Final Results

RNS Number : 8425W

Boomerang Plus PLC

26 November 2010

 



Date:  26 November 2010

On behalf of:         Boomerang Plus plc ('Boomerang', 'the Company', or 'the Group')

Embargoed until:   0700hrs

Boomerang Plus plc

Preliminary Results

Boomerang Plus plc (AIM: BOOM.L), a profitable and vertically integrated, multi-genre, independent television production group operating within the Nations and Regions, today announces its preliminary results for the year ended 31 May 2010.

Financials

§ Revenue of £21.41 million (2009: £19.76 million).

§ Operating profit of £0.61 million (2009: £1.14 million).

§ Adjusted operating profit* of £0.78 million (2009: £1.25 million).

§ Profit before tax of £0.54 million (2009: £1.09 million).

§ Strong balance sheet with cash and cash equivalents at year end of £3.07 million (2009: £3.03 million).

Operations

§ Good progress in diversifying the Group's operations.

§ Acquisition of Indus Films Limited in October 2009.

§ Continued growth of Advertiser Funded Programming ("AFP") both organically and through investment into the "Freeze" winter sports and music festival and acquisition of "Method", the multimedia snowboarding publisher in September 2009.

§ Awarded three-year contract for £4.0 million (£1.33 million per year) to produce programming and links for Cyw, S4C's pre-school service, reinforcing our position as one of the largest children's content producers in the UK.

§ 428 hours of television programming in calendar year 2009 (2008: 371 hours).

* adjusted for professional fees in relation to unsuccessful corporate transactions (2010: £0.07 million, 2009: £0.07 million), provision for impairment of investments (2010: £0.07 million, 2009: £nil), amortisation of intangible assets arising on business acquisitions (2010: £0.02 million, 2009: £0.02 million), and share-based payments (2010: £0.01 million, 2009: £0.02 million).

Current Trading and Outlook

§ Strong pipeline of programme revenues of £50.0 million, including current year to date.

§ Favourable regulatory environment of Nations and Regions Network quotas.

§ Strong balance sheet to fund future growth.

§ Trading in the current year to date is in line with the Board's expectations.

Huw Eurig Davies, Chief Executive Officer of Boomerang Plus, commented:

"Against a challenging backdrop, we have made very good progress with our strategy of diversifying the Group's operations.  The addition of Indus has been a fantastic fit for the Group; it has taken us into new genres, broadened our customer base, and made a valuable contribution to our revenues for the period. We continue to enjoy long-term revenue visibility and a strong balance sheet, giving us an excellent platform for the next phase of the Group's growth." 

- Ends -

For further information, please contact:

Boomerang Plus plc	Via Redleaf Communications
Huw Eurig Davies, Chief Executive
Mark Fenwick, Finance Director
Redleaf Communications	020 7566 6700
Anna Dunkin / Rebecca Sanders-Hewett	[e-mail]
Altium
Tim Richardson / Melanie Szalkiewicz	020 7484 4040

Boomerang Plus plc

§ Boomerang, founded in 1994, has extensive experience in producing content in a variety of genres, including entertainment, factual, sport, music, drama, and children's programming for television, radio and the web.

§ The Group operates across the whole spectrum of creative industry activities including content production, post-production services, television facilities, and talent management.

§ Boomerang aims to be independent television production company of choice to the Network broadcasters looking to fill their Ofcom quotas from the 'Nations and Regions' (broadcasters must source between 10% and 50% of qualifying programme hours from outside the M25 boundary).

§ Boomerang is ranked in the top five independent television production companies, by revenue, in the Nations and Regions according to the Broadcast Survey 2010.

§ Boomerang's strategy is to continue to produce high quality content across a breadth of genres and to become a leading producer of AFP and digital content and services. The Group also aims to achieve strong organic growth by leveraging its existing customer base and making strategic acquisitions, with a view to becoming a major supplier to UK networks looking to satisfy their Nations and Regions quotas.

Chairman's Statement

I am pleased to present the Group's results for the year ended 31 May 2010.

It has been a challenging environment for the UK television production sector in light of the continuing economic difficulties faced by broadcasters. Programme budgets and margins have remained under constant pressure and commissioning decisions have been subject to delay. As highlighted previously, this has inevitably had an adverse impact on Boomerang's revenue and profitability in the year under review.

Despite this backcloth, the Board has continued to advance successfully its previously stated strategy of diversifying the Group's operations. This has been achieved through broadening our broadcaster customer base, expanding our genre expertise, consolidating our leading position in Advertiser Funded Programming (AFP) with an expanding portfolio of UK and global client brands, developing our reputation as a provider of digital media content and services, and continuing to invest in businesses that have future IP potential.  

At the same time, we have maintained our strong position as a key supplier to S4C with the award during the year of two three-year contracts, totalling £16 million, for the provision of children's programming. This is a great endorsement of the creative talent within the Company and makes Boomerang one of the UK's largest producers of children's content.

As anticipated, following the Government's Comprehensive Spending Review announced in October 2010, S4C will have a reduced programming budget in the future and this will inevitably impact production companies based in Wales. I believe, however, that our position as one of the largest Nations and Regions television production companies in the UK, producing across a wide variety of genres including entertainment, drama, lifestyle, children's, sports and factual programming, will mitigate the impact on Boomerang of S4C's changed circumstances and will bring considerable benefits to the Company over the coming years as the increased Ofcom quota requirements for broadcasters come into force.

The Company continues to benefit from a strong balance sheet with cash and cash equivalents at the year-end of £3.07 million. This, together with the long-term revenue visibility provided by our £50 million pipeline of future commissions (including the current year to date), gives us a strong platform for the next phase of the Group's growth as we start to see the anticipated returns from our diversification strategy. We will continue to look for further acquisition opportunities that both fit our strategic objectives and can add value to the Group. Whilst I expect the macro environment to remain challenging for the foreseeable future, I am confident that the Company is well-positioned to deliver significant long-term value for its shareholders.

Finally, I would like to thank all the Boomerang staff for the hard work and commitment that they have given to the Company in what has been a demanding and challenging year for everyone. We are very fortunate to have such a great team of people showing so much passion for the Boomerang cause.

Richard Huntingford

Non-Executive Chairman

26 November 2010

Business Review

Financial Review

As highlighted in the trading update released on 13 May 2010, the revenues and profits from a number of the Group's projects in the year under reviewwere delayed into the current financial year. Despite this, the acquisition of Indus enabled us to grow revenues in the year ended 31 May 2010 by 8.4% to £21.41 million (2009: £19.76 million).

One of the Group's key performance indicators is gross profit, which increased by 21.6% to £3.50 million (2009: £2.88 million). Gross profit margin for the year was 16.3% (2009: 14.6%). This increase was principally due to two of the Group's projects under-performing financially in the prior year. However, there continues to be general downward pressure on programme budgets.  Adjusted operating profits* decreased 37.7% to £0.78 million (2009: £1.25 million).

Other administrative expenses increased from £1.86 million to £2.93 million due to £0.56 million of costs associated with the acquisitions and new businesses in the year and accelerated investments into programming and business development of £0.4 million (2009: £0.1 million). Costs of £0.07 million (2009: £0.07 million) regarding professional fees in relation to unsuccessful corporate transactions and provision for impairment of investments of £0.07 million (£2009: £nil) were incurred in the year. Reported profit before tax for the year was £0.54 million (2009: £1.09 million).

The Group had cash and cash equivalents of £3.07 million at 31 May 2010 (2009: £3.03 million). The Group incurred capital expenditure of £1.65 million in the year to 31 May 2010 (2009: £0.44 million), principally on studio, post-production and outside broadcast facilities in order to service the Children's contracts awarded by S4C. £1.11 million of this expenditure was funded by finance leases. Intangible fixed assets of £0.46 million, principally in respect of "Method" snowboarding magazine, were acquired in the year and acquisition and deferred consideration payments of £1.30 million and debt repayments of £0.37 million were also made during the year.

As at 31 May 2010 the Group had net assets of £8.98 million (2009: £8.66 million). 

* adjusted for professional fees in relation to unsuccessful corporate transactions (2010: £0.07 million, 2009: £0.07 million), provision for impairment of investments (2010: £0.07 million, 2009: £nil), amortisation of intangible assets arising on business acquisitions (2010: £0.02 million, 2009: £0.02 million), and share-based payments (2010: £0.01 million, 2009: £0.02 million).

Programming

The Group's content production businesses, Boomerang, Fflic, Alfresco and Apollo, together with the recently acquired Indus, contributed towards a strong, multi-genre portfolio of programmes for our broadcast customers during the year. 

We again produced a broad raft of multi-genre programming for S4C. These include "The Royal Welsh Show"; "Stwnsh" and "Cyw" Children's services; drama series "Teulu" and "Alys"; factual entertainment series "Tocyn", "Sioe'r Ty", "3 Lle" and "Cyfnewid"; music series "Bandit" and "Nodyn"; youth series "Gofod;" and sports series "Chwa", "Rasus" and "Ras i Lundain", amongst others.

We had noted success in increasing our organic Network presence in a number of key genre during the period. In Comedy Drama we had our first network commission for BBC4/BBC2 - "A Child's Christmases in Wales" as a co-production with Tidy Productions; in Children's we won our first commission for CBBC "My Dad in Prison", building on our position as one of the largest children's producers in the UK; and in Factual we produced "Too Poor for Posh School?" for Channel 4's Cutting Edge strand. In Sports, we have produced "That Paralympic Show" for Channel 4, a multi-platform magazine series introducing the London 2012 Paralympics.

AFP programming had another year of record turnover. We won our first 3D commission to produce a Skateboard Documentary with legendary American Skateboarder Tony Hawk. Filming for Quiksilver's Tony Hawk's European Tour wrapped in July 2010 following a three-week tour across Berlin, Rome, Barcelona and Brighton. Other AFP productions during the last year included Roxy Jam Biarritz, the annual Women's World Longboard Championships, and a music festival held in the European surf mecca of Biarritz; the third series of Sony Ericsson World B-boy Championships; the global search for the best breakdancing crew in the world, filmed on location in New York, Japan, Korea, Europe and concluding in Brixton for the competition final; and Sony Playstation GT Academy, the virtual-to-reality motor racing competition once again hosted by F1 luminaries Eddie Jordan and Johnny Herbert and filmed across Australia, New Zealand, Europe and the UK. This organic growth has been complemented through investment into the "Freeze" winter sports and music festival and the acquisition of "Method", the multimedia snowboarding publisher.

Complementing this organic success, the addition of Indus to the Group brought the world renowned and award-winning expertise of the producers of "Amazon" (with Bruce Parry), "Living with Monkeys", "Coalhouse", "Everest ER", "Venom Hunter" and "Panorama: Chocolate, the Bitter Truth". Current Indus productions include "Arctic" (with Bruce Parry) and "Snowdonia 1890".

Recent critical acclaim for a wide number of our programmes has continued this year with Welsh BAFTA 2009 wins for "Con Passionate", "Y Saith Magnifico a Matthew Rhys" and six awards for "Martha, Jac a Sianco". "Rhestr Nadolig Wil" won a BAFTA Children's award for best drama as well as a nomination at the inaugural KidScreen in New York.

Digital Media

With our digital media partner, Cube Interactive, we continue to explore and develop opportunities in digital media including websites, web streaming and interactive media.  Significant interactive contracts include content for the "Royal Welsh", "Stwnsh" and "Cyw".

Increasingly most of our programming, especially our AFP content, has a multi-platform element which is expected to increase further over the coming years.

Post-Production and Facilities

The Group invested £1.65 million during the year in expanding its post-production, camera and studio facilities and acquiring an outside broadcast truck. The Group currently operates 69 edit suites, four pro-tools dub suites and four studios together with the outside broadcast truck. We have significantly increased capacity, HD capability and high-end finishing capability during the year. Our editing facilities now include a Baselight grading system, two DS Nitris systems and two Symphony Nitris systems. These cutting-edge facilities provide a quality finish to many of the productions across the Group and for external clients.

The Group's camera facilities joint venture, Zoom, continued to expand in the year.

Radio

The Group continues to supply a diverse range of radio productions, including programmes for BBC Radio Wales, Radio Cymru and Radio 4.

Talent Management

Boom Talent, a management company representing singers, actors and presenters in film, television, theatre, radio, corporate and voice-over work, continues to establish itself.

Regulatory Environment

Ofcom, the Industry Regulator, published phase 2 of its second public sector broadcasting review on 25 September 2009. This for the first time proposes a specific quota (3%) from outside England from 2010 for Channel 4 together with an increase in the outside London quota from 30% to 35%. Ofcom also "welcomes the BBC's target to reach 50% out-of-London production, with 17% from the Nations…". This strengthens our belief that being based in the Nations, and Wales in particular, provides substantial opportunities for the Group.

Dividend Policy

The directors are not recommending the payment of a dividend for the year (2009: £nil). The declaration of any future dividends will depend on the Group's results, its financial position, cash requirements, future prospects and other factors deemed to be relevant at that time. In due course, the directors intend to adopt a progressive dividend policy.

Going Concern

The Group has considerable financial resources together with long-term relationships with its key customers.  Due to the nature of the Group's business, management has visibility over its pipeline of productions over the foreseeable future, which is fully funded by its customers.  As a consequence, the directors believe the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The directors, after making enquiries, have a reasonable expectation that the Company will have adequate resources to continue operating for the foreseeable future and therefore the going concern basis has been adopted in preparing these accounts.

Current Trading and Outlook

Our position as a multi-genre independent television production company based in the Nations and Regions makes us ideally placed to take advantage of the Ofcom quotas that exist as we look to expand our Network programming.

Our success in securing new contracts and track record on recommissions provides the Group with excellent visibility over revenues for the current financial year and the first half of 2011/12. Current trading is in line with the Board's expectations.

Organic network growth, the acquisition of Indus and growth in AFP programming has diversified the Group's customer base and widened its intellectual product base. This will drive further growth in an increasingly global market and provide opportunities to increase our profit margins.

We will also continue to look for further acquisitions that can add value for shareholders in a fast-changing media marketplace.

Huw Eurig Davies	Mark Fenwick
Chief Executive OfficerFinance Director
26 November 2010	26 November 2010

BOOMERANG PLUS PLC

Consolidated income statement

Year ended 31 May 2010

				2010	2009
		Note		£'000	£'000
Continuing operations
Revenue				21,409	19,759
Cost of sales				(17,912)	(16,882)
GROSS PROFIT				3,497	2,877
Administrative expenses
Other administrative expenses				(2,928)	(1,862)
Professional fees in relation to unsuccessful corporate transactions				(73)	(66)
Provision for impairment of investments				(70)	-
Amortisation of intangibles arising on business acquisitions				(20)	(21)
Equity-settled share-based payments				(7)	(23)
Total administrative expenses				(3,098)	(1,972)
Other operating income				227	232
Share of results of  joint ventures and associates				(18)	3
OPERATING PROFIT				608	1,140
Investment revenue				3	25
Finance costs				(76)	(71)
PROFIT BEFORE TAX				535	1,094
Tax			2	(218)	(207)
PROFIT FOR THE YEAR				317	887
Attributable to:
Equity holders of the parent				317	887
Earnings per share			3
Basic				3.56p	9.96p
Diluted				3.50p	9.70p
Adjusted - basic				5.47p	11.20p
Adjusted - diluted				5.38p	10.91p

There were no items of comprehensive income in the current or prior year other than the profit for the year and, accordingly, no statement of comprehensive income is presented.

BOOMERANG PLUS PLC

Consolidated statement of changes in equity

Year ended 31 May 2010

			Share capital £'000	Share premium account £'000	Merger reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 June 2008			89	3,931	1,217	2,510	7,747
Profit for the financial year			-	-	-	887	887
New shares issued			-	2	-	-	2
Equity-settled share-based payments			-	-	-	23	23
Balance at 1 June 2009			89	3,933	1,217	3,420	8,659
			-
Profit for the financial year			-	-	-	317	317
New shares issued			-	1	-	-	1
Equity-settled share-based payments			-	-	-	7	7
Balance at 31 May 2010			89	3,934	1,217	3,744	8,984

The Group has taken advantage of section 612 of the Companies Act 2006 and therefore the excess over the nominal value of shares issued other than for cash has been allocated to the merger reserve.

BOOMERANG PLUS PLC

Consolidated balance sheet

31 May 2010

		2010	2009
		£'000	£'000
NON-CURRENT ASSETS
Goodwill		3,049	2,131
Other intangible assets		2,444	1,161
Property, plant and equipment		2,931	1,686
Investments		371	147
		8,795	5,125
CURRENT ASSETS
Inventories		9	-
Trade and other receivables		4,158	3,625
Current tax assets		219	219
Cash and cash equivalents		3,070	3,027
		7,456	6,871
TOTAL ASSETS		16,251	11,996
CURRENT LIABILITIES
Trade and other payables		4,615	2,106
Current tax liabilities		84	407
Interest-bearing loans and borrowings		492	307
Deferred consideration		333	209
		5,524	3,029
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings		742	175
Other payables		47	17
Deferred tax liabilities		232	116
Deferred consideration		722	-
		1,743	308
TOTAL LIABILITIES		7,267	3,337
NET ASSETS		8,984	8,659
EQUITY
Share capital		89	89
Share premium account		3,934	3,933
Merger reserve		1,217	1,217
Retained earnings		3,744	3,420
TOTAL EQUITY		8,984	8,659

BOOMERANG PLUS PLC

Consolidated cash flow statement

Year ended 31 May 2010

		Note	2010 £'000	2009 £'000
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES		5	2,615	(2,828)
INVESTING ACTIVITIES
Interest received			3	25
Purchase of property, plant and equipment			(544)	(183)
Acquisition of subsidiaries			(768)	-
Acquisition of joint ventures and associates			(326)	(33)
Acquisition of subsidiaries - deferred consideration payments			(209)	(146)
Acquisition of intangible fixed assets			(458)	-
Proceeds on disposal of property, plant and equipment			1	54
NET CASH USED IN INVESTING ACTIVITIES			(2,301)	(283)
FINANCING ACTIVITIES
Repayments of obligations under finance leases			(372)	(340)
Proceeds on issue of shares			1	3
Grants received			100	150
NET CASH USED IN FINANCING ACTIVITIES			(271)	(187)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			43	(3,298)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR			3,027	6,325
CASH AND CASH EQUIVALENTS AT END OF YEAR			3,070	3,027

BOOMERANG PLUS PLC

Notes to the preliminary announcement

1.         basis of preparation

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 May 2010 or 2009. The financial information for the year ended 31 May 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s498(2) or (3) Companies Act 2006. The audit of the statutory accounts for the year ended 31 May 2010 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.

The Group income statement, balance sheets and cash flow statements for the years ended 31 May 2010 and 31 May 2009 have been prepared on a basis consistent with the accounting policies disclosed in the Group's annual report for the year ended 31 May 2009.

Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the EU, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in December 2010.

2.         TAX on profit on ordinary activities

			2010 £'000	2009 £'000
Current taxation
United Kingdom corporation tax:
Current tax on income for the year at 28% (2009: 28%)			100	194
Adjustment in respect of prior years			3	-
Total current tax			103	194
Deferred tax
Origination and reversal of timing differences			115	13
			115	13
Total charge for the year			218	207

The difference between the total tax shown above and the amount calculated by applying the standard rate of United Kingdom corporation tax to the profit before tax is as follows:

			£'000	£'000
Profit on ordinary activities before tax			535	1,094
Tax on profit on ordinary activities before tax at 28% (2009: 28%)			150	306
Factors affecting charge for the year
Expenses not deductible for tax purposes			27	34
Non-deductible amortisation and impairment charges			25	6
Capital allowances (in excess of)/less than depreciation			(103)	17
Tax losses			23	7
Other			(20)	(8)
Marginal relief			-	(2)
UK Film tax credit adjustment			-	(166)
Adjustment in respect of prior years			3	-
Origination and reversal of timing differences			(2)	-
Total tax charge for the year			103	194

Included within the current tax charge in 2009 is a credit of £219,000.  This relates to the UK Film tax credit earned within Boom Films Limited, a subsidiary company.

The reduction in the corporation tax rate from 28% to 27%, from 1 April 2011 is not anticipated to materially affect the tax charge.

3.         Earnings per share    

The calculation of the basic, diluted and adjusted earnings per share is based on the following data:

				2010	2009
				£'000	£'000
Earnings
Profit for the year				317	887
Exceptional administrative expenses				73	66
Amortisation of intangibles arising on business acquisitions				20	21
Provision for impairment of investments				70	-
Equity-settled share-based payments				7	23
Adjusted profit				487	997
Number of shares				No.	No.
Weighted average number of ordinary shares for the purpose of basic earnings per share				8,911,902	8,903,478
Effect of dilutive potential ordinary shares:
Share options				153,798	238,178
Dilutive weighted average number of shares				9,065,700	9,141,656
Earnings per ordinary share - basic				3.56p	9.96p
Earnings per ordinary share - diluted				3.50p	9.70p
Adjusted earnings per share - basic				5.47p	11.20p
Adjusted earnings per share - diluted				5.38p	10.91p

4.         Acquisition of subsidiaries

On 19 October 2009, Boomerang Plus Plc acquired the entire share capital of Indus Films Limited, an independent television production company. The initial consideration was £1,100,000 of which £880,000 was paid on completion and £220,000 was paid on 19 October 2010. Further consideration of up to £1,295,000 is payable in cash or shares based on the performance of Indus Films Limited in the three years post completion. The directors have estimated based on forecasts that £802,000 of the contingent consideration will become payable and this has been provided in the accounts. The transaction has been accounted for by the purchase method of accounting.

Outlined below are the provisional fair values of assets acquired. No fair value adjustments have been booked.

				Book and fair value £'000
Net assets acquired
Property, plant and equipment				40
Receivables				434
Cash and cash equivalents				164
Payables				(465)
Hire purchase				(13)
Deferred tax				(1)
				159
Goodwill				918
Customer relationships				862
Non compete agreements				24
Total consideration				1,963
Satisfied by
Cash				880
Deferred consideration				229
Deferred contingent consideration				802
Purchase consideration				1,911
Directly attributable costs				52
Total consideration				1,963
				£'000
Net cash outflow arising on acquisition
Cash consideration				880
Costs				52
Cash and cash equivalents acquired				(164)
				768

The goodwill arising on the acquisitions relates to creative talent and opportunities which do not meet the criteria for recognition as separate intangible fixed assets.

Indus has contributed £2,761,204 to revenue and £22,826 to profit before tax for the period from the date of acquisition to the balance sheet date. If the acquisition had been completed by the first day of the financial year, group revenue and group profit before tax would be £993,021 higher and £24,437 lower respectively. 

5.         notes to the consolidated cash flow statement

			2010 £'000	2009 £'000
Profit from operations			608	1,140
Adjustment for:
Amortisation of intangible fixed assets			61	68
Depreciation of property, plant and equipment			446	396
Loss/(profit) on property, plant and equipment disposals			2	(37)
Government grants			(117)	(165)
Results of joint venture			20	5
Provision for impairment of investment			70	-
Equity-settled share-based payments			7	23
Operating cash flows before movement in working capital			1,097	1,430
Decrease in receivables			(79)	(775)
Increase/(decrease) in payables			2,109	(2,823)
(Increase)/decrease in inventory			(9)	3
Cash generated by operations			3,118	(2,165)
Income taxes paid			(451)	(592)
Interest paid			(52)	(71)
Net cash inflow/(outflow) from operating activities			2,615	(2,828)

 

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. The carrying amount of these assets is approximately equal to their fair value.

 

END

 

 

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