Final Results

Ten Alps Communications PLC 16 June 2003 Ten Alps Communications PLC ('the Group') Preliminary Results for the year ended 31 March 2003 Group financial headlines 2002/3: â€¢ Cash increased by 31% to Â£3.3m (2002: Â£2.5m). Positive cash flow of Â£1.3m before Â£0.5m net cash outflow on acquisitions. â€¢ Revenues increased by 25% to Â£13.06m (2002: Â£10.45m) â€¢ EBITDA of Â£596,000 (2002: Â£709,000). â€¢ Profit after tax of Â£88,000 (2002: Â£444,000), after ongoing goodwill write off increased by Â£184,000 to Â£404,000 (2002: Â£220,000). â€¢ Two TV production company acquisitions completed for cash. â€¢ No new shares issued. â€¢ Net asset position improved to Â£6.62m (2002: Â£6.53m). Operational Headlines 2002/3: â€¢ Advertising, corporate party and commentator representation divisions showed strong increases in profits. TV and radio division showed good profits, plus was boosted by acquired companies' profits. â€¢ Weak performance in corporate events division, as highlighted in interims, due to economic downturn and the war. â€¢ TV company Brook Lapping (acquired during year) has since produced or had commissioned programmes for Channel 4, ITV, BBC, Discovery, Five. BAFTA awards for 'The Fall of Milosevic.' â€¢ New marketing clients included O2, British Airways, Ralph Lauren, Cacherel, Redken, P&O Ocean Village. Plus over 50 repeat-business clients including Microsoft, Sony, BBC, Stannah, Sunsail, Corus, EMI. â€¢ Development of TV and events content in which intellectual property retained. â€¢ Entered animation business with acquisition of Red Welly Studios. Trading in April and May 2003: â€¢ Advertising agencies and events companies traded above 2002 levels. â€¢ TV/Radio have over 10 shows in production or negotiation, including a 2-year, 4-5 hour Middle East project in the vein of 'The Fall of Milosevic.' Most will reach the bottom line beyond the current accounting period. Chairman Brian Walden: 'Create and communicate. That is what we do for our clients. And this year the Group significantly grew its revenues and its cash - against the difficult backdrop of a marketing recession. This year, Ten Alps bought two more TV production companies without issuing any shares, and still ended up with more cash than it started with. Our advertising and TV activities were significantly larger than last year. And we were able to start investing in our own content, which we believe is vital for long-term growth. In 2003/4 we will make further steps in this direction through committing cash to content investment with a 2-3 year horizon. However - as we warned in our interims - higher ongoing goodwill write off impacted our net profits. These are a near-inevitable consequence of buying creative companies where the assets are talent-based, and are an accounting necessity even when (as in this case) the companies are performing acceptably. This effect will continue. As we also warned in our interims, one of our events companies was hit by the exhibition industry downturns in the Summer of 2002, and then again by the unforeseeable Iraq war. Meanwhile our overall client base was better than ever in 2002/3 - with a broad range of blue-chip names. Our production work won awards, loyalty from key customers, and praise (mostly) from the press. Our management remained stable, with no significant staff losses. Meanwhile, our most recently started-up company, political commentator representation agency Know Comment, went through the roof, with turnover increased more than tenfold. For much of the past six months, our cash has constituted over 50% of our market capitalisation. We believe that this cash gives us the foundation to go after more growth.' Chief Executive Alex Connock said: The run-up to the new Communications Bill is changing the media landscape in our key areas - like independent TV production. There has been a flurry of venture capital investment in the sector, based on possible increases in overall production demand. We believe that the sector will see more consolidation. With the cash we made this year through doing more business - we too are now targeting growth in three ways. First, we are again looking at acquisitions of companies with creative talent that have been able to also make profits. In both Brook Lapping and Red Welly we achieved those goals this year - and after a period of consolidation, we are now actively looking for similar situations going forward. Second, and in an important strategic evolution, we are now investing more heavily in our own content, taking a slice of the cash flow and committing it to intellectual property development projects in events and TV. At Brook Lapping we are using our money to top up funding from broadcasters so as to retain rights, and at Red Welly we are investing in childrens' animation. We believe we have sufficient cash and attractive enough projects for this to now make sense as a tactical choice. Insofar as it is written off in each period (and not capitalised) this increased investment will lower profits on the one-year horizon. Nothing is certain, but the benefits of success would be radically steeper long term growth. Third, we are developing commercially. Happily, every one of our operating companies is still run by the entrepreneurs who started it, and they are constantly looking for opportunities to drive more business. That might be a trade relationship which has already yielded British Airways as an events client. It might be a job (we trust) well done for Stannah which has simply produced more sales. Or it might be Dr Party's new series of promotional events around the country for O2. We will continue to help our talented managers in their sales activities, and look to invest more actively in bringing in the right new people from the outside. Financial Director Nitil Patel: We produce advertising campaigns, TV and Radio programmes and event marketing which we can sell, here and now, to paying customers. It's not always sexy - but it is a good starting point and is one reason why we have kept hold of our cash. We have not so far capitalised content creation on our balance sheet, and any content investment has been fully written off in the same year. As investment is increased, consideration will be given to the appropriate capitalisation of development costs in accordance with GAAP. Trading Analysis Group turnover grew by 25% to Â£13.06m with acquisitions contributing Â£1.44m. The gross profit increased by 16% to Â£4.28m (2002: Â£3.68m). Administrative expenses continue to be controlled and represent 29% of turnover (2002: 29%). An argument for further acquisitions would be a possible decrease in the average impact of this cost. The Group's EBITDA has fallen by 16% to Â£596,000 (2002: Â£709,000) reflecting the adverse conditions in the Events Sector. The profit after tax (PAT) was Â£88,000 (2002; Â£444,000) reflecting a goodwill amortisation charge of Â£404,000 (2002: Â£220,000) for the year. The basic earnings per share fell from 1.36p in 2002 to 0.20p in 2003. Once accounting for goodwill and profits on disposals of businesses, the restated earnings per share is 1.11p in 2003 compared to 1.91p in 2002. Group Balance Sheet Shareholders funds have increased from Â£6.53m to Â£6.62m, reflecting the results for the year. The profit and loss account shows the deficit being reduced to Â£ (191,000) (2002: Â£(279,000)). The long term debt at the year end reflects loans from the European Union for development of programmes of Â£276,000 and finance leases of Â£71,000 (2002: Â£64,000). Share Price The mid-market share price of the Group has fluctuated between 10p and 22.5p during the year. At the yearend the mid-market closing price was 10p giving the Group a market capitalisation of Â£4.4m. The group balance sheet as at 31 March 2003 was Â£6.62m, of which Â£3.3m was held in cash. Division Reports Ten Alps RMA Advertising agency, based in Fareham, Hampshire With a number of new client wins and significant projects on behalf of existing clients, this year the agency has achieved a significant year on year increase in revenues. Continuing to outperform its sales targets for Stannah Stairlifts, RMA has benefited from higher agreed incentive bonuses. The agency has worked with Ski and Board magazine, with the brief to improve the presentation of the publication and reposition the magazine - which this year became arguably the premium ski magazine on the UK market. We are also moving forward in the holiday and maritime sectors, with work on behalf of client P&O to advertise the launch of their new cruise liner, Ocean Village. Following its appointment with the BMF (British Marine Federation), the agency was briefed to produce the creative work announcing the new venue for the London International Boat Show at ExCel exhibition centre in London Docklands.More recently the agency worked in collaboration with a new Ten Alps member, Red Welly, to produce an animated TV commercial for Computer Quote. Ten Alps MTD Advertising agency, based in Edinburgh Despite a depressed advertising and marketing communications market in Scotland, the business outperformed its targets, and saw year on year growth in revenues. MTD positioned itself as a 'Top Ten' Agency in Scotland, according to industry surveys. MTD was active internationally for Ahlstrom FiberComposites in Europe, North America and Asia producing a wide range of brochures and promotional material. The direct marketing campaign for Kwik Fit Insurance Services developed and grew. Stewart Milne the house builder invested in a strong advertising programme, and work for many of Scotland's Further Education colleges continued to develop, with a TV campaign produced. MTD is now working closely with our Events team, and for the establishment of a Scottish branch of Ten Alps sister company Know Comment. Brook Lapping TV production company based in London 100% of the equity in leading documentary production company Brook Lapping was acquired for cash with a self-financing earnout component by Ten Alps in October 2002 (for details of the acquisition, see Ten Alps' website). In 2002-3 Brook Lapping and its directors have won five awards: the first documentary award given by the annual television news journalists' annual conference, News World; the International Current Affairs award of the Royal Television Society; the Alan Clarke award given by BAFTA for its 'outstanding creative contribution to television'; the Harvey Lee award of the Broadcasting Press Guild for its 'distinguished and innovatory contribution to television documentary'; and a gold medal from the New York Film and Television Festival for its programme I MET ADOLF EICHMANN. Brook Lapping brings a strong history of series documentary production to the group. Transmitted programmes during the whole of 2002-3 included AVENGING TERROR (two hours made for Channel 4, PBS and transmitted in 20 other countries), THE FALL OF MILOSEVIC (three 90 minute programmes transmitted on BBC2 and sold to 15 countries), and MAGGIE: THE FIRST LADY (four one hour programmes for ITV and PBS in America.) The company has a range of new programmes in production and development. It remains based at its Kentish Town offices, into which Ten Alps Broadcasting has been merged, so that back office and production synergies can be targetted. Ten Alps Broadcasting TV and Radio Production company based in London Ten Alps Broadcasting has developed in two clear niches. In political programming, our SUNDAY SERVICE Radio 5 Live programme evolved into our new co-production with the BBC, the 3-hour, weekly JULIAN WORRICKER SHOW, presenting a mix of investigative journalism and current affairs. In entertainment, the company produced a range of shows, such as further series of TASTEFUL TV, BRITAIN VS THE WORLD and SPY SCHOOL for Bravo and Tech TV in the US, and PRIVATE EYES for BBC UK Horizons. The company is actively discussing new political and business formats with broadcasters at present. In radio music and entertainment programming there was a diverse range, including the successful ARTHUR SMITH LECTURES reached their 8th series on Radio 2, and a number of music documentaries, such as the ALICE COOPER STORY, presented by former Sex Pistol John Lydon. Ten Alps Know Comment Political commentator representation agency, based in London Know Comment, a recent in-house startup, increased turnover tenfold. The agency has expanded its representation of commentators to around 40 people across the political spectrum from Charlie Whelan to Steve Norris, and Amanda Platell to Yasmin Alibhai Brown. During the year the company has added several clients to its list including former Arab League ambassador Ghayth Armanazi, David Seymour, Roy Greenslade and ex Downing Street supremo James Humphreys. In addition to the agency side the company has grown its media training and public affairs portfolio with a range of clients from both public & private sector. Know Comment has also been active in government communications and this year did work for the Home Office, Department of Work and Pensions and the Greater London Authority. The company has branched into the political and press consultancy sector, and clients include the Professional Contractors Group. In the summer of 2003 we will be launching Know Comment Scotland. Dr Party Corporate party company based in London In a tough year in the corporate events sector, Dr Party maintained revenues and achieved margins improvement this year. Existing clients such as Sony Computer Entertainment Europe and Microsoft returned to commission repeat business. Significantly, during this year, Dr Party has also added several household names to its roster of client brands, including O2, Courvoisier, Escada and L'Oreal. The cosmetics group commissioned a launch for Polo Blue, the new fragrance from Ralph Lauren and another for their hair product brand Redken. The broadcasting group Flextech commissioned a 10th anniversary party for UK Gold, and launches for Bravo and FTN. Dr Party shares an office with Ten Alps Events. Ten Alps Events Corporate events company based in London Ten Alps Events found that amid the general uncertainty in the markets, many larger brands reconsidered their communication strategies, and spent less on their corporate communications, conferences and exhibitions. Events revenue dropped, and the company delivered a six-figure loss, in contrast to six-figure profits in each of the previous four years. The Company continued to work with core clients including Ford Motor Company, EMI, Corus and RMC. It organised a major conference for the Office of National Statistics, and the launch of the national census in 2002. The company has also been developing its expertise in other arenas which include consumer facing PR activities - most notably, for British Airways. The first two months of 2003-4 have seen revenues above the 2002-3 levels for the period. The company is also looking for real long term value in generating its own brand of consumer events, such as Firedance and Winter City, and these will be a focus of investment by the plc in the forthcoming year. Ten Alps Red Welly Animation company based in Derby Red Welly was 100% acquired during September 2002 for cash with an earnout component related to profitability over the next two and a half years. (For details, please see the press releases section on the Ten Alps website). Red Welly has a talented team of designers producing both 2-D and 3-D animated material, and has worked for a wide range of major corporations (from Virgin to the Ministry of Defence) mostly as a subcontractor. It has also done a substantial amount of graphic design and TV titles work for Ten Alps, which it will of course continue to handle. Furthermore Red Welly had 10 directly invoiced clients for 2002/3 and has shown a clear ability to generate work from commercial sectors as well as animation customers such as the BBC. Ten Alps subsidiaries RMA and MTD have used Red Welly for production work on commercials. The PLC will this year invest in Red Welly's production of rights-owned animation projects. Ten Alps Communications plc Consolidated Profit and Loss Account For the year ended 31 March 2003 2003 2002 Â£'000 Â£'000 Notes Turnover - continuing operations 11,622 10446 - acquisitions 1,437 - 13,059 10,446 Cost of sales (8,779) (6,763) Gross profit 4,280 3,683 Administrative expenses (3,832) (3,079) Amortisation of goodwill (404) (220) Operating profit-continuing operations 32 384 -acquisitions 12 - 44 384 Discontinued operations: Profit on disposal of businesses - 41 Profit on ordinary activities before interest 44 425 Net interest receivable 35 52 Profit on ordinary activities before tax 79 477 Taxation 9 (33) Retained profit for the year 88 444 Basic earnings per share 2 0.20p 1.36p Earnings per share before goodwill amortisation and profit on disposal of businesses. 2 1.11p 1.91p A statement of total recognised gains and losses is not included as there are no recognised gains or losses other than those disclosed above. Ten Alps Communications plc Consolidated Balance Sheet As at 31 March 2003 31 March 2003 31 March 2002 Â£'000 Â£'000 Fixed Assets Intangible assets 3,717 3,588 Tangible assets 560 358 4,277 3,946 Current assets Work in progress 482 44 Debtors 2,215 2,104 Bank 3,339 2,545 6,036 4,693 Creditors Amounts falling due within one year (3,344) (2,041) Net current assets 2,692 2,652 Total assets less current liabilities 6,969 6,598 Creditors Amounts falling due after one year (347) (64) Net assets 6,622 6,534 Capital and reserves Called up share capital 883 883 Share premium account 2,999 2,999 Merger reserve 2,930 2,930 Profit and loss account (191) (279) Equity shareholders' funds 6,621 6,533 Equity minority interest 1 1 6,622 6,534 Ten Alps Communications plc Consolidated Cash Flow Statement For the year ended 31 March 2003 2003 2002 Â£'000 Â£'000 Net cash inflow from operating activities 1,579 56 Return on investments and servicing of finance 35 52 Taxation (124) (113) Capital expenditure and financial investment (166) (127) Acquisitions and disposals (505) (183) Net cash inflow/(outflow) before financing 819 (315) Financing - issue of ordinary share capital - 2,772 - capital element of finance lease rentals (25) (27) Net cash (outflow)/inflow from financing (25) 2,745 Increase in cash 794 2,430 Reconciliation of net cash flow movement to movement in net debt Increase in cash in the period 794 2,430 Cash outflow from decrease in debt and lease financing 25 27 Change in net debt resulting from cash flows 819 2,457 Finance leases (34) (114) Loans acquired with subsidiaries (414) - Movements in loans 1 - Exchange adjustments (39) - 333 2,343 Net funds at 1 April 2002 2,458 115 Net funds at 31 March 2003 2,791 2,458 Notes 1. No final dividend is being proposed 2. Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders of Â£88,000 (2002 - Â£444,000) and on 44,172,080 shares (2002- 32,676,703 shares) being the weighted average number of ordinary shares in issue during the year. The adjusted earnings per share have been provided in order that the effects of goodwill amortisation and profit on disposal of businesses on reported earnings can be fully appreciated. This is based on earnings calculated as follows: 2003 2002 Â£'000 Â£'000 Retained profit for the year 88 444 Goodwill amortisation 404 220 Profit on disposal of businesses 0 (41) Profit before goodwill amortisation profit on disposal of businesses 492 623 The calculation is also based on 44,172,080 shares (2002 - 32,676,703 shares) being the weighted average number of ordinary shares in issue during the year. The warrants and options granted over ordinary shares are considered to be non-dilutive. 3. The financial information relating to the year ended 31 March 2003 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. The financial information relating to the year ended 31 March 2002 has been extracted from the 2002 Annual Report and Accounts which received an unqualified auditors' report and have been delivered to the Registrar of Companies. 4. Copies of the Company's Annual Report and Accounts for 2003 will be sent to shareholders as soon as is practicable. Copies of this announcement are available at the Company's head office at 10 Blue Lion Place, 237 Long Lane London SE1 4PU and copies of the Annual Report and Accounts will also be available on request. For further information please contact: Press Contact: Sheila Gunn - mobile 07884 437 934 Office: Alex Connock - office 0207 428 3100 alex@tenalps.tv Nitil Patel- office 0207 089 3686 nitil@tenalps.com www.tenalps.com END This information is provided by RNS The company news service from the London Stock Exchange

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