Source - RNS
RNS Number : 3936L
DCD Media PLC
30 September 2016
 

·      Revenue

£3.3m (2015: £6.5m)

·      Gross profit

£1.2m (2015: £1.6m) 

·      Operating loss

£0.5m (2015: £0.2m) 

·      Unadjusted loss before tax

£0.5m (2015: £0.3m)

·      Adjusted EBITDA

£0.0m (2015: £0.1m) 

·      Adjusted profit/(loss) before tax

£0.0m (2015: (£0.0m)) 

·      Cash & cash equivalents

£0.9m (2015: (£1.5m)) 

·      Adjusted basic earnings per share

3p (2015: Loss 2p)

Highlights

 

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·      'The Rolling Stones: Havana Moon'

 

 

Post period events

 

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, commented:

"As indicated in the Chairman's statement in the 2015 Annual Report, the Board of DCD Media announced that, in order to strategically realign the business, it had ceased development activity within its production division. While the Group has had to make a number of redundancies, the outlook for the business going forward is positive. Despite the cessation of production, the Group will continue to focus on key production franchises including, September Films' Penn and Teller: Fool Us in Vegas having delivered season two to the CW Network in America, and Rize USA's Got What it Takes?, produced for CBBC in the UK.

 

"While the business reports an

 

"In the short-term, Group revenue is likely to be lower than it was (HY16 £3.3m; HY15: £6.5m) under the larger consolidated umbrella of production and rights. However, the Board anticipates the continued growth of the rights division and discussions are underway with a number of new funding partners keen to help the DCD Rights team acquire more programming on commercial terms.  

 

"Consistent with this theme, during the period, the rights team has achieved a number of notable successes and continue to set the pace as a leading independent global content distributor. DCD Rights achieved recognition for its ABC Australia drama Rake through nominations for best drama series in both the Screen Producer Awards and the AWGIEs.

 

"And returning for a second series, The Code has also been well-received, securing an AWGIE nomination, and landing major deals with AMC Networks International Broadcasting, Netflix, BBC, and broadcasters in Denmark, Canada, Iceland, and France. Both formats were amongst a number of DCD Rights distributed dramas including The Principal, Dreamland, Jack Irish and How To Murder Your Wife, which gained international recognition at several of the major film and television awards.

 

"We are also delighted to welcome Philippa Chuter to the new role of Senior Acquisitions Executive.

 

"In Sequence, the Group's post production business, the period saw

 

"To conclude, we are pleased with the steps taken by the Board during the course of the year and we anticipate a performance in line with management expectations for 2016 underpinning the new strategic focus."

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

 

 

Executive Chairman's Statement

 

This announcement presents the unaudited interim results for the Group for the six months ended 30 June 2016.

 

During the period, following a long-standing review of the production businesses, and in the context of strong competition from consolidated TV production companies with scale, the Board of DCD Media announced, in May 2016, that it had immediately ceased development activity within its production division. As a consequence, the Group unfortunately made a number of redundancies in the production businesses and support team, which has now concluded.

 

The resultant business is a rights focused play with an ambition for DCD Media to become one of the UK's leading independent distributors through a deep, globally-connected network of distribution relationships. The rights business has more than doubled in size in the last three years and has achieved success largely because it has been expertly managed and has proven itself to be a true partner to creative talent across the world. 

 

We are pleased to report that DCD Rights has delivered a promising first half performance in 2016, securing a range of world-wide distribution deals across a number of genres, to add to its catalogue, including scripted dramas, factual, entertainment, and music programming. As a consequence, it has further cemented its growing reputation as a rights business at the forefront of both media acquisition and distribution. 

 

This year's MIPTV, typically one of the Company's major trade marketplaces, saw the launch of a number of programmes which went on to secure major global deals. Real Detective, for example, struck deals with Netflix, Sony True Crime, Nine Networks Australia, Universal, and Sky Italy. The ratings proved to be exceptional, resulting in talks for the commissioning of a new season.

 

In May 2016, DCD Media relocated from its long-time Hammersmith accommodation to a streamlined facility next to Edgware Road in London's west end. The new facility is smaller but allows the Rights team to work effectively as a self-contained unit. The location has already proved to be a hugely popular space for meetings and for content demonstrations.

 

The strong reputation, credibility and success of the DCD Rights business, while widely recognised in the industry, is now generating interest in the investment community.

 

As alluded to above and consistent with the growth strategy, DCD Media has been working with third party investors to attract additional investment into programming, bolstering the content library. To date, the Company has struck an agreement with an EIS fund provider with more than £1m being made available from this fund already in addition to a fund which has been provided by DCD Media majority shareholder Timeweave Ltd. Further discussions are underway with new funding providers and material updates will be provided when appropriate. 

 

In the Post Production business, Sequence, has formed some new relationships with successful production teams. We are delighted that Sequence has continued to build on its strong reputation for music content post production and continues to forge ahead with new clients in broad based TV production genres.

 

We are pleased that we now have a business which feels capable of sustained growth on a stable platform, and that has the capacity to challenge in the marketplace and is proving to be a long-term partner with TV distributors and content houses alike across the world. 

 

1.             Financial Review

 

 

 

2.             Profit and Loss Review

 

Revenues for the six months to 30 June 2016 were £3.3m (2015: £6.5m). The decrease is primarily due to the poor uptake of new production commissions coupled with the cessation of Celebrity Squares.  The development of new programmes has ceased and several redundancies were announced.  These results include the redundancy and other restructuring costs associated with this decision.  

 

DCD Rights has performed well despite revenue falling by £0.5m to £2.7m.  This reduction in revenue has been caused by a couple of larger contracts being signed early in July 2016 whereas their prior year equivalents were concluded before the period end in June 2015. 

 

Adjusted profit before tax was £0.02m (2015: loss £0.02m), resulting in an adjusted gain per share for the period of 3p (2015: loss 2p). Due to the £0.2m non-cash charge against intangibles, described in the balance sheet section below, and £0.3m of restructuring costs in the period, the Group's statutory loss after tax was £0.4m (2015: £0.2m).

 

Adjusted profit or loss before tax (PBT or LBT) is the measure used by the Group to indicate operating performance and aims to reflect normalised trading before exceptional, restructuring items and non cash impairment charges, but after net finance costs. Adjusted PBT was £0.03m (2015: LBT £0.02m). This change is largely down to restructuring cost add backs and continued cost control efforts across all divisions.

 

A reconciliation of the Group's operating loss to Adjusted Loss before Tax and Earnings before Interest Tax Depreciation

and Amortisation (EBITDA) is shown below:

 

Intangible assets as at 30 June 2016 stood at £1.5m (2015: £3.8m). The balance as at 31 December 2015 was £1.8m and details of this movement were explained in the results for the year ended 31 December 2015. The subsequent movement in intangible assets within the six month period to 30 June 2016 reflects the ongoing amortisation of trade names of £0.2m (2015: £0.2m) and the net capitalisation, amortisation and impairment of programme rights of £0.04m (2015: £0.07m).

 

Trade and other receivables and trade and other payables at £9.0m (2015: £7.1m) and £9.6m (2015: £7.5m) respectively have both risen due to the continued increase in activity in DCD Rights. 

 

Cash on hand at the period end stood at £1.2m (2015: £2.1m). T. The balance at June 2015 contained £0.6m of cash in relation to production activity.

Bank overdrafts are secured by a fixed charge over the Group's intangible programme rights and a floating charge over the remaining assets of the Group.  The bank overdraft has been extended to the 31 October 2016, and is repayable on demand. The Directors expect an overdraft facility to be available to the Group for the foreseeable future.

 

The Group continues to be in discussion with Timeweave to formalise this debt.

The amounts recoverable from HMRC in relation to VAT and social security stood at £0.3m (2015: owing to HMRC of £0.3m).

 

There is no UK tax charge as a result of losses available for offset. No deferred tax asset has been recognised in relation to these losses.

 

Called up share capital at 30 June 2016 stood at £12.3m (2015: £10.1m).  The balance as at 31 December 2015 was £12.3m and details of the movement in the second half of 2015 can be found in the results to 31 December 2015. 

                                                                                                                                                                                 

No interim dividend is proposed for the period. Adjusted earnings per share are disclosed in note 3 to the interim financial statements. 

 

4.             Substantial shareholdings

 

As at 29 September 2016, the following notifications had been made by holders of beneficial interests in 3% or more of the Company's issued ordinary share capital as follows:

*Timeweave Ltd and Colter Ltd are under common ownership.

**Henderson means Henderson Global Investors Limited and certain funds managed by Henderson Alternative Investment Advisor Limited.

 

DCD Rights has had a very encouraging first half of 2016, securing an array of world-wide distribution deals across a number of genres to add to its catalogue, including scripted dramas, factual, entertainment, and music programming.  As a result it further cemented its growing reputation as a business at the forefront of both media acquisition and distribution. 

 

Hit ABC Australian drama Rake had yet another successful season, receiving nominations as best drama series for both the Screen Producer Awards, and the AWGIE's. The series sold exceptionally well across many territories including the US, Australia, Europe, Latin America, and the Middle East. The third and fourth seasons saw a number of big names such as Cate Blanchett and Miriam Margolyes grace the screens alongside Richard Roxburgh.

 

Returning for a second series, The Code also proved successful, receiving an AWGIE nomination, and landing major deals with AMC Networks International Broadcasting, Netflix, BBC, and broadcasters in Denmark, Canada, Iceland, and France. Both formats were amongst a number of DCD Rights distributed dramas including The Principal, Dreamland, Jack Irish and How To Murder Your Wife, which gained international recognition at several of the major film and television awards.

 

MIPTV saw the launch of a number of programs which went on to secure major global deals. Real Detective, for one, struck deals with Netflix, Sony True Crime, Nine Networks Australia, Universal, and Sky Italy. The ratings proved to be exceptional, resulting in talks for the commissioning of a new season. 

 

On the culinary front, Sarah Graham's Food Safari sold well, with deals across major broadcasters including Discovery, The Food Network, AMC Networks International Broadcasting in Latin America, and more. On the back of the success of the first season, a new season has been commissioned. Meanwhile, in our music catalogue, DCD is quickly topping the charts as a 'go-to' distributor for hit music programming, with global sales on programs such as David Gilmour - Wider Horizons.

 

Finally, the first six months of 2016 has been a big year for the DCD Rights team dynamic, with a number of new additions to the legal, accounts, technology, sales, and acquisitions departments. Most noteworthy, was the recent hiring of Acquisitions Executive, Phillipa Chuter, who has already initiated the acquisition of many new titles including most notably from independent producers such as Tern TV.

 

 

 

After seven months of skilled work across the team, the films were delivered to Eagle Rock in August 2016 (ingest and transcoding commenced in early February 2016) and Sequence aims to capitalise on its involvement in these projects. The sense of achievement throughout the team has been palpable.

 

One project from this year, namely 'Ed Sheeran: Jumpers for Goalposts' has been entered for a Broadcast Award for 'Best Music Documentary' and Sequence is also vying for the 'Best Post House' too.

 

Amidst the larger scale shows, Sequence has formed new relationships with several short form production teams. Commercial / Brand work is generally much more profitable than standard HD Broadcast work so the aim for the near future is to focus on encouraging more of these type of relationships.

 

6.             Outlook

 

The last six months has been challenging for the business given the obvious shift to a more streamlined, cash-flow positive and stable business. But the transition has been a necessity and has now brought with it a refreshing and tangible energy in the rights team as they forge ahead with their strategic goals for the next two to three years.

 

As a Board, we are happy with the balance we have now struck with a capable, skilled and motivated team who are comfortable operating at any level and are highly-respected among their industry peer group. The challenge for the Board going forward is ensuring we have sufficient capital for the acquisition of good content; and once that has been achieved, that we maintain the highest standards possible for content acquisition to protect the integrity of the existing library and the reputation of the team for putting quality ahead of quantity. 

 

The outlook in the short to medium term is very encouraging, as we continue to expand and enrich our library and seek to affirm our position as one of the UK's most progressive TV content distribution businesses.

 

In my time as Chairman and CEO of DCD Media, the future has never looked brighter.

 

 

 

David Craven

Executive Chairman

30 September 2016

 

Consolidated income statement (unaudited) for the 6 months ended 30 June 2016


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

(expressed as pence per share)

 

 

 

 

 


Consolidated statement of comprehensive income (unaudited) for the 6 months to 30 June 2016

 


















Consolidated statement of financial position (unaudited) at 30 June 2016

 





Assets

Non-current

Goodwill

Other intangible assets

Property, plant and equipment

Trade and other receivables



Current assets


Inventories

Trade and other receivables

Taxation and social security

Cash and cash equivalents



Liabilities


Current liabilities


Bank overdrafts

Bank and other loans

Unsecured convertible loan

Trade and other payables

Taxation and social security

Obligations under finance leases




Non-current liabilities


Obligations under finance leases

Deferred tax liabilities






Net assets



Equity


Called up share capital

Share premium account

Equity element of convertible loan

Translation reserve

Own shares held

Retained earnings


Equity attributable to owners of the parent


Non controlling interest


Total equity



Consolidated statement of cash flows (unaudited) for the 6 months ended 30 June 2016


Cash flow from operating activities


Net loss before taxation

Adjustments for:

Depreciation of tangible assets

Amortisation and impairment of intangible assets

Net bank and other interest charges

Increase in stock provision

Net exchange differences on translating foreign operations



Net cash flows before changes in working capital


Decrease in inventories

Increase in trade and other receivables

Increase in trade and other payables


Cash from operations


Interest paid


Net cash flows from operating activities



Investing activities


Purchase of property, plant and equipment

Purchase of intangible assets


Net cash flows used in investing activities



Financing activities


Repayment of finance leases

Repayment of loan

New loans raised


Net cash flows from financing activities


Net increase in cash


Cash and cash equivalents at beginning of period


Cash and cash equivalents at end of period

 

 


                       Statement of changes in equity (unaudited)


Share capital

Share premium

Equity element of convertible loan

Translation

reserve

 

 

 

Own Shares Held

Retained earnings

Equity attributable to owners of the parent

Amounts attributable to non-controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000











Balance at

30 June 2014

10,145

51,118

99

(201)

 

(37)

(58,476)

2,648

(137)

2,511











Loss and total comprehensive income for the period

-

-

(1)

-

 

 

-

-

(1)

79

78

Exchange differences on translating foreign operations

-

-

-

20

 

 

-

-

20

-

20











Balance at

31 December 2014

10,145

51,118

98

(181)

 

(37)

(58,476)

2,667

(58)

2,609











Loss and total comprehensive income for the period

-

-

-

-

 

 

-

(228)

(228)

(5)

(233)

Exchange differences on translating foreign operations

-

-

-

(2)

 

 

-

-

(2)

-

(2)











Balance at

30 June 2015

10,145

51,118

98

(183)

 

(37)

(58,704)

2,437

(63)

2,374











Loss and total comprehensive income for the period

-

-

-

-

 

 

-

(2,096)

(2096)

95

(2,001)

Shares allotted on conversion of loan notes

2,127

-

-

-

 

-

-

2,127

-

2,127

Equity element on conversion of convertible loans

-

97

(97)

-

 

 

-

-

-

-

-

Exchange differences on translating foreign operations

-

-

-

6

 

 

-

-

6

-

6











Balance at

31 December 2015

12,272

51,215

1

(177)

 

(37)

(60,800)

2,474

32

2,506











Loss and total comprehensive income for the year

-

-

-

-

 

 

-

(444)

(444)

(8)

(452)

Exchange differences on translating foreign operations

-

-

-

3

 

 

-

-

3

-

3











Balance at

30 June 2016

12,272

51,215

1

(174)

 

(37)

(61,244)

2,033

24

2,057

 

 

Notes to the interim financial statements (unaudited)

 

Nature of operations and general information

 

During the period, the principal activity of DCD Media Plc and subsidiaries (the Group) was the production of television programmes in the United Kingdom, and the worldwide distribution of those programmes for television and other media; the Group also distributes programmes on behalf of other independent producers. On 27 May 2016, the Group announced the cessation of development in its TV production divisions and the continued focus is primarily on the distribution division.

 

DCD Media Plc is the Group's parent company, and it is incorporated and domiciled in Great Britain. The address of DCD Media Plc's registered office and its principal place of business is 9th Floor Winchester House, 259-269 Old Marylebone Road, London, NW1 5RA. DCD Media Plc's shares are listed on the AIM market of the London Stock Exchange.

 

DCD Media Plc's condensed consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.

 

These condensed consolidated interim financial statements have been approved for issue by the Board of Directors on 30 September 2016.

 

The financial information in the half yearly report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the half yearly report are those the Group expects to apply in its financial statements for the year ending 31 December 2016 and are unchanged from those disclosed in the Group's Directors' Report and consolidated financial statements for the year ended 31 December 2015. This interim report has neither been audited nor reviewed pursuant to guidance issued by the Audit Practice Board.

 

The financial information for the six months ended 30 June 2016 and the six months ended 30 June 2015 is unaudited and does not constitute the Group's statutory financial statements for those periods. The comparative financial information for the full year ended 31 December 2015 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified.

 

While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

 

1.             Basis of preparation

 

These interim condensed consolidated financial statements (the Interim Financial Statements) are for the six months ended 30 June 2016. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2015.

 

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements and remain unchanged form those set out in the previous audited consolidated financial statements.

 

Basis of preparation - Going Concern

 

 

 

 

 

2.             Tax

 

There is no UK tax charge as a result of losses available for offset. No deferred tax asset has been recognised in relation to these losses.

 

 

 

3.             Loss per share

 

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the average number of shares in issue during the period.

 

 



 

4.             Dividends

 

The Directors do not propose to recommend the payment of a dividend.

 

 

5.             Events after the reporting date

 

On 18 August 2016, David Green resigned as non-executive director of the Company. 

 

 

6.             Publication of non-statutory accounts

 

Copies of the Interim Financial Statements are available from the registered office of DCD Media Plc or from the website - www.dcdmedia.co.uk. The address of the registered office is: 9th Floor, Winchester House, 259-269 Old Marylebone Road, London, NW1 5RA.

 

 


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