Final Results
31 March 2010
Talent Group plc
("Talent" or the "Company")
Final results for the year ended 30 September 2009
Chairman's Statement
Whilst I would customarily state that I am pleased to report your Company's
results for the year ended 30 September 2009, I can derive little pleasure from
the current year's results.
This has been, yet again, another difficult year for the television industry,
and these difficulties are inevitably reflected in our financial statements.
Group turnover for the period has fallen to £644,000 against £1,841,000 for the
previous year, which was itself a steep decline on the 2007 figure of
£3,333,000. These figures reflect the lack of commissioning by the major UK
broadcasters as they themselves struggle with reduced revenues in the current
economic climate. The commissioning process has been further exacerbated by
continuing personnel changes within the broadcasters, with its inevitable
adverse effect on the short-term decision making process.
Gross margins remained constant at around 30 per cent, and during the year we
have continued to reduce the overhead base. Nevertheless, the fall in turnover
directly impacts upon the loss before taxation, which has increased from £
441,000 in 2008 to £702,000 for 2009.
Clearly the Company cannot continue to incur losses on this scale, and the
Board is taking active measures to address the situation. We have continued to
develop programmes and formats for the major UK broadcasters, our traditional
market, and a number of these will, we believe, result in significant
commissions. We have also actively sought out new markets for our talents.
Since the year-end we have been commissioned to produce an instructional DVD
for retail (with more, we hope, to follow); we have produced the first ever
live National Schools Quiz on the internet, with over seven thousand
participants; we have developed digital marketing strategies for high-street
brands seeking to enhance their on-line presence; and we have entered into a
co-production agreement to develop and produce a feature film. These are all
new areas of activity for the Group, and are intended to allow a future less
dependant on the vagaries of the traditional broadcaster commissioning process.
In June 2009 Stephen Callen replaced Frances Horrell as Finance Director, and
he has continued to drive down overheads. Tony Humphreys, as Managing Director,
and Jonathan Glazier, Director of Entertainment, have continued to demonstrate
drive and enthusiasm despite the prevailing difficulties, and it is largely due
to their efforts that we have been able to develop the range of proposals that
we rely on to restore profitability. I must also thank the few other remaining
employees of the Group for their loyalty and commitment during these difficult
times. I am also grateful for the continuing support of the Company's advisers
and shareholders, which enabled us to raise £70,000 through the placing of
shares in November 2009 to provide continuing working capital for the Group.
In my last year's report, I wrote `The current year will undoubtedly be
challenging but we believe we have the personnel, the expertise and the
development slate to make us well placed to benefit from any opportunity that
arises.' The year turned out to be even more challenging than I had imagined,
but I continue to believe in the ability of the Company to transform its
development proposals into profitable commissions, and I look forward to seeing
the fruits of these in the not too distant future.
Terry Bate
Chairman
31 March 2010
Business Review and Principle Activities
The commissioning environment remained very difficult throughout 2009 with
visibility into 2010 uncertain, as broadcasters continued to respond to the
on-going economic downturn. As our figures show, this resulted in even fewer
commissions than for the same period the previous year. Anticipating this
continued delay to the progress of your Company from our television production
activities, we again reviewed our operational efficiencies and additionally
re-focussed our strategy in order to adapt to the market conditions.
Given the declining opportunities in entertainment, it was decided to reduce
our in-house development resource (and overhead) and replace it by encouraging
the growing number of freelance creators to submit their projects so that we
could acquire the best of them under option. Additionally, the executives of
the Company agreed to reductions in salaries in order to assist further with
the Company's immediate cash flow and time was spent reviewing the company
archives so that further savings could be made in the coming year by reducing
our on-going storage requirements.
Notwithstanding the above, the development and production of television formats
and programmes continued and this resulted in a both a ten-part series, How
Clean is my Crime Scene, and a one hour documentary for Virgin Media; the
production of a new game show pilot (entitled Changing Fortunes) which will be
marketed internationally at the MIP TV television market in Cannes in April;
the co-development (with ITV Studios) of a major physical challenge game show
for which a pilot will be recorded in May 2010; and the commissioning of
another major prime time event which should be contracted in time to be
announced in mid April. Talent Television South also received its first
commission from the Crime and Investigation Network for a one hour documentary
(Fred Dinenage on the Krays) which aired earlier this month and quadrupled the
slot's average audience.
The main revision of strategy was to use our expertise and reputation as
content providers and broadcast television producers to target new
opportunities for the supply of content on-line. Early activity in this field
has resulted in video content for websites as varied as The Nod and Oak
Furniture Land. Our related market research has led us to the development and
creation of our own IP which allows viewers to click and buy whilst watching
our content. To speed up our progress in this field, we have established a
relationship with an experienced and reputable freelance digital executive who
has brokered introductions to a number of big brand companies keen to increase
their on-line presence by using technology such as we now have to offer.
As mentioned in the Chairman's Report, on March 12th we produced for Becta, as
part of its Next generation Learning initiative, the first ever on-lone live
National Schools Quiz which had over 7,200 eight and nine year old
participants. We are already working on a raft of similar projects which we
expect to be equally as ground-breaking and successful.
We have also increased the level of activity in scripted projects. This has
resulted in the re-invigoration of one of our children's live-action comedies
which is now in development with a major UK broadcaster and respected
international co-production partners; an animation series which will be
unveiled at MIP TV with French and Korean partners; and a comedy drama which is
at script stage and in co-development with a New Zealand producer. Finally on
the scripted front, we acquired the rights on a novel entitled The Mumper which
will be our first theatrical feature film with co-producer Gateway Films.
During the year we agreed a First Look deal with international distributor
Digital Rights Group which, I am pleased to say, will continue into 2010.
Tony Humphreys
Managing Director
31 March 2009
Further Enquiries
Talent Group plc
Tony Humphreys Tel: 020 7822 3900
Merchant John East Securities Limited
John East Tel: 020 7628 2200
Audited consolidated income statement for the year ended 30 September 2009
2009 2008
Notes £'000 £'000
Revenue 644 1,841
Cost of sales (447) (1,271)
Gross profit 197 570
Administrative expenses (865) (1,008)
Operating loss (668) (438)
Finance income 1 7
Finance costs (41) (10)
Loss before taxation (708) (441)
Income tax expense
- Prior year 2 - 13
- Current tax - -
Loss for the year (708) (428)
Loss per share (pence) 3 (4.25p) (2.63p)
Diluted loss per share (pence) 3 (4.10p) (2.53p)
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 2009
2009 2008
Notes £'000 £'000 £'000 £'000
Assets
Non-current assets
Goodwill 1,082 1,082
Other intangible assets 31 37
Property, plant & equipment 34 49
1,147 1,168
Current assets
Inventories 57 68
Trade receivables 42 548
Cash & cash equivalents 4 7 178
106 794
Total assets 1,253 1,962
Equity and liabilities
Equity
Share capital 6,315 6,315
Share premium 11,675 11,675
Share option reserve 126 120
Retained earnings (17,870) (17,162)
Total equity 246 948
Current liabilities
Borrowings 5 728 600
Trade & other payables 6 279 414
Total Liabilities 1,007 1,014
Total equity & liabilities 1,253 1,962
Audited consolidated cash flow statement from the year ended 30 September 2009
2009 2008
Notes £'000 £'000 £'000 £'000
Cash flows from operating
activities
Loss before taxation (708) (441)
Adjustments for:
Depreciation of tangible assets 23 20
Amortisation of intangible assets 6 6
Loss on disposal of tangible - 3
assets
Interest received (1) (7)
Interest paid 41 10
(639) (409)
Decrease/(increase) in trade & 506 (140)
other receivables
Decrease/(increase) in inventories 11 (14)
Decrease in other payables (129) (777)
(251) (1,340)
Tax refund received - 21
Tax paid - (1)
Net cash from operating activities (251) (1,320)
Cash flows from investing
activities
Purchase of property, plant and (8) (8)
equipment
Interest received 1 7
Acquisition of subsidiary net of - 2
cash acquired
Net cash used in investing (7) 1
activities
Cash flows from financing
activities
Proceeds from borrowing 100 600
Repayments of borrowings - (36)
Interest paid (41) (10)
Net cash used in financing 59 554
Net decrease in cash and cash 7 (199) (765)
equivalents
Cash and cash equivalents at the
beginning
of the year 7 178 943
Cash and cash equivalents at the 7 (21) 178
end of the year
Audited consolidated statement of changes in equity from the year ended 30
September 2009
Share
Share Share Option Retained
Capital Premium Reserve Earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 October 2007 6,310 11,634 117 (16,734) 1,327
Changes in equity
Loss for the year - - - (428) (428)
Equity share option - - 3 - 3
recognised
New shares issued 5 41 - - 46
At 1 October 2008 6,315 11,675 120 (17,162) 948
Changes in equity
Loss for the year - - - (708) (708)
Equity share option - - 6 - 6
recognised
At 30 September 2009 6,315 11,675 126 (17,870) 246
Notes to the preliminary results for the year ended 30 September 2009
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 2008 and 2009, but is
derived from those accounts. Statutory accounts for 2008 have been delivered to
the Registrar of Companies and those for 2009 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
2009 2008
£'000 £'000
Domestic current year tax
UK corporation tax - -
Domestic prior year tax
UK corporation tax - (13)
- (13)
Factors affecting the tax charge for the period:
Loss on ordinary activities before taxation (708) (441)
Loss on ordinary activities multiplied by the
standard rate of
Corporation tax in the UK of 21 per cent. (2007: 20 (149) (93)
per cent.)
Expenses not deductible for tax purposes 3 5
Depreciation in excess of capital allowances for the 5 5
year
Unutilised tax losses 141 83
Prior year tax - (13)
Current tax charge for the year - (13)
3. Loss per share
2009 2008
£'000 £'000
Numerator
Basic/Diluted: Net loss (708) (428)
Denominator
Basic: Weighted average shares 16,670,284 16,241,791
Effect of diluted securities: stock options 591,000 643,439
Diluted: Adjusted weighted average shares 17,261,284 16,885,230
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. Since the year end, the number of ordinary shares
in issue has been increased by 1,400,000 which will be brought into the
Earnings per Share calculation in the year to 30 September 2010.
4. Cash and cash equivalents
2009 2008
£'000 £'000
General office 7 178
Bank overdraft (28) -
(21) 178
5. Borrowings
2009 2008
£'000 £'000
Bank overdraft 28 -
Other loan 700 600
728 600
The above loan is a loan from Terry Bate, Non-Executive Chairman. Interest is
payable monthly at the rate of a minimum of 6 per cent. per annum. Prior to 21
January 2009 interest was charged at a minimum of 1.5 per cent. above base
rate. The loan is unsecured and no guarantees were given.
a) Ageing
The loan is 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
2009 2008
£'000 £'000
Social security and other taxes 73 25
Other payables 79 293
Controlled productions - 35
Accruals and deferred income 127 61
279 4146
7. Reconciliation of net cash flow to movement in cash and cash equivalents
2009 2008
£'000 £'000
Net decrease in cash and cash equivalents (199) (765)
Cash and cash equivalents at beginning of year 178 943
Cash and cash equivalents at end of year (note 4) (21) 178
8. Financial commitments
Office Office Land and Land and
equipment equipment buildings buildings
2009 2008 2009 2008
£'000 £'000 £'000 £'000
At 30 September 2009, the Group had
commitments under non - cancellable
operating leases as follows:
Expiry date:
Between two and five years 6 6 105 160
At 30 September 2009 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 proposed 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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