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Works Media Grp(The) (WKS)

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Friday 28 March, 2008

Works Media Grp(The)

Final Results

Works Media Group (The) PLC
28 March 2008

                           THE WORKS MEDIA GROUP PLC
                              PRELIMINARY RESULTS
                  FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2007

The Works Media Group plc ('The Works') a leading independent UK film
distributor and international sales agent, announces today its preliminary
results for the twelve months ended 31 December 2007.

Financial Highlights

o        Group retained loss falls to £0.14 million from £0.59 million in 2006.
o        Group turnover rises 98% to £3.31 million from £1.68 million in 2006.
o        UK Distribution turnover rises 308% to £2.29 million.
o        Gross margin rises to £1.84 million from £1.14 million in 2006.
o        Cash reserves of £0.82 million (2006: £1.16 million).
o        Adoption of IFRS with effect from 1 January 2007.

Corporate Highlights

o        Board Changes
         •    New Chairman and Chief Executive.

o        Film Distribution - The Works UK Distribution
         •    11 films released in cinemas and 7 on DVD during the year.
         •    7 titles released on Video On Demand through Virgin Media.
         •    Video On Demand output agreement signed with BT Vision.
         •    Multi-media rights to 25 titles acquired to date on long licences.
         •    UK Distribution profitable in 2007.

o        Film Sales - The Works International
         •    The Works International turnover rises 21% to £0.59 million.
         •    This is England wins BAFTA for Best British Film


o        Fundraising to increase volume of rights under Group control.
o        £1.26 million raised through two placings of new shares at 3p.
o        Theta Group subsidiary Milcoz Films becomes largest shareholder at

Costa Theo, non-executive Chairman of The Works Media Group said:

'This is our best set of results since 2004 and I am pleased to report that the
re-engineering of The Works Media Group is proceeding well.   The new business
of film distribution already dominates the economic activity of the Group and
although there is still work to be done at our sales agency, The Works
International, I am optimistic about the general outlook for this business.
The future is positive.'

For further information, please contact:

The Works Media Group plc                                        020 7612 0030
Norman Humphrey, CEO

City Financial Associates Limited                                020 7492 4777
James Caithie



The goal at the beginning of the year was to continue the steady growth of the
Company.   This has been achieved and 2007 was the third consecutive year of
improving performance.   During the last six months the Company has been at a
break-even position after losses of £134,000 in the first half of the year,
retained losses of £598,000 for 2006 and of £1,284,000 in 2005.   The
improvement has been due to the excellent performance of the Works UK
Distribution, where the division released 11 films theatrically and had one
break out hit with 'Two Days in Paris'.

Another factor contributing to the Company's growth this past year is the
increase in revenue from Video on Demand (VOD).   This is the fastest growing
income stream and the Company has had success with certain titles such as
Shortbus.   It is expected The Works Media Group will benefit greatly from
growth in the sector over the next year.

Our sales agency, The Works International, still finds itself in a challenging
space due to the general downturn in UK film production and more specifically
because the Group has moved away from production.   However, it is a brand which
commands respect as a purveyor of art films and we intend to build upon this
reputation and expand the business by acquiring and selling more commercial


The continued migration from production to distribution and the consequential
obligation to invest in new content increased the Company's working capital
requirement during the year.   To this end in May the Group attracted an initial
£500,000 investment from a subsidiary of Theta Group, Milcoz Films, through a
placing of 16,666,667 shares at 3p.   Milcoz Films secured 13.6% of the Company
at the placing and expanded its holding to 15.3% by acquisition in the market.
In October Milcoz Films acquired a further 25,436,562 shares through a second
placing at 3p per share, raising further funds for the Company of £763,000.
Milcoz Films and its associates currently own 29.9% of the issued share capital.


During the 12 months to 31 December 2007, The Works Media Group made a retained
loss of £139,000.   Because £100,000 of this loss related to reorganisation
costs, including significantly the severance package of the former CEO Chris
Auty, the Group's ordinary losses where only £39,000.   This compares very
favourably with the loss of £598,000 in 2006.   The substantial reduction of the
Group's retained loss demonstrates the improved quality of earnings following
the move into UK distribution.

The available cash at bank fell from £1,164,000 at 31 December 2006 to £823,000
at 31 December 2007.


The Directors do not recommend the payment of a dividend in respect of 2007
(2006 £nil).


I joined the Board as a non-executive Director on 25 May 2007.

Crispin Barker resigned as Chairman of the Board on 11 January 2008 in order to
focus more fully on his other business interests.   The Company has benefited
greatly under his chairmanship since 2003   He was supportive of the move by the
Group away from film production into distribution, to the Company's financial
benefit and I personally wish to thank him for his time and dedication.   He
remains a non- executive director of The Works Media Group.

I have the privilege of succeeding Crispin to the Chairmanship.  I hope to
assist the Company's executives in making the Company profitable for the first
time since 2004 by building on our successes in UK distribution and
reinvigorating the International division to make it more competitive.  I bring
to the position a background in international film production and financing, and
experience in international corporate acquisition.


The AGM will be held at 10.00am on Friday 6th June at the offices of City
Financial Associates Limited, 46 Worship Street, London EC2A 2EA.


At the Works UK distribution, the strategy going forward is to maintain a
release schedule of 12 films a year.   As we will not be increasing volume
significantly, extra value will be extracted from our yearly slate by increasing
our acquisition and marketing budgets for the release of certain titles, such as
that currently planned for Mongol.   This should increase box office grosses and
have the knock on effect of increasing revenue further 'downstream' in the
ancillary rights such as DVD and VOD.   We also expect via this strategy to
significantly increase sales to television.

At the Works International, it is understood that this subsidiary requires
additional finance in order to be able to compete in the purchasing of more
commercial product.   This fund raising was begun in 2007 and there is cautious
optimism that this should bear fruit in 2008.

The outlook going forward is positive.

Costa Theo
28 March 2008



I am pleased to report that the first phase of the re-engineering of The Works
Media Group has been successfully completed.   It is a fundamentally different
business today than it was just a couple of years ago.   The old core film
production activity has been marginalised in favour of a move into distribution
and the impact has been dramatic.   In 2007, 70% of Group turnover was
attributable to The Works UK Distribution, despite the subsidiary having been
created from a standing start in late 2005.

The Board believes the losses sustained in recent years are justified by the
creation of a better positioned and scaleable distribution business.   We are
also now steadily building a film catalogue.   Twenty five films have so far
been acquired by The Works UK Distribution, most with terms in excess of 20
years, and new films are currently being added at the rate of approximately one
per month.


I am pleased to report the business has performed well and in line with both
market and management expectations.   Group turnover is up 98% to £3,312,000
from £1,675,000 in 2006.   Turnover at The Works UK Distribution rose 308%, to
£2,293,000 from £744,000 and turnover at the Works International rose 21% to
£591,000 from £489,000.

Across the Group, the gross margin increased by 60% from £1,142,000 to
£1,836,000, and the margin in 2007 was three times that achieved in 2005.
Consolidated administration expenses rose from £1,710,000 in 2006 to £1,946,000,
but the increase included £100,000 of redundancy and restructuring costs, as
noted in the chairman's statement.   Despite the increase in turnover, overheads
are broadly the same as they were in 2005.   As a consequence of the rising
gross margin and steady costs, the retained loss fell to £139,000 in 2007 from
£598,000 in 2006.


The Works UK Distribution is beginning to mature and in 2007 eleven films were
released in cinemas, seven on DVD and seven on video on demand (VOD).   This
compares favourably with five, three and two respectively in 2006, which was the
company's first full year of trading.   We expect to achieve our target volume
of twelve films per year in cinemas, on DVD and on VOD during 2008.

Throughout 2007, we had sub-licensing arrangements with Universal Pictures for
DVD and Internet Download to Own and with Virgin Media for VOD.   Since the
year-end we have contracted a similar arrangement with BT Vision, which will
also place our films on its own rapidly expanding VOD platform.

Key releases for The Works in 2007 were Robert Altman's last film, A Prairie
Home Companion, Richard Attenborough's wartime drama Closing The Ring, and Julie
Delpy's romantic comedy Two Days in Paris, which was our most successful cinema
release to date.   Towards the end of the year we released the horror film
Hatchet and a biopic of Mark Chapman entitled The Killing of John Lennon, both
of which we expect to work well on DVD in 2008

Eight films have already been secured for release in 2008, including the
romantic comedy Cashback and the eponymous documentary Joy Division.   However,
the most eagerly anticipated title is the Oscar nominated historical epic
Mongol, which dramatises the rise to power of Ghengis Khan.   The film opens
nationwide on the 6th June.


Since publishing last year's Financial Statements in March 2007 films sold by
The Works International have won 23 awards and been nominated for many more.
The directors of Brick Lane and The Killing of John Lennon, Sarah Gavon and
Andrew Piddington, were both nominated for BAFTA awards, and Shane Meadow's This
Is England did indeed win the BAFTA for Best British Film.

Sarah Gavon's Brick Lane, Vincent Ward's River Queen starring Kiefer Sutherland,
and Roger Michell's Venus starring Peter O'Toole, were the company's best
performing films of the year.   However, despite the solid performance of
certain individual titles and the 21% increase in turnover achieved year on year
The Works International has been adversely affected by the Group's migration
from feature film production.   The Works Media Group previously sold the films
it produced and the change of business model has combined with a downturn in
British production to decrease the volume of titles available to our sales
agency.   During 2007, the Group devoted resource to this issue, appointing a
Head of Acquisition and spending time enhancing relationships with the
independent American production community.

New films secured by The Works International for sale in 2008 include Shane
Meadow's Somers Town, romantic comedy French Film staring Hugh Bonneville and
Eric Cantona, and a documentary about the man who walked a high wire between the
World Trade Towers, Man on Wire.


The Works Media Group is in better condition than it has been for many years.
Given the prevailing difficulties in British film production, the Company's move
into distribution was a sensible one.   The Works UK Distribution has found its
feet, is profitable and has the prospect of delivering sustainable growth moving
forward.   It is also building a catalogue, which should over time make business
performance more predictable.

Overcoming the current disparity in scale between The Works UK Distribution and
The Works International is important if the sales agency is not to be
marginalised and the Board is particularly focused on this issue.   Hopefully
some headway in this regard may be achieved during 2008.

We continue to seek opportunity in new media and to evaluate possible
synergistic or complementary acquisitions.   I believe we are making
satisfactory progress and look forward to the future with confidence.

Norman Humphrey
28 March 2008

Consolidated Income Statement
For the year ended 31 December 2007

                                                         Notes            2007        2006
                                                                       £ 000's     £ 000's

Revenue                                                  1               3,312       1,675

Cost of sales                                                          (1,476)       (533)

Gross Profit                                                             1,836       1,142

Selling and distribution costs                                            (46)        (45)

Administrative costs                                                   (1,946)     (1,710)
Operating loss                                                           (156)       (613)

Investment income                                                           17          30

Finance costs                                                                -        (15)
Loss before taxation                                                     (139)       (598)

UK corporation tax                                                           -           -

Loss for the period attributable to equity shareholders                  (139)       (598)

Earnings per share

Basic (pence)                                            3              (0.09)      (1.37)
Diluted                                                  3              (0.09)      (1.37)
Dividend                                                                     -           -

Consolidated Balance Sheet
As at 31 December 2007
                                                       Notes            As at         As at
                                                                  31 Dec 2007   31 Dec 2006
                                                                         £000          £000

Non Current Assets
Goodwill and intangible non current assets               1                  0         2,262
Property, Plant and Equipment                                              15            28
Investments                                                               100           100
                                                                          115         2,390

Current assets
Inventory                                                               1,693         1,294
Receivables                                                             1,167           889
Cash and cash equivalents                                2                964         1,343
                                                                        3,824         3,526

Total assets                                                            3,939         5,916

Current liabilities
Payables                                                                (965)       (1,423)
Accruals                                                                (296)         (172)
Deferred Revenue                                                        (316)         (752)
                                                                      (1,577)       (2,347)
Non current liabilities
Production Loan                                                             -          (64)

Total liabilities                                                     (1,577)       (2,411)

Net assets                                                              2,362         3,505

Shareholders' equity
Called up share capital                                                 4,394         4,352
Share premium account                                                   8,688         7,472
Retained earnings                                                    (10,558)       (8,157)
Minority interest                                                       (162)         (162)

Equity Shareholders' funds                                              2,362         3,505

Consolidated Cash Flow Statement
For the year ended 31 December 2007

                                                       Notes            12 Months           12 Months
                                                                            Ended               Ended
                                                                      31 Dec 2007         31 Dec 2006
                                                                             £000                £000
Cash flows from operating activities:

Operating loss                                                              (156)               (613)
Depreciation                                                                   26                  21
Profit on disposal of non current assets                                      (1)                   -
(Increase)/Decrease in inventory                                            (399)             (1,263)
(Increase)/Decrease in debtors                                              (278)               (192)
Increase/(Decrease) in creditors                                            (834)                 765

Net cash generated by operating activities                                (1,642)             (1,282)

Cash flows from investing activities

Interest received                                                              17                  30
Purchase of non current assets                                               (13)                 (8)
Sale proceeds on disposal of non current assets                                 1                   -
Net cash generated by investing activities                                      5                  22

Cash inflow/(outflow) before financing                                    (1,637)             (1,260)

Cash flows from financing activities

Interest paid                                                                   -                (15)
Issue of ordinary share capital                                             1,263                1250
Share issue costs                                                             (5)               (174)
Net cash received from financing activities                                 1,258               1,061

Net (decrease)/ increase in cash and cash                                   (379)               (199)

Cash and cash equivalent at beginning of year                               1,343               1,542

Cash and cash equivalent at the end of  year             2                    964               1,343

Less:  Production and Development funds held on                             (141)               (179)
trust for third parties.

Available cash at bank and in hand                                            823               1,164

Statement of Changes in Equity
For the year ended 31 December 2007

                          Number of        Share        Share     Minority     Retained         Total
                             shares      capital      premium     interest     earnings
                                           £ 000        £ 000        £ 000        £ 000         £ 000

At 1 January 2007       105,399,208        4,352        7,472        (162)        (8,157)       3,505

Share capital issued     42,103,229         42          1,221          -             -          1,263

Share issue costs            -               -           (5)           -             -           (5)

Retained loss for the        -               -            -            -           (139)        (139)

Minority interest in         -               -            -            -             -            -
loss for the year

Adoption of IFRS -           -               -            -            -          (2,262)      (2,262)
goodwill written to

At 31 December 2007     147,502,437        4,394        8,688        (162)       (10,558)       2,362


1.      Basis of preparation

Accounting convention

These financial statements have been prepared in accordance with the historical
cost convention, using accounting policies that have been consistently applied
during the year.

The Group's policies on revenue recognition, Inventory and goodwill are set out

Adoption of International Financial Reporting Standards

In accordance with AIM rules the group adopted International Financial Reporting
Standards as the basis for preparing the financial statements in 2007.  The last
sets of financial statements produced under UK GAAP were those for the period
ending 31 December 2006.


Revenue of the Group for the period has been derived from its principal
activities; the distribution of feature films in the United Kingdom, the
international sale of film rights and the management of development, financing
and production of feature films.

U K distribution revenue is recognised per licensed right as follows:

•         Theatrically as films are exhibited in cinemas.

•         DVD, Pay Television and Free to Air Television upon contract and
satisfaction of conditions precedent.

•         Video On Demand and Pay Per View upon receipt of licensees periodic
report of unit retail sales.

Commission derived from the international sale of film rights is recognised when
payable by licensees; on signature of contract and on delivery of materials.

Film development and executive production fees arising from production
management are recognised when contractually payable, in stages during the
production process.


Development costs are written off in the period of expenditure except when
recoverability can be assessed with reasonable certainty and there is a clearly
defined project.   Amounts carried forward are shown in Inventory.


Inventory, which is stated at the lower of cost and net realisable value,
represents acquired rights, capitalised print and advertising expenditure, and
film development and production costs.

Film acquisition costs and royalty advances are expensed to cost of sales in
line with income recognition throughout the licence period, at rates determined
by individual distribution agreements.  Film acquisition costs, royalty advances
and print and advertising expenditure is carried forward only to the extent that
predicted future revenue streams anticipate recoupment.

Film development, and production expenditure is carried forward as inventory
only when, in the opinion of the directors, there is a clearly defined project,
and the recovery of these costs can reasonably be expected.   Where production
expenditure has been financed by non-recourse loans, the company makes provision
in full against such 'ring fenced' expenditure as it is incurred.   The
non-recourse loans are only repayable to the extent revenues are generated from
the exploitation of the asset to which they relate.   Accordingly, full matching
provision is made in respect of these liabilities, with no overall net effect on
the Income Statement.   Any revenues subsequently received are recognised on
receipt, and a corresponding release of both the rights and loan provisions made
to the Income Statement.


Under UK GAAP, goodwill on consolidation, representing the excess of the
consideration paid over the fair value of the identifiable net assets of
subsidiary undertakings at the date of acquisition, was capitalised and
amortised over twenty years, as the directors believed this to be the economic
useful life.

The Group adopted International Financial Reporting Standards (IFRS) with effect
from 1st January 2007 as per IFRS 1, first time adoption.   Following this
introduction goodwill on consolidation has now been written to reserves as
allowed by the standard.

2.       Cash and cash equivalents
                                                                             2007       2006
                                                                          £ 000's    £ 000's

Cash and bank balances                                                        964      1,343
Bank overdraft                                                                  -          -

Cash and cash equivalents in a disposal group held for sale                     -          -
                                                                              964      1,343

3.       Earnings per share

The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.

The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post tax effect of
dividends and interest on the assumed conversion of all dilutive options and
other dilutive potential ordinary shares.

Reconciliation of the earnings and weighted average number of shares used in the
calculations is set out below:

                                   2007                                    2006
                    Earnings      Weighted     Earnings     Earnings     Weighted    Earnings per
                                   average     per share                  average       share
                                  number of                              number of
                                   shares                                 shares
                     £'000's      Thousands      Pence      £'000's      Thousands      Pence

Basic earnings        
per share  -
attributable to
shareholders          (139)        157,947      (0.09)        (598)       43,700        (1.37)                   

Dilutive effect
of options               -             -            -          -             -            -
Diluted Earnings                   
Per Share             (139)        157,947      (0.09)       (598)        43,700        (1.37)

4.       Publication of non-statutory accounts

The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act

The summarised balance sheet at 31 December 2007 and the summarised Income
statement, summarised cash flow statement, statement of changes in equity and
associated notes for the year then ended have been extracted from the Group's
draft financial statements.   Those financial statements have not yet been
delivered to the Registrar, nor have the auditors reported on them.

The financial information for the year ended 31 December 2006 is an extract of
the statutory accounts to that date as delivered to the Registrar of Companies
restated under IFRS.    Those accounts included an audit report which was
unqualified and that did not contain a statement under Section 237 (2) or (3) of
the Companies Act 1985.

5.       Availability of accounts

Copies of the Report and Accounts for the year ended 31 December 2007 are being
sent to shareholders in due course.   Further copies will be available from the
Company's registered office, 4th Floor, Portland House, 4 Great Portland Street,
London, W1W 8QJ.

                      This information is provided by RNS
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