12th Jun 2007 07:01
Tinopolis PLC12 June 2007 TINOPOLIS PLC ("TINOPOLIS" or the "COMPANY") INTERIM RESULTS FOR THE SIX MONTHS TO 31st MARCH 2007 Financial Highlights: - Turnover £31.6m, up 112% (2006: £14.9m) - Profit before tax of £0.961m against the prior year loss of £ (1.066) m (£0.09m profit excluding restructuring charges) - Earnings per share 0.7p (2006: (1.7)p) - Net cash inflow from operating activities £0.8m - Cash and cash equivalents at end of period is £13.5m - Share buy-back of £1.9m (4,650,000 shares repurchased for treasury at an average price of 39.9p) Operational Highlights: - Integration and restructuring on track - Mentorn turnaround progressing well - John Willis joins to lead Mentorn - London operations relocated to new premises Post period end: - BBC Jam termination issues resolved - Acquisition of Video Arts for £2.3m Commenting on the results, Ron Jones, Executive Chairman said: "This year has been about delivering the plan we presented to shareholders whenwe acquired The Television Corporation. All parts of the business areperforming well. Mentorn has re-established its reputation as one of the UK's leading productioncompanies and has won new contracts in the UK and the US to prove it. Itsfinancial recovery is well under way. Despite the problems caused by the BBC's decision to terminate the BBC Jam e-education project, Tinopolis Interactive is profitable and growing andfollowing our acquisition of Video Arts is in good shape to become a majorplayer in its field. The rest of the business has shown good organic growth and profitability andacross the Company we have excellent revenue visibility. The targets we set asstaging posts in maximising shareholder value are now being achieved." For further information, please contact: Tinopolis Plc. 01554 880880Ron Jones, Executive ChairmanArwel Rees, Managing Director Mantra PRNick Bishop 020 7907 7800 RESULTS STATEMENT Introduction The priorities for the Company this year have been to progress the turnaround ofthe Mentorn business we acquired in January 2006 and to ensure that our otherbusiness areas continue to develop successfully. Despite the difficulties caused by the BBC's unilateral decision to terminate its Jam e-education projectthese priorities have been met. Although the Jam termination will result in aprofit reduction in the second half of the year of £0.5m, the Company is nowwell-placed to take advantage of the opportunities for growth and consolidationavailable in the content production industry. Review of Operations Turnover increased by 112% compared with the same period last year to £31.6million, reflecting a full 6 months contribution from the businesses acquiredlast year. On a like for like comparison, adjusting for a full 6 month period of trading in 2006 for these acquired businesses, organic growth was 22%. Profit before tax was £0.96m compared with a loss of £(1.07) m in the priorperiod that arose largely because of one-off restructuring costs of £1.15mfollowing the acquisition of TV Corp. Our profit before tax and restructuringcosts increased by 992% over the first 6 months of 2006. During the period John Willis joined us as Chief Executive of Mentorn and theCompany's Creative Director. He is one of the best known figures in thetelevision industry, having been Director of Programmes at Channel 4, Managing Director of LWT and United Productions, Vice President of National Programmes atWGBH and most recently the BBC's Director of Factual and Learning. The effectsof his leadership are already being seen in the performance of Mentorn. We continue to emphasise the need for strong revenue visibility with long-termcontracts or strong returning series, key components of sustainableprofitability in this industry. Across the Company we are performing well with significant visibility into 2008 in drama, factual programmes and sport. Mentornhas historically been short of returning series and we are seeing majorprogress with long-term projects such as Question Time and Heart and Soul for the BBC being won this year. Late March saw a sudden decision by the BBC to terminate BBC Jam, their e-education project for schools. There was no consultation and no notice and thedecision has caused widespread damage to the BBC's suppliers and to users of theservice. Inevitably there will be a financial as well as an operational impacton the Company. We particularly regret that 13 of our staff had to be maderedundant as a result. Despite this we expect Tinopolis Interactive to be profitable this year and to continue its steady progress. Revenue visibilityremains strong. We have historically had one of the most diverse customer lists in the industry.This has been further extended this year with new broadcaster customers in theUS and the large numbers of corporate customers of our newest acquisition, Video Arts. Our business has never been dependent on revenue streams arising from secondaryrights and building a portfolio of programmes with secondary rights value istherefore potentially beneficial to the group going forward. Mentorn has beenleading our efforts and has already been successful in re-establishing some ofits brands in the US market. Factual programming Mentorn continues to be one of the UK's leading producers of factualprogramming. Under its new Chief Executive, John Willis, it has won severalsignificant new contracts. In March, the company beat 14 other independent producers to win a newthree-year contract to provide the BBC with its flagship political programmeQuestion Time, a deal worth in the region of £5.5 million over 3 years. Thefollowing month, the company beat 36 others to win the contract to provide theBBC's new Sunday Morning religious programme, to be called Heart and Soul, acontract worth £1.2m in the first year. Both tenders included significant newmedia elements provided by the teams at Mentorn and Tinopolis Interactive,demonstrating the synergies available within the group. Mentorn also won fromChannel 4 another 10 programmes of its current affairs strand, The Insider, andcontinued to provide various editions of Channel 4's Dispatches. In the USA, thesecond series of Oil, Sweat and Rigs performed well for Discovery and led to anew six part series, Wildcatters. Folio won an order from the BBC for ten editions of its long-running TrafficCops brand and its other police-based series, Car Wars, won good ratings for thenetwork. Folio continued to grow its business for other networks - particularlyITV - where the Half Ton Hospital series achieved high ratings in both peak timeand daytime slots. In Wales, Wedi 3 and Wedi 7, S4C's live daily programmes continued and deliveredhigh audiences. The programmes led S4C's on-screen re-branding this year andWedi 3 was available on analogue for the first time and proved a great success.For ITV Wales we produced two new series, Great Pubs of Wales and Truckers, aswell as a celebrity special. Sport Sunset + Vine won several significant contracts during the period. Our decisionto open Sunset + Vine Cymru in October 2006 paid dividends as we won thecontract to produce more than 50 hours of coverage of the 2007 Rugby World Cupfor S4C. The company has also been contracted by BBC Scotland to provide all ofits sports coverage, including Football, Bowls, Rugby and Shinty. We continuedto produce horse racing for the BBC, football and overnight sports for Five andour cricket highlights for Five were nominated for a BAFTA and several RoyalTelevision Society sports awards. The BBC coverage of the Ashes tour was alsoone of ours. Advertiser Funded Programming (AFP) is an important revenue generator for Sunset+ Vine, and during the period, the company won contracts to produce its VolvoOcean Race programme through to 2009 and a new Formula One Business series,sponsored by Philips, for BBC World. Sunset + Vine remains the UK's biggest producer in the fast growing televisionprogramming area of gaming. Our most recent success was being commissioned toproduce the Grosvenor Poker UK Tour, a monthly series to be shown on Channel 4,sponsored by Blue Square. Tinopolis Interactive and Sunset + Vine also producedan innovative live web cast to accompany the television production of the finalof the European Poker Tour in Monte Carlo, again demonstrating the cross-companyskills we can use to provide a multiplatform offering to commissioners. Whilethe appeal of televised celebrity poker is waning, the professional poker tourswhere Sunset + Vine is strong have been going from strength to strength. POP1 has won a commission to produce two further years coverage of the WorldRally Championship for S4C. Le Rygbi, S4C's coverage of the French club rugbyseason, has also been recommissioned. Drama The first two productions made by our new drama brand, Daybreak Pictures, wereaired earlier this year, winning high ratings and receiving huge press coverage.The Trial of Tony Blair for Channel 4 and Confessions of a Diary Secretary forITV1 have reinforced our reputation for factually-based dramas and led tofurther paid development for two series. We are currently in post-production onour two-part fictional drama for Channel 4, Britz, which is directed andproduced by Peter Kosminsky - with whom we won three BAFTAs for The GovernmentInspector. Fiction Factory, our Welsh drama company, has another series of its S4C hitseries Caerdydd in production at the moment and another series, its fourth, inpre-production. Their new crime drama, working title The Cocklefarmers, also hasits first two series in production. Entertainment Sunset+Vine has won its first major non-sports commission, with a two year dealto produce a new prime time format provisionally called Taking the Floor, forBBC ONE. The show, which is a live Eurovision dance contest involvingcontestants from 16 countries, will air in September In the USA the success of Mentorn's reality format for the BRAVO network, WorkOut, led to a commission for an extended second series of 9 shows, and has nowcommissioned a third series. We also won a major commission from the FOX RealityChannel and My Network to produce a new 16-part series of our hit reality formatParadise Hotel, to air in early 2008. The series value is $6m with the potentialfor further series. The previous series of Paradise Hotel has been sold, as alicensed or format deal, to around 30 countries worldwide and we are confidentthat the new series will also sell internationally. An American version ofMentorn's successful Britain's Worst Driver is under consideration by 3 USnetworks. Work Out, Half Ton Hospital and the upcoming BBC format Make Me a Baby allgenerated significant interest from buyers at MIPTV in April. Tinopolis Interactive Our new media business has been hit by the BBC's decision in late March, withoutconsultation, to terminate its entire Jam e-education project. The reasons givencentre around the BBC's concerns that it might be in breach of state-aidregulations following prolonged lobbying by some large private-sector educationproviders. The effect of the termination is that £2.1 million of revenueanticipated in the period to the end of 2008, in respect of commissions awarded,will not be forthcoming. As a result of the BBC's actions we have had to make anumber of staff redundant. The slimming-down costs and the loss of profits willresult in a one-off shortfall against Tinopolis Interactive's anticipated profitfrom operations in 2007 of £0.5m, including redundancy costs. Despite this unforeseeable development Tinopolis Interactive continues to growits revenues, its profitability and its customer base. These include acommission to produce Foundation Phase interactive learning materials for theWelsh Assembly Government, a commission (in partnership with Influence at Work), from Ufi to produce a series of short comedy based video sketches for SMEbusinesses, featuring the comedian Neil Mullarkey and further commissions underour Framework agreement with the Ministry of Defence. The company has also extended its range of strategic joint ventures withtraining specialists, including Influence at Work, authors of severalbest-selling books centred on social influencing and persuasion techniques. Acquisition of Video Arts In May we bought Video Arts Group Limited ("Video Arts") for consideration of£2.3 million on a debt free basis, payable in cash. In the year ended 31December 2006 it generated turnover of £4.9 million and EBIT adjusted for non-recurring management charges of £0.5 million. Video Arts was established in 1972 and has over 200 current titles that havebeen used to provide training to over 100,000 organisations world-wide, winningover 200 major training awards. Recently, recognising that customers increasingly need digital delivery of its products, it has launched its DigitalContent Library. This currently includes over 100 of its most popular titles,divided into hundreds of learning chapters. Tinopolis Interactive has the skills and scale to accelerate the creation of this library, add to itsfunctionality, and offer bespoke services to supplement the generic learningcontained in the back catalogue. The Company believes this will prove acompelling offer for Video Arts' existing clients, and an important feature inattracting new customers and increasing the scope and value of existingaccounts. Video Arts' traditional business has been product-based, whilst the group'sexisting business majors on bespoke new media training materials and products.Both had identified the need to have some of the other's skills and marketpresence. Both businesses have specialised in producing and delivering videobased learning, and we believe this focus will be a significant competitiveadvantage in this sector as clients and consumers demand increasingly richcontent 'on demand'. The acquisition gives us a combined business bringing amuch wider range of skills to this market and better able to serve our existingand new customers. It consolidates our position as a leading player in theindustry. Share buy-back During the period 4,650,000 shares were bought for treasury at an average price of 39.9p. Outlook Our portfolio of customers and genres is strong and we have the creative andmanagement skills to make the most of them. We believe all our business areascontinue to have the potential for organic growth Revenue visibility for the balance of 2007 is very strong and should, as inprevious years, benefit from the traditional increase in profitability in thesecond half of the year. The order book for 2008 is also looking good. Consolidation continues to be a significant factor in the business of contentproduction. We are actively looking for companies that complement our existingbusinesses and potential targets have been identified and discussions are continuing. However, valuation expectations in the industry remain high makingvalue difficult to find. The ability to create shareholder value remains ouracid test when evaluating acquisitions. The results for the remainder of the year will be hit by the one-off costs ofthe BBC Jam termination. However, excluding this, we remain confident ofmeeting the board's expectations for the Company for the full year. Ron Jones Arwel ReesExecutive Chairman Managing Director 12th June 2007 TINOPOLIS PLCCONSOLIDATED INCOME STATEMENTSIX MONTHS ENDED 31 MARCH 2007 Unaudited six months ended Unaudited six 31 March months ended 31 Year ended 30 Notes 2007 March 2006 September 2006 £000 £000 £000 Revenue 31,620 14,946 47,334Cost of sales (25,739) (11,617) (37,230) ------ ------ ------Gross profit 5,881 3,329 10,104 Operatingexpenses - restructuring costs - (1,155) (1,154) - other (5,123) (3,281) (8,944) - profit on sale of Hawk-Eye - - 866 ------ ------ ------Totaloperating expenses (5,123) (4,436) (9,232) ------ ------ ------Operatingprofit/(loss) 758 (1,107) 872Interest payable (7) (16) (57)Interestreceivable 210 57 245 ------ ------ ------Profit/(loss) on ordinary activitiesbefore taxation 961 (1,066) 1,060Taxation 3 (279) 73 (89) ------ ------ ------Netprofit/(loss) for the period 682 (993) 971 ------ ------ ------Attributable to:Equity holders of the parent company 641 (1,019) 934Minority interest 41 26 37 Earnings/(loss) per share - basic 4 0.7p (1.7)p 1.2pEarnings/(loss) per share - diluted 4 0.6p (1.6)p 1.2p ====== ====== ====== TINOPOLIS PLCCONSOLIDATED BALANCE SHEETAS AT 31 MARCH 2007 Unaudited Restated as at unaudited As at 30 31 March as at September 2007 31 March 2006 2006 Notes £000 £000 £000Assets Property, plant and equipment 4,287 4,631 4,316Intangible assets - goodwill 21,922 21,869 21,869Intangible - other - 2,500 -Deferred tax asset - 91 52 ------ ------ ------Total non-current assets 26,209 29,091 26,237 Current assetsTrade and other receivables 9,688 11,398 9,044Cash and cash equivalents 13,485 13,562 15,101 ------ ------ ------Total current assets 23,173 24,960 24,145 ------ ------ ------Total assets 49,382 54,051 50,382 ====== ====== ======EquityIssued capital 1,990 1,989 1,989Share premium 24,157 24,147 24,147Merger reserve 607 607 607Retained earnings 1,980 1,242 3,195 ------ ------ ------Total equity attributable toshareholders 28,734 27,985 29,938Minority interest 81 49 60 ------ ------ ------Total equity 28,815 28,034 29,998 ------ ------ ------Non-current liabilitiesInterest bearing loansand borrowings 17 154 23Other payables 617 1,515 677Deferred tax liabilities 261 374 313 ------ ------ ------Total non-currentliabilities 895 2,043 1,013 ------ ------ ------Current liabilitiesBank overdraft 2,013 2,110 1,556Interest bearing loansand borrowings 29 1,341 635Current income tax payable 1,066 1,296 1,090Trade and other payables 16,564 19,227 16,090 ------ ------ ------Total current liabilities 19,672 23,974 19,371 ------ ------ ------Total liabilities 20,567 26,017 20,384 ------ ------ ------Total equity andliabilities 49,382 54,051 50,382 ====== ====== ====== TINOPOLIS PLCCONSOLIDATED CASH FLOW STATEMENTSIX MONTHS ENDED 31 MARCH 2007 Unaudited six Unaudited six months ended months ended Year ended 30 31 March 2007 31 March 2006 September 2006 £000 £000 £000Profit/(loss) for the period 682 (993) 971Adjustments for: Depreciation 484 393 892Net finance costs (203) (41) (188)Gain on sale of subsidiary - - (866)Loss / (Gain) on sale ofproperty, plant and equipment 101 (19) (21)Share-based payments 6 26 26Income tax expense /(credit) 279 (73) 89 ------ ------ ------Operating profit/(loss) beforechanges in working capital 1,349 (707) 903 Change in trade and otherreceivables (742) 1,085 3,402Change in trade and other payables 507 2,713 (1,703) ------ ------ ------ 1,114 3,091 2,602 Interest paid (7) (29) (51)Income taxes paid (310) (431) (797) ------ ------ ------Net cash from operatingactivities 797 2,631 1,754 ------ ------ ------Acquisition of subsidiary,net of cash acquired (53) 8,896 8,896Purchase of treasury shares (1,862) - -Payments to acquire property,plant and equipment (577) (793) (1,246)Receipts from sales of property,plant and equipment 24 20 47Receipt from sale of subsidiary - - 4,053Interest received 210 57 245 ------ ------ ------Net cash (used in) /generated from investingactivities (2,258) 8,180 11,995 ------ ------ ------ Repayment of borrowings (568) (136) (925)Payment of finance lease liabilities (44) (75) (131) ------ ------ ------Net cash used in financing activities (612) (211) (1,056) ------ ------ ------Net (decrease)/ increase in cash and cash equivalents (2,073) 10,600 12,693 Cash and cash equivalents at start ofperiod 13,545 852 852 ------ ------ ------Cash and cash equivalents at end of period 11,472 11,452 13,545 ====== ====== ====== TINOPOLIS PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the six months ended 31 March 2007 Attributable to equity holders of the parent company March 2007 Share Share Merger Retained Total Minority Total capital premium reserve earnings interest equity £000 £000 £000 £000 £000 £000 £000 Balance at 1 October 2006 1,989 24,147 607 3,195 29,938 60 29,998 Profit/ (loss) for the period - - - 641 641 41 682Dividends paid - - - - - (20) (20)Share options amortised - - - 6 6 - 6Shares issued 1 10 - - 11 - 11Purchase - - - (1,862) (1,862) - (1,862) ------- ------- ------- ------- ------- ------- -------Balance at 31 March 2007 1,990 24,157 607 1,980 28,734 81 28,815 ======= ======= ======= ======= ======= ======= ======= During the period from 18 January 2007 and 6 March 2007, the Company purchased4,650,000 shares at an average price of 39.9p each. Attributable to equity holders of the parent company March 2006 Share Share Merger Retained Total Minority Total capital premium reserve earnings interest equity £000 £000 £000 £000 £000 £000 £000 Balance at 1 October 2005 497 - 657 1,967 3,121 33 3,154Loss/(profit) for the period - - - (1,019) (1,019) 26 (993)Dividends paid - - - - - (10) (10)Share options amortised - - - 294 294 - 294Shares issued 1,442 24,147 - - 25,589 - 25,589Movement in the year 50 - (50) - - ------- ------- ------- ------- ------- ------- -------Restated balance at 31 March 2006 1,989 24,147 607 1,242 27,985 49 28,034 ======= ======= ======= ======= ======= ======= ======= Attributable to equity holders of the parent company September 2006 Share Share Merger Retained Total Minority Total capital premium reserve earnings interest equity £000 £000 £000 £000 £000 £000 £000 Balance at 1 October 2005 497 - 657 1,967 3,121 33 3,154Profit for the period - - - 934 934 37 971Dividends paid - - - - - (10) (10)Share options amortised - - - 294 294 - 294Shares issued 1,442 24,147 - - 25,589 - 25,589Movement in the year 50 - (50) - - - ------- ------- ------- ------- ------- ------- -------Balance at 30 September 2006 1,989 24,147 607 3,195 29,938 60 29,998 ======= ======= ======= ======= ======= ======= ======= Notes to the interim accounts 1 Accounting policies Basis of preparation The condensed consolidated interim financial statements for the six months ended31 March 2007 have been prepared under applicable International FinancialReporting Standards adopted by the European Union ("IFRS"), which includeInternational Accounting Standards ("IAS") and interpretations issued by theInternational Accounting Standards Board ("IASB") and its committees, which areexpected to be endorsed by the European Union. The financial information included in this document is unaudited and does notcomprise statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The comparative figures for the financial year ended 30 September 2006are extracted from the statutory financial statements for that year which havebeen filed with the Registrar of Companies and on which the auditor gave anunqualified report, without any statement under section 237(2) or (3) of theCompanies Act 1985. The following principal accounting policies have been applied consistently indealing with items which are considered material in relation to the group'sfinancial statements. The financial statements have been prepared on thehistorical cost basis. These accounting policies have been applied consistentlyacross the group for the purposes of these consolidated financial statements. Repurchase of share capital When share capital recognised as equity is repurchased, the amount of theconsideration paid, including directly attributable costs, is recognised as adeduction from equity. Repurchased shares are classified as treasury shares andare presented as a deduction from total equity. 2 Changes to comparative information The balance sheet at 31 March 2006 has been restated in order to reflect theadjustments to the provisional fair values on the acquisition of The TelevisionCorporation plc completed in the six months ending 30 September 2006 andincluded in the financial statements for that year. 3 Taxation charge / (credit) Taxation for the six months to 31 March 2007 is based on the effective rate oftaxation which is estimated to apply for the year ending 30 September 2007. Unaudited six Unaudited six months ended months ended 31 Year ended 30 31 March 2007 March 2006 September 2006 £000 £000 £000 UK taxation atstandard rate 279 3 187Deferred taxation - (76) (98) ------- ------- ------- 279 (73) 89 ------- ------- ------- 4 Earnings per share Unaudited six Unaudited six months ended months ended 31 Year ended 30 31 March 2007 March 2006 September 2006 £000 £000 £000 Profit/(loss)for the period attributableto equity holders 641 (1,019) 934 Weighted average numberof shares - basic 97,699,336 60,373,452 77,459,136Earnings per share - basic 0.7p (1.7)p 1.2p Weighted average numberof shares - diluted 101,757,426 62,640,010 81,093,086Earnings pershare - diluted 0.6p (1.6)p 1.2p 5 Post Balance Sheet events On 4 May 2007, Tinopolis Plc acquired 100% of the share capital of Video ArtsLimited from August Equity for a total consideration of £2,280,000, paid incash. Independent review report to Tinopolis Plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 March 2007 which comprises the consolidated incomestatement, consolidated balance sheet, consolidated cash flow statement,consolidated statement of changes in equity and the related notes. We have readthe other information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMRules which require that the interim report must be presented and prepared in aform consistent with that which will be adopted in the company's annual accountshaving regard to the accounting standards applicable to such annual accounts. Review work performed We conducted our review having regard to the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the UK. A review consistsprincipally of making enquiries of group management and applying analyticalprocedures to the financial information and underlying financial data and basedthereon, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Statements on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2007. KPMG Audit Plc Chartered Accountants Marlborough HouseFitzalan CourtFitzalan RoadCardiffCF24 0TE 12 June 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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