TIDMDCD
RNS Number : 9286P
DCD Media PLC
01 June 2018
The information communicated in this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
DCD Media Plc
("DCD Media" or the "Company")
Audited results for the year ended 31 December 2017
DCD Media and its subsidiaries, the independent TV distribution
and production group ("the Group"), today report results for the
year ended 31 December 2017.
Financial Summary
Continuing operations:
-- Revenue GBP10.2m (2016: GBP8.2m)
-- Gross profit GBP2.5m (2016: GBP2.5m)
-- Operating profit/(loss) GBP0.5m (2016: (GBP0.1m))
Discontinued operations:
-- Revenue GBP0.4m (2016: GBP0.4m)
-- Gross profit GBP0.3m (2016: GBP0.3m)
-- Operating (loss)/profit (GBP0.1m) (2016: GBP0.1m)
Group results:
-- Operating profit GBP0.4m (2016: GBP0.0m)
-- Adjusted EBITDA GBP0.8m (2016: GBP0.8m)
-- Adjusted profit before tax GBP0.8m (2016: GBP0.8m)
Please refer to the table within the Performance section within
the Group Strategic Report for an explanation of the profit
adjustments.
Business highlights
-- Filming of the third series of Penn & Teller: Fool Us in
Vegas was completed in H1 2017. The series is a co-production
between 1/17 Productions and September Films for the CW Network in
the USA.
-- DCD Rights secured the distribution rights for the ongoing
hit American series Mama June: From Not to Hot following its
premiere on WE tv.
-- DCD Rights signed a number of new deals for its diverse
selection of factual and factual entertainment content, including
presales for the brand new second season of Electric Pictures'
reality series Aussie Gold Hunters.
-- DCD Rights' distribution title, My Baby, Psychosis & Me,
won Best Factual Documentary at the RTS Scotland Awards.
-- DCD Rights signed a multi-territory deal with SundanceTV
Global for conspiracy thriller Acceptable Risk as well as major
deals with a number of high profile subscription streaming
services.
-- MIPTV - DCD Rights celebrated its first 10 years with an
event at MIPTV in Cannes. After signing a number of early sales for
the factual entertainment series James Martin's French Adventures
distributed by DCD Rights, James Martin was on hand at the event,
speaking directly to more potential buyers.
-- DCD Rights has continued to secure additional funding for content acquisition.
-- Series two of Rize USA's hugely popular talent show for
teenagers Got What it Takes? aired on CBBC.
-- DCD Rights secured a format deal with WE TV for the return of
the highly popular and long running September Films' series
Bridezillas, which will make its debut in early 2018 on WEtv.
-- Series three of Rize's popular children's reality show Got
What it Takes? began to air in Q1 2018.
Overview
We are pleased to announce the full year results for DCD Media
which demonstrate a strong operational platform that positions the
Company well for future organic growth.
Turnover for the year ending 31 December 2017 was GBP10.2m
(2016: GBP8.2m) which represents a highly credible achievement of
c.25% top-line growth. The Company achieved a 2.0% increase in
adjusted EBITDA to GBP0.80m (2016: GBP0.79m). Operating profit was
recorded at GBP0.4m and continued to improve against previous years
(2016: GBP0.0m).
During the year, the business was profitable and the rights
division saw its fifth consecutive year of turnover growth and with
the benefit of access to additional funding, acquired rights and
primed the market for sales in this fiscal year. The Board expects
revenue growth to continue in the current financial year.
We were delighted that anticipated revenue growth in the second
half of the fiscal year was delivered by a highly professional and
energised management team. The Board believes the stable and
scalable operational platform will enable the team to drive further
sales growth. The Board is confident that the market backdrop will
present significant opportunities and the prospects for further
expansion are positive going forward into the new fiscal year.
The Board remains confident in the long-term potential of the
DCD Media business. Continued year-on-year improvements in both
revenue and EBITDA are a reflection of the historic work undertaken
to consolidate the business into a pure-play international TV
rights distribution. The growth has also been made possible as a
consequence of access to competitively-priced third-party funding
for the acquisition of programming rights.
Following an office move in the previous year; the team is now
well-established with its new headquarters in premises off Edgware
Road, Marylebone, close to the BBC and other key UK-based
customers.
Over the last few years, under Timeweave's management, actions
to restructure the Group, reduce the cost structure and refocus the
business on the burgeoning sales and distribution market have been
taken. This work also included the rationalising of the production
divisions ensuring that output from productions has remained very
strong through outsourced co-production arrangements.
The Board is particularly pleased, therefore, to note that core
formats vesting in the production entities have been recommissioned
under co-production arrangements which provides both continued cash
flow for the Group and a growing library of 'owned' content to
complement the third-party rights held under licence.
Notably, filming of the third series of Penn & Teller: Fool
Us in Vegas was completed in the year H1 2017. The series is a
co-production between 1/17 Productions and September Films for the
CW Network in the USA. And series three of Rize's popular
children's reality show Got What it Takes? is currently in
production and began to air in Q1 2018.
We believe the marketplace continues to evolve and the
consumption model for consumers shifting heavily towards on-demand
content provision shows no signs of abating. Demand for quality
content is therefore high and DCD Media has capitalised by
increasing its sales territories as well as booking block deals
with major international cable and SVOD platforms. The year also
saw the continued expansion of the catalogue across all genres,
with approximately 10% more hours available than in the previous
year.
David Craven, Executive Chairman and Chief Executive Officer,
commented: "We are delighted to report very strong sales growth in
the business this year and there is plenty of capacity to grow in
the market going forward. Positive trading conditions generally
increases competition in the market for quality content and the DCD
Rights team have prevailed against the tough commercial challenges
which face small independent TV distributors.
"The key challenge going forward is to ensure the business has
available funding together with strong pipelines and sources for
award-winning content to showcase in the library for the coming
years. DCD Media is very well placed to benefit from a scaled
operation and we fully expect the business to thrive in the
marketplace.
"The DCD Media business reports an adjusted EBITDA profit of
GBP0.80m compared with GBP0.79m in 2016. Although a modest
increase, the top-line growth of c.25% in sales sets the business
on the correct footing for continued growth. The success in revenue
growth is brought about through a strong and experienced management
team, more sources of programme funding and a strong, credible
reputation in the marketplace.
"The Board remains optimistic for the future and we see
expansion from the rights division. With continued access to
funding; we have a thriving rights business capable of sustained
growth in the future."
For further information please contact:
Lucy Pryke Stuart Andrews / Carl Holmes
Investor Relations/ Media / Giles Rolls
Relations, DCD Media Plc finnCap
Tel: +44 (0)20 3869 0190 Tel: +44 (0)20 7220 0500
ir@dcdmedia.co.uk
Executive Chairman's review
The core rights business continued its expansion phase with
strong year-on-year revenue growth supported by a solid underlying
EBITDA performance for the financial year.
Supporting this financial performance, DCD Rights consolidated
its position as one of the world's top independent TV rights
distributors in 2017 with quality additions to the library and
sales to a wider client base than ever before. The team struck two
significant 'block' international deals with major SVOD channels,
as well as achieving a large number of international,
multi-territory sales worldwide.
The DCD Rights team successfully negotiated a further season of
the 1/17 Productions and DCD Media's co-production of Penn &
Teller: Fool Us, for US network The CW. The entertainment show
features world famous magicians Penn and Teller and continues to
prove a top-rated show for the network.
Also, the team reached agreement with WEtv in the US to bring
back the iconic, long-running show Bridezillas, in a new series of
the September Films format, to be produced by WEtv. This new series
reinvigorates the catalogue which sees more than 200 episodes of
Bridezillas featured within the DCD Rights factual entertainment
portfolio.
At MIPTV in April, DCD Rights celebrated its first 10 years of
business, with the launch of James Martin's French Adventure. The
celebrity chef was on hand to encourage buyers directly to acquire
the show for audiences internationally. Earlier in 2017, DCD Rights
announced the completion of a variety of early sales deals ahead of
the launch and the series has now been marketed to over 40
territories.
DCD Rights' Factual Catalogue scooped awards including; Ocean
Adventurer at the SAFTA's (South Africa Film and Television
Awards), My Baby, Psychosis & Me at the RTS Scotland Awards
together with Real Detective, which received four nominations at
the Canadian Screen Awards.
At MIPCOM in autumn 2017, DCD Rights launched a major new
contemporary political thriller Romper Stomper, starring David
Wenham and Sophie Lowe. The STAN original series, which recorded
more viewing in its first 24 hours than any previous premiere, was
acquired by BBC Three UK and Sundance TV in an international,
multi-territory deal with its contemporary and topical issues being
faced by many countries worldwide.
The Board wants to thank the management team and staff at DCD
Media for their hard work and dedication in the fiscal year and for
their support over recent years helping to consolidate and reshape
the business.
The Board believes that we are well placed for DCD Media's
rights and distribution business to deliver strong growth in 2018
and beyond.
D Craven
Executive Chairman and Chief Executive Officer
31 May 2018
Group strategic report
Strategic outlook
The backdrop for TV content consumption is positive, albeit TV
markets can be volatile and smaller companies will continue to be
under-funded when high value third-party rights are presented to
the market.
Accordingly, and in common with other rights acquirers, the
Group requires access to affordable third-party TV programming and
funding, but remains confident that its key value drivers will
continue to deliver these and associated year-on-year growth.
The Group's development strategy has an underlying value
philosophy, focusing primarily on layering market leading quality
content into the library supported by Timeweave and third-party
funding. Management are now working more closely with evolving
producers in the market and are taking initiatives to acquire small
wholesale libraries where possible to create shareholder value and
to generate improved equity returns.
The Board is therefore optimistic in its outlook for 2018 with
all elements of the content acquisition process well advanced to
ensure the Group has secured licence deals on quality titles to
bring the library to market with a fresh and compelling
offering.
The Board looks forward to future growth in 2018.
Review of divisions for the year to 31 December 2017
Rights and Licensing
DCD Rights
During the year, DCD Rights negotiated a further season of the
1/17 Productions and DCD Media owned, September Films,
co-production of Penn & Teller: Fool Us, for US Network The CW.
The competition based entertainment show features world famous
magicians Penn and Teller and continues to prove a top rated show
for the network.
In addition, the team reached agreement with WEtv in the US to
bring back the iconic, long running show Bridezillas, in a new
series of the September Films format, to be produced by WEtv. This
new series reinvigorates the catalogue which now sees more than 200
episodes of Bridezillas featured within the DCD Rights factual
entertainment portfolio with a plethora of international sales to
territories ranging from the UK, Poland, Belgium and Australia.
Having already achieved success with reality content including
the Bridezillas spin-off, Marriage Boot Camp: Bridezillas, Marriage
Boot Camp Reality Stars, DCD Rights secured a deal for distribution
rights for America's number one new reality show Mama June: From
Not To Hot. The series included 30 hours of new reality content and
the latter has captured the imagination of buyers from Italy, Latin
America, Africa and New Zealand.
Following the success of factual crime programming, Swipe Right
for Murder, in association with UKTV's Really Channel, Australia's
Seven Network and MediaWorks New Zealand, became part of a new
slate of co-production projects for DCD Rights, with the intention
to boost its output to five series per year. A second series of
Nurses Who Kill, also a co-production partnership, was unveiled for
sales in October. Throughout the year, DCD Rights continued
long-term relationships with independent producers in order to
maintain the increased demand for market tailored programming.
During MIPTV in April, DCD Rights celebrated its first 10 years
of business, with a cocktail party in Cannes and where the launch
of James Martin's French Adventure was its focus. The celebrity
chef was the guest of honour and encouraged buyers directly to
acquire the show for audiences internationally. Earlier in the
year, it was announced that DCD Rights had completed a variety of
early sales deals ahead of the launch and the series has now been
sold to over 40 territories.
At the midpoint, DCD Rights continued to match the demand for
high quality factual and factual entertainment content. An assembly
of new deals were signed, as well as pre-sales for a second season
of reality series Aussie Gold Hunters, before heading to NATPE
Budapest to showcase their latest releases.
With preparations to showcase even more factual content at
MIPCOM, DCD Rights signed a number of significant presales for a
range of new programming including; Dangerous Borders: A Journey
Across India And Pakistan picked up by Arte (France and Germany),
Best Laid Plans sold to Foxtel Australia and a second series of Art
Detectives, which hit the headlines with its discovery of a Rubens
masterpiece. Factual programming performed well on the
international front and continues to sell well globally, alongside
ongoing relationships with industry leading production companies.
DCD Rights also continued to work alongside Matchlight in an output
deal that includes recent titles, The Real Doctor Zhivago and the
three-part Darcey Bussell: Looking For... series.
DCD Rights' Factual Catalogue also achieved great results by
winning awards which included; Ocean Adventurer at the SAFTA's
(South Africa Film and Television Awards), My Baby, Psychosis &
Me at the RTS Scotland Awards together with Real Detective, which
received four nominations at the Canadian Screen Awards.
The DCD Rights Drama Catalogue maintained its excellence ahead
of MIPTV earlier in the year with a significant multi-territory
deal with Sundance TV Global for Acceptable Risk. The
internationally produced conspiracy thriller aired across many
countries later in the year and proved to be one of the highest
rated shows on Danmarks Radio in Denmark.
At MIPCOM, DCD Rights launched a major new contemporary
political thriller Romper Stomper, starring David Wenham and Sophie
Lowe. The STAN original series, which recorded more viewing in its
first 24 hours than any previous premiere, was acquired by BBC
Three UK and Sundance TV in an international, multi-territory deal
with its contemporary and topical issues being faced by many
countries worldwide.
Having already proved popular with the first series, returning
drama Striking Out was renewed in two early presale deals,
extending its potential to international buyers as a trademark
series. Both series were picked up by Channel 5 later in the year,
to air during the launch of their new channel, 5Select. The first
series also saw Amy Huberman win the award for 'Best Actress In A
Lead Role In Drama' at the IFTA's and picked up a nomination for
'Best Drama'.
Dreamland (Utopia), a comedy now in its third series, accepted
the award for 'Best Comedy Television Series' for the second time
at the annual AACTA Awards, as well as nominations for its artistic
flair. This was alongside nominations for distributed titles Janet
King: Playing Advantage and Deep Water: The Real Story.
Deep Water and Deep Water: The Real Story were also nominated
for six awards across both projects at the LOGIE awards in April.
Deep Water continued its excellence at the Seoul Drama Awards,
where the short series won the 'Silver Bird' Excellence Award For
Mini Series. This deeply moving series sold into the BBC, North
America and played out in a multi-territory deal on significant
SVOD platforms.
Productions
The DCD Media productions division comprised the following
brands:
September Films London, UK
UK
Rize Television London, UK
The output of September Films is overseen by DCD Media and
complimented by the Group's Rights and Licensing division.
September Films
As announced on 22 December 2017, September Films agreed to
co-produce, with US based 1/17 Productions, a further series of the
highly successful entertainment show, Penn & Teller: Fool Us.
This is the fourth season produced in the US and the fifth season
overall. It will consist of 13 episodes and continue to be hosted
by Alyson Hannigan and again feature the world famous magicians
Penn & Teller. The show will continue to be aired on The CW
network in the US following the renewal of the licence
accordingly.
September Films will continue to be involved in the production
of future series of Penn & Teller: Fool Us. The company
continues to review its library of formats and titles.
Rize
Rize continues to be involved in the production of Got What It
Takes? which is now into its third series and began to air in Q1
2018. The second series finished in April 2017 culminating with the
winner playing at BBC Radio 1's Big Weekend summer festival in
Hull.
Rize USA will continue to be involved in the production of
future series of Got What it Takes?.
Post - Production
Sequence Post
During the year Sequence Post ceased trading following an over
burdening rent increase imposed on it. Despite several attempts to
save the business, management were unable to locate suitable and
affordable new premises or to find an interested buyer to take the
business forward. As a result, the staff were made redundant and
the business ceased trading at the end of November 2017.
Performance
At a turnover level, the Group delivered GBP10.6m in revenue,
GBP10.2m from continuing operations compared with GBP8.2m in 2016.
The Group is now entering a growth stage having previously
consolidated the less profitable production strands of the business
as mentioned in prior years.
The Group made an operating result for the year of GBP0.4m
(2016: GBP0.0m), which is stated after impairment and amortisation
of intangible assets, including goodwill and trade names.
Adjusted EBITDA and Adjusted PBT are the key performance
measures that are used by the Board, as they more fairly reflect
the underlying business performance by excluding the significant
non-cash impacts of goodwill, trade name and programme rights
amortisation and impairments.
The headline adjusted EBITDA in the year ended 31 December 2017
was GBP0.8m (2016: GBP0.8m), inclusive of GBP0.3m of foreign
exchange gains (2016: GBP0.5m).
Adjusted continuing profit before tax for the Group was GBP0.8m
in 2017 (2016: GBP0.8m).
The following table represents the reconciliation between the
operating profit/(loss) per the consolidated income statement and
adjusted Profit Before Tax (PBT) and adjusted Earnings Before
Interest Tax Depreciation and Amortisation (EBITDA):
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
Operating profit/(loss) per
statutory accounts (continuing
operations) 0.5 (0.1)
Add: Discontinued operations (0.1) 0.1
Operating result per statutory
accounts 0.4 0.0
Add: Amortisation of programme
rights 0.1 0.3
Add: Impairment of programme
rights 0.0 0.0
Add: Amortisation of trade
names 0.2 0.4
Add: Impairment of goodwill
and related intangibles 0.0 0.0
Less: Capitalised programme
rights intangibles 0.0 (0.2)
Add: Depreciation 0.0 0.0
EBITDA 0.7 0.5
Add: Restructuring costs - 0.3
Add: Loss on discontinued
operations 0.1 -
Adjusted EBITDA 0.8 0.8
Less: Net financial expense (0.0) (0.0)
Less: Depreciation (0.0) (0.0)
Adjusted profit before tax 0.8 0.8
--------------------------------- ------------- -------------
Intangible assets
The Group's consolidated income statement and consolidated
statement of financial position has again this year been impacted
by the amortisation and impairment of intangible assets, see note
11 to the consolidated financial statements.
The Group has seen amortisation and impairment of goodwill and
trade names for the year of GBP0.2m (2016: GBP0.4m) and a net
amortisation and impairment of programme rights of GBP0.0m (2016:
GBP0.3m).
The accounting implications, in terms of the effect of reporting
impaired intangible assets under International Financial Standards,
are explained below.
Goodwill
The Directors have assessed the carrying value of goodwill
attributable to September Films and have booked no impairment in
2017 (2016: GBPNil). This is in light of the back-end catalogue
income expected to be received within the business.
Trade names
Trade names are amortised over ten years on a straight line
basis and a non-cash expense of GBP0.2m was expensed in the year
relating to trade names. The carrying value of trade names after
the amortisation was GBPNil (2016: GBP0.2m).
Restructuring costs
Restructuring costs of GBP0.0m (2016: GBP0.3m) have been
disclosed in the consolidated statement of comprehensive income.
The 2016 amount relates to non-recurring costs within the
production entities whose activity was wound down in that year.
Earnings per share
Basic profit per share in the year was 17p (year ended 31
December 2016: 1p) and was calculated on the result after taxation
of GBP0.422m (year ended 31 December 2016: GBP0.033m) divided by
the weighted average number of shares in issue during the year
being 2,541,419 (2016: 2,541,419).
Balance sheet
The Group's net cash balances have decreased to GBP1.3m at 31
December 2017 from GBP2.2m at 31 December 2016. A substantial part
of the Group cash balances represent working capital commitment in
relation to its rights business and is not considered free cash.
The decrease in the year is largely due to temporary movements in
receivables and payables in working capital.
At the year end, the Group had an available gross overdraft
facility of GBP0.35m and a net facility of GBP0.175m.
Shareholders' equity
Retained earnings as at 31 December 2017 were GBP(60.6m) (2016:
GBP(61.0m)) and total shareholders' equity at that date was GBP2.9m
(2016: GBP2.5m).
Current trading
The Group has experienced a challenging start to the year in
line with other content distribution companies. However, the second
quarter has been more fruitful and the team at DCD Rights are
confident in surpassing 2017 sales levels and will continue to grow
the business.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance, financial
position and borrowings are set out above. In addition, note 17 to
the consolidated financial statements sets out the Group's
objectives, policies and processes for managing its financial
instruments and risk.
The Group's day-to-day operations are funded from cash generated
from trading and the use of an overdraft facility with other
activities funded from a combination of equity and short and
medium-term debt instruments. The overdraft facility reduced from
GBP0.25m to GBP0.175m during the year and has recently been
extended to November 2018. The facility reduced by a further GBP25k
after the year end giving a revised current limit of GBP0.15m. The
overdraft will be reviewed further by the Group's principal
bankers, Coutts & Co ("Coutts"), on 30 November 2018 but the
Directors have a reasonable expectation that an overdraft facility
will continue to be available to the Group for a period in excess
of 12 months from the date of approval of these financial
statements.
In considering the going concern basis of preparation of the
Group's financial statements, the Board has prepared profit and
cash flow projections which incorporate reasonably foreseeable
impacts of the ongoing challenging trading environment. These
projections reflect the management of the day-to-day cash flows of
the Group which includes assumptions on the profile of payment of
certain existing liabilities of the Group. They show that the day
to day operations will continue to be cash generative.
The Directors' forecasts and projections, which make allowance
for potential changes in its trading performance, show that with
the ongoing support of its shareholder and its bank; the Group can
continue to generate cash to meet its obligations as they fall
due.
The Directors have regular discussions with the Group's main
shareholders and its principal bankers and have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the annual report and financial statements.
Key Performance Indicators (KPIs)
Year ended Year ended
31 December 31 December
2017 2016
Revenue from continuing operations
(GBPm) 10.2 8.2
Continuing operating profit/(loss)
from operations (GBPm) 0.5 (0.1)
Adjusted EBITDA (GBPm) 0.8 0.8
Adjusted profit before tax
(GBPm) 0.8 0.8
------------------------------------- ------------- -------------
Principal risks and uncertainties
General commercial risks
The Group's management aims to minimise risk of over-reliance on
individual business segments, members of staff, productions or
customers by developing a broad, balanced stable of production and
distribution activities and intellectual property. Clear risk
assessment and strong financial and operational management is
essential to control and manage the Group's existing business,
retain key staff and balance current development with future growth
plans. As the Group operates in overseas markets, it is also
subject to exposures on transactions undertaken in foreign
currencies.
Production and distribution revenue
Production revenue will fall as the Group has ceased to pursue
productions in development and is due to focus on its two current
franchises. Distribution revenue is forecast to rise as this
division is the prime focus of the Group going forward.
Funding and liquidity
Costs incurred during production are not always funded by the
commissioning broadcaster. The Group policy is to maintain its
production cash balances to ensure there is no financial shortfall
in the ability to produce a programme. It is inherent in the
production process that the short-term cash flows on productions
can sometimes be negative initially. This is due to costs incurred
before contracted payments have been received, in order to meet
delivery and transmission dates. The Group funds these initial
outflows, when they occur, in three ways: internally, ensuring that
overall exposure is minimised; through a short-term advance from a
bank or other finance house; or through a short-term loan from
Timeweave Ltd, its main shareholder, which will be underwritten by
the contracted sale. The Group regularly reviews the cost/benefit
of such decisions in order to obtain the optimum use from its
working capital.
The Group's cash and cash equivalents net of overdraft at the
end of the period was GBP1.3m (2016: GBP2.2m) including certain
production related cash held to maintain the Group policy. The
Group debt consists primarily of an overdraft, some convertible
debt and accrued management recharges due to Timeweave. Details of
interest payable, funding and risk mitigation are disclosed in
notes 7, 15 and 17 to the consolidated financial statements.
Exchange rate risk
Management review expected cash inflows and outflows in source
currency and when required, take out forward options to protect
against any short-term fluctuations.
D Craven
Executive Chairman and Chief Executive Officer
31 May 2018
Group report of the Directors for the year ended 31 December
2017
The Directors present their report together with the audited
financial statements for the year ended 31 December 2017.
Principal activities
The main activities of the Group in the year continued to be
distribution and rights exploitation and content production. The
main activity of the Company continued to be that of a holding
company, providing support services to its subsidiaries.
Business review
A detailed review of the Group's business including key
performance indicators and likely future developments is contained
in the Executive Chairman's Review and Group Strategic Report,
which should be read in conjunction with this report.
Results
The Group's profit before taxation for the year ended 31
December 2017 was GBP0.5m (2016: loss of GBP0.1m). The result for
the year post-taxation was GBP0.4m (2016: GBP0.0m) and has been
carried forward in reserves.
The Directors do not propose to recommend the payment of a
dividend (2016: GBPnil).
Directors and their interests
At 31 December At 31 December
2017 2016
----------- ---------------------- ----------------------
Ordinary Deferred Ordinary Deferred
shares shares shares shares of
of of of GBP1 each
GBP1 GBP1 each GBP1
each each
----------- --------- ----------- --------- -----------
N Davies
Williams 781 69,317 781 69,317
----------- --------- ----------- --------- -----------
D Craven - - - -
----------- --------- ----------- --------- -----------
N McMyn - - - -
----------- --------- ----------- --------- -----------
A Lindley - - - -
----------- --------- ----------- --------- -----------
Mr Lindley and Mr McMyn are Non-Executive Directors. Biographies
of the Company's Directors can be found can be found on page 13 of
the consolidated financial statements.
Other than as disclosed in note 21 to the consolidated financial
statements, none of the Directors had a material interest in any
other contract of any significance with the Company and its
subsidiaries during or at the end of the financial year.
Substantial shareholdings
The Company has been notified, as at 30 May 2018, of the
following material interests in the voting rights of the Company
under the provisions of the Disclosure and Transparency Rules:
Name No. of GBP1 ordinary %
shares
Timeweave Ltd 1,818,377 71.55
Lombard Odier Investment
Managers 664,728 26.16
Share capital
Details of share capital are disclosed in note 18 to the
consolidated financial statements.
Employee involvement
The Group's policy is to encourage employee involvement at all
levels as it believes this is essential for the success of the
business. There is significant competition for experienced and
skilled creative staff and administrators. The Directors are aware
of this and have looked to encourage and develop internal resources
and to put in place succession plans. In addition, the Group has
adopted an open management style to encourage communication and
give employees the opportunity to contribute to future strategy
discussions and decisions on business issues.
The Group does not discriminate against anyone on any grounds.
Criteria for selection and promotion are based on suitability of an
applicant for the job. Applications for employment by disabled
persons are always fully considered, bearing in mind the respective
aptitudes of the applicants concerned. In the event of members of
staff becoming disabled, every effort will be made to ensure that
their employment with the Group continues and that appropriate
training is arranged. It is the policy of the Group that the
training, career development and promotion of disabled persons
should, as far as possible, be at least comparable with that of
other employees.
Financial instruments
Details of the use of financial instruments by the Company are
contained in note 17 to the consolidated financial statements.
CORPORATE GOVERNANCE
Statement of compliance
The Group has adopted a framework for corporate governance which
it believes is suitable for a company of its size with reference to
the key points within the UK Corporate Governance Code issued by
the Financial Reporting Council ("the Combined Code").
DCD Media Plc's shares are quoted on AIM, a market operated by
the London Stock Exchange Plc and as such there is no requirement
to publish a detailed Corporate Governance Statement nor comply
with all the requirements of the Combined Code. However, the
Directors are committed to ensuring appropriate standards of
Corporate Governance are maintained by the Group and this statement
sets out how the Board has applied the principles of good Corporate
Governance in its management of the business in the year ended 31
December 2017.
The Board recognises its collective responsibility for the
long-term success of the Group. It assesses business opportunities
and seeks to ensure that appropriate controls are in place to
assess and manage risk.
During a normal year, there are a number of scheduled Board
meetings with other meetings being arranged at shorter notice as
necessary. The Board agenda is set by the Chairman in consultation
with the other Directors and Company Secretary.
The Board has a formal schedule of matters reserved to it for
decision which is reviewed on an annual basis.
Under the provisions of the Company's Articles of Association
all Directors are required to offer themselves for re-election at
least once every three years. In addition, under the Articles, any
Director appointed during the year will stand for election at the
next annual general meeting, ensuring that each Board member faces
re-election at regular intervals.
The Directors are entitled to take independent professional
advice at the expense of the Company and all have access to the
advice and services of the Company Secretary.
Board committees
The Board has established an Audit, Nomination and Remuneration
Committee. All are formally constituted with written terms of
reference. The terms of reference are available on request from the
Company Secretary.
Relations with shareholders
The Company communicates with its shareholders through the
Annual and Interim Reports and maintains an on-going dialogue with
its principal institutional investors from time to time. The Board
welcomes all shareholders at the annual general meeting where they
are able to put questions to the Board. This assists in ensuring
that the members of the Board, in particular the Non-Executive
Directors, develop a balanced understanding of the views of major
investors of the Company.
The Group uses the website www.dcdmedia.co.uk to communicate
with its shareholders.
Internal control
The Board has overall responsibility for ensuring that the Group
maintains a sound system of internal control to provide it with
reasonable assurance that all information used within the business
and for external publication is adequate, including financial,
operational and compliance control and risk management.
It should be recognised that any system of control can provide
only reasonable and not absolute assurance against material
misstatement or loss, as it is designed to manage rather than
eliminate those risks that may affect the Group achieving its
business objectives.
Going concern
For the reasons set out in the Executive Chairman's Review, the
Directors consider it is appropriate to continue to adopt the going
concern basis in preparing the annual report and financial
statements.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union, and the parent company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (Financial Reporting Standard 102 "The
Financial Reporting Standard applicable in the United Kingdom and
Republic of Ireland' and applicable law). Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether IFRSs as adopted by the European Union and
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the consolidated
and parent company financial statements respectively; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and of the Company and
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Supplier payment policy
The Company and Group's policy is to agree terms of payment with
suppliers when agreeing the overall terms of each transaction, to
ensure that suppliers are aware of the terms of payment and that
Group companies abide by the terms of the payment.
Share capital
Details of the Company's share capital and changes to the share
capital are shown in note 18 to the consolidated financial
statements.
Resolutions at the Annual General Meeting
The Company's AGM will be held on Wednesday 27 June 2018.
Accompanying this Report is the Notice of AGM which sets out the
resolutions to be considered and approved at the meeting together
with some explanatory notes. The resolutions cover such routine
matters as the renewal of authority to allot shares, to dis-apply
pre-emption rights and to purchase own shares.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website
(www.dcdmedia.co.uk) in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors' responsibility also
extends to the on-going integrity of the financial statements
contained therein.
Charitable and political donations
Group donations to charities worldwide were GBPnil (2016:
GBPnil). No donations were made to any political party in either
year.
Auditors
After the year end, SRLV Audit Limited was appointed as auditor.
A resolution to re-appoint SRLV Audit Limited as the Company's
auditors will be put forward at the AGM to be held on 27 June
2018.
Disclosure of information to the auditors
In the case of each of the persons who are Directors at the time
when the annual report is approved, the following applies:
-- so far as that Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- that Director has taken all the steps that they ought to have
taken as a Director in order to be aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
Directors' Report approved by the Board on 31 May 2018 and
signed on its behalf by:
D Craven
Executive Chairman and Chief Executive Officer
31 May 2018
Consolidated income statement for the year ended 31 December
2017
Year ended Year ended
31 December 31 December
2017 2016
Note GBP'000 GBP'000
--------------------------------- ----- ------------- -------------
Revenue 10,243 8,165
Cost of sales (7,708) (5,642)
Impairment of programme rights 5 (13) (9)
--------------------------------- ----- ------------- -------------
(7,721) (5,651)
Gross profit 2,522 2,514
Administrative expenses:
- Other administrative expenses (1,792) (1,914)
- Amortisation of trade names 5 (209) (419)
- Restructuring costs - (287)
(2,001) (2,620)
Operating profit/(loss) 521 (106)
Finance costs (2) (24)
Profit/(loss) before taxation 519 (130)
Taxation 40 76
Profit/(loss) after taxation
from continuing operations 559 (54)
--------------------------------- ----- ------------- -------------
(Loss)/profit on discontinued
operations net of tax 3 (137) 87
Profit for the financial year 422 33
Profit attributable to:
Owners of the parent 422 33
422 33
--------------------------------- ----- ------------- -------------
Earnings per share attributable to the equity holders
of the Company during the year (expressed as pence
per share)
Basic profit/(loss) per share
from continuing operations 3 22p (2p)
Basic earnings per share from
discontinued operations (5p) 3p
Total basic profit per share 4 17p 1p
--------------------------------- ----- ------------- -------------
Diluted profit/(loss) per share
from continuing operations 3 21p (2p)
Diluted earnings per share
from discontinued operations (5p) 3p
Total diluted profit per share 4 16p 1p
--------------------------------- ----- ------------- -------------
Consolidated statement of comprehensive income for the year
ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Profit for the financial year 422 33
Other comprehensive income
Exchange gains arising on translation
of foreign operations - 177
Total other comprehensive income - 177
Total comprehensive income 422 210
---------------------------------------- ------------- -------------
Total comprehensive income
attributable to:
Owners of the parent 422 210
422 210
--------------------------------------- ------------- -------------
Consolidated statement of financial position as at 31 December
2017
Company number 03393610
As at As at
31 December 31 December
Note 2017 2016
GBP'000 GBP'000
Non-current assets
Goodwill 5 1,017 1,017
Other intangible assets 5 19 265
Property, plant and equipment 35 94
Trade and other receivables 64 224
------------------------------- ----- ------------- -------------
1,135 1,600
Current assets
Trade and other receivables 10,937 8,975
Cash and cash equivalents 1,323 2,628
12,260 11,603
Total assets 13,395 13,203
Current liabilities
Bank overdrafts 6 - (427)
Other loans 6 - (133)
Unsecured convertible loan 6 (73) (67)
Trade and other payables (10,378) (10,014)
Taxation and social security (48) (25)
Obligations under finance
leases 6 - (23)
(10,499) (10,689)
Non-current liabilities
Deferred tax liabilities - (40)
- (40)
Total liabilities (10,499) (10,729)
------------------------------- ----- ------------- -------------
Net assets 2,896 2,474
------------------------------- ----- ------------- -------------
Equity
Equity attributable to
owners of the parent
Share capital 12,272 12,272
Share premium account 51,215 51,215
Equity element of convertible
loan 1 1
Translation reserve - -
Own shares held (37) (37)
Retained earnings (60,555) (60,977)
Equity attributable to
owners of the parent 2,896 2,474
Total equity 2,896 2,474
------------------------------- ----- ------------- -------------
The consolidated financial statements were approved and
authorised for issue by the Board of Directors on 31 May 2018.
D Craven
Director
Consolidated statement of cash flows for the year ended 31
December 2017
Year
ended Year ended
31 December 31 December
2017 2016
Cash flow from operating activities
including discontinued operations GBP'000 GBP'000
----------------------------------------- -------------- -------------
Net profit/(loss) before taxation 382 (43)
Adjustments for:
Depreciation of tangible assets 47 37
Amortisation and impairment of
intangible assets 246 676
Net bank and other interest charges 2 24
Net cash flows before changes
in working capital 677 694
Decrease in inventories - 5
Increase in trade and other receivables (1,793) (652)
Increase in trade and other payables 387 1,257
Cash from continuing operations (729) 1,304
Cash flow from discontinued operations
----------------------------------------- -------------- -------------
Net profit before taxation (137) 87
Adjustments for:
Loss/(profit) on discontinued
operations 137 (87)
------------------------------------------ -------------- -------------
Net cash flows before changes
in working capital - -
Cash from discontinued operations - -
Cash from operations (729) 1,304
Interest paid (2) (25)
Net cash flows from operating
activities (731) 1,279
Investing activities
Sale of property, plant and equipment 13 -
Purchase of property, plant and
equipment (4) (63)
Purchase of intangible assets - (196)
Net cash flows used in investing
activities 9 (259)
Financing activities
Repayment of finance leases (23) (10)
Repayment of loan (133) (61)
New loans raised - 71
Net cash flows from financing
activities (156) -
Net (decrease)/increase in cash (878) 1,020
Cash and cash equivalents at beginning
of year 2,201 1,181
Cash and cash equivalents at end
of year 1,323 2,201
------------------------------------------ -------------- -------------
Consolidated statement of changes in equity for the year ended
31 December 2017
Equity Equity Amounts
element attributable attributable
of Own to owners to
Share Share convertible Translation shares Retained of the non-controlling Total
capital premium loan reserve held earnings parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- ------------ ------------ -------- --------- ------------- ---------------- --------
Balance at
31 December
2015 12,272 51,215 1 (177) (37) (60,800) 2,474 32 2,506
Profit and
total
comprehensive
income for
the year - - - - - 33 33 (32) 1
Exchange
differences
on translating
foreign
operations - - - (33) - - (33) - (33)
Movement
between
reserves - - - 210 - (210) - - -
Balance at
31 December
2016 12,272 51,215 1 - (37) (60,977) 2,474 - 2,474
Profit and
total comprehensive
income for
the year - - - - - 422 422 - 422
Balance at
31 December
2017 12,272 51,215 1 - (37) (60,555) 2,896 - 2,896
---------------------- ------- ------- ----- --------- ------ ------
Notes to the consolidated financial statements for the year
ended 31 December 2017
During the year, the principal activity of DCD Media Plc and
subsidiaries (the Group) was the worldwide distribution of
programmes for television and other media; the Group also
distributes programmes on behalf of other independent
producers.
DCD Media Plc is the Group's ultimate parent company, and it is
incorporated and registered in England and Wales. The address of
DCD Media Plc's registered office is 9th Floor, Winchester House,
259 - 269 Old Marylebone Road, London, NW1 5RA, and its principal
place of business is London. DCD Media Plc's shares are listed on
the Alternative Investment Market of the London Stock Exchange.
DCD Media Plc's consolidated financial statements are presented
in Pounds Sterling (GBP), which is also the functional currency of
the parent company. Amounts are presented in rounded thousands. The
accounts have been drawn up to the date of 31 December 2017.
1 Principal accounting policies
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out below. The
policies have been consistently applied to all the years presented,
unless otherwise stated. The Group financial statements have been
prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations
(collectively IFRSs) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("Adopted
IFRSs"), and with those parts of the Companies Act 2006 applicable
to companies preparing their financial statements under Adopted
IFRSs.
Basis of preparation - going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Executive Chairman's Review and the Strategic
Report. The financial position of the Group, its cash position and
borrowings are set out in the performance section of the Strategic
Report. In addition, note 17 to the consolidated financial
statements sets out the Group's objectives, policies and processes
for managing its financial instruments and risk.
The Group's day-to-day operations are funded from cash generated
from trading and the use of an overdraft facility of GBP0.15m
(GBP0.175m at 31 December 2017) with other activities funded from a
combination of equity and short and medium term debt
instruments.
The Group's overdraft facility has been extended by its
principal bankers until 30 November 2018. The Directors have a
reasonable expectation that an overdraft facility will continue to
be available to the Group for the foreseeable future and beyond the
current extension period.
In considering the going concern basis of preparation of the
Group's financial statements, the Board have prepared profit and
cash flow projections which incorporate reasonably foreseeable
impacts of the ongoing challenging market environment.
The Directors' forecasts and projections, which make allowance
for reasonably possible changes in its trading performance, show
that, with the ongoing support of its lenders and its bank, the
Group can continue to generate cash to meet its obligations as they
fall due.
The Directors, after making enquiries, have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the annual report and financial statements.
The financial statements do not include the adjustments that
would result if the Group or Company were unable to continue as a
going concern.
Changes in accounting policies
A number of amendments to standards issued by IASB become
effective from 1 January 2017. These have been reviewed and no
adjustments deemed necessary. Those becoming effective from 1
January 2018 have not been adopted early by the Group. Management
have reviewed these standards and believe none are expected to have
a material effect on the Group's future financial statements.
Application of new and revised International Financial Reporting
Standards (IFRSs)
New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
Issued Effective
Standard Description date date
-------------------- -------------------------------- ------- ----------
IFRS 9 Financial Amendments regarding prepayment Oct-17 Jan-19
Instruments features with negative
compensation and modifications
of financial liabilities
-------------------- -------------------------------- ------- ----------
IFRS 17 Insurance Original issue May-17 Jan-21
Contracts
-------------------- -------------------------------- ------- ----------
IAS 28 Investments Amendments regarding long-term Oct-17 Jan-19
in Associates interests in associates
and Joint Ventures and joint ventures
-------------------- -------------------------------- ------- ----------
IFRS 15 Revenue Clarifications to IFRS Apr-16 Jan-18
from Contracts 15
with Customers
-------------------- -------------------------------- ------- ----------
IFRS 16 Leases Relates to measurement, Jan-16 Jan-19
presentation and disclosure
of leases
-------------------- -------------------------------- ------- ----------
No early adoption has been taken up where permitted on any of
the above revisions, amendments and original issue IFRSs.
Revenue and attributable profit
Production revenue represents amounts receivable from producing
programme/production content, and is recognised over the period of
the production in accordance with the milestones within the
underlying signed contract. Profit attributable to the period is
calculated by capitalising all appropriate costs up to the stage of
production completion, and amortising production costs in the
proportion that the revenue recognised in the year bears to
estimated total revenue from the programme. The carrying value of
programme costs in the statement of financial position is subject
to an annual impairment review.
Where productions are in progress at the year end and where
billing is in advance of the completed work per the contract, the
excess is classified as deferred income and is shown within trade
and other payables.
Distribution revenue arises from the licensing of programme
rights which have been obtained under distribution agreements with
either external parties or Group companies. Distribution revenue is
recognised in the statement of comprehensive income on signature of
the licence agreement, and represents amounts receivable from such
contracts.
All revenue excludes value added tax.
Basis of consolidation
The Group financial statements consolidate those of the Company
and of its subsidiary undertakings drawn up to 31 December 2017.
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain
benefits from its activities. The Group obtains and exercises
control through voting rights.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Non-controlling interests
For business combinations completed prior to 1 July 2009, the
Group initially recognised any non-controlling interest in the
acquiree at the non-controlling interest's proportionate share of
the acquiree's net assets. For business combinations completed on
or after 1 July 2009 the Group has the choice, on a transaction by
transaction basis, to initially recognise any non-controlling
interest in the acquiree which is a present ownership interest and
entitles its holders to a proportionate share of the entity's net
assets in the event of liquidation at either acquisition date fair
value or, at the present ownership instruments' proportionate share
in the recognised amounts of the acquiree's identifiable net
assets. Other components of non-controlling interest such as
outstanding share options are generally measured at fair value. The
Group has not elected to take the option to use fair value in
acquisitions completed to date.
From 1 July 2009, the total comprehensive income of non-wholly
owned subsidiaries is attributed to owners of the parent and to the
non-controlling interests in proportion to their relative ownership
interests. Before this date, unfunded losses in such subsidiaries
were attributed entirely to the Group. In accordance with the
transitional requirements of IAS 27 (2008), the carrying value of
non-controlling interests at the effective date of the amendment
has not been restated.
Goodwill
Goodwill represents the excess of the cost of a business
combination over, in the case of business combinations completed
prior to 1 January 2010, the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired and, in the case of business combinations completed on or
after 1 July 2009, the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired. For business combinations completed prior to 1 July 2009,
cost comprises the fair value of assets given, liabilities assumed
and equity instruments issued, plus any direct costs of
acquisition. Changes in the estimated value of contingent
consideration arising on business combinations completed by this
date are treated as an adjustment to cost and, in consequence,
result in a change in the carrying value of goodwill.
For business combinations completed on or after 1 July 2009,
cost comprised the fair value of assets given, liabilities assumed
and equity instruments issued, plus the amount of any
non-controlling interests in the acquiree plus, if the business
combination is achieved in stages, the fair value of the existing
equity interest in the acquiree. Contingent consideration is
included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, re-measured subsequently through profit or loss. For
business combinations completed on or after 1 January 2010, direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
Property, plant and equipment
Property, plant and equipment are stated at cost net of
depreciation and any provision for impairment. Depreciation is
calculated to write down the cost less estimated residual value by
equal annual instalments over their expected useful lives. The
rates generally applicable are:
Motor vehicles 25% on cost
Office and technical equipment 25%-33% on cost
The assets' residual values and useful lives are reviewed at
each statement of financial position date and adjusted if
appropriate.
Other intangible assets
Trade names
Trade names acquired through business combinations are stated at
their fair value at the date of acquisition. They are amortised
through the statement of comprehensive income, following a periodic
impairment review, on a straight line basis over their useful
economic lives, such periods not to exceed 10 years.
Programme rights
Internally developed programme rights are stated at the lower of
cost, less accumulated amortisation, or recoverable amount. Cost
comprises the cost of all productions and all other directly
attributable costs incurred up to completion of the programme and
all programme development costs. Where programme development is not
expected to proceed, the related costs are written off to the
statement of comprehensive income. Amortisation of programme costs
is charged in the ratio that actual revenue recognised in the
current year bears to estimated ultimate revenue. At each statement
of financial position date, the Directors review the carrying value
of programme rights and consider whether a provision is required to
reduce the carrying value of the investment in programmes to the
recoverable amount. The expected life of these assets is not
expected to exceed 7 years.
Purchased programme rights are stated at the lower of cost, less
accumulated amortisation, or recoverable amount. Purchased
programme rights are amortised over a period in-line with expected
useful life, not exceeding 7 years.
Amortisation and any charge in respect of writing down to
recoverable amount during the year are included in the statement of
comprehensive income within cost of sales.
Leased assets
Property, plant and equipment acquired under finance leases or
hire purchase contracts are capitalised and depreciated in the same
manner as other property, plant and equipment, and the interest
element of the lease is charged to the statement of comprehensive
income over the period of the finance lease. Minimum lease payments
are apportioned between the finance charge and the reduction of the
outstanding liability by using an effective interest rate. The
related obligations, net of future finance charges, are included in
liabilities.
Rentals payable under operating leases are charged to the
statement of comprehensive income on a straight line basis over the
period of the lease.
Inventories
Inventories comprise pre-production costs incurred in respect of
programmes deemed probable to be commissioned, and finished stock
of DVDs available for resale. Where it is virtually certain
production will occur, pre-production costs are capitalised in
inventories and transferred to intangibles on commencement of
production. Finished stock of DVDs available for re-sale is also
included within inventories. Inventories are valued at the lower of
cost or recoverable amount.
Programme distribution advances
Advances paid in order to secure distribution rights on third
party catalogues or programmes are included within current assets.
Distribution rights entitle the Company to license the programmes
to broadcasters and DVD labels for a sales commission, whilst the
underlying rights continue to be held by the programme owner. The
advances are stated at the lower of the amounts advanced to the
rights' owners less actual amounts due to rights owners based on
sales to date.
Impairment of non-current assets
For the purposes of assessing impairment, assets are grouped
into separately identifiable cash-generating units. Goodwill is
allocated to those cash-generating units that have arisen from
business combinations.
At each statement of financial position date, the Group reviews
the carrying amounts of its non-current assets, to determine
whether there is any indication those assets have suffered an
impairment loss. If any such indication exists the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Goodwill is tested for impairment
annually. Goodwill impairment charges are not reversed.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value and value in use based on an internal discounted cash flow
evaluation.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits. Bank overdrafts that are repayable on demand are included
as a component of cash and cash equivalents. Bank overdrafts are
shown in current liabilities on the statement of financial
position. Overdrafts are included in cash and cash equivalents for
the purpose of the cash flow statement.
Discontinued operations
The results of operations disposed during the year are included
in the consolidated statement of comprehensive income up to the
date of disposal.
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operations or is a subsidiary acquired exclusively with a
view to resale, that has been disposed of, has been abandoned or
that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated
statement of comprehensive income as a single line which comprises
the post-tax profit or loss of the discontinued operation along
with the post-tax gain or loss recognised on the re-measurement to
fair value less costs to sell or on disposal of the assets or
disposal groups constituting discontinued operations.
Equity
Equity comprises the following:
-- Share capital represents the nominal value of issued Ordinary shares and Deferred shares;
-- Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue;
-- Equity element of convertible loan represents the part of the
loan classified as equity rather than liability;
-- Translation reserve represents the exchange rate differences
on the translation of subsidiaries from a functional currency to
Sterling at the year end;
-- Own shares held represents shares in employee benefit trust;
-- Retained earnings represents retained profits and losses; and
-- Non-controlling interest represents net assets owed to non-controlling interests.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs from its tax base, except for
differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
statement of financial position date and are expected to apply when
the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Foreign currency
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the statement of financial position
date. Exchange differences arising on the settlement and
retranslation of monetary items are taken to the statement of
comprehensive income.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at the exchange rate ruling at the
statement of financial position date. Income and expense items are
translated at the average exchange rates for the year. Exchange
differences arising are classified as equity and transferred to the
Group's retained earnings reserve.
Financial instruments
Financial assets and financial liabilities are initially
recognised in the Group's statement of financial position when the
Group becomes a party to the contractual provisions of the
instrument at their fair value and thereafter at amortised
cost.
Trade receivables
Trade receivables are recorded at their amortised cost less any
provision for doubtful debts. Trade receivables due in more than
one year are discounted to their present value.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are reported in a separate allowance account with the
loss being recognised within administrative expenses in the
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Convertible loans
Convertible loan notes are regarded as compound instruments,
consisting of a liability component and an equity component. At the
date of issue the fair value of the liability component is
estimated using the prevailing market interest rate for similar
non-convertible debt. The difference between the proceeds of issue
of the convertible loan note and the fair value assigned to the
liability component, representing the embedded option to convert
the liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity
components of the convertible loan notes based on their relative
carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity.
The interest expense of the liability component is calculated by
applying the effective interest rate to the liability component of
the instrument. The difference between this amount and the interest
paid is added to the carrying amount of the convertible loan
note.
Bank borrowings
Bank borrowings are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the year to
repayment is at a constant rate on the balance of the liability
carried in the consolidated statement of financial position.
Finance charges are accounted for on an effective interest method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the year in which they
arise.
Trade payables
Trade payables are stated at their amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded as the
proceeds received, net of direct costs.
Retirement benefits
The Group contributes to the personal pension plans for the
benefit of a number of its employees. Contributions are charged
against profits as they accrue.
2 Segment information
Under IFRS 8 the accounting policy for identifying segments is
based on the internal management reporting information that is
regularly reviewed by the senior management team.
The Group has three main reportable segments:
-- Rights and Licensing - This division is involved with the
sale of distribution rights, DVDs, music and publishing deals
through DCD Rights.
-- Production - This division is involved in the production of television content.
-- Post-Production - This division is involved in post-production and contains Sequence Post.
The Group's reportable segments are strategic business divisions
that offer different products to different markets, while its Other
division is its head office function which manages activities that
cannot be reported within the other reportable segments. They are
managed separately because each business requires different
management and marketing strategies.
Uniform accounting policies are applied across the entire Group.
These are described in note 1 to the consolidated financial
statements.
The Group evaluates performance of the basis of profit or loss
from operations but excluding exceptional items such as goodwill
impairments. The Board considers the most important KPIs within its
business segments to be revenue, segmental adjusted EBITDA and
adjusted profit before tax.
Inter-segmental trading occurs between the Rights and Licensing
division and the production divisions where sales are made of
distribution rights. Royalties and commissions paid are governed by
an umbrella agreement covering the Group that applies an
appropriate rate that is acceptable to the local tax
authorities.
Segment assets include all trading assets held and used by the
segments for their day to day operations. Goodwill and trade-names
are allocated to their respective segments. Segment liabilities
include all trading liabilities incurred by the segments. Loans and
borrowings incurred by the Group are not allocated to segments.
Details of these balances are provided in the reconciliations
below:
2017 Segmental analysis - income statement
Production Rights Post Other Total
and Production 2017
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------ -------- --------
Total revenue 409 9,925 349 65 10,748
Inter-segmental revenue (91) - - (65) (156)
---------------------------------- ----------- ----------- ------------ -------- --------
Total revenue from external
customers 318 9,925 349 - 10,592
Discontinued operations - - (349) - (349)
Group's revenue per consolidated
statement of comprehensive
income 318 9,925 - - 10,243
---------------------------------- ----------- ----------- ------------ -------- --------
Operating (loss)/profit before
tax - continuing operations (194) 1,155 - (440) 521
Operating loss before tax
- discontinued operations - - (137) - (137)
Operating (loss)/profit before
interest and tax (194) 1,155 (137) (440) 384
Amortisation of programme
rights 24 - - - 24
Impairment of programme rights 10 - - 3 13
Amortisation of goodwill
and trade names - - - 209 209
Depreciation - 34 13 - 47
Segmental EBITDA (160) 1,189 (124) (228) 677
Continuing adjusted EBITDA (160) 1,189 - (228) 801
Discontinued adjusted EBITDA - - (124) - (124)
Net finance expense (10) - - 8 (2)
Depreciation - (34) (13) - (47)
Segmental adjusted (loss)/profit
before tax (170) 1,155 (137) (220) 628
---------------------------------- ----------- ----------- ------------ -------- --------
Continuing segmental adjusted
(loss)/profit before tax (170) 1,155 - (220) 765
Discontinuing segmental adjusted
(loss)/profit before tax - - (137) - (137)
---------------------------------- ------ ------ ------ ------ ------
2017 Segmental analysis - financial position
Production Rights Post Other Total
and Production 2017
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ------------ -------- ---------
Non-current assets - 35 - - 35
-------------------------------- ----------- ----------- ------------ -------- ---------
Reportable segment assets 128 12,049 42 159 12,378
Goodwill 393 624 - - 1,017
Total Group assets 521 12,673 42 159 13,395
-------------------------------- ----------- ----------- ------------ -------- ---------
Reportable segment liabilities (56) (9,338) (62) (970) (10,426)
Loans and borrowings - - - (73) (73)
Total Group liabilities (56) (9,338) (62) (1,043) (10,499)
-------------------------------- ----------- ----------- ------------ -------- ---------
2016 Segmental analysis - income statement
Production Rights Post Other Total
and Production 2016
Licensing
---------------------------------- ----------- ----------- ------------ -------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 703 7,558 455 105 8,821
Inter-segmental revenue (147) - (23) (54) (224)
---------------------------------- ----------- ----------- ------------ -------- --------
Total revenue from external
customers 556 7,558 432 51 8,597
Discontinued operations - - (432) - (432)
Group's revenue per consolidated
statement of comprehensive
income 556 7,558 - 51 8,165
---------------------------------- ----------- ----------- ------------ -------- --------
Operating (loss)/profit before
tax - continuing operations (750) 655 (9) (11) (115)
Operating profit before tax
- discontinued operations - - - 96 96
---------------------------------- ----------- ----------- ------------ -------- --------
Operating (loss)/profit before
interest and tax (750) 655 (9) 85 (19)
Capitalisation of programme
rights (196) - - - (196)
Amortisation of programme
rights 248 - - - 248
Impairment of programme rights 9 - - - 9
Amortisation of goodwill
and trade names 419 - - - 419
Depreciation - 27 9 1 37
Segmental EBITDA (270) 682 - 86 498
Restructuring expense 287 - - - 287
Segmental adjusted EBITDA 17 682 - 86 785
Net finance income/(expense) 3 (2) - (25) (24)
Depreciation - (27) (9) (1) (37)
Segmental adjusted profit/(loss)
before tax 20 653 (9) 60 724
---------------------------------- ----------- ----------- ------------ -------- --------
Continuing segmental adjusted
(loss)/profit before tax 20 653 - 60 733
Discontinuing segmental adjusted
(loss)/profit before tax - - (9) - (9)
---------------------------------- ----------- ----------- ------------ -------- --------
2016 Segmental analysis - financial position
Production Rights Post Other Total
and Production 2016
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------- ------------ -------- ---------
Non-current assets - 46 21 27 94
-------------------------------- ------------ ----------- ------------ -------- ---------
Reportable segment assets 571 11,179 83 144 11,977
Goodwill 393 624 - - 1,017
Trade-names 209 - - - 209
Total Group assets 1,173 11,803 83 144 13,203
-------------------------------- ------------ ----------- ------------ -------- ---------
Reportable segment liabilities (361) (9,060) (33) (1,019) (10,473)
Loans and borrowings (126) (23) - (67) (216)
Deferred tax liabilities (40) - - - (40)
Total Group liabilities (527) (9,083) (33) (1,086) (10,729)
-------------------------------- ------------ ----------- ------------ -------- ---------
3 Discontinued operations
During 2017, the Board made the decision to cease trading within
Sequence Post Ltd. The business had been loss making and following
a notification to increase rental charges the business was no
longer viable. The staff were made redundant in November 2017 and
it is the Board's intention to strike the company off by 31
December 2018.
Year
Year ended ended
31 December 31 December
2017 2016
Result of discontinued operations GBP'000 GBP'000
----------------------------------- ------------- -------------
Loss from discontinued operations
before tax (137) (9)
Tax expense - -
Loss from discontinued operations
after tax (137) (9)
----------------------------------- ------------- -------------
In June 2011, the Board took the decision to part company with
key management at one of its subsidiaries, Done and Dusted Group
Ltd ("Done and Dusted"). This decision was to allow the Company to
focus on its key markets, that of television production and
distribution. Done and Dusted remained within the Group, however
trade names were passed to key management in consideration of key
management returning their shares in the Company. Operations within
Done and Dusted ceased from 1 January 2012 and it was subsequently
struck off the register on 9 January 2018.
Year
Year ended ended
31 December 31 December
2017 2016
Result of discontinued operations GBP'000 GBP'000
------------------------------------- -------------- -------------
Profit from discontinued operations
before tax - 96
Tax expense - -
Profit from discontinued operations
after tax - 96
------------------------------------- -------------- -------------
Year
Year ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
------------------------------------------ ------------- -------------
(Loss)/profit on discontinued operations (137) 87
Basic earnings per share (pence) (5p) 3p
Diluted earnings per share would remain at a loss of 5 pence
(2016: remains at a profit of 3 pence) were convertible loan
balances held at the year-end converted at their respective
conversion prices.
4 Earnings per share
The calculation of the basic profit per share is based on the
profit attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The
calculation of diluted profit per share is based on the basic
profit per share, adjusted to allow for the issue of shares and the
post tax effect of dividends and interest, on the assumed
conversion of all other dilutive options and other potential
ordinary shares.
2017 2016
Weighted Per Weighted Per
average share average share
Profit number amount Profit number amount
GBP'000 of shares pence GBP'000 of shares pence
-------------------------- --------- ---------- ------- ---------- ----------- --------
Basic and diluted
profit per share
Profit attributable
to ordinary shareholders 422 2,541,419 17 33 2,541,419 1
If convertible loan balances held at the year-end were converted
at their respective conversion prices the number of shares issued
would be 2,614,288 (2016: 2,608,890 shares if all the convertible
loan balances held at the prior year end had been converted at
their respective conversion prices). Diluted earnings per share
would decrease to 16 pence were this transaction to take place.
Prior year figures have not been restated as there would be no
change to the prior year numbers due to the small profit made.
5 Goodwill and intangible assets
Trade Programme
Goodwill Names Rights Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- -------- ---------- --------
Cost
------------------------------- --------- -------- ---------- --------
At 1 January 2016 17,388 8,036 36,750 62,174
Additions - - 196 196
At 31 December 2016 17,388 8,036 36,946 62,370
------------------------------- --------- -------- ---------- --------
At 1 January 2017 17,388 8,036 36,946 62,370
Additions - - - -
At 31 December 2017 17,388 8,036 36,946 62,370
------------------------------- --------- -------- ---------- --------
Amortisation and impairment
------------------------------- --------- -------- ---------- --------
At 1 January 2016 16,371 7,408 36,633 60,412
Amortisation provided in year
in cost of sales - - 248 248
Impairment provided in year
in cost of sales - - 9 9
Amortisation provided in year
in administrative expenses - 419 - 419
At 31 December 2016 16,371 7,827 36,890 61,088
------------------------------- --------- -------- ---------- --------
At 1 January 2017 16,371 7,827 36,890 61,088
Amortisation provided in year
in cost of sales - - 24 24
Impairment provided in year
in cost of sales - - 13 13
Amortisation provided in year
in administrative expenses - 209 - 209
At 31 December 2017 16,371 8,036 36,927 61,334
------------------------------- --------- -------- ---------- --------
Net book value
At 31 December 2017 1,017 - 19 1,036
------------------------------- --------- -------- ---------- --------
At 31 December 2016 1,017 209 56 1,282
------------------------------- --------- -------- ---------- --------
Goodwill and trade names
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination.
Details of goodwill allocated to cash generating units for which
the amount of goodwill so allocated is as follows:
Goodwill carrying
amount
Segment (note 31 December 31 December
2) 2017 2016
GBP'000 GBP'000
----------------------- --------------- ------------ ------------
Cash generating units
(CGU):
Rights and
DCD Rights Ltd Licensing 624 624
September Films Ltd Production 393 393
1,017 1,017
--------------------------------------- ------------ ------------
Trade name carrying
amount
Segment (note 31 December 31 December
2) 2017 2016
GBP'000 GBP'000
----------------------- --------------- ------------- ------------
Cash generating units
(CGU):
September Films Ltd Production - 209
- 209
----------------------------------------------------- ------------
Goodwill and trade names are allocated to CGUs for the purpose
of the impairment review. The recoverable amounts of the CGUs are
determined from value in use calculations. The key assumptions for
the value in use calculations are those regarding the discount
rates and expected profitability of the CGUs over the future seven
years. Management estimates discount rates using pre-tax rates that
reflect current market assessments of the time value of money and
the risks inherent in the CGUs.
The Board performs an annual impairment review of all intangible
assets, including goodwill and trade names. The recoverable amounts
of all the above CGUs have been determined from value in use
calculations. Detailed budgets and forecasts cover a two year
period to December 2019. The forecasts are then extrapolated for a
further five years using models that estimate the distribution
income profile of the GGU's library. The Board uses this seven year
period of projection as it believes it is reasonably aligned with
the expected lifespan of a TV production. The impairments arising
from this value in use calculation are recorded below.
Impairment
charge
Segment (note 31 December 31 December
Goodwill 2) 2017 2016
GBP'000 GBP'000
---------------------- ---------------- ------------ ------------
Cash generating units
(CGU):
September Films Ltd Production - -
- -
---------------------- ---------------- ------------ ------------
Amortisation Impairment
charge charge
Segment
(note 31 December 31 December 31 December 31 December
Trade names 2) 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------- ------------ ------------ ------------ ------------
Cash generating
units (CGU):
September Films
Ltd Production 209 419 - -
209 419 - -
------------- ------------ ------------ ------------ ------------
The key assumption used for value in use calculations is the
discount factor applied to the forecasts.
The rate used to discount the forecast cash flows is 6.9% for
all CGUs. If the discount rates used were increased by 3% to 9.9%,
the carrying value of goodwill would still not be impaired.
Discount factor
31 December 31 December
2017 2016
% %
----------------------- ---------------- ------------
Cash generating units
(CGU):
DCD Rights Ltd 6.9 4.9
September Films Ltd 6.9 4.9
Programme rights
The Board performed an impairment review of programme rights
held by the business. The valuations of programme rights are based
on the recoverable amounts from their value in use using a discount
factor of 6.9%. The forecasts are based on historic sales of the
programmes and future sales are forecast over a seven year period
on a reducing basis. Seven years is used for the forecasts because
the programme rights are held for periods longer than five years,
but not more than ten years. If the discount rate was increased or
decreased by 3% to 9.9% or 3.9% the change in carrying value would
not be a material amount.
6 Interest bearing loans and borrowings
Due within one year
31 December 31 December
2017 2016
GBP'000 GBP'000
---------------------------------- -------------- --------------
Bank overdraft (secured) - 427
Convertible debt (unsecured) 73 67
Amount owed to related parties - 133
Obligations under finance leases - 23
73 650
---------------------------------- -------------- --------------
The principal terms and the debt repayment schedule for the
Group's loans and borrowings are as follows as at 31 December
2017:
Nominal Year of
Currency rate % maturity
3.5 over
Bank overdraft (secured) Sterling Base Rate 2018
Convertible debt (unsecured) Sterling 8.0 2018
Bank borrowings
The bank overdraft has been extended to 30 November 2018, but is
repayable on demand. The Directors expect an overdraft facility to
be available to the Group for the foreseeable future.
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.
Convertible debt
Convertible debt is unsecured and is subordinate to the bank
overdraft.
7 Other information
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2017 or
the year ended 31 December 2016 but is derived from those accounts.
Statutory accounts for 2016 have been delivered to the registrar of
companies, and those for 2017 will be delivered in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2016 or 2017.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BLGDUISXBGIB
(END) Dow Jones Newswires
June 01, 2018 02:00 ET (06:00 GMT)
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