25th Sep 2007 07:01
Works Media Group (The) PLC25 September 2007 THE WORKS MEDIA GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 The Works Media Group Plc ("The Works Media Group" or "the Company") whoseprincipal activity is the international sale and UK distribution of featurefilms announces today its interim results for the six months ended 30 June 2007. Financial Highlights • Turnover for the period increased by 7.1% to £810,000 (2006:£756,000) • Turnover at start-up UK Distribution subsidiary rises 51% • Loss of £130,000 after redundancy and reorganisation costs of £100,000 (2006 loss £180,000) • Cash reserves of £691,000 (2006: £732,000) Corporate Highlights • Successful execution of strategy to transform business • Film Distribution - The Works UK Distribution o Continuing expansion of distribution activity. o 5 films released in cinemas and 4 on DVD during the six months. o Universal Pictures released all titles on DVD under output agreement. o Multi-media rights to 21 titles acquired to date on 20 year licences. o 2 Days In Paris on course to be most successful film ever released by The Works. • Film Sales - The Works International o Ongoing sales of Venus and This is England. o Critically acclaimed Brick Lane looks promising for the second half. Fundraising o Company raised £0.5 million by placing of new shares in May 2007. o Theta Group takes 15.3% of issued share capital. o Milcoz Films executive joins the Board. Crispin Barker, non-executive Chairman of The Works Media Group said: "The first stage of our ambitious re-engineering programme is almost complete;The Works UK Distribution is profitable and making a material contribution toGroup overheads. We have established a stable base from which to scale up thebusiness and the Board continues to evaluate funding and corporate opportunitiesto further its plans for expansion." For further information, please contact: The Works Media Group plc 020 7612 0030Norman Humphrey, CEO City Financial Associates Limited 020 7492 4777James Caithie ICIS 020 7651 8688Tom Moriarty, Caroline Evans-Jones CHAIRMAN'S STATEMENT OVERVIEW The Works Media Group improved its performance in the first half of 2007 as ithas done steadily since the move away from production services at the end of2005. The retained loss for the period is £134,000, after charging £100,000 ofredundancy and reorganisation costs,. The Works UK Distribution is currently theengine for growth at The Works. The subsidiary has put five films into cinemas,and released four DVD's during the six months, considerably more than anycomparable period in its history. Our international sales activity continues tobe affected by the downturn in the UK production sector; however the recentappointment of a new Group Head of Acquisition is expected to improve thesourcing of product. FUND RAISING Our migration from production to distribution and the consequential investmentin a catalogue of rights has increased the Company's working capitalrequirement. Having encouraged the possibility of strategic trade investment, wewere delighted in May 2007 to welcome Theta Group, through its subsidiary MilcozFilms, as a major investor in The Works Media Group. Milcoz Films invested£500,000 in The Works through a placing at 3p per share, acquiring 13.6% of theCompany. That investment has subsequently been increased in the market and Thetacurrently owns 15.3% of The Works. FINANCIAL REVIEW This is the first Interim Statement prepared by the Company in accordance withrecently introduced International Financial Reporting Standards. During the 6 months to 30th June 2007 The Works Media Group made a retained lossof £134,000. Adjusting for redundancy and reorganisation costs of £100,000(the majority of which are directly attributable to the departure of theprevious CEO, Chris Auty) the loss of £34,000 compares favourably with the lossof £175,000 suffered during the comparable period in 2006. The consolidatedturnover increased marginally, from £756,000 to £810,000, but changes in theunderlying divisional performance are significant. Turnover at the Works UKDistribution rose by 51%, whilst that achieved by the marginalised productionservices entity, The Film Consortium, fell by 60%. There was little change atThe Works International. The Company had cash of £691,000 as at 30th June 2007 (2006 £732,000). BOARD CHANGES Chris Auty resigned from his position as Chief Executive Officer on 8th March2007. Norman Humphrey, the Chief Financial Officer, was promoted to theposition of Chief Executive on the same day. The Company does not propose toappoint a new Chief Financial Officer at this time. Costa Theo, ChiefExecutive of Milcoz Films was appointed to the Board on 25th May 2007, followinghis company's investment in the Works Media Group. OUTLOOK The outlook remains positive. The second half of 2007 will see continuinggrowth at The Works UK Distribution; more commercial product, more "downstream"revenue from pay-per-view, video on demand and television, as well as graduallyincreasing back-catalogue income. We continue to evaluate opportunities for synergistic corporate expansion tosupplement our development of the existing core activity in UK Distribution andInternational Sales. Crispin Barker25 September 2007 CHIEF EXECUTIVE'S REPORT OVERVIEW The Works Media Group is in a strong position. The business has beenre-engineered and early indications are that our move from production into UKDistribution has been successful. The material losses suffered during the pastcouple of years, as production revenues were replaced by distribution overhead,have been stemmed and it is my intention to expand the remaining coredistribution and international sales activities. INTERNATIONAL SALES The Works International remains active. It continues to sell Roger Michell'sVenus and Shane Meadow's highly acclaimed This Is England, which was incompetition at the Berlin Film Festival and is one of the best performingBritish films of recent years. New titles acquired so far this year includeRamin Bahrani's Chop Shop which premiered in Director's Fortnight at the CannesFilm Festival in May, eco-environmental documentary Garbage Warrior, and theKilling of John Lennon, a chilling portrait of killer Mark Chapman, which isalso being distributed by The Works UK Distribution later this year. Product currently in the pipeline includes Brick Lane, an adaptation of thecritically acclaimed novel by Monica Ali. The American rights have just beensold by The Works International to Sony Pictures. In post-production is FrenchFilm, a romantic comedy staring Hugh Bonneville, Douglas Henshall and EricCantona. The UK production sector remains depressed and in this competitive market themost overtly commercial material remains hard to secure. Although trading atThe Works International is broadly similar to that achieved in the first half of2006, it is the Company's intention to both increase the funding and scale ofour sales agency business. DISTRIBUTION ACTIVITY The Works UK Distribution is just two years old but is already making steady andencouraging progress. From a standing start the division has quickly becomeone of the UK's leading independent film distributors. This success hasoccurred despite the unit not yet being fully operational as it awaits thelifting of media hold-backs on early acquisitions, and builds a body of rightsfrom which to derive back-catalogue revenue. Trading at The Works UK Distribution continues to gather momentum. Turnover isup over 50% on the comparable period last year and during the first half of 2007the unit distributed almost as much product as it did during the whole of 2006.Five films were released theatrically in the first half of this year, comparedwith six throughout the preceding twelve months. So far this year, ourtheatrical releases include Robert Altman's last film, A Prairie Home Companion,romantic comedy The Truth About Love staring Jennifer Love Hewitt and KevinCostner's drama The Upside of Anger. We have also released critically acclaimedFrench and Australian art films, Paris Je T'aime and 10 Canoes, both of whichare still in British cinemas three months after their theatrical release date. Four titles were released on DVD in the six months to June 2007, the same numberas released during the whole of 2006; urban drama Havoc, staring Anne Hathaway,A Prairie Home Companion, The Truth About Love, and the sexually explicitcomedy, Shortbus. Sales of these titles, which were released under our outputarrangement with Universal Pictures, now appear likely to exceed initialexpectations and should deliver DVD value for many years to come. The Works UK Distribution has so far acquired multi-media rights to 21 titles onterms of approximately 20 years. It is quickly building a catalogue withdemonstrable long-term value. This investment in assets is evident from theincrease in stock and work in progress from £686,000 at June 2006 to £1,846,000at June 2007. Currently we have on general release Julie Delpy's tour deforce, the romantic comedy 2 Days in Paris, which has already exceeded thecumulative box office performance of any film previously released theatricallyby The Works UK Distribution. Amongst those titles yet to be released thisyear are the cult horror Hatchet and the eagerly anticipated Interview staringSienna Miller, which premieres at the London Film Festival on 18th October. OUTLOOK I am pleased to report we have made excellent progress. The Company hasevolved to a point where we now have a more stable business model, whichgenerates a more predictable revenue stream and is a solid platform for futuregrowth. Given our current pipeline of commercial product and an everincreasing library of content, we look forward to the Company's continuingsuccess. Norman Humphrey25 September 2007 GROUP INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 6 Months Ended 6 Months Ended 12 Months 30 June 2007 30 June 2006 Ended Unaudited Unaudited 31 Dec 2006 Audited Notes £000 £000 £000 Turnover 3 810 756 1,675 Cost of sales (96) (88) (533) Gross profit 714 668 1,142 Distribution costs (25) (21) (45) Administrative costs (838) (839) (1,710) Operating loss (149) (192) (613) Interest Receivable 15 23 30 Interest Payable - (6) (15) Loss before taxation (134) (175) (598) UK Corporation Tax - - - Loss for the period attributable to (134) (175) (598)equity share holders Earnings per shareBasic (pence) 4 (0.09) (0.41) (1.37)Diluted 4 (0.09) (0.41) (1.37)Dividend - - - GROUP BALANCE SHEET AS AT 30 JUNE 2007 As at As at As at 30 June 2007 30 June 2006 31 Dec 2006 Unaudited Unaudited Audited £000 £000 £000 Non Current AssetsGoodwill and intangible fixed assets 2,262 2,262 2,262Property, Plant and Equipment 20 35 28Investments 100 100 100 2,382 2,397 2,390Current assetsStocks 1,846 686 1,294Trade and other receivables 980 1,012 889Cash and cash equivalents 691 732 1,343 3,517 2,430 3,526 Total assets 5,899 4,827 5,916 Current liabilitiesTrade and other payables (1,057) (1,376) (1,423)Accruals (105) (175) (172)Deferred Income (871) (294) (752) (2,033) (1,845) (2,347) Non current liabilitiesProduction Loan - (130) (64) Total liabilities (2,033) (1,975) (2,411) Net assets 3,866 2,852 3,505 Shareholders' equityCalled up share capital 4,369 4,290 4,352Share premium account 7,950 6,458 7,472Retained earnings (8,291) (7,734) (8,157)Minority interest (162) (162) (162) Equity Shareholders' funds 3,866 2,852 3,505 GROUP CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 6 Months 6 Months 12 Months Ended Ended Ended 30 June 2007 30 June 2006 31 Dec 2006 Unaudited Unaudited Audited £000 £000 £000 Cash flows from operating activities: Operating loss (149) (192) (613) Depreciation 10 11 21Loss on disposal of fixed assets - - -Amortisation of goodwill - - -(Increase)/Decrease in stocks (553) (655) (1,263)(Increase)/Decrease in debtors (90) (315) (192)Increase/(Decrease) in creditors (377) 330 765 Net cash generated by operating activities (1,159) (821) (1,282) Cash flows from investing activities Interest received 15 23 30Purchase of non current assets (3) (6) (8) Net cash generated by investing activities 12 17 22 Cash inflow/(outflow) before financing (1,147) (804) (1,260) Cash flows from financing activities Interest paid - (6) (15)Issue of ordinary share capital 500 - 1250Share issue costs (5) - (174) Net cash received/(used) by financing 495 (6) 1,061activities Net (decrease)/ increase in cash and cash (652) (810 (199)equivalents Cash and cash equivalent at beginning of 1,343 1,542 1,542period Cash and cash equivalent at the end ofperiod 691 732 1,343 Less: Production and Development funds held (145) (239) (179)on trust for third parties. Available cash at bank and in hand 546 493 1,164 STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2007 Number of Share Share Minority Retained Total share shares capital premium interest earnings holders' funds £ 000's £ 000's £ 000's £ 000's £ 000's GroupAt 1 January 2007 105,399,208 4,352 7,472 (162) (8,157) 3,505Retained loss for the - - - - (134) (134)periodShare capital issued 16,666,667 17 483 - - 500Share issue costs - - (5) - - (5)At 30 June 2007 122,065,875 4,369 7,950 (162) (8,291) 3,866 The accompanying accounting policies and notes form an integral part of thesefinancial statements. NOTES TO THE GROUP INTERIM FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2007 1. Basis of Preparation The interim figures for the six-month period to 30 June 2007 are unaudited.The comparative figures for the 12 month period ended on 31 December 2006 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 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, production and distributionof feature films and the international sale of film rights. 4. Earnings per share The calculation of basic earnings per ordinary share is based on earningsattributed to equity share holders of £ (133,402). The weighted average numberof ordinary shares in issue during the six month period ended 30 June 2007 was150,679,368 ordinary shares for basic earnings per ordinary share. The calculation of diluted earnings per share is based on the basic earnings pershare, adjusted to allow for the issue of shares and the post tax effect ofdividends and interest on the assumed conversion of all dilutive options andother dilutive potential ordinary shares. 5. 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 2006 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. 6. Reporting under International financial reporting standards This interim report is the first to be prepared under IFRS. The comparativefigures have been prepared on the same basis and have therefore been restatedfrom those previously prepared under UK GAAP where applicable. 7. AIM Rule Compliance Report 1. The Works Media Group plc is quoted on AIM and as such under AIM Rule 31 the Company is required to: 2. have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules; 3. seek advice from its nominated adviser ("Nomad") regarding its compliance with the AIM Rules; 4. provide the company's Nomad with any information it requests in order for the Nomad to carry out its responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisors; 5. ensure that each of the Company's Directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and 6. ensure that each director discloses without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosures of Miscellaneous Information) insofar as that information is known to the director or could with reasonable diligence be ascertained by the director. In order to ensure that these obligations are being discharged the Board hasestablished a committee of the Board (the "AIM Committee"), chaired by CrispinBarker, a non-executive director of the Company. Having reviewed relevant Board papers and met with the Company's Executive Boardand the Nomad to ensure that such is the case, the AIM Committee is satisfiedthat the Company's obligations under AIM Rule 31 have been satisfied during theperiod under review. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Winking Studios