28th Nov 2005 07:02
UBC Media Group PLC28 November 2005 28th November 2005 INTERIM REPORT FOR THE SIX MONTHS TO 30 SEPTEMBER 2005 Financial Highlights The main financial highlights for UBC Media Group for the six months to 30September 2005 are as follows: - Turnover increased 31.5% to £9.4 million (2004: £7.15 million). - Reduction in operating loss in the period before goodwill amortisation to £58,000 (2004: loss of £247,000). The operating loss includes the investment in digital licences and digital music downloading totalling £747,000 (2004: £720,000). - Exceptional profit of £629,000 in the period from the sale of 51% of Oneword Radio Limited to Channel 4 Television. - Profit before taxation of £132,000 (2004: loss before taxation of £495,000). - At 30 September 2005 UBC had cash in the bank of £2.5 million (2004: £2.3 million). Strategic Highlights - Revenues from Networked Programming in the first six months are 71.4% ahead of the same period last year as the network of stations taking our syndicated programmes grows. This represents a like for like increase in advertising revenues of 20%. Overall, the industry has seen a decline in the period of -7.2%. - Launch of 'Network News' bulletin from 1 October 2005, using Sky News content, adds a new advertising property to UBC's network. - Sale of 51% shareholding in Oneword Radio to Channel 4 Television for £1 million delivers an exceptional profit of £629,000 and offers the prospect of creating a major cross-media brand. - Significant contract awarded to Unique Interactive by BT Livetime to supply UBC's Electronic Programme Guide software for DAB-enabled mobile phones. - Successful first stage technical trials for our innovative music downloading service completed. Commenting on the performance of UBC Media Group in the six months to 30September 2005, Simon Cole, Chief Executive, said, "We believe that the radio industry is experiencing a far more rapid transitionto digital than was previously expected. Digital listening and sales of DABdigital radios have both more than doubled in the past year, and UBC continuesto benefit from this. Our modelling shows that most radio listening will be todigital services before the end of the decade. Already UBC is delivering growthfrom the evolving digital landscape. These early revenues, however, take noaccount of what we believe will prove to be substantial revenues from futureservices, such as music downloading". Simon Cole Chief Executive For further information, please contact: Simon Cole, CEO, UBC Media Group plc Tel: 020 7453 1600Tim Allan, Portland for UBC Tel: 020 7404 5344 Introduction Radio listening on digital platforms has doubled in the last twelve months.14.24 million people a week are now listening to digital services and theirimportance to advertisers is growing rapidly. The 'first wave' of significantdigital revenues is now flowing into UBC. Through the programme networks that the company has built up in the last threeyears, UBC is taking an increasing share of national advertising revenue. In afragmenting radio industry with a multitude of new digital channels, ournetworks are delivering critical mass to advertisers and cost savings to radiostations whose margins are under increasing pressure. UBC has also shown in this period that its careful preparations for the 'secondwave' of digital revenues are well advanced. Much of these revenues will comefrom interactive services and the software that drives them. The company'ssoftware division, Unique Interactive, has signed significant contracts both inthe UK and North America and is now a recognised market leader. UBC has previously announced plans to invest approximately £400,000 in the sixmonths to 30 September 2005 to create a service that will allow music to bedownloaded to portable devices over digital radio. We can report good progressin the period, and 'proof of concept' and first stage technical trials have beensuccessfully completed. To date, the level of investment has been less than thatoriginally planned. We expect to have completed the final phase technicaltrials, thereby investing £400,000 in total, by the end of March 2006. We areconfident this investment will lead to commercial services in 2006. Operating Review by Division NETWORKED & COMMISSIONED PROGRAMMING UBC's Production Division encompasses both the Group's networked programmesproduced for the commercial radio industry and commissioned radio programmingfor the BBC. The performance of both has been strong in the first half of theyear. The Company has continued to outperform the rest of the radio industry asadvertisers increasingly turn to networked programming to deliver market sharein a multi-channel digital environment. Networked Programming 2005 2004 £m £m % ChangeTurnover 5.21 3.04 +71.4 Revenues from UBC's Networked Programming business were up 71.4% on the sameperiod in 2004 at £5.21 million (2004: £3.04 million). Despite a difficulttrading environment, UBC has continued to see strong growth in advertisingrevenues, with a 20% increase in like for like turnover in the first half of thefinancial year, compared to the same period last year. UBC has been at the forefront of developing networked programming services forthe commercial radio sector. We believe networked programming will be anincreasingly important element of the commercial radio sectors' scheduling inthe future, as radio groups seek cost-effective programming solutions andadvertisers seek ways of reaching a fragmented market. At the start of the yearwe reported that UBC was actively exploring ways in which to grow its networkedprogramming business further. In October 2005, UBC was appointed by ChrysalisRadio and Ulster Television's subsidiary, Wireless Group, to act as sales-pointfor a new syndicated news service using content from Sky News. 'Network News'adds a third major airtime sales property to UBC's Networked Programmingbusiness. Early indications are that advertisers have welcomed the launch of the'Network News' service and the Company is optimistic about the prospects forgrowth in this service. Sales of both the 'Traffic & Travel' and 'Entertainment News' network servicesin the second half of the year have started strongly. We have set ourselveschallenging targets for the Networked Programming business for the full year,and with the momentum achieved to date we are confident of the outlook for theremainder of the year. Commissioned Programming 2005 2004 £m £m % ChangeTurnover 1.53 1.35 +13.3 UBC's Commissioned Programming business for the BBC comprises the productioncompanies, Unique and Smooth Operations. The commissioned programming businessreported revenues up 13.3% on the same period last year. In particular, theperformance reflects a positive contribution from regionally-based SmoothOperations, underlining its successful integration into the group and thebenefits of broadening the Commissioned Programming business. As expected, theBBC is concentrating growth in commissions outside London and this isparticularly benefiting Smooth Operations. With a strong order book of long-term commissions from the BBC, prospects forthe Commissioned Programming division in the second-half of the year arepositive. Looking ahead, the business is well placed to benefit from the BBC'scommitment to increase the number of hours of programming it allocates to theindependent radio production sector. RADIO STATIONS In the first half of the year, the performance of UBC's two main radio stations,Classic Gold Digital and Oneword Radio, was once again closely linked to thegrowth of digital radio in the UK and, in the case of Classic Gold, to the rapidtransition away from listening on AM. Classic Gold Digital 2005 2004 £m £m % ChangeTurnover 2.10 2.22 -5.4 Classic Gold Digital broadcasts a Classic Hits format on a network of analogueand digital platforms across the UK. The task for UBC is to migrate listeningfrom the original analogue AM licences to its digital platforms, therebyenabling Classic Gold to be heard across a larger area. This transition willnot be an even one and, despite reporting encouraging RAJAR audience figures forthe period, the long-term trend of a continuing decline in listening on AMfrequencies has only partially been compensated for by growth in digitalaudiences. As part of its long-term strategy to limit the rate of audienceerosion on AM and build its audiences on digital platforms, Classic Gold Digitalcontinues to invest in the marketing and promotion of the network andmaintaining the quality of programming on the station. Moreover, in common withthe rest of the commercial radio sector, Classic Gold Digital was adverselyaffected by poor trading conditions in sponsorship and promotions in the firstsix months of the year. The Company has, however, experienced a recovery inrevenues from sponsorship and promotions since October. Oneword Radio Oneword Radio is the UK's only national, digital spoken-word radio station. InApril 2005, Channel 4 Television acquired a 51% interest in Oneword Radio for acash consideration of £1 million. Since then there have been a number ofinitiatives to build on the progress achieved by Oneword Radio, includingbroadcasting from new offices in London's West End and the launch of a newprogramme schedule. UBC and Channel 4 are currently working closely together onplans to develop Oneword Radio - building on what we believe will be a coreasset as the growth in digital listening accelerates in the next few years. RADIO SERVICES UBC's Radio Services division comprises the Group's digital software developmentand facilities businesses. 2005 2004 £m £m % ChangeTurnover 0.56 0.53 +5.7 Turnover from Radio Services in the six-months to 30 September 2005 was £557,000(2004: £530,000), representing an increase of 5.7% on the same period last year.The performance reflects the growth in the sale of software to the radioindustry, which compensated for an anticipated decline in revenues from ourfacilities business. Unique Interactive Sales of Unique Interactive's software products continue to show strong growth,as UBC continues to benefit from the growing levels of investment by radiobroadcasters in their digital broadcasting services, and the launch of the firstreceivers capable of delivering television and radio to mobile telephone usingDAB technology. UBC's position as a market leader in the development of softwaresolutions for digital radio services was underlined during the period with majornew contract awards in both UK and North America. Unique Facilities UBC's facilities business continues to trade in line with expectations. UniqueFacilities operates in a highly competitive market, and opportunities forsignificant organic revenue growth have historically been limited. However,occupancy rates have remained healthy for much of the period and the operatingfocus continues to be on providing higher margin audio services to customers. Outlook In the last year the major features of the new landscape have become clearer. Aswith all new technologies, the emergence of digital radio presents bothchallenges and opportunities for the radio industry. The greatest opportunitiesrevolve around the new revenue streams that arise as a result of the emergenceof the new technology; whilst the challenge for many players is replacingtraditional revenue models that will become obsolete as digital radio fragmentslistening whilst raising costs. The performance in the six months to 30 September 2005 underlines how UBCcontinues to take advantage of the opportunities that have arisen from thedevelopment of digital radio. UBC is positioned to benefit from the developmentof the new technology: whether satisfying the demand for low-cost, high qualitysyndicated programming; providing software systems to drive the new digitalradio services; operating radio stations that benefit from the rapidly growingdigital audiences; or developing potential new revenue streams that will ariseas a result of digital radio - such as music downloading on demand. The first six months of the year has been a critical period for the Company.However, our continuing strong performance despite a difficult tradingenvironment gives us confidence that our performance for the full year will bein line with expectations. Financial Review Disposal In April 2005 UBC sold a 51% interest in Oneword Radio Limited to Channel 4Television Corporation for a cash consideration of £1 million. As was reportedat the time of the disposal, Channel 4's investment in Oneword Radio representsthe first partnership of a national television and a commercial radio station. Smooth Operations deferred consideration The acquisition of the business of Smooth Operations in August 2004 included amaximum deferred consideration of £1.9 million depending upon the profit growthachieved by Smooth Operations in each of the two years following theacquisition. The first part of the deferred consideration of £665,000 becamepayable in September 2005, comprising a cash payment of £399,000 and the issueof approximately 1.07 million new UBC ordinary shares. The maximum remainingdeferred consideration is capped at £1.235 million. Any further considerationwill be payable 60% in cash and 40% from the issue of new UBC ordinary shares. Classic Gold Digital option As previously disclosed, GCap Media holds an option which it may exercise fromNovember 2005 which would allow it to increase its shareholding in Classic GoldDigital from 20% to 75%. The agreement between UBC and GCap Media provides aformula to calculate the price GCap Media would pay UBC for the increased stake.This formula is based on the performance of Classic Gold Digital. Investment in digital radio In the six-months to 30 September 2005 UBC invested the following amounts indevelopment: - Investment in Classic Gold Digital licences of £483,000 (2004: £481,000), which related to transmission of Classic Gold Digital on digital multiplexes primarily covering Northern England and London. - Investment of £175,000 (2004: nil.) in Digital Music Downloading; and £89,000 (2004: £97,000) in data licence fees for broadcasting regional data services on five MXR digital multiplexes. - Joint Venture Investment of £231,000 (2004: £278,000) in Oneword Radio. UBC's investment in Oneword Radio in the six-months to 30 September 2004 included investment in the station both as a joint venture and as a subsidiary. Cash At 30 September 2005, UBC had cash in the bank of £2.5 million (2004: £2.3million). Payment of dividend The board is not recommending the payment of a dividend for the interim period. CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 Unaudited Unaudited Audited Six months Six months Full year ended 30 ended 30 ended 31 September September March 2005 2004 2005 £'000 £'000 £'000 Turnover (including share of joint ventures)Continuing operations 9,451 7,155 15,970Less: Share of turnover of joint ventures (56) (10) (10)Group turnover 9,395 7,145 15,960Cost of sales (6,952) (5,088) (11,475)Gross profit 2,443 2,057 4,485 Administrative expenses before goodwill amortisation, digital licence costs (1,754) (1,584) (3,410) and development costs.Digital licence costs (572) (720) (1,501)Development costs (175) - -Goodwill amortisation (271) (195) (667)Total administrative expenses (2,772) (2,499) (5,578)Group operating loss (329) (442) (1,093)Share of operating loss in joint ventures (229) (108) (165)Total operating loss: Group and share of joint ventures (558) (550) (1,258)Profit on sale of subsidiary 629 - -Interest receivable 62 55 106Interest payable (1) - (3)Profit/(loss) on ordinary activities before taxation 132 (495) (1,155)Tax (charge)/credit - (5) 4Profit/(loss) on ordinary activities after taxation 132 (500) (1,151)Equity minority interest 50 62 131Retained profit/(loss) for the financial year 182 (438) (1,020) Profit/(loss) per share Basic-pence 0.11 (0.27) (0.61) Diluted-pence 0.10 (0.27) (0.61) CONSOLIDATED BALANCE SHEETAS AT 30 SEPTEMBER 2005 Unaudited Unaudited Audited As at 30 As at 30 As at 31 September September March 2005 2004 2005Group £'000 £'000 £'000Fixed assets Goodwill and intangible assets 3,470 3,884 4,059Tangible assets 197 251 183 3,667 4,135 4,242 Investments 266 266 266 Current assetsWork in progress 34 47 36Debtors 4,210 4,461 3,282Cash at bank and in hand 2,519 2,312 3,498 6,763 6,820 6,816Creditors: amounts falling due within one year (4,070) (3,620) (4,136)Net current assets 2,693 3,200 2,680Total assets less current liabilities 6,626 7,601 7,188Creditors: amounts falling due after more than one year (337) (1,537) (1,078)Investment in joint venturesShare of gross assets 110 35 -Share of gross liabilities (175) (62) (53)Provisions for liabilities and charges (65) (27) (53)Net assets 6,224 6,037 6,057 Capital and reservesCalled up share capital 1,717 1,707 1,707Shares to be issued 494 - 760Share premium account 15,325 15,062 15,034Other reserves (801) (801) (801)Merger reserve - 731 670Profit and loss account (10,086) (10,356) (10,938)Equity shareholders' funds 6,649 6,343 6,432Equity minority interest (425) (306) (375)Capital employed 6,224 6,037 6,057 CONSOLIDATED CASH FLOW STATEMENTSIX MONTHS ENDED 30 SEPTEMBER 2005 Six months Six months Year ended 30 ended 30 ended 31 September September March 2005 2004 2005 £'000 £'000 £'000Net cash outflow from operating activities (1,352) (2,056) (862)Returns on investments and servicing of financeInterest received 62 55 121Interest paid (1) - (3)Net cash inflow from returns on investment and servicing of finance 61 55 118 TaxationUK Corporation tax received/(paid) 8 - (23)Capital expenditure and financial investmentPurchase of tangible fixed assets (79) (41) (77)Sale of tangible fixed assets 7 - -Purchase of fixed asset investment - (266) (266)Loans to joint ventures - (91) (90)Investment in joint ventures (231) - -Net cash outflow from capital expenditure and financial investment (303) (398) (433) Acquisitions and disposalsPurchase of interest in joint ventures - (32) (32)Purchase of subsidiary undertakings (399) (1,297) (1,279)Sale of subsidiary undertakings 932 - -Net overdrafts disposed/(acquired) with subsidiary undertakings 39 - (1)Net cash inflow/(outflow) from acquisitions and disposals 572 (1,329) (1,312)Net cash outflow before financing (1,014) (3,728) (2,512) Management of liquid resourcesIncrease in short-term deposits with banks - 1,000 1,000 FinancingIssue of ordinary share capital - 1,800 1,800Expense of share issue 35 (84) (114)Net cash inflow from financing 35 2,716 2,686(Decrease)/increase in cash in the year (979) (1,012) 174Cash balances at the beginning of the year 3,498 3,324 3,324Cash balances at the end of the year 2,519 2,312 3,498 Represented by Cash and bank balances 2,519 2,312 3,498 NOTES 1 Basis of Preparation These financial statements do not constitute statutory accounts within themeaning of the Companies Act 1985 and are unaudited. The figures for the year to31 March 2005 have been extracted from the statutory accounts for that year thathave been delivered to the Register of Companies and contain an unqualifiedaudit report. The financial information contained in this interim statement doesnot constitute accounts as defined by Section 290 of the Companies Act 1985. 2 Accounting Policies The statements have been prepared on the basis of the accounting policiesapplied at the year ended 31 March 2005. 3 Goodwill amortisation and development costs Goodwill and Development costs include goodwill amortisation of £271,000 (2004:£195,000) and digital licence fees of £572,000 (2004: £720,000). 4 Profit/(loss) per share The profit/(loss) per share for the six months ended 30 September 2005 is 0.11pence (2004: loss per share of 0.27 pence). The profit/(loss) per share has beencalculated based on the profit/(loss) for the period and the weighted number ofshares in issue during the period. 5 Taxation The group has trading losses for the period 30 September 2005 and has notprovided for taxation for the period. 6 Disposals In April 2005 UBC sold a 51% interest in Oneword Radio Limited to Channel 4Television for a cash consideration of £1 million thereby reducing UBC'sinterest in Oneword Radio Limited to 49%. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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