30th Sep 2005 07:01
Works Media Group (The) PLC30 September 2005 THE WORKS MEDIA GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 30 September 2005 The Works Media Group Plc, whose principal activity is the finance, sale anddistribution of feature films, announces today its interim results for the sixmonths ended 30 June 2005. Highlights include: • Change of name and re-branding o Company name changed to The Works Media Group Plc o All group businesses re-branded "The Works" • Film Distribution - The Works UK Distribution o Expansion of activities into domestic theatrical, DVD and television sales o Achieved without the cost of a corporate acquisition o Delivers a move up the value chain to more regular predictable revenues o Experienced and highly commercial team appointed o "Heidi" and Berlin Festival winner "Live and Become" start the ball rolling o Slate currently being assembled for exploitation in 2006 • Film Sales - The Works International o Critically acclaimed slate gathers momentum but trades below expectation o Sales visibility remains unpredictable • Financials o Half year loss £0.10 million after goodwill and depreciation of £0.11 million o Cash reserves of £1.98 million o Half year admin costs fall to £0.77 million Crispin Barker, non-executive Chairman of The Works Media Group Plc said: "I am pleased to report the continuing diversification of the business. Wehave re-branded the Group and moved successfully at no capital cost into UKdistribution. Whilst uncertainty continues to surround the environment forInternational Sales and Production, these activities will become less importantto the Group as we move forward ". For further information, please contact: The Works Media Group Plc 020 7612 0030Crispin Barker, ChairmanChris Auty, Managing DirectorNorman Humphrey, Finance director Citigate Dewe Rogerson 020 7638 9571Seb Hoyle CHAIRMAN'S STATEMENT OVERVIEW Since my last report in March this year, the Group has re-branded itself "TheWorks" and moved into UK distribution. These are fundamental and positivesteps along the road to a more diversified and ultimately less risky mediabusiness. The correctness of this policy is amply demonstrated by thecontinuing uncertainties which surround the Group's old core activities of filmfinance and international rights sales, where immediate prospects remain gloomy. On 26th August 2005, shareholders voted overwhelmingly to change the name of theGroup from Civilian Content Plc, to The Works Media Group Plc. Henceforth, allGroup activity will be branded "The Works". Our sales agency, formerly TheWorks, is now trading as The Works International, and our production servicesbusiness, formerly The Film Consortium, is now trading as The Works Production. The result for the six months to 30 June 2005 was a loss of £96,000, afterallowing for amortisation of goodwill and depreciation of £113,000. Whilstthis is below the performance achieved in the comparable period of 2004, it isin line with our expectations; given that the delivery of our 2005 productionslate and the major film markets are skewed towards the second half of the year. However, indications from the recent trade market at Toronto suggest thefull-year contribution made by The Works International will be materially belowforecasts. The US, theoretically the World's largest market for Englishlanguage films, is still not buying rights in any meaningful quantity. In production, the picture is also uneasy. Continuing uncertainty surrounds theavailability of tax relief for UK production investment, and this is impactingthe number of films being made. Consultative documents recently issued by theInland Revenue may lead to clarity later this year, but in the interregnum, itis very difficult indeed to green-light production. Whilst it is too early to say whether these changes to our old core businessactivities are structural or temporary, clearly at the present time it hasceased to be a buyers market. This is therefore a perfect time to launch adistribution company, to buy and exploit rather than sell rights. On 20th July2005, The Works UK Distribution was born, and although so far it has taken onlyits first tentative steps, the management intend it to quickly become acornerstone activity. The impact of The Works UK Distribution on second halfperformance is likely to be negative as we acquire product and initiatecampaigns. However, we will be fully operational by the end of this year, withfour titles being released theatrically in the first quarter of 2006. FUTURE PLANS The creation of The Works UK Distribution has moved the Group further up thevalue chain, and the Board intends to continue moving the centre of gravity intomore regular and predictable revenues streams. We are looking at theacquisition of domestic film catalogues and evaluating opportunities for movinginto cinema exhibition. FINANCIAL REVIEW During the six months to 30 June 2004, The Works Media Group made a loss of£96,000 on turnover of £719,000. This compares unfavourably with the profit of£429,000 achieved in the first half of 2004. Administration expenses have fallen once again, from £797,000 during the firsthalf of 2004 to £771,000 during the first half of 2005. The available cash at bank has fallen from £2,330,000 at 31 December 2004 to£1,976,000 million at 30 June 2005. Crispin Barker 30 September 2005 MANAGING DIRECTOR'S STATEMENT OVERVIEW The highlight of the first half of the year has been a significant move into UKdistribution. This new company headed by Mick Southworth (ex- Channel 4,Winchester Entertainment and Content Film) was launched in July 2005. Branded"The Works UK Distribution" it has hit the ground running and will release asizable slate of films in the UK over the next twelve months, including thisyear's Berlin audience award winner Live and Become; and Grey Friars Bobby theclassic children's story originally made by Disney. Our first video release,Heidi, will go into the DVD and video market as a Christmas offering later thisautumn. We are pleased to have created this new cornerstone activity withoutthe acquisition of a pre-existing business and therefore at no capital cost. Unfortunately, like most of our competitors, we are finding the internationalfilm sales market tough. Our significant and critically acclaimed slate offilms, offered to the market most recently in Toronto, has not sold as well asexpected and this will have a detrimental effect on the second half results ofthe Group. Production activity has been poor in the first half of the year following thewithdrawal of certain key tax breaks by the government, and the environmentremains uncertain whilst consultation on new tax incentives with the industrycontinues until October 2005. This is having, and will continue to have, adetrimental impact on "The Works Production" during 2005. INTERNATIONAL SALES & PRODUCTION ACTIVITY The early part of the year saw the successful launch of several titles,including: The Sun, Tickets, Love & Hate, and The Mighty Celt at the Berlin FilmFestival. Following on from the Berlin activity, six new titles were screened as marketpremieres during the Cannes Film Festival, including: The Best Man, TheProposition, Tara Road, Guy X and Wah Wah. The late spring saw hectic activity around the completion of the 2004-05production slate with several films (Vincent Ward's River Queen, John Hillcoat'sThe Proposition, Gilles McKinnon's Tara Road, Stefan Schwartz's The Best Man,and Michael Winterbottom's Cock & Bull Story) all being delivered at almost thesame time. Although completed during the period, Cock & Bull Story, starringSteve Coogan, was premiered at the Toronto Film Festival to great acclaim inSeptember and sales prospects are promising. The film opens across the USlater this autumn. CURRENT OUTLOOK & FUTURE PROSPECTS We are reasonably optimistic about the Group's prospects for 2006 which weexpect to be driven by the material growth of The Works UK Distribution.Whilst this may be offset by ongoing difficult trading conditions in bothproduction and international sales, we are actively seeking new businessopportunities and continue to maintain tight controls on costs and overheads. Chris Auty 30 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2005 6 Months Ended 6 Months Ended 12 Months 30 June 2005 30 June 2004 Ended Unaudited Unaudited 31 Dec 2004 Audited Notes £000 £000 £000 Turnover: 3Continuing operations 719 1,352 3,872 Cost of sales (36) (114) (1,342) Gross profit 683 1,238 2,530 Administrative expenses (771) (797) (1,733) Selling and distribution expenses (34) (32) (69) Operating (loss)/profitContinuing operations (122) 409 728 Net interest 26 20 43 (Loss)/profit on ordinary activities (96) 429 771before taxation Taxation - - - Equity minority interests - - - Retained (loss)/profit (96) 429 771 Earnings per shareBasic (pence) 4 (0.23) 1.05 1.86 CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005 6 Months Ended 6 Months Ended 12 Months 30 June 2005 30 June 2004 Ended Unaudited Unaudited 31 Dec 2004 Audited Notes £000 £000 £000 Fixed assetsGoodwill 2,367 2,542 2,439Tangible assets 28 15 33 2,395 2,557 2,472 Current assetsStocks 31 62 31Debtors 1,083 866 1,334Debtors: amounts falling due after one year - 11 5Cash at bank and in hand 6 2,268 2,248 2,524 3,382 3,187 3,894 Creditors: amounts falling due within one (1,300) (1,517) (1,881)year Net current assets 2,082 1,670 2,013 Total assets less current liabilities 4,477 4,227 4,485 Creditors: amounts falling due after more (263) (360) (276)than one year Provision for liabilities & charges - - - Shareholders' funds 4,214 3,867 4,209 Capital and reservesShare capital 4,289 4,188 4,188Share premium account 6,458 6,458 6,458Profit and loss account (6,371) (6,617) (6,275) 4,376 4,029 4,371 Minority interest (162) (162) (162) Shareholders' funds 4,214 3,867 4,209 The accompanying accounting policies and notes form an integral part of thesefinancial statements. CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 6 Months Ended 6 Months Ended 12 Months 30 June 2005 30 June 2004 Ended Unaudited Unaudited 31 Dec 2004 Audited Notes £000 £000 £000 Net cash (outflow)/inflow from operating 5 (346) 1,621 1,905activities Return on investments and servicing of 26 20 42finance Taxation - - - Operating cash flow after taxation and (320) 1,641 1,947finance costs Capital expenditurePurchase of tangible fixed assets (4) (1) (31) Acquisitions and disposals - - - Equity dividends paid - - - Financing Exercise of share options 68 - - (Decrease)/increase in cash during the 6 (256) 1,640 1,916period NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 1. Basis of Preparation The interim figures for the six-month period to 30 June 2005 are unaudited.The comparative figures for the 12 month period ended on 31 December 2004 areextracts from the published accounts for that year and do not constitute fullstatutory accounts. A copy of the full accounts for that period, on which theauditors have issued an unqualified report, has been delivered to the Registrarof Companies. 2. Accounting Policies The financial statements have been prepared in accordance with applicable UnitedKingdom accounting standards and under the historical cost convention. The principal accounting policies of the Group have remained unchanged from theprevious year. 3. Turnover Turnover of the Group for the period has been derived from its principalactivity, the management of development, financing, and production of featurefilms and the international sale of film rights. 4. Earnings per share The calculation of basic earnings per ordinary share is based on earnings of £(96,000). The weighted average number of ordinary shares in issue during thesix month period ended 30 June 2005 was 42,661,112 ordinary shares for basicearnings per ordinary share. Diluted earnings per share are not materiallydifferent from basic earnings per share. 5. Net cash inflow from operating activities 6 Months Ended 6 Months Ended 12 Months 30 June 2005 30 June 2004 Ended Unaudited Unaudited 31 Dec 2004 Audited £000 £000 £000 Operating (loss)/profit (122) 409 728 Depreciation 8 27 39Loss on disposal of fixed assets - - -Amortisation of goodwill 105 78 181(Increase)/Decrease in stocks 0 (44) (13)Decrease/(Increase) in debtors 257 517 54(Decrease)/Increase in creditors (594) 634 916 Operating cash flow (346) 1,621 1,905 6. Reconciliation of net cashflow to movement in net fund 6 Months Ended 6 Months Ended 12 Months 30 June 2005 30 June 2004 Ended Unaudited Unaudited 31 Dec 2004 Audited £000 £000 £000 (Decrease)/Increase in cash in the period (256) 1,640 1,916and change in net funds resulting fromcash flows. Net funds at 1 January 2005 2,524 608 608 Net funds at 30 June 2005 2,268 2,248 2,524 Less: Production and Development funds (292) (647) (194)held on trust for third parties. Available cash at bank and in hand 1,976 1,601 2,330 7. Publication of Non-Statutory Accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 December 2004 have been extracted from thestatutory financial statements that have been filed with the Registrar ofCompanies. The auditors' report on those financial statements was unqualifiedand did not contain a statement under Section 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Winking Studios