Final Results
7 March 2011
Talent Group plc
("Talent" or the "Company")
Final results for the year ended 30 September 2010
Chairman's Statement
This has been another difficult trading year for the Group, which has been
adversely affected by events outside its control. Nevertheless the results for
the year to 30 September 2010 show some improvement over the previous year.
Although Group turnover has increased only slightly to £653,000 (2009 - £
644,000), gross profit has increased to £342,000 (2009 - £197,000).
Administrative costs, which for the current year include an exceptional bad
debt charge of £174,000, are £792,000 (2009 - £865,000). Our loss before
taxation has therefore fallen to £492,000 (2009 - £708,000). Whilst I consider
any loss to be unacceptable, this is at least a step in the right direction.
The extent of this year's loss is particularly disappointing as, at the time of
announcing our interim results, we had expectations of a greatly improved
second-half year performance. However, the subsequent cancellation of the A:3K
Football Event at the O2 Arena, for which we had been commissioned to provide
television coverage, not only impacted on our turnover and gross profits, but
eventually left us with a bad debt of £174,000. Another of our 2009/10
commissions was the National Schools Quiz, which we produced in March and
involved over seven thousand primary school children across the country
competing simultaneously in a pioneering, interactive competition. The success
of this had suggested further such events might be forthcoming but
unfortunately the commissioning client, BECTA, was the very first quango to be
abolished by the new government.
Better progress has been made on other projects. During the year our regional
subsidiary, Talent Television South, delivered a highly-acclaimed one-hour
documentary on the notorious Kray Twins for the Crime and Investigation
Network. The success of this led to a commission for a series of eight one-hour
crime documentaries for the same channel: production on these commenced in
August with final delivery due in March 2011. Additionally, since the year-end,
we have completed a further one-hour documentary on the Damilola Taylor case.
Some of our longer-term projects are also beginning to bear fruit. The Mumper,
for which we acquired the film rights two years ago, has gone into production
since the year-end, with Talent as co-producer. Principal photography has now
been completed and the film, featuring Bob Hoskins, Jenny Agutter and Rita
Tushingham, is due for cinema release later in the year. Another long-term
project, My Phone Genie, is expected to go into production later this year as
an international co-production with our French and Irish co-producers, for CITV
and ZDF Germany. Development work on other projects has continued to make
progress.
On a smaller scale, during the last year we undertook work for a number of
corporate clients, and completed production of two instructional DVDs: more
such commissions are expected in the current year. We also continue to earn
royalties from our back catalogue.
The last financial year has undoubtedly been difficult, exacerbated by the A3:K
situation. I commend the drive and commitment of directors and staff in
striving to overcome the problems of a troublesome year, and their resolve to
restore the Group to profitability.
Terry Bate
Chairman
4 March 2011
Business Review and Principle Activities
The past year has been a very frustrating mixture of disappointments and
progress. We were commissioned by ITV to produce the television version of the
highly promoted A:3K Football event at the O2 Arena, but England's poor
performance at the World Cup meant that the event producer decided to postpone
it only two weeks before the due date, when we had everything ready to go for
the production. Although we had a contract with the event producer to
underwrite our position, that company has subsequently gone into liquidation
which has left us with the exceptional loss in our own figures for the year.
There are still plans for this event to be re-mounted at a future date and we
are about to explore our potential involvement with the new owners.
Whilst we didn't manage to secure any other UK commissions in our core
Entertainment genre in 2010, we have continued to develop new entertainment
formats which are under consideration by UK broadcasters and being taken to
market internationally by our distributor DRG. However, given the still slow
progress being made generally in independent production and in particular
entertainment, we decided to diversify our activities a little more into the
scripted area of production for both television and, for the first time, film.
Having reported last year that we would be aiming to diversify our activities
more into scripted projects, I am pleased to report that we have made real
progress in this area. We have two scripted comedy projects for Kids
television, My Phone Genie and Media Meerkats, which are now at the point of
pre-production and scripting with our French partner, Moonscoop, and we
recently delivered the first script of our full length TV comedy drama Head
South (pilot for a potential series) which is in co-development with New
Zealand producer Comedia Productions. However, most radical has been our
successful move into the production of movies! Having acquired the rights for a
book entitled The Mumper, in December we went into production with our
co-producer Gateway Films on our first theatrical feature, inspired by the book
and currently called Weighed In - The Story of The Mumper. Having attracted a
first class cast of well known British movie actors for this production, it is
already getting a lot of interest and press coverage and, as we have now
completed filming, we have high hopes not only for the future of this movie but
also in the prospect of producing others.
In other areas, and as the Chairman states in his report, we were also a
`related' victim of one of the first government cutbacks when BECTA, the
department for next generation learning, was closed and with it, any hope of a
repeat of The National Schools Quiz, which we produced so successfully and with
such acclaim last March. However, our involvement with such innovative projects
underlines our ability to continue to provide quality content for a variety of
platforms and we are currently looking at ways to expand this experience and
also to exploit some of our back catalogue and current ideas for the growing
Apps/download market.
Whilst some of the events refereed to above have caused us frustration, I am
pleased to say that Talent South has continued to progress well. Our one-off
special, `The Krays by Fred Dinenage' was a ratings winner for its channel and
has, as the Chairman says, led to the commissioning of nine more hours from the
same channel. Our distributor DRG has also started to exploit the Talent South
back catalogue internationally, and the Talent South team continues to build a
vibrant slate of other new projects which we are hopeful will lead to further
business in the coming year.
Our year of frustration is not over yet as the exceptional and unexpected
losses were a real set-back, particularly to our immediate cash flow. That
said, I am pleased to report that trading in the first quarter of 2011 has
shown real progress, so we enter the coming year with the same grit and
determination we did the last and can assure shareholders that even though
times remain tough, we are doing everything we can to turn things around.
Tony Humphreys
Managing Director
4 March 2011
Further Enquiries
Talent Group plc
Tony Humphreys Tel: 020 7822 3900
Merchant Securities Limited
John East Tel: 020 7628 2200
Audited consolidated income statement for the year ended 30 September 2010
2010 2009
Notes £'000 £'000
Revenue 653 644
Cost of sales (311) (447)
Gross profit 342 197
Administrative expenses (792) (865)
Operating loss (450) (668)
Finance income 1 1
Finance costs (43) (41)
Loss before taxation (492) (708)
Income tax expense
- Prior year 2 - -
- Current tax 2 - -
Loss for the year (492) (708)
Loss per share (pence) 3 (2.76p) (4.25p)
Diluted loss per share (pence) 3 (2.67p) (4.10p)
The income statement has been prepared on the basis that all operations are
continuing operations.
The accounting policies and the notes, which are set out in the Company's
report and accounts, form an integral part of these financial statements.
There are no recognised gains or losses other than those passing through the
income statement.
Audited consolidated balance sheet as at 30 September 2010
2010 2009
Notes £'000 £'000 £'000 £'000
Assets
Non-current assets
Goodwill 1,082 1,082
Other intangible assets 25 31
Property, plant & equipment 31 34
1,138 1,147
Current assets
Inventories 6 57
Trade receivables 42 42
Cash & cash equivalents 4 31 7
79 106
Total assets 1,217 1,253
Equity and liabilities
Equity
Share capital 6,329 6,315
Share premium 11,731 11,675
Share option reserve 133 126
Retained earnings (18,362) (17,870)
Total equity (169) 246
Current liabilities
Borrowings 5 889 728
Trade & other payables 6 497 279
Total Liabilities 1,386 1,007
Total equity & liabilities 1,217 1,253
Audited consolidated cash flow statement from the year ended 30 September 2010
2010 2009
Notes £'000 £'000 £'000 £'000
Cash flows from operating
activities
Loss before taxation (492) (708)
Adjustments for:
Depreciation of tangible assets 13 23
Amortisation of intangible assets 6 6
Loss on disposal of tangible - -
assets
Interest received (1) (1)
Interest paid 43 41
(431) (639)
(Increase)/decrease in trade & (1) 506
other receivables
Decrease in inventories 51 11
Increase/(decrease) in other 226 (129)
payables
(155) (251)
Tax refund received - -
Tax paid - -
Net cash from operating activities (155) (251)
Cash flows from investing
activities
Purchase of property, plant and (10) (8)
equipment
Interest received 1 1
Net cash used in investing (9) (7)
activities
Cash flows from financing
activities
Proceeds from borrowing 162 100
Proceeds from issue of shares 70 -
Interest paid (43) (41)
Net cash used in financing 189 59
Net increase/(decrease) in cash 7 25 (199)
and cash equivalents
Cash and cash equivalents at the
beginning
of the year 7 (21) 178
Cash and cash equivalents at the 7 4 (21)
end of the year
Audited consolidated statement of changes in equity from the year ended 30
September 2010
At 1 October 20086,31511,675120(17,162)948
Share Share Share Retained Total
Option
Capital Premium Earnings £'000
Reserve
£'000 £'000 £'000
£'000
Changes in equity
Loss for the year - - - (708) (708)
Equity share option - - 6 - 6
recognised
At 1 October 2009 6,315 11,675 126 (17,870) 246
Changes in equity
Loss for the year - - - (492) (492)
Equity share option - - 7 - 7
recognised
New shares issued 14 56 - - 70
At 30 September 2010 6,329 11,731 133 (18,362) (169)
Notes to the preliminary results for the year ended 30 September 2010
1. Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are
in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2009 and 2010, but is
derived from those accounts. Statutory accounts for 2009 have been delivered to
the Registrar of Companies and those for 2010 will be shortly. The Auditors
have reported on those accounts; their reports were unqualified and did not
contain statements under the Companies Act 2006 section 498.
2. Taxation
2010 2009
£'000 £'000
Domestic current year tax
UK corporation tax - -
Domestic prior year tax
UK corporation tax - -
- -
Factors affecting the tax charge for the period:
Loss on ordinary activities before taxation (492) (708)
Loss on ordinary activities multiplied by the
standard rate of
Corporation tax in the UK of 21 per cent. (2007: 20 (103) (149)
per cent.)
Expenses not deductible for tax purposes 8 3
Depreciation in excess of capital allowances for the 3 5
year
Unutilised tax losses 92 141
Current tax charge for the year - -
3. Loss per share
2010 2009
£'000 £'000
Numerator
Basic/Diluted: Net loss (492) (708)
Denominator
Basic: Weighted average shares 17,847,817 16,670,284
Effect of diluted securities: stock options 577,500 591,000
Diluted: Adjusted weighted average shares 18,425,317 17,261,284
Basic loss per share is calculated by dividing the net loss for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
Diluted loss per share is computed using the weighted average number of shares
outstanding during the period adjusted for the dilutive effect of stock options
outstanding for the period.
4. Cash and cash equivalents
2010 2009
£'000 £'000
Cash at bank and in hand 31 7
Bank overdraft (27) (28)
4 (21)
5. Borrowings
2010 2009
£'000 £'000
Bank overdraft 27 28
Other loans 862 700
889 728
The above borrowings are loans from Terry Bate, Non-Executive Chairman. On the
first loan of £700,000, interest is payable monthly at the rate of a minimum of
6 per cent. per annum. During the year Mr Bate provided a further loan facility
to the Company as production finance for a commission that was subsequently
cancelled. The maximum amount drawn under this facility was £162,000. At the
year end £162,000 remained outstanding. Interest on this loan is payable at the
rate of 7 per cent. per annum. The loans are unsecured and no guarantees were
given.
a) Ageing
The loans are due on demand.
b) Fair values
Cash and cash equivalents
The carrying value approximates to fair value.
Other assets and liabilities
No disclosure of fair value has been made as the carrying value is a reasonable
approximation of the fair value.
6. Trade and other payables: amounts falling due within one year
2010 2009
£'000 £'000
Social security and other taxes 144 73
Other payables 58 79
Accruals and deferred income 295 127
497 279
7. Reconciliation of net cash flow to movement in cash and cash equivalents
2010 2009
£'000 £'000
Net increase/(decrease) in cash and cash 25 (199)
equivalents
Cash and cash equivalents at beginning of year (21) 178
Cash and cash equivalents at end of year (note 4) 4 (21)
8. Financial commitments
Office Office Land and Land and
equipment equipment buildings buildings
2010 2009 2010 2009
£'000 £'000 £'000 £'000
At 30 September 2010, the Group had
commitments under non - cancellable
operating leases as follows:
Expiry date:
Less than one year 2 - 50 -
Between two and five years - 6 - 105
At 30 September 2010 there are no terms of renewal or purchase options and
escalation clauses. There are also no restrictions imposed by lease
arrangements concerning dividends, additional debt and further leasing.
9. Dividend
The Directors do not propose a dividend payment.
10. Copies of report and accounts
Copies of the Report and Accounts will be posted to shareholders shortly, will
be available from the Company's registered office Lion House, Red Lion Street,
London WC1R 4GB and will be available from the Company's website
www.talenttv.com.
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