Final Results
Newsplayer Group PLC
03 March 2004
NEWSPLAYER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST OCTOBER 2003
Newsplayer Group plc (NPG), the media company, today announces its preliminary
results for the year ended 31st October 2003, the Company's third full year of
trading.
Financial Highlights:
• Trading loss before write-offs £1.7 million (2002: £2.0 million)
• Operating expenses £1,739,495 (2002: £2,349,623)
• Pre-tax loss £6.53 million (2002: £3.46 million) after writing off
all remaining content costs up to 31st October 2003 of £4.09 million
(2002: £1.51 million)
• Cash reserves: £587,323 (2002: £438,874)
Operational Highlights:
• Agreement signed with EMI to act as a Digital Service Provider in Europe
for the provision of downloaded audio tracks.
• 2-year agreement signed with NTL to provide two channels of content to
their Broadband platform.
• Acquisition of Global Media Services Inc. in New York.
• Placing of new shares to raise £1,380,500.
• Agreement signed with KPN, the Dutch telecommunications company, to
provide content to their broadband subscribers.
Events subsequent to the period under review:
• Acquisition of Betelgeuse Productions Inc. in New York declared
unconditional on 27th February 2004.
• Placing of new shares to raise £2,750,000.
• Betelgeuse and GMS win $5 million ChampCar contract.
Commenting on the results, Paul Duffen, Chief Executive Officer, said:
'I welcome the addition of Global Media Services and Betelgeuse Productions to
the NPG family. They have already demonstrated the benefit of combining
complimentary businesses by winning the $5 million ChampCar contract. We will
continue to seek further acquisitions to strengthen our ability to create,
manage and distribute audio-visual content. The Group is now profitable on a
monthly basis and I am confident that we will make a profit for the current
financial year ending 31st October 2004.'
Appointment of new Broker
The Company is pleased to announce that it has appointed Durlacher as nominated
advisor and stockbroker effective from 16th February 2004.
Board Changes
Hugo Drayton resigned as a non-executive Director with effect from 31st July
2003. Steven Smith was appointed as a non-executive Director with effect from
12th August 2003 and has now become Deputy Chairman. David Wiseman was
appointed as Chief Financial Officer with effect from 1st September 2003. Adam
Cohen was appointed as an executive Director with effect from 10th September
2003.
Change of Auditor
The Company is pleased to announce that it has appointed Nexia Audit Limited as
auditors effective from 15th December 2003.
Enquiries:
Paul Duffen, Chief Executive Officer Tel: 020 7927 6699
Newsplayer Group plc
Philip Ranger, Merlin PR Tel: 020 7653 6620
Simon Hirst, Durlacher Tel: 020 7459 3600
CHAIRMAN'S STATEMENT
This has been a significant period of achievement and growth for NPG. During
2003 the business was re-structured, important new distribution deals were
signed and we acquired a media services business in New York. Since the end of
the 2003 financial year we have pursued another acquisition in New York which
was declared unconditional on 27th February 2004. As a result of these
initiatives I am pleased to announce that the Group is now profitable and cash
generative on a monthly basis.
Financial results
2003 was a year of transition leading to a sharp fall in turnover mainly due to
the cessation of loss making activities relating to hard media licensing in the
UK. Consequently, the trading loss before write-offs narrowed to £1.7 million
from £2.0 million in the previous year. We implemented an extensive programme
of cost reductions in our core UK business and increased our focus on the US.
As part of this process, we closed our technology facility in Harrogate and
transferred all of our technology resources to Global Media Services ('GMS') in
New York. The UK headcount was reduced by 40% and successfully re-focused on
targeting bulk deals with major distributors, the benefit of which will impact
our current year numbers.
Distribution
In the first half of the year we signed an agreement with Cross Media
Entertainment to distribute NPG properties in North America and we launched a
mobile streaming video pilot programme with SFR in France.
In September 2003 we signed a distribution agreement with leading Dutch
telecommunications company, KPN, to license our Newsplayer, PureWorldCup,
Screenplayer and VideoTV streaming video archives for provision to their ADSL
customers. In December 2003 we announced a distribution agreement with NTL Home
to provide content for NTL's Broadband Plus ('B+') service. The B+ package
offers NTL broadband subscribers unlimited access to a comprehensive choice of
games, music and entertainment for £3.99 per month and NTL will pay NPG a share
of these revenues. The two-year agreement makes all seven of NPG's content
channels available to NTL's 300,000 broadband customers in the UK with
connection speeds of 600kbps or 1mbps.
These agreements highlight the leading role that NPG will play in the broadband
video-on-demand world as it continues to develop.
Acquisitions
In September 2003 we completed the acquisition of GMS and in February 2004 the
acquisition of Betelgeuse Productions Inc. ('BPI') was declared unconditional.
These acquisitions further enhance the Group's positioning as a full service,
cross platform, digital content business and provide critical mass,
infrastructure and efficiencies for the Group's activities in the USA.
GMS, based in New York, generates its revenues by providing customers with a
comprehensive portfolio of professional services to enable the exploitation of
audio-visual content on the Internet. GMS provides the Group with service-based
revenues from activities such as encoding, hosting, content delivery,
encryption, distribution, ad insertion, pay-per-view, syndication, digital
rights management, content management, messaging, transaction processing and
clearing.
BPI is an independent programme maker as well as a provider of broadcast
production and post-production services for major TV networks, cable channels
and advertising agencies. The business is based in central Manhattan, where it
has been located for over 20 years. In that time BPI has established itself as a
market leader with strong brand values and has won over 50 Emmy awards. Amongst
other shows, BPI produces 'Inside the Actors' Studio' for NBC, now in its 9th
season and one of the most highly rated programmes on the Bravo channel. BPI's
expertise in programme making will be applied to NPG's extensive content
libraries to produce programming specifically designed for new platforms such as
mobile and broadband. NPG's existing stock footage business, Footage.net, will
be relocated from Virginia to BPI's premises in Manhattan which will accelerate
the launch of a transactional platform allowing researchers to locate, retrieve,
license and take delivery of stock footage quickly and efficiently. This will
significantly increase the revenue generating potential of Footage.net and its
clients.
In addition, GMS will work closely with BPI to develop digital solutions for
content management, storage and distribution as well as web based initiatives to
add value to traditional broadcast technologies. This collaboration will enable
BPI to become a leading provider of Internet Protocol based video-on-demand
services to the US television industry alongside its existing focus on creative
excellence.
The partnership between BPI and GMS has delivered early success in winning the
contract to provide both television and Internet production services to the
ChampCar racing series for the 2004 season. The initial contract will run from
February 24th 2004 until December 31st 2004 and will generate revenues of circa
US$5 million for the Group.
Summary
With the addition of GMS and BPI, the Group now has a broad base of services,
content and expertise with which to build revenues and profits. During the year
NPG raised £1,380,500 in new equity and is in the process of completing a
placing of new shares to realise a further £2,750,000 in additional working
capital. The Company is now on a sound financial footing and we remain committed
to grow the business both organically and by acquisition.
David Holdgate, Chairman.
OVERVIEW
These results cover the year ended 31st October 2003, NPG's third full year of
trading.
NPG's principal activity during the period was exploiting rights and/or licenses
to quality cultural and historical video content and marketing them globally to
business, educational and consumer audiences using interactive technology.
Revenues were generated from the licensing of content to third parties, from
subscription and pay-per-view fees paid by consumers, and from shared
advertising revenues.
Financial Results
Revenues for the year were £264,522 down from £954,264 for the period ended 31st
October 2002. Revenues were generated from subscriptions to the various NPG
websites, from licensing of content, and from product licensing to third
parties.
The Group has amended its accounting policy with regard to intangible fixed
assets in relation to intellectual property rights. Previously the Group wrote
off such rights over the period of the licence to exploit them subject to a
provision for impairment. With effect from the accounting period starting 1st
November 2002 the Group writes off these intellectual property rights in full
during the period in which they are incurred. Consequently all rights acquired
up to 31st October 2003 have now been written off through the P&L account. The
resultant write off in the year of £4,087,064 (2002: £1,500,281) includes an
impairment charge, an amortisation charge and royalties incurred in the year.
Trading loss before write-offs was £1.7 million compared with £2.0 million for
the year ended 31st October 2002.
Gross profit generated from activities was £146,037, compared with £425,527 for
the year ended 31st October 2002.
The pre-tax loss for the year was £6,528,434 compared with a loss of £3,465,596
for the year ended 31st October 2002.
Cash reserves in the bank on 31st October 2003 were £587,323 compared with
£438,874 on 31st October 2002. No dividend has been paid or is proposed.
Business review
Overview
NPG is a media Group that creates, manages and protects moving image content.
As well as its own content portfolio NPG has the tools and technology to enable
third party content on interactive platforms through the application of Internet
Protocol technology. With the agreed acquisition of Betelgeuse Production Inc.,
NPG has broadened its base to include television programme making as well as
broadcast production and postproduction services.
Newsplayer
Newsplayer Ltd exploits rights and/or licenses in television and cinema content
and markets them globally to business, education and consumer audiences using
interactive technology. Revenues are generated from the licensing of content to
third parties, from subscription and pay-per-view fees paid directly by
consumers and from advertising revenues.
VideoTV
In November 2001, NPG announced a five-year, non-exclusive agreement with EMI
Recorded Music to license footage from EMI's catalogue of historic and current
video material to VideoTV, NPG's video-on-demand (VOD) channel. The Company also
announced that Virgin Holdings Inc. (a division of EMI Recorded Music) was
taking an equity stake in NPG.
The VideoTV service was launched towards the end of 2002 with over 3,000 music
videos.
Screenplayer
Screenplayer (www.screenplayer.com) provides an additional revenue stream for
NPG by offering consumers on a subscription basis, over 600 hours of on-demand
programming related to the stars of Hollywood cinema, 20th Century musicians and
musicals, comedians and other entertainers. The catalogue originates from the
archives of Passport International Productions from whom NPG obtained an
exclusive 12-year worldwide licence for the programmes in June 2001. NPG pays
royalties to Passport International in the amount of 50% of gross revenues
received.
RSPB Film Collection
NPG has an agreement with the Royal Society for the Protection of Birds (RSPB)
covering both content and distribution and targeting both consumers and
professional filmmakers. This agreement has been in place since December 2001.
NPG manages the archives of the RSPB Film Collection to make them easily
available, for a licensing fee, to professional programme-makers at
www.rspb.org.uk/films. The Film Collection is the world's most comprehensive
resource for UK and European bird footage. The archive dates back to 1953 and
features more than 100 different species of birds.
NPG receives a monthly service fee from RSPB for managing its film collection
online and a commission for licensing material to programme makers.
Birdstream
NPG also offers consumers and educational institutions access to the RSPB Film
Collection through its on-demand subscription channel Birdstream. The RSPB
supports the marketing of this service in its member publication and receives a
30% share of the £7.95 annual subscription fee.
FrostTV
FrostTV (www.frost.tv) is a joint venture between NPG and internationally
acclaimed TV interviewer and broadcaster Sir David Frost. NPG has acquired the
exclusive rights to hundreds of interviews with leading politicians and
celebrities conducted over 40 years, much of which has not been seen since its
original screening. Additional programming from Sir David's catalogue has been
acquired from other sources including the BBC, which provides the Breakfast with
Frost series. The material has been catalogued, tagged and digitised by NPG and
can be searched and viewed online at FrostTV. The subscription fee is £25 per
annum, but discounted for subscribers to other NPG channels.
The joint venture agreement, which was signed in December 2000, gives NPG
exclusive rights to exploit opportunities in both online and off-line
syndication. NPG also allows broadcasters and programme makers to license the
content for FrostTV online. Further revenue opportunities exist in the
post-production of the material, the syndication to third party websites and
portals, and the production and sale of DVDs.
The joint venture is structured as a revenue share between NPG and Sir David
Frost.
Newsplayer.com
Newsplayer.com is NPG's original and flagship website. It is a
subscription-based VOD channel enabling consumers to search for and stream video
and audio clips of major news events around the world since 1896. The content
for Newsplayer.com is provided via NPG's 20-year non-exclusive licence (acquired
in 1999) to the ITN archives, which include news from ITN, Reuters, French
Pathe, Gaumont, Paramount, Empire News, and Visnews.
Whilst all the material on the site is encoded at both narrowband and broadband
speeds, it is significant that most of the footage streamed by customers has
been over broadband connections. This supports the Directors' belief that the
Company is well positioned to benefit from the rapid take up of high speed
Internet connections around the world.
PureWorldCup
In February 2002, NPG acquired ten-year worldwide internet rights to 11 hours of
World Cup football programming from the North American Institute, Miami.
PureWorldCup (www.pureworldcup.com) features 11 post-produced films celebrating
the highlights from each World Cup tournament from 1958 to 1998. NPG expects to
add highlights from the 2002 tournament in Japan/South Korea to PureWorldCup
shortly. This series is available to consumers for on-demand streaming for £9.99
for a three-month subscription.
GMS
New York-based Global Media Services, Inc. ('GMS') generates its revenues by
providing customers with a comprehensive portfolio of professional services to
enable the exploitation of audio-visual content on the Internet. GMS provides
the Group with service-based revenues from activities such as encoding, hosting,
content delivery, encryption, distribution, ad insertion, pay-per-view,
syndication, digital rights management, content management, messaging,
transaction processing and clearing. GMS eliminates the need for companies to
invest and maintain separate content and digital rights management, e-commerce
and streaming media delivery systems.
Betelgeuse
Betelgeuse (pronounced 'Beetle juice') Productions Inc is an independent
programme maker as well as a provider of broadcast production and
post-production services for major TV networks, cable channels and advertising
agencies. The business is based in central Manhattan, where it has been located
for over 20 years. In that time BPI has established itself as a market leader
with strong brand values and has won over 50 Emmy awards.
Amongst other shows, BPI produces 'Inside the Actors' Studio' for NBC, now in
its 9th season and one of the most highly rated programmes on the Bravo channel.
The acquisition of BPI further enhances the Group's positioning as a full
service, cross platform, digital content business and will provide critical
mass, infrastructure and efficiencies for the existing Group activities in the
USA. It is expected that GMS will work closely with BPI to develop digital
solutions for content management, storage and distribution as well as web based
initiatives to add value to traditional broadcast technologies. This
collaboration will enable BPI to become a leading provider of Internet Protocol
based video-on-demand services to the US television industry alongside its
existing focus on creative excellence.
FOOTAGE.net
FOOTAGE.net is the world's leading portal for stock footage. Over 3.5 million
searches are conducted annually over the combined online network of databases.
NPG acquired the trade and assets of FOOTAGE.net in December 2001 through its US
subsidiary NPG Inc.
FOOTAGE.net creates and maintains databases for dozens of the world's leading
stock footage libraries including ABC News, CNN, Action Sports and National
Geographic.
The site brings together in one single location millions of clips that can be
searched with a single query enabling researchers, advertising agencies and
programme makers to find specific footage 24 hours a day, 365 days a year. The
database is currently text only, however NPG is currently building an advanced
platform to incorporate a video facility within the site, which will enable
users to view, select, license and order clips online.
The FOOTAGE.net portal has now positioned NPG to take a leading role in the
stock footage industry.
FINANCIAL RESULTS
Extract of the unaudited financial information for the year ended 31st October
2003 is as follows:
Consolidated Profit and Loss account
Year ended Year ended
31st Oct 2003 31st Oct 2002
(unaudited) (audited)
Note £ £
Turnover 2
Existing Operations 226,751 823,792
Acquisitions 37,771 130,472
Continuing operations 264,522 954,264
Cost of sales (118,485) (526,737)
Gross profit 146,037 427,527
Operating expenses
Acquisition goodwill amortisation (65,359) (19,474)
Depreciation (92,827) (82,600)
Content write-offs 1 (4,087,064) (1,500,281)
Prepayment write off (682,058) -
Other operating expenses (1,739,495) (2,349,623)
(6,666,803) (3,951,978)
Operating loss
Existing operations (6,509,050) (3,442,691)
Acquisitions (11,716) (81,760)
Continuing operations (6,520,766) (3,524,451)
Net interest receivable 7,673 59,855
Net interest payable (15,341) -
Loss on ordinary activities before (6,528,434) (3,464,596)
taxation
Taxation 6 204,269 (1,000)
Loss on ordinary activities after taxation (6,324,165) (3,465,596)
Loss per ordinary share - basic 3 (7.88p) (5.03p)
Loss per ordinary share - diluted 3 (6.32p) (5.03p)
Statement of Total Recognised Gains and Losses
Year ended Year ended
31st Oct 2003 31st Oct 2002
(unaudited) (audited)
£ £
Loss for the year (6,324,165) (3,465,596)
Currency translation difference 16,566 -
Total recognised losses for the year (6,307,599) (3,465,596)
Consolidated Balance Sheet
31st Oct 2003 31st Oct 2002
(unaudited) (audited)
Note £ £ £ £
Fixed assets:
Intangible assets 3,342,067 2,727,455
Tangible assets 171,617 237,370
3,513,684
2,964,825
Current assets:
Debtors 186,595 1,067,839
Cash at bank and in hand 587,323 773,918 438,874 1,506,713
Creditors: amounts falling due within (1,896,570) (342,349)
one year
Net current (liabilities) / assets (1,122,652) 1,164,364
Total assets less current liabilities 2,391,032 4,129,189
Creditors: amounts falling due in more (160,000) -
than one year
Total Net assets 2,231,032 4,129,189
Capital and Reserves
£ £
Called up share capital 4 1,214,624 692,688
Shares to be issued 1,012,640 -
Share premium account 12,775,192 11,707,380
Merger reserve 1,295,676 (509,386)
Profit and loss account (14,069,092) (7,761,493)
Minority Interest 1,992 -
Shareholders' funds 2,231,032 4,129,189
Consolidated Cash Flow Statement
Year ended 31st Year ended
Oct 2003 31st Oct 2002
(unaudited) (audited)
Note £ £
Net cash outflow from operating activities 5 (1,355,300) (1,223,993)
Returns on investment and servicing of finance (1,013) 59,855
Taxation 6 204,436 (1,500)
Capital expenditure and financial investment (76,922) (1,893,015)
Acquisition (131,825) (335,330)
Financing:
Issue of ordinary share capital 4 1,349,073 34,636
Issue of loan note 160,000 -
Increase in cash 148,449 (3,359,347)
Notes to the Financial Highlights
The results for the year ended 31st October 2003 are unaudited and the
comparative results for the year ended 31st October 2002 are taken from the
group's statutory accounts.
1. Accounting policies
This statement of the 2003 results has been prepared under the historical cost
convention as modified by the revaluation of certain assets and in accordance
with applicable accounting standards.
The Group has amended its accounting policy with regard to intangible fixed
assets in relation to intellectual property rights. Previously the Group wrote
off such rights over the period of the licence to exploit them subject to a
provision for impairment. With effect from the accounting period starting 1st
November 2002 the Group writes off these intellectual property rights in full
during the period in which they are incurred. Consequently all rights acquired
up to 31st October 2003 have now been written off through the P&L account. The
resultant write off in the year of £4,087,064 (2002: £1,500,281) includes an
impairment charge, an amortisation charge and royalties incurred in the year.
2. Turnover
Turnover is subscription income for access to web sites and fees from licensing
of content and applications.
3. Loss per share
The calculation of the basic loss per share is based on the average number of
80,225,329 issued ordinary shares (2002: 68,942,343) and on the loss
attributable to ordinary shareholders of £6,324,165 (2002: £3,465,596).
The diluted loss per share calculation is based on the average number of issued
shares plus the dilutive potential ordinary shares of 19,843,207 (2002:nil).
4. Share Capital
31st Oct 2003 31st Oct 2002
(unaudited) (unaudited)
£ £
Authorised:
130,000,000 (2002: 90,000,000) ordinary shares of 1 pence each 1,300,000 900,000
Allotted, issued and fully paid:
121,462,433 (2002: 69,268,797) ordinary shares of 1 pence each 1,214,624 692,688
There have been alterations in the issued share capital during the year.
Share movements in year
3,000,000 Ordinary 1p Shares were issued to Hollinger International Publishing
Inc at a price of 5p per share on 1st April 2003.
16,455,003 Ordinary 1p Shares were placed on 1st August 2003 at a price of 4.5p
per share.
7,546,154 Ordinary 1p Shares were placed on 4th September 2003 at a price of
6.5p per share.
24,067,489 Ordinary 1p Shares were issued for nil consideration on 5th September
2003 in respect of the purchase consideration of GMS.
1,125,000 Ordinary 1p Shares were issued on 2nd October 2003 in respect of the
settlement of deferred Directors' remuneration.
At 31st October 2003 there were 7,500,000 unapproved share options outstanding
under the Executive Share Option Scheme. There were also 429,800 warrants in
issue, exercisable at any time up to and including the date which falls 28 days
after the publication of the Company's final results for the year ending 31st
October 2005.
5. Reconciliation of operating loss to operating cash flows
Year ended 31st Year ended
Oct 2003 31st Oct 2002
(unaudited) (audited)
£ £
Operating loss (6,520,766) (3,524,451)
Write off intangibles 1,995,234 998,699
Amortisation of Intellectual Property rights 555,101 357,108
Prepayment write-off 682,058 -
Depreciation 92,827 82,600
Amortisation of goodwill on acquisition 65,359 19,474
Loss on disposal fixed assets 12,755 5,990
Increase in debtors 199,019 805,891
Increase in creditors 1,547,567 30,696
Increase in minority interest 1,992 -
Exchange adjustment 13,554 -
Net cash outflow from operating activities (1,355,300) (1,223,993)
6. Taxation
The tax credit represents the Research and Development tax credit received in
July 2003 from the Inland Revenue of £205,631 (2002: £nil) less overseas tax
payable £1,362 (2002: £1,000)
7. Annual Report
The Annual Report containing the audited financial statements will be despatched
to shareholders in due course and copies will be available, free of charge, from
the Company's registered office 12 Gough Square London EC4A 3DW.
This information is provided by RNS
The company news service from the London Stock Exchange
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