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Photon Kathaas (PKP)

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Tuesday 09 August, 2011

Photon Kathaas

Interim Results

RNS Number : 9777L
Photon Kathaas Productions Ltd
09 August 2011
 



Photon Kathaas Productions

 

Interim results

 

Chennai, 9 August 2011.  Photon Kathaas Productions Ltd. (AIM: PKP, "Photon Kathaas", "the Company") the South Indian film company has published its results for the six months ended 30 June 2011.

 

Highlights

 

·      Two productions completed: Nadunisi Naaygal" and  "Veppam"

·      Shooting of the Hindi remake of Vinnai Thandi Varuvaaya, directed by Gautham Vasudev Menon with music by A.R.Rahman completed

Co-production with Fox Star Studios, a Twentieth Century Fox and Satellite Television Asia Region (STAR) JV

Expected to be released in the second half of 2011

·      Since the period end contract agreed with R.S.Infotainment and Sai Sarvanthi Movies to co-produce a Tamil/Telugu bilingual film with an estimated budget of $5m

·      Revenue $1.4m

·      Gross profit $0.57m

·      Profit before tax $38,071

 

Michael Rosenberg comments:

 

"In our first full trading year, the results at this stage reflect the early stage nature of the business. With revenues generated from two productions we have already reported a maiden profit.

 

"We are confident that in the second half, we will see a notable increase in revenues and profitability.  In addition to productions underway or recently completed, we have a good pipeline of new projects under discussion for development in the next financial year."

 

Enquiries

 

Photon Kathaas


Michael Rosenberg

+  44 (0)20 7938 4026

Venkat Somasundaram, Chief Executive

+65 6224 4991

Reshma Ghatala, Head of Marketing

+91 44 2820 2988



Seymour Pierce Limited (Nomad & broker)

020 7107 8000

Nandita Sahgal/Tom Sheldon (Corporate Finance)

Laetitia MacManus (Corporate Broking)




Rivington Street Corporate Finance (Broker)

020 7562 3373

Jon Levinson

Dru Edmonstone




College Hill

020 7457 2020

Adrian Duffield/Jon Davies


 

 

About Photon Kathaas Productions

 

Photon Kathaas Productions is the first film company specifically created to make and distribute films of different genres to a primarily South Indian audience, speaking the languages of Telugu, Tamil, Kannada and Malayalam.

 

PKP benefits from a special creative relationship with its chief creative officer, Gautham Vasudev Menon. Gautham is one of the leading directors and producers in South Indian cinema. He has been involved in nine films to date, not only as a director but also as a screenplay writer, an executive producer and a producer. His earlier films include: Minnale (2000), Rehna He Tera Dile Mein (2001), Kaaka Kaaka (2003), Gharshana (2004), Vettaiyadu Vellaiyadi (2006), Pachaikili Muthucharam (2007), Vaaranam Aayiram (2008) Vinnaithaandi Varuvaayaa (2010), Ye Maaya Chesave (2010) and Nadunissi Naaygal (2011).

 

A. R. Rahman is PKP's creative adviser. He is an Indian film composer, record producer, musician and singer and is credited for totally overhauling the style in which music is made in India. A. R. Rahman has won two Academy Awards (Slumdog Millionaire), 25 Filmfare Awards, four Indian National Film Awards, a Bafta Award, two Golden Globes and two Grammy Awards.

 

Operational review

 

During the first half of the year the management focused on ensuring that the business developed as planned. With the initial capital raised in November 2010, the Company has produced two films with gross profit margins in excess of 35% achieved.

 

The shooting of the Hindi remake of Vinnai Thandi Varuvaaya, directed by Gautham Vasudev Menon with music by A.R.Rahman has been completed. The movie is a co-production with Fox Star Studios, a joint venture between Twentieth Century Fox and Satellite Television Asia Region (STAR), and is expected to be released in the second half of 2011.

 

In July, PKP finalised three further production agreements:

 

·      The theatrical rights for the small budget Tamil movie, "Thanga Meengal", have been sold before release.  
Photon Kathaas is the sole producer of the film, which is due for release during the second half of 2011.

·      The Company finalised a contract with R.S.Infotainment and Sai Sarvanthi Movies to co-produce a 
Tamil/Telugu bilingual film with an estimated budget of $5m. The film will be directed by Gautham Vasudev Menon and will commence shooting from August 2011 for release in 2012.

·      Photon Kathaas has finalised a contract with a leading production house to produce a large budget Tamil film, directed by Gautham Vasudev Menon featuring a leading film star of the South Indian film industry. Further details of this production will be announced later in the year.

The film is expected to commence shooting during the first quarter of 2012 and made at an estimated budget of $10m.  The movie will be funded by the production house with Photon Kathaas managing the production and receiving a production fee.  The Company will receive 20% of the profits.

 

Financial review

 

Revenues of $1,410,679 were generated from the exploitation of rights in two films.  As this is the first full year of trading since the IPO in November 2010, there are no meaningful comparisons to be made with the previous year.

 

A gross margin of $573,388 of approximately 41% was achieved.

 

By keeping a very tight control on costs, Photon Kathaas reported profits before tax of $38,071. Earnings per share are 0.154 cents.

 

Net assets were $1,093,328.

 

Cash as at 30 June 2011 was $161,366 but trade receivables as at that date were $945,328.  During July a good proportion of those receivables were collected. There was a net current asset surplus over current liabilities of approximately $1.04m as at the accounting date. Inventory, which is the value of work in progress of 3 movies, amounted to US$ 1,346,454 (VTV - Hindi (US$ 1,026,372), Thanga meengal (US$ 264,030) and bilingual (US$ 56,052))

 

Current trading and outlook

 

The second half of the current financial year is expected to see notable increases in revenues and profits from the release of the ongoing productions, including a sole small budget production and the co-production with Fox Star Studios.

 

The profile of PKP as a listed company with a proven high quality management and creative team has already begun to attract many potential new projects.  On the back of the recently signed agreements and other new projects currently under discussion, Photon Kathaas has a strong production pipeline which should ensure continued good progress during the second half of 2011 and a good start to 2012 in line with the Board's expectations.  

 

 

Venkat Somasundaram

Chief Executive

 

 

Consolidated statement of financial position

As at 30 June 2011

 


Notes

 

(Unaudited)

30 June 2011

(Unaudited)

30 June 2010

(Audited)

31 December 2010



US $

US $

US $

ASSETS





Non-current assets





Property, plant and equipment


3,535

-

2,608

Intangible assets


10,827

13,229

11,655

Other non-current assets


37,894

2,550

22,897

Total non-current assets


52,256

15,779

37,160






Current assets





Trade receivables


945,238

10,936

38,512

Other current assets


136,678

25,194

16,350

Inventories


1,346,454

10,439

473,948

Cash and cash equivalents


161,336

30,737

1,116,254

Total current assets


2,589,706

77,306

1,645,064






Total Assets


2,641,962

93,085

1,682,224






EQUITY AND LIABILITIES










SHAREHOLDERS' EQUITY





Share capital

2

1,402,016

10,989

1,345,306

Retained earnings


(273,700)

(124,001)

(306,657)

Foreign exchange reserve


(45,763)

(530)

(39,419)

Other reserves


10,775

-

2,632






Total Shareholders' equity


1,093,328

(113,542)

 1,001,862






LIABILITIES





Non-current liabilities





Deferred tax liability

3

5,340

-

226



5,340

-

226

Current liabilities





Trade and other payables


1,543,294

206,627

680,136



1,543,294

206,627

680,136






Total Liabilities


1,548,634

206,627

680,362






Total Equity and Liabilities


2,641,962

93,085

1,682,224

 

 

Consolidated statement of comprehensive income

For the six month period ended 30 June 2011

 


Notes

(Unaudited)

Six months ended

30 June 2011

(Unaudited)

Six months ended

30 June

2010

(Audited)

Year

ended

31 December

2010



US $

US $

US $

CONTINUING OPERATIONS





Revenue


1,410,679

100,000

200,176





Cost of sales


(837,291)

(95,000)

(166,670)






Gross profit


573,388

5,000

33,506

Distribution costs


(148,656)

-

-

Administrative expenses

 

 

(386,661)

 

(127,020)

 

(337,956)






Profit / (loss) before tax


38,071

(122,020)

(304,450)

Income tax expense

 

3

(5,114)

-

(226)

 

Profit / (loss) for the period attributable to the owners of the parent


32,957

(122,020)

(304,676)

Other comprehensive income





Foreign exchange translation differences


(6,344)

(530)

(39,419)






Total comprehensive profit / (loss) for the period attributable to the owners of the parent


26,613

(122,550)

(344,095)






Earnings / (loss) per share





(a) Basic

 

4

0.002

 

(0.030)

 

(0.031)

(b) Diluted

 

4

0.002

 

(0.030)

 

(0.031)

 

 

Consolidated statement of cashflows

For the six month period ended 30 June 2011

 


Notes

 

 

(Unaudited)

Six months ended

30 June 2011

(Unaudited)

Six months ended

30 June 2010

(Audited)

Year

ended

31 December

2010



US $

US $

US $






Net cash (used) / generated in operating activities

 

5

(1,022,856)

 

33,507

 

(200,159)






Cash flow from investing activities





 

Purchase of intangible assets


-

 

(13,229)

 

(13,310)

Purchase of property, plant and equipment


(1,649)

 

-

 

(2,683)

Net cash used in investing activities


(1,649)

(13,229)

(15,993)






Cash flow from financing activities





Proceeds from issue of capital


56,710

10,889

2,414,509

Share issue expenses


-

 

-

 

(1,069,303)

Net proceeds from financing activities


56,710

10,889

1,345,206






Net change in cash and cash equivalents


(967,795)

 

31,167

 

1,129,054

Cash and cash equivalents at the beginning of the period


1,116,254

 

100

 

100

Effect of foreign exchange rate changes


12,877

(530)

(12,900)

Cash and cash equivalents at the end of the period


161,336

 

30,737

 

1,116,254

 

 

 

Notes to the consolidated financial statements

For the six month period ended 30 June 2011

 

1.      Profile and basis of preparation

 

Photon Kathaas Productions Limited ("PKP" or "the Company") is a Singapore registered company. The Company's registered office is situated at 31 Cantonment Road, Singapore 089747.

 

The principal activities of the Company and its subsidiaries (the "Group") are those relating to the business of production and co-production of films primarily targeted at the South Indian audience of varying genre, language and budget.

 

The interim financial information for the period ended 30 June 2011 and comparative numbers have been prepared using accounting policies as are applied in the Company's annual financial statements and in accordance with International Financial Reporting Standards (IFRS).

 

The consolidated interim financial statements have been prepared on the historical cost basis and going concern basis of accounting which assumes adequate financial resources are available to the Group for the period of twelve months from the date of issue of these interim financial statements. The Directors have prepared forecasts and projections which show that the Group will be able to operate within the existing cash available and generated through the future release of movies.

 

The financial information set out herein is based on the transactions of the Group, which consists of the Company and its subsidiaries: Photon Kathaas International Productions Limited, Singapore and Photon Kathaas Production Private Limited, India. The transactions and balances between the entities have been eliminated in the preparation of the consolidated interim financial statement.

 

The consolidated interim financial statements of the Group for the six months to 30 June 2011 and comparative numbers, unless indicated, are unaudited and do not comprise Group's statutory accounts within the provision of the Singapore Companies Act, Chapter 50.

 

The numbers pertaining to 31 December 2010 were audited and the accounts approved by the shareholders on June 27, 2011.

 

 

2.      Share capital

 

PKP which is incorporated in Singapore is not required to have authorised share capital under the national jurisdiction. There is also no concept of a par value for the shares. For all matters submitted to vote in the shareholders meeting, every holder of the equity shares, as reflected in the records of the company on the date of the shareholders meeting has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of companies.

 

Issued, paid up and allotted share capital:

 

Issued, allotted and fully paid

Number of shares

US $

Subscribers shares

10,000

100

Allotment of shares on 26 April 2010

1,088,900

10,889

As at 30 June 2010  

1,098,900

10,989

Allotment of shares on 17 September 2010

401,800

4,018

Allotment of shares on 17 September 2010

139,409

1,394


1,640,109

16,401

Split ratio of 10:1 on 17 September 2010

16,401,090

16,401

Allotment of shares on 4 November 2010

4,894,301

2,398,208

As at 31 December 2010

21,295,391

         2,414,609

Allotment of shares on 17 February 2011

68,071

33,354

Allotment of shares on 16 June 2011

47,665

23,356

As at 30 June 2011

21,411,127

2,471,319

 

 

3.      Income tax

 

The income tax expense comprises:

 

a.       Current tax

b.       Deferred tax

 

The current tax expense for the period is nil on account of the carry forward of losses from the previous year.

 

The income tax expense for the period relates entirely to movements in the deferred tax liability.

 

The deferred tax liability is on account of:

 

 

Six months ended

30 June 2011

Six months ended            30 June 2010

Year ended            31 December 2010

 

US$

US$

US$

Liability

 

 

 

Difference between tax and book written down value of tangible assets

 

(5,340)

 

-

 

(226)

Deferred Tax Liability

(5,340)

-

(226)

 

 

The deferred tax asset not recognised is approximately US$ 27,000 relating to the Singapore entities and US$ 2,000 relating to the Indian entity. The Singapore entities have an indefinite period of carry forward benefit of the losses and the India entity has a carry forward benefit of eight years.

 

Income tax is based on the tax rates applicable on Statement of Comprehensive Income in various jurisdictions in which the Group operates.    

 

 

4.      Earnings per share

 

(a) Basic

 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period.

 

           

Six months ended

30 June 2011

Six months ended            30 June 2010

Year ended            31 December 2010

 

US$

US$

US$

Profit / (Loss) attributable to equity holders of the company

32,957

 

(122,020)

(304,676)

 

 

 

 

Weighted average number of ordinary shares in issue

 

21,349,736

 

4,070,575

 

9,907,674

 

 

(b) Diluted

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company's average share price for the period ended 30 June 2011 was lower than the exercise price of stock options in issue during the period. As a result, the stock options are not considered to be dilutive.

 

           

Six months ended

30 June 2011

Six months ended            30 June 2010

Year ended            31 December 2010

 

US$

US$

US$

Profit / (Loss) attributable to equity holders of the company

32,957

 

(122,020)

(304,676)

 

 

 

 

Weighted average number of ordinary shares in issue

 

21,349,736

 

4,070,575

 

9,907,674

 

 

5.      Cash generated from / (used in) operations

 

 


Six months ended

30 June 2011

Six months ended            30 June 2010

Year ended            31 December 2010


US $

US $

US $

Operating profit / (loss) before tax

38,071

(122,020)

(304,450)





Foreign exchange gain

-

-

(20,673)

Depreciation of property, plant and equipment

722

 

-

 

75

Amortisation of intangible assets

828

-

1,655

Share based payment expense

8,143

-

2,632

Increase in receivables

(904,112)

(10,936)

(39,870)

Increase in inventory

(891,028)

(10,439)

(501,160)

Increase in trade and other payables

859,845

 

204,646

 

702,450

Increase in other current assets

(120,328)

(25,194)

(16,350)

Increase in other non-current assets

(14,997)

(2,550)

(24,468)


 

 


Cash (used in) / generated from operations

(1,022,856)

33,507

(200,159)

 

 

6.      Segment information

 

Management has determined the operating segments based on the reports reviewed by the board of directors that is charged with the strategic decision-making process for the Group.

 

The board of directors considers the business to be made up of only one segment, being revenues from films and film production and therefore business segmental reporting is not considered necessary.

 

In addition to this, the board also considers segmental information from a geographic perspective. Geographically, management considers the performance of the business by reviewing its performance in India and Rest of the World ('RoW').

 

The segment information based on geography as of and for the period ended 30 June 2011 is as follows:

 

 

India

US$

   RoW

US$

Total

US$

Revenue 

1,376,489

34,190

1,410,679

Direct expenses 

(815,397)

(21,894)

(837,291)

Gross profit

561,092

12,296

573,388

 

 

 

 

Indirect expenses

(357,318)

(177,999)

(535,317)

 

Profit / (loss) before tax

203,774

(165,703)

38,071

Income tax expense

(5,114)

-

(5,114)

Profit / (loss) for the period

198,660

(165,703)

32,957

Other comprehensive expense

(6,344)

-

(6,344)

Total comprehensive profit / (loss)

192,316

(165,703)

26,613

 

           

India

US$

   ROW

US$

Total

US$

 

 

 

 

Cash and cash equivalents

73,996

87,340

161,336

Non-current assets

4,362

47,894

52,256

Current assets

2,323,684

104,686

2,428,370

 

2,402,042

239,920

2,641,962

 

 

 

 

Trade and other payables

(975,528)

(567,766)

(1,543,294)

Deferred tax liability

(5,340)

-

(5,340)

 

1,421,174

(327,846)

1,093,328

 

The segment information based on geography as of and for the period ended 30 June 2010 is as follows:

 

 

India

US$

RoW

US$

Total

US$

Revenue 

-

100,000

100,000

Direct expenses 

-

(95,000)

(95,000)

Gross profit

-

5,000

5,000

 

 

 

 

Indirect expenses

(19,565)

(107,455)

(127,020)

Loss before tax

(19,565)

(102,465)

(122,020)

Income tax expense

-

-

-

Loss for the period

(19,565)

(102,465)

(122,020)

Other comprehensive expense

(530)

-

(530)

Total comprehensive loss

(20,095)

(102,455)

(122,550)

 

 

India

US$

RoW

US$

Total

US$

Cash and cash equivalents

678

30,059

30,737

Non-current assets

3,229

12,550

15,779

Current assets

29,320

17,249

46,569

 

33,227

59,858

93,085

Trade and other payables

(31,268)

(175,359)

(206,627)

Deferred tax liability

-

-

-

 

1,959

(115,501)

(113,542)

 

The segment information based on geography as of and for the year ended 31 December 2010 is as follows:

 

 

India

US$

RoW

US$

Total

US$

Revenue 

100,176

100,000

200,176

Direct expenses 

(71,670)

(95,000)

(166,670)

Gross profit

28,506

5,000

33,506

 

 

 

 

Indirect expenses

(235,455)

(102,501)

(337,956)

Loss before tax

(206,949

(97,501)

(304,450)

Income tax expense

(226)

-

(226)

Loss for the period

(207,175)

(97,501)

(304,676)

Other comprehensive income expense

(39,419)

-

(39,419)

Total comprehensive loss

(246,594)

(97,501)

(344,095)

 

 

India

US$

RoW

US$

Total

US$

Cash and cash equivalents

314,366

801,888

1,116,254

Non-current assets

4,263

32,897

37,160

Current assets

510,576

18,234

528,810

 

829,205

853,019

1,682,224

Trade and other payables

(88,045)

(592,091)

(680,136)

Deferred tax liability

(226)

-

(226)

 

740,934

260,928

1,001,862

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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