Final Results

RNS Number : 8552T

Ten Alps PLC

15 June 2009

 

Press Release                                                                                                                                      15 June 2009

Ten Alps PLC

Final Results

Ten Alps ('Ten Alps', the 'Company' or the 'Group'), the factual media company, announces its final results for year ended 31 March 2009. 

Ten Alps achieved growth in profits and margins in line with market expectations, despite tough conditions. This was primarily due to the accelerated migration of the business online, more demand for factual TV, the B2B and public sector bias in the client base and attention to costs. 

Ten Alps will continue to drive the business online and aim to further increase margins in the 2009-10 year.

Highlights

Financial 

• Revenue £80.2m, down by 1.5% (2008: £81.4m)

• EBITDA £5.9m, up 9.3% (2008 £5.4m) 

• Pre-tax profit (PBT) £3.3m, up 5% (2008: £3.15m)

• Net profit £3.0m, up 7.1% (2008: £2.8m) 

• Basic EPS 5.34p, up 9.7% (2008: 4.87p)

• Adjusted Basic EPS 6.52p, up 7.6% (2008: 6.06p)

• Cash balance at the year end of £13.1m, up 18.0% (2008: £11.1m)

• Shareholders' Equity £22.7m, up 35.1% (2008: £16.8m)

Operational

• All content, including TV catalogue, moving towards a single online database 

• Shift towards online publishing in major units, creating cash flow benefits

• Resilience in B2B through focus on less recession-affected sectors - like defence, education and health

• Strong in factual TV, with groundbreaking programmes delivered to Channel 4 (Dispatches) and BBC (Iran and the West) 

• Acquisition of video production company Twenty First Century Media creating a platform for the drive in to online video market

• Acquisition of factual TV producers Films of Record and Below the Radar, with focus on online video projects like Fermanagh TV 

• Raised £3m (before costs) during March 2009 through the placing of 11.1m shares at 27p

Current projects, aiming for launch this year 

• Six online sector portals covering Ten Alps' B2B publications (current roll out)

• Online TV training site Accountancy TV, with international scope 

• Online TV science channel Newton TV, with the Science Museum and Open University 

• Bid for public sector local news contracts, subject to Digital Britain tenders being issued

Commenting on the results Alex Connock, Chief Executive of Ten Alps, said:

'2008-9 was a volatile economic landscape, but we met financial targets set out before the crisis - for which our managers and staff deserve great credit. We also strengthened our cash position. 

The new financial year has commenced with a decent order book. However, it is too early to assume strong organic growth from existing customers. So this year we intend to continue migrating online, targeting further margin benefits and growth opportunities.'

Extracts from the final results appear below and a full version, together with frequent updates on content output, is available on the Company's newly-upgraded website www.tenalps.com

For further information, please contact:

Ten Alps plc
Alex Connock, CEO	Tel: [phone]
c/o Moira McManus
www.tenalps.com
Grant Thornton, Nominated Adviser	Tel: [phone]
Fiona Owen / Robert Beenstock
www.grant-thornton.co.uk
Canaccord Adams, Broker
Mark Williams / Adria Da Breo Richards	Tel: [phone]
www.canaccordadams.com
Pelham Public Relations
Alex Walters / Francesca Tuckett	Tel: [phone]
www.pelhampr.com

Chairman's Statement 

Ten Alps' management team continues to build a multi-platform offering which is meeting the evolving demands of its customers. Examples include:

• Large public sector tenders for combined online and TV service provision;

• Increasing demand for online B2B products previously in print, and for associated events

• Requests from broadcasters for '360-degree' TV and online programming.

Our approach has enabled Ten Alps to not only survive the economic fallout and grow profits, but also to have a powerful and unique platform for growth going forward. 

What everyone in the business understands is that fundamental progress on margins is key to long term success. 

In order to deliver online projects and margin growth we have continued to operate within the following corporate structure which has served us well over the past three years: 

• The Content division produces high-value, factual content, in TV, radio and online TV. 

• The Communications division provides clients with specialist audiences - B2B and public sector - online, in print, events and online TV.

The divisions share offices and are integrating their content within a single online resource. The fundamental and increasing strength of the group is that its ability to marry high end content production with powerful commercial exploitation makes it uniquely suited to the content creation and ownership opportunities of the multi-platform age we are undoubtedly in, especially in niche factual media.

Brian Walden

Chairman 

Chief Executive's Statement 

We aim in both the Content and Communications divisions to drive our content online, own more of it, monetise further revenues against it, and increase margins. We are evolving, from being an independent producer of content for other organisations, to being an independent owner of content. Online migration is the key to that, because we can own online assets more easily than client-funded TV programmes or print products.

Overall Margin Focus

The Group is targeting 3 Key Performance Indicators (KPIs) in order to address and increase margins:

(1) Gross margin

Gross margin has improved on last year to 29.8% (2008: 28.2%) and reflects the change in the product mix due to online migration, the acquisitions of Films of Record and Below the Radar and greater cost control. 

(2) Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)

This is a key measure we use to assess the results of the Group in any one year, as growth in the EBITDA figure ensures that the Group can increase [profit] margins and not just revenue. The Group produced good EBITDA growth in the year of 9.8% to £5.9m (2008: £5.4m). The EBITDA margin increased from 6.6% to 7.4% during the year.

(3) Adjusted Operating Profit margin (EBITA)

Together with the gross margin KPI, this target aims to maintain profitable products and programmes, to keep overheads under control and increase cashflows. The Group increased EBITA by 11.1% to £5.1m (2008: £4.6m). The margin increased from 5.7% to 6.4% during the year.

Content Division 

The Content division produces TV and radio programmes and online TV channels, and is now aiming to migrate and exploit its content online, including its back catalogue of over 500 programmes. The division has a management role in Teachers TV (www.teachers.tv) and Kent TV, (www.kenttv.com) as well as its own online projects. 

The Content division is run by Nitil Patel (also Group Finance Director) from offices in London and Manchester, with up to 100 core staff (depending on productions), and includes reputed TV executives such as Andrew Bethell, Denys Blakeway, Roger Graef, Brian Lapping, Norma Percy, Sarah Murch and Fiona Stourton. During the year we recruited new executives such as Kate Botting and Eve Kay and through the acquisition of Below the Radar, Trevor Birney, to expand the range of output in the division.

Review of Operations

Revenue in 2008-9 was £23.6m (2008: £25.7m) with EBITDA of £1.6m (2008: £1.8m) (before corporate  overheads) and EBITA of £1.2m (2008: £1.3m). The margins were lower after adjusting for a difficult economic environment, increased executive costs and lower KPIs from the new Teachers TV contract. 

During the year, the Content Division produced ground breaking TV programmes including Iran and the West (BBC2, National Geographic, France 3, described by the Financial Times as 'riveting, authoritative'), Attack on the Pentagon (Discovery), Gordon Brown: Where did it all go wrong? (Channel 4), Afghanistan: Mission Impossible? (Channel 4), Secrets of the Austrian Cellar (Channel 4), Forgotten Children of the Congo (Channel 4), 9/11 Faker (Channel 4), Murder Mansions (Channel 4) and Health and Safety (BBC 1).

The current slate includes Madoff: The Ultimate Con (BBC2), Hunger (BBC2), The Big Idea (BBC Worldwide), Balmoral (BBC2), The Rise and Fall of Detroit (BBC4), Great Ormond Street Hospital (BBC2) and After the Break (BBC2), all due to be released during the current year

Radio programmes produced included 1968: Philosophy in the Streets (Radio 4), The New York 77 Blackout'(Radio 4), Political Correctness RIP? - parts 1 and 2 (Radio 4), Che Lives! (Radio 2), Human Rights Now! (Radio 2) and The Album is Art (Radio 2).

The current slate includes Hearts and Minds: How Intellectuals won the Cold War (R4), On The Outside it Looked Like an Old Fashioned Police Box (R4), Jeopardising Justice (x 4) (Radio 4), Art of Laughter (Radio 2), Shedding Hippie Blood (Radio 2) and Woodstock 40th Anniversary (Radio 2). Radio is of limited commercial opportunity to the group but a very good creative avenue for the creation of new projects.

Online migration

Ten Alps continues to work in the growing market for public sector online TV projects. Kent TV, the pioneering local authority-funded channel, saw a rise in its viewing figures during the year. Fermanagh TV, which is a local online community TV offering launched in May 2009 (www.fermanagh.tv) and Ten Alps aims to roll out more in the coming year. Ten Alps has expressed a strong interest in bidding in any public sector tenders in the local news field under the current Digital Britain review, particularly in Northern Ireland, the North West, the North East and the Midlands, in each of which region Ten Alps has an indigenous production presence.

The Content division plans to further expand its online offering. Projects include:

• Newton TV, a project providing high-end online TV science content, combining the skills of Ten Alps' subsidiary Brook Lapping with the Open University, the Science Museum and the Royal Institution; and

• A plan to launch Accountancy TV, a service providing continuing professional development to the accounting industry.

Communications Division

The Communication division's output spans over 600 specific areas of trade media, increasingly online but also still generating valuable and sustained revenues in print and associated events. The division is run by Adrian Dunleavy with over 400 staff and offers a multi-platform communications service to the public sector, business to business and trade clients.

Review of Operations

Revenues in the division increased to £56.6m (2008: £55.7m) with EBITDA improving to £5.4m (2008: £4.5m). The EBITA figures were £5.1m (2008: £4.6m) before corporate costs.

This year saw revenue pressures in the advertising and client events markets due to the impact of the general economic climate. However, by reallocating resources, reducing underlying overhead and by driving output to higher margin sectors, owned assets and across online products, the business managed growth in revenue, gross margin and EBITDA.

The directors believe this approach will provide a strong base from which to develop the business over the coming years.

In the year strong performances were delivered in online publishing, owned events, digital production and in corporate communications notably in the corporate responsibility sector.

A review of activities is given below by output type:

(1) Publishing

The division undertakes factual publishing on behalf of clients and across owned titles (100 titles). Output spans a number of key sectors including Trade, Medical, Infrastructure, Energy, Environment and Defence. Revenues are generally derived from client fees and advertising with distribution achieved across print and online formats.

Publishing accounted for £26.8m revenue being 47.3% of the divisions output (2008: £28.1m and 50.4%).  Included in this figure is £4.8m (2008: £1.4m) of revenues for online publishing (see below). 

The year has seen a shift in output to higher margin online revenues which now account for 18.0% of publishing activity (2008: 5.1%). Resources have also been transferred to the higher margin sectors such as Medical, Technology and Environment during the year and there has been a planned shift of focus to owned titles, now 31.3% of the division's revenue (2008: 18.4%). These moves to higher margin growth models demonstrate the positive flexibility in Ten Alps publishing model. 

New publishing projects in the year included: European Metabolic Review, Neurology Insights Europe, Energy Focus for the Energy Industries Council and the Atlas of Innovation for the World Alliance for Innovation (WAINOVA).

(2) Events

Historically, the division provided event management services to third parties. This is still a core offering but the division is moving resources away from this lower margin income stream and is instead developing a number of higher margin owned events on the back of its publishing sector experience. 

Events accounted for £3.2m revenue being 5.6% of the divisions output (2008: £4.6m and 8.3%). This reduction reflects the move away from client-based events.

Owned events represented 40.9% of that output (2008: 30.8%) and new owned events in the period included Passenger Transport and Central Government Project Management

(3) Online And Video

The division provides online production and development services as well as being a market leader in the sales and production of online video and online video channels - a fast growing high margin sector with  further potential.

With the acquisition of Twenty First Century Media, an online video production business, in July 2008, the division's online and video capability has extended nationally and its revenues have grown to £7m (including the £4.8m in online publishing as detailed above) representing 12.4% of the division's output (2008: £2.6m and 4.7%).

This year has seen cross selling of online and video production services to existing clients and projects were delivered in the year for the likes of Optometry TV, British Wind Energy Association, Corus, Scottish Public Pensions Agency and Transport for London. There is potential to increase the pace of this activity and to create a business of scale around the online video sector.

(4) Advertising Sales

The division uses its sector skills to sell advertising on behalf of certain niche trade and not for profit organisations on a commission basis. The advertising sector has been under some pressure this year, however with positive business development generating new clients for the division the results have been encouraging in that context.

Advertising sales accounted for £12.5m revenue being 22.1% of the divisions output (2008: £10.9m and 19.6%).

New clients in the period included BT, Capita Gas, Xafinity and the National Osteoporosis Society.

(5) Corporate Communications

The division has skill in providing multi platform communication services for the corporate market including design, media buying and web services. Notably it has enjoyed significant success in the area of social responsibility where its subsidiary DBDA is a leading exponent of this service in the education, safety  and environmental sectors. 

Following a strong new business drive this year sales increased to £12.1m being 21.4% of the divisions output (2008: £11.0 and 19.8%).

New clients in the period included National Grid, Hampshire County Council and Nationwide Building Society.

Online Migration

The Board intends to continue to drive more output online within the Communications division. With the soft launch of its sector online portals during the year, there is great potential for reduced production and distribution costs as online content provision overtakes the more traditional and expensive print mediums.

The use of portals improves operating cash flow, not only because of the positive margin impact but the fact that the production of a sale is immediate online and as a result the invoice point is brought significantly closer to the point of sale than would have historically been the case.

As new online platforms are introduced, there is the potential for increased revenue per client. Online publications offer opportunities for link, directory and video based sales alongside the more traditional display and classified revenues.

The ability to offer online video channels and related content production services opens up a further client base and the potential of a longer term commercial relationship through a content production service rather than a pure advertising sale.

The division enjoyed positive business and product development in the year. This enabled it to expand client communications across leading online techniques, which is having a positive effect on each facet of its new business development. Furthermore, it opens the opportunity to migrate the model to a higher margin, online product.

We intend to increase the pace of migration online in the coming year.

Alex Connock

Chief Executive

Financial Review

Group revenue was down by (1.5)% to £80.2m (2008: £81.4m) but gross profit increased by 4.3% to £24m (2008: £23m).

Gross margin has improved from 28.2% to 29.8% in the year with administrative expenses increasing slightly as a percentage and now represent 23.5% of revenues (2008: 22.6%).

EBITDA or headline profit, a key performance measure used by the board, increased by 9.8% to £5.92m (2008: £5.39m), after all development costs being written off directly to the income statement. Operating profit was up 13% to £4.36m (2008: £3.86m) after an amortisation charge of £773,000 (2008: £765,000).

For the year ended 31 March 2009, the Group pays tax at a rate of 28% on profits chargeable to corporation tax. However the effective rate is lower (9.3%), driven by utilisation of losses acquired in this and preceding years and an overprovision in the previous year. 

Earnings per share

Basic earnings per share in the year was 5.34p (2008: 4.87p) and was calculated on the profits after taxation of £2.9m (2008: £2.5m) divided by the weighted average number of shares in issue during the period being 53,553,753 (2008: 52,047,080). The number of shares has increased due to the placing in March 2009 and the full impact on the weighted average will be reflected next year.

Diluted basic earnings per share in the year was 5.31p (2008: 4.79p) and is based on the basic earnings per share calculation above, except that the weighted average number of shares includes all dilutive share options outstanding. This gives a weighted average number of shares in issue of 53,883,572 (2008: 52,892,148) reflecting the impact of the outstanding share options as at 31 March 2009.

The Group continues to maintain a significant cash balance and held £13.1m as at March 2009 (2008: £11.1m). The balance is £2m higher than last year as it mainly reflects the movement in working capital, impact of the placing and financing and the payments of deferred consideration.

The Group has provided for deferred consideration of £2.45m (2008: £4.71m) on the balance sheet of which £0.8m (2008: £1.7m) is due after more than one year. Both the current and long term amounts relate to earn out payments due on the acquisitions of Atalink and DBDA.

As at the year end, the Group had outstanding bank loans of £14.45m (2008: £13.75m) of which £11.95m (2008: £10.48m) is due after more than one year. The loan was reduced by a scheduled payment of £2.5m on 30 April 2009. 

Shareholders' Equity

Called up share capital increased to £1.278m (2008: £1.042m) and the share premium increased to £10m (2008: £7.2m).

Retained earnings as at 31 March 2009 were £8.5m (2008: £5.6m) and total shareholders' equity at that date was £22.74m (2008: £16.78m).

Minority Interests

Minority interest in the income statement reflects the Teachers' TV consortium members share in the year (25%). The balance as at 31 March 2009 was £167,000 (2008: £145,000).

Nitil Patel

Group Finance Director

  Ten Alps Plc

Consolidated Income Statement for the year ended 31 March 2009

		Year ended	Year ended
		31 March	31 March
		2009	2008
	Notes	£'000	£'000
Revenue		80,221	81,389
Operating costs before amortisation of intangible assets		(75,086)	(76,766)
Earnings before interest, tax and amortisation (EBITA)		5,135	4,623
Amortisation of intangible assets		(773)	(765)
Total operating costs		(75,859)	(77,531)
Operating profit		4,362	3,858
Finance costs		(1,325)	(1,060)
Finance income		291	354
Profit before tax		3,328	3,152
Income tax expense		(312)	(324)
Profit for the year		3,016	2,828
Attributable to:
Equity holders of the parent		2,860	2,533
Minority interest		156	295
		3,016	2,828
Basic earnings per share	2	5.34p	4.87 p
Diluted earnings per share	2	5.31p	4.79 p

All results for the Group are derived from continuing operations in both the current and prior year.

The accompanying principal accounting policies and notes from part of these consolidated financial statements.  Ten Alps Plc

Consolidated Balance Sheet as at 31 March 2009

		As at	As at
		31 March	31 March
		2009	2008
		£ '000	£ '000
Assets
Non-current
Goodwill		24,575	23,106
Other intangible assets		3,681	4,023
Property, plant and equipment		1,716	1,870
		29,972	28,999
Current assets
Inventories		3,743	3,603
Trade and other receivables		18,057	19,459
Cash and cash equivalents		13,127	11,148
		34,927	34,210
Liabilities
Current liabilities
Trade and other payables		(25,985)	(29,473)
Current tax liabilities		(526)	(539)
Borrowings and other financial liabilities		(2,536)	(3,642)
Derivative financial instruments		(134)	(25)
		(29,181)	(33,679)
Net current assets		5,746	531
Non-current liabilities
Borrowings and other financial liabilities		(11,974)	(10,564)
Derivative financial instruments		(2)	(25)
Deferred tax		(72)	(128)
Other liabilities		(767)	(1,888)
		(12,815)	(12,605)
Net assets		22,903	16,925
Equity
Called up share capital		1,278	1,042
Share premium account		9,999	7,198
Merger reserve		2,930	2,930
Retained earnings		8,529	5,610
Total attributable to equity shareholders of parent		22,736	16,780
Minority interest		167	145
Total equity		22,903	16,925

The consolidated financial statements were approved by the Board on 12 June 2009 and are signed on its behalf by

Alex Connock                        Nitil Patel

Director                                 Director  Ten Alps Plc

Consolidated Cash flow Statement for the year ended 31 March 2009

		Year ended	Year ended
		31 March	31 March
		2009	2008
		£ '000	£ '000
Cash flows from operating activities
Profit for the period		3,016	2,828
Adjustments for:
Income tax expense		312	324
Depreciation		782	767
Amortisation and impairment of intangibles		773	765
Finance costs		1,325	1,060
Finance income		(291)	(354)
Write-back of other loans		(317)	-
Share based payment charge		59	13
Loss/(Profit) on sale of property, plant and equipment		10	(5)
		5,669	5,398
(Increase)/Decrease in inventories		(136)	874
Decrease/(Increase) in trade and other receivables		1,919	(7,152)
Decrease in trade and other payables		(3,175)	(870)
Cash generated/(used in) from operations		4,277	(1,750)
Finance costs paid		(1,448)	(1,010)
Finance income received		291	354
Foreign exchange loss on other loans		-	19
Tax paid		(446)	(315)
Net cash flows from/(used in) operating activities		2,674	(2,702)
Investing activities
Acquisition of subsidiary undertakings, net of cash and overdrafts acquired		(646)	(2,823)
Payment of deferred consideration		(2,685)	-
Purchase of property, plant and equipment		(532)	(961)
Proceeds of sale of property, plant and equipment		40	131
Development of websites		(279)	(106)
Net cash flows used in investing activities		(4,102)	(3,759)
Financing activities
Issue of ordinary share capital		2,922	9
Borrowings repaid		-	(1,000)
Borrowings received		700	4,600
Capital element of finance lease payments		(81)	(8)
Dividends paid to minority interests		(134)	(360)
Net cash flows from financing activities		3,407	3,241
Net increase/(decrease) in cash and cash equivalents		1,979	(3,220)
Cash and cash equivalents at 1 April		11,148	14,368
Cash and cash equivalents at 31 March		13,127	11,148

Ten Alps Plc

Consolidated Statement of changes in Equity for the ended 31 March 2009

		Share capital	Share premium	Merger reserve	Retained earnings	Total attributable to equity shareholders	Minority interest	Total equity
		£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2007		1,041	7,190	2,930	3,064	14,225	210	14,435
Profit for the Year		-	-	-	2,533	2,533	295	2,828
Total recognised income and expense		-	-	-	2,533	2,533	295	2,828
Equity-settled share-based payments		-	-	-	13	13	-	13
Dividends paid		-	-	-	-	-	(360)	(360)
Shares issued		1	8	-	-	9	-	9
Balance at 31 March 2008		1,042	7,198	2,930	5,610	16,780	145	16,925
Balance at 1 April 2008		1,042	7,198	2,930	5,610	16,780	145	16,925
Profit for the Year		-	-	-	2,860	2,860	156	3,016
Total recognised income and expense		-	-	-	2,860	2,860	156	3,016
Equity-settled share-based payments		-	-	-	59	59	-	59
Dividends paid		-	-	-	-	-	(134)	(134)
Shares issued		236	2,801	-	-	3,037	-	3,037
Balance at 31 March 2009		1,278	9,999	2,930	8,529	22,736	167	22,903

Notes to the Consolidated Financial Statements

1) ACCOUNTING POLICIES

General Information

Ten Alps plc and its subsidiaries (the Group) is a factual media Group which provides and manages content on TV, radio, online TV and print.

Ten Alps plc is the Group's ultimate parent and is a public listed company incorporated in Scotland. The address of its registered office is Great Michael House, 14 The Links Place, Edinburgh, EH6 7EZ. Its shares are listed on the Alternative Investment Market of the London Stock Exchange.

These consolidated financial statements have been approved for issue by the Board of Directors on 12 June 2009.

Basis of Preparation

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union (EU) and the Companies Act 1985 applicable to companies reporting under IFRS. The financial statements have been prepared primarily under the historical cost convention. Areas where other bases are applied are identified in the accounting policies below. 

Following the transition to IFRS, the Group's accounting policies as set out below, have been applied consistently throughout the Group to all the periods presented, unless otherwise stated. The Group's consolidated financial statements were prepared in accordance with United Kingdom Generally Accepted Accounting ('UK GAAP') principles until 31 March 2007. 

In preparing the financial statements the Directors have adopted the going concern basis of accounting having assessed current trading, market conditions and the funding in place for the Group. These are discussed further in the Director's Report in the full financial statements.

New Significant Standards and Interpretations Not Yet Adopted

A number of new standards, amendments to standards and interpretations are not yet effective for the period ended 31 March 2009, and have not been applied in preparing these consolidated financial statements:

IFRS 8 - Operating segments (effective for accounting periods beginning on or after 1 January 2009)

IFRS 8 introduces the 'management approach' to segment reporting. This standard will require disclosure of segment information based on internal reports regularly reviewed by the Group's board in order to assess each segment's performance and to allocate resources to them. This standard is concerned only with disclosure and replaces IAS 14 'Segment reporting'. 

IAS 1 - Presentation of financial statements (revised 2007)

This standard is applicable for accounting periods beginning on or after 1 January 2009. The main changes triggered by this standard result in a separate presentation of changes in equity that arise from transactions with owners in their capacity as owners from other changes in equity. The amended version of this standard also changes the terminology and presentation of the primary financial statements.

Other standards which will become effective in future periods, but which are not materially expected to impact on the Group are:

• Revised IAS 23 - Borrowing Costs

• IFRIC 11 - IFRS 2 - Group and Treasury Share Transactions 

• IFRS 3 - Business Combinations (revised 2008)

• IAS 27 - Consolidated and Separate Financial Statements (revised 2008) 

• Amendment to IFRS 2 Share-Based Vesting Conditions and Cancellations 

Basis of Consolidation

The Group financial statements consolidate the financial statements of the company and of its subsidiary undertakings drawn up to 31 March 2009. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting policies. 

Intercompany transactions, balances and unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Revenue

Revenue is recognised when it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable from customers, net of trade discounts, VAT, other sales related taxes, and after eliminating sales within the Group. Revenue is recognised as follows:

Content

Production revenue comprises broadcaster licence fees and other pre-sales receivable for work carried out in producing television programmes. Certain customer-specific production contracts are reported using the percentage-of-completion method. 
In this method, revenues and gains on customer-specific contracts are recognised on the basis of the stage of completion of the respective project concerned. The percentage of completion is calculated as the ratio of the contract costs incurred up until the end of the year to the total estimated project cost (cost-to-cost method). Irrespective of the extent to which a project has been completed, losses resulting from customer-specific contracts are immediately recognised in full in the period in which the loss is identified. Gross profit on production activity is recognised over the period of the production and in accordance with the profitability of the underlying contract. Overspends on productions are recognised as they arise and underspends are recognised on completion of the productions.

Included in production revenue is accrued income in relation to Key Performance Indicators (KPIs) being achieved with respect to the Teachers' TV operation with the range being between 0% to 10%. As the full assessment will not be known until July 2009, the Directors have recognised a best estimate accrual.

Revenue also includes sums receivable from the exploitation of programmes in which the company owns rights and is recognised when all of the following criteria have been met:

i)    an agreement has been executed by both parties;

ii)    the programme is available for delivery; and

iii)    the arrangements are fixed and determinable.

Gross profit from the exploitation of programme rights is recognised when receivable.

Communications 

Revenue is recognised in the accounting period in which the goods or services are rendered by reference to stage of completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Publishing: advertising revenue is recognised on the date publications are dispatched to customers. 

Exhibitions: revenue is recognised when the show has been completed. Deposits received in advance are recorded as deferred income on the balance sheet.

Online: revenue is recognised at the point of delivery or fulfilment for single/discrete services.

Production Costs

When the Group is commissioned to make a programme by a broadcaster, the broadcaster pays a licence fee for the programme in their own territory and the Group retains the right to exploit the programme elsewhere.

Where the licence fee exceeds the cost of production, then, due to the uncertain nature of other future revenues, the Group writes off 100% of the production cost against the licence fee income.

Where the estimated production costs are greater than the licence fee from the broadcaster, production will only take place if estimates of future income from all sources exceed the excess production costs. Under these circumstances, the excess production cost is included in 'Intangible Assets'. The net book value of the production is reduced at the year end by the income received in the year and the amount held on the balance sheet will be the lesser of the amount of anticipated future ancillary revenues and the amortised cost of investment as this is an indicator of impairment.

Property, plant and equipment

Property, plant and equipment are stated at cost net of depreciation and any provision for impairment.

Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by equal annual instalments over their expected useful lives. The rates generally applicable are:

Leasehold premises        over the term of the lease

Motor vehicles                 20% on cost

Office equipment             10% on cost

Computer Equipment       20% on cost

Useful economic lives are reviewed annually. Depreciation is charged on all additions to, or disposals of, depreciating assets in the year of purchase or disposal. Any impairment in values is charged to the income statement.

Intangible assets

Goodwill

Subject to the transitional relief in IFRS1, all business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries. In respect of business acquisitions acquired since 1 April 2006, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but tested annually for impairment. 

In respect of acquisitions prior to 1 April 2006, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The cost and amortisation of goodwill have been adjusted to show a net position as at the date of transition to IFRS.

Other Intangibles assets

The fair value of other intangible assets acquired as a result of business combinations are capitalised and amortised on a straight line basis through the income statement. The rates applicable, which represent directors' best estimate of the useful economic life, are:

Customer Relations         5 - 8 years

Magazine Titles              3 years

Customer Contracts        Length of contract

Where websites are identified as income generating, they are capitalised and amortised on a straight line basis through the income statement over 5 years. Capitalised website costs include external direct costs of material and services and the payroll and payroll-related costs for employees who are directly associated with the project.

Production costs included in intangible assets are amortised against ancillary income received associated with the production (see policy relating to production costs).

Leased assets

In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee.

A corresponding amount is recognised as a finance leasing liability. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease.

All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight line basis over the lease term.

Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

Inventories

Content 

Inventories comprise of costs on productions that are incomplete at the year-end less any amounts recognised as cost of sales.

Communications

Inventories comprise cumulative costs incurred in relation to unpublished titles or events, less provision for future losses and are valued on the basis of direct costs plus attributable overheads based on a normal level of activity. No element of profit is included in the valuation of inventories.

Programmes in progress at period end

Where productions are in progress at the period end and where the sales invoiced exceed the value of work done the excess is shown as deferred income; where the sales recognised exceed sales invoiced the amounts are classified as accrued income. Where it is anticipated that a production will make a loss, the anticipated loss is provided for in full.

Impairment of assets

For the purposes of assessing impairment, non-financial assets are Grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at the cash-generating unit level. 

Goodwill is allocated to those cash generating units that are expected to benefit from the synergies of the related business combination and represent the lowest level within the Group at which management monitors the related cash flows. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturity of less than seven months.

Equity

Equity comprises the following:

• Share capital represents the nominal value of equity shares.

• Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

• Merger Reserve represents the excess over nominal value of the fair value of consideration received for equity shares, where ordinary shares are issued as consideration for the purchase of subsidiaries in which the Group hold a 90% interest or above.

• Retained earnings represents retained profits.

Current and Deferred taxation

Current tax is the tax currently payable based on taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. 

Deferred tax is not recognised in respect of: 

• the initial recognition of goodwill that is not tax deductible and

• the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Financial Instruments

Financial assets and liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial Assets

Trade and other receivables

Trade and other receivables are recorded at their fair value less provision for any impairment.

Financial Liabilities

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Bank Borrowings

Interest bearing bank loans and overdrafts are recorded at fair value, net of direct issue costs.

Finance charges, including premiums payable on settlement and direct issue costs, are accounted for on an effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Media Loans

Media loans are recorded at the proceeds received and adjusted for foreign exchange movements. Media loans are written off as grants once the Company has no further obligations with respect to the loans.

Trade and other payables

 Trade and other payables are stated at their fair value.

Derivative Financial Instruments and Hedging Activities

The Group monitors interest rates and has entered into an interest rate collar to manage its exposures to fluctuating interest rates. These instruments are initially recognised at fair value on the trade date and are subsequently re-measured at their fair value on the balance sheet date. The resulting gain or loss is recognised in the incomes statement in finance costs. 

Underlying the definition of fair value is the presumption that the Group is a going concern without any intention of materially curtailing the scale of its operations.

In determining the fair value of a derivative, the appropriate quoted market price for an asset held is the bid price, and for a liability issued is the offer price.

Employee Benefits

Share-based Payments

Under IFRS 2, all share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 April 2006 are recognised in the financial statements.

Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions.

All equity-settled share-based payments are ultimately recognised as an expense in the income statement with a corresponding credit to reserves.

If vesting periods apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised.

Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

Retirement benefits

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

Significant judgements and estimates

The preparation of consolidated financial statements under IFRS requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below.

Impairment of goodwill

The Group is required to test, at least annually, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a suitable discount rate in order to calculate the present value of these cash flows. Actual outcomes could vary. See note 9.

Intangible assets

The Group recognises intangible assets acquired as part of business combinations at fair value at the date of acquisition. The determination of these fair values is based upon management's judgement and includes assumptions on the timing and amount of future incremental cash flows generated by the assets and selection of an appropriate cost of capital. Furthermore, management must estimate the expected useful lives of intangible assets and charge amortisation on these assets accordingly. See note 9.

Depreciation of property, plant and equipment

Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives as set out above. See note 10.

Deferred Consideration

Where deferred consideration is payable in cash and discounting would have a material effect the liability is discounted to its present value. Where the deferred consideration is contingent and dependent upon future trading performance, an estimate of the present value of the likely consideration payable is made. See note 17.

Revenue Recognition on Significant Contracts

Included in production revenue is accrued income in relation to Key Performance Indicators (KPIs) being achieved with respect to the Teachers' TV operation with the range being between 0% to 10%. As the full assessment will not be known until July 2009, the Directors have recognised a best estimate accrual.

Segmental reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

2) EARNINGS PER SHARE

	2009	2008
Weighted average number of shares used in basic
earnings per share calculation	53,553,753	52,047,080
Dilutive effect of share options	329,819	845,068
Weighted average number of shares used in diluted	53,883,572	52,892,148
earnings per share calculation
	£'000	£'000
Profit for period attributable to shareholders	2,860	2,533
Amortisation and impairment of intangible assets adjusted for deferred tax impact	571	607
Share-based payments	59	13
Adjusted profit for period attributable to equity holders of the parent	3,490	3,153
Basic Earnings per Share	5.34 p	4.87 p
Diluted Earnings per Share	5.31 p	4.79 p
Adjusted Basic Earnings per Share	6.52 p	6.06 p
Adjusted Diluted Earnings per Share	6.48 p	5.96 p

3) No final dividend is being proposed.

4) Publication of Non-Statutory Accounts

The financial information relating to the year ended 31 March 2009 set out above does not constitute the Company's statutory accounts for that year, but have been extracted from the statutory accounts, which received an unqualified auditors' report and which have not yet been filed with the Registrar of Companies.  Copies of the Company's Annual Report and Accounts for 2009 will be sent to shareholders as soon as is practicable.

 

END

 

 

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