
classified as intangible fixed assets.
A charge is made to write down the cost of completed programmes and acquired
programme rights over their useful lives. The amortisation is matched against
revenues recognised, on an income forecast method, giving an average of less
than 10 years.
An assessment is made at each balance sheet date by the Directors to determine
whether a provision is required to reduce the carrying value of investment in
programmes to net realisable value. Any charge for writing down to net
realisable value during the period is included in the profit and loss account as
part of cost of sales.
Taxation
The charge for taxation is based on the loss for the year and takes into account
taxation deferred because of timing differences between the treatment of certain
items for taxation and accounting purposes. Deferred taxation is provided on
all timing differences which have arisen but not reversed by the balance sheet
date, except as otherwise required by FRS19.
Segmental information
Analysis of turnover by destination:
Total Total
2002 2001
#'000 #'000
UK 17,963 7,597
Rest of Europe 3,510 2,672
North & South America 631 1,194
Rest of World 3,456 2,321
25,560 13,784
Turnover originates in the UK within the following classes of business:
Total Total
2002 2001
#'000 #'000
Television and production 7,184 6,357
Home entertainment 8,796 1,532
Consumer products 9,580 5,895
25,560 13,784
Consumer products relate to merchandising and licensing agreements.
Further disclosures have not been provided in respect of profit before taxation
and net assets, as in the opinion of the Directors, such disclosure would be
seriously prejudicial to the interests of the Group.
3. Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after charging/
(crediting):
2002 2001
#'000 #'000
Depreciation of owned tangible assets 237 150
Depreciation of tangible assets held under finance leases 48 50
Amortisation of investment in programmes 2,081 1,040
Amortisation of other intangibles
- Goodwill 1,984 1,356
- Copyrights 559 404
Auditors' remuneration
- audit services (parent company #3,000, (2001 - #3,000)) 65 66
- other fees paid to the auditors and their associates 89 24
Operating lease rentals - rent and office equipment 380 298
Loss/(profit) on disposal of tangible fixed assets 3 (1)
4. Interest payable and similar charges 2002 2001
#'000 #'000
Bank loans and overdrafts 255 1
Net loss on foreign exchange 334 34
Other loans 481 231
Finance leases - 6
1,070 272
5. Taxation
Restated
2002 2001
(a) Analysis of taxation charged in the period #'000 #'000
Current tax:
Prior year credit (31) -
Total current tax (Note 5(b)) (31) -
Deferred tax:
Origination and reversal of timing differences 795
Total deferred tax - 795
Tax (credit)/charge on loss on ordinary activities (31) 795
(b) Factors affecting tax charge for the period 2002 2001
#'000 #'000
Loss on ordinary activities before tax (921) (827)
Profits chargeable to corporation tax multiplied by (276) (248)
standard rate of UK corporation tax of 30%
Effects of:
Expenses not deductible for tax purposes (primarily 610 446
goodwill amortisation)
Tax allowances for period in excess of depreciation (318) (486)
Movement on tax losses (16) 288
Adjustments to tax charge in respect of previous periods (31) -
Current tax credit for the period (Note 5(a)) (31) -
There is no corporation tax charge for the year as a result of the availability of Group
relief and trading losses brought forward.
6. Provision for deferred taxation
Restated
2002 2001
#'000 #'000
Accelerated capital allowances 45 54
Other timing differences 1,186 1,177
1,231 1,231
The Company has #7.7m (2001 - #6.3m) of tax losses which may be available for
relief against future trading profits.
Prior Year Restatements
Under FRS19, deferred tax is provided for on a full provision basis, whereas
previously it had been provided for using the partial provision method. The
application of this change in accounting policy has been treated as a prior
period adjustment to the year ended 31 December 2001.
7. Intangible fixed assets
Group
Investment in Trademarks
Goodwill programmes and copyrights Total
#'000 #'000 #'000 #'000
Cost
At 1 January 2002 33,113 10,376 10,968 54,457
Additions - 6,737 501 7,238
At 31 December 2002 33,113 17,113 11,469 61,695
Amortisation
At 1 January 2002 7,379 1,422 611 9,412
Charge for the year 1,984 2,081 559 4,624
At 31 December 2002 9,363 3,503 1,170 14,036
Net book value
At 31 December 2002 23,750 13,610 10,299 47,659
At 31 December 2001 25,734 8,954 10,357 45,045
8. Debtors
2002 Restated
2001
#'000 #'000
Amounts falling due within one year:
Trade debtors 3,519 6,134
Deferred tax asset 98 30
Other debtors 737 82
Prepayments and accrued income 4,656 1,583
9,010 7,829
Trade debtors 223 191
Amounts owed by Group undertakings - -
223 191
Total debtors 9,233 8,020
9. Creditors: amounts falling due within one year
2002 Restated
2001
#'000 #'000
Loan notes payable (Note 11) 2,894 9,216
Term loan 812 -
Bank overdraft 126 -
Mortgage payments due 86 98
Obligations under finance leases 128 44
Trade creditors 1,797 1,416
Deferred tax liability 50 125
Other taxation and social security 926 500
Other creditors - 150
Accruals and deferred income 6,500 3,394
13,319 14,943
As at 31 December 2002, finance costs of #112,000 (2001 - #146,000) are
capitalised against the loan notes payable of #3,006,000 (2001 - #9,362,000) and
are being amortised over the term of the banking facility made available to
cover these loan notes.
10. Creditors: amounts falling due after more than one year
2002 Restated
2001
#'000 #'000
Loan notes payable (Note 11) - 3,000
Term loan 8,652 -
Deferred tax liability 1,279 1,136
Amounts owed to Group undertakings - -
Obligations under finance leases 129 47
Mortgage payments due 274 305
10,334 4,488
11. Financial instruments
On 28 June, 2002 the vendors of Link Licensing Limited called on #6,421,574 of
principal loan notes that were issued in connection with the acquisition of Link
Licensing Limited in April, 2001. On 6 November, 2002 the vendors of Woodland
Animations Limited called on #3,042,411 of principal loan notes that were issued
in connection with the acquisition of Woodlands Animations Limited in November,
2001. The Group drew down #9.5 million of the #12.5 million term loan facility
in order to finance the loan note redemptions.
As at 31 December 2002, #3,000,000 of loan notes remain redeemable within one
year at a fixed rate of 4% p.a.
Undrawn committed borrowing facilities
The Group has undrawn committed borrowing facilities, which were available at 31
December 2002 of #5.5 million (2001 - #15 million). The facilities comprise a
term loan and guarantee of #3 million to repay the unredeemed loan notes
remaining from the acquisition of Woodland Animations Limited, and a revolving
credit facility of #2.5 million, both at floating LIBOR +1.75%.
Borrowing Commitments
Details of the committed borrowing facilities as at 31 December 2002 and the
repayment terms follow:
Term Loan Revolving facility
#'000 #'000 Total
#'000
Within 1 year 812 312 1,124
Greater than 1 but not more than 2 years 2,563 625 3,188
Between 2 and 5 years 9,125 1,563 10,688
12,500 2,500 15,000
12. Reconciliation of movements in shareholders' funds and reserves
Share Share Merger Profit Total
capital premium reserve and loss 2002
#'000 #'000 #'000 #'000 #'000
Group
At 1 January 2002 13,117 24,355 16,470 (14,809) 39,133
Loss for the year - - - (890) (890)
At 31 December 2002 13,117 24,355 16,470 (15,699) 38,243
13. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the consolidated loss after tax for the
period of #890,000 (2001 restated - #1,622,000 loss) and on 262,345,389 shares (2001 - 246,454,978), being
the weighted average number of ordinary shares in issue during the period.
In view of the loss for the period, the share options are anti-dilutive, and therefore a diluted per share is
not presented.
Reconciliation of the earnings and weighted average number of shares used in the calculations are set out
below:
2002 2001
#'000 #'000
Basic loss on ordinary activities after taxation (890) (1,622)
Amortisation of goodwill 1,984 1,356
Underlying earnings/(loss) 1,094 (266)
Weighted average number of shares in issue 262,345,389 246,454,978
Basic loss per share (pence) (0.34p) (0.66p)
Goodwill amortisation per share 0.76p 0.55p
Underlying earnings/(loss) per share (pence) 0.42p (0.11p)
14. Reconciliation of operating profit/(loss) to net cash outflow from operating
activities
2002 2001
#'000 #'000
Operating profit/(loss) 100 (735)
Depreciation and amortisation:
- tangible fixed assets 285 200
- intangible fixed assets 4,624 2,800
Loss/(gain) on disposal of tangible fixed assets 3 (1)
Increase in programme development costs (1,843) (628)
Increase in debtors and related items (2,183) (4,384)
Increase in creditors and related items 3,347 1,220
4,333 (1,528)
15. Reconciliation of net cash flow to movement in net (debt)/funds
2002 2001
#'000 #'000
(Decrease)/increase in cash in the (1,370) 1,062
period
Cash (inflow)/outflow from (increase)/decrease in debt and lease (9,318) 56
financing
Cash (outflow) from increase in liquid resources - (5,165)
Change in net debt resulting from cash flows (10,688) (4,047)
Redemption/(issue) of loan notes 9,322 (12,216)
New finance lease (269) (60)
Net debt and lease financing acquired through acquisition of subsidiary - (456)
(1,635) (16,779)
Net (debt)/funds at the start of the (10,605) 6,174
period
Net (debt)/funds at the end of the (12,240) (10,605)
period
16. Analysis of changes in net debt
At 1 January Non-Cash Foreign At 31 December
2002 Changes Exchange Cashflow 2002
#'000 #'000 #'000 #'000 #'000
Cash at bank and in hand 2,105 - (67) (1,177) 861
Bank overdrafts - - - (126) (126)
2,105 - (67) (1,303) 735
Debt less than one year:
- Loan notes payable (9,216) (3,039) - 9,361 (2,894)
- Term loan - - - (812) (812)
- Mortgage payments due (98) (31) - 43 (86)
(9,314) (3,070) - 8,592 (3,792)
Debt greater than one year:
- Loan notes payable (3,000) 3,000 - - -
- Term loan - - - (8,652) (8,652)
- Mortgage payments due (305) 31 - - (274)
(3,305) 3,031 - (8,652) (8,926)
Finance leases (91) (269) - 103 (257)
(10,605) (308) (67) (1,260) (12,240)
This information is provided by RNS
The company news service from the London Stock Exchange
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FR SFMEDWSDSEFD