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Works Media Grp(The) (WKS)

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Wednesday 30 June, 2010

Works Media Grp(The)

Final Results

RNS Number : 4702O
Works Media Group (The) PLC
30 June 2010
 



30 June 2010

THE WORKS MEDIA GROUP PLC

FINAL RESULTS

 

The Works Media Group plc ('The Works' or the 'Group'), a leading independent UK Film distributor and international film sales agent, today announces its final results for the twelve months ended 31 December 2009.

 

For further information, please contact:

 

The Works Media Group plc

Costa Theo, Chairman

Andy Ordonez

020 7612 0030




Astaire Securities Plc

Antony Legge

Gavin Burnell

020 7492 4750




www.theworksmediagroup.com



 

Copies of the Report and Accounts for the year ended 31 December 2009 have been posted to shareholders today and will be available on the Group's website, Further copies are available from the Group's registered office, 4th Floor, Portland House, 4 Great Portland Street, London, W1W 8QJ.

 

CHAIRMAN'S STATEMENT

 

OVERVIEW

As expected at the beginning of the year, 2009 was a challenging year for The Works Media Group Plc.  The main contributing factors to this were the global recession and the Group's limited cash resources, which we attempted to preserve until the recession had subsided and the opportunities to raise further capital had improved.  This affected the Group, in particular our subsidiary The Works UK Distribution ("UK Distribution"), in the following ways:

 

·      The recession meant that the production of films in the US and UK, our primary sources of product, was reduced by over 60%.  Therefore, the price of available rights increased, often beyond our resource.

 

·      Our tight cash position meant we could only release 7 films in 2009 (we released 9 in 2008 and 11 in 2007), which in turn reduced Group turnover.

 

·      The downturn in domestic television advertising revenues reduced the acquisition budgets of broadcasters who had less money to spend buying television rights.

 

Unfortunately the result of the above factors was a cash constraint so severe that the Group was forced to restructure its entire organisation in December, leading to the redundancy of 10 positions across the group.  It is the expectation of the board that this reduction of overhead will give the Group time to outlast the global downturn and allow our international sales operation, Works International, to grow and drive the business going forward.

 

FUND RAISING

In December 2009 the group concluded a £300,000 two year loan with Milcoz Films Limited, of which I am a director.  The purpose of the loan was to enable the Group to conduct the restructuring mentioned earlier.

 

Cash flow remains tight and the board continues to recognise that if the group is to take advantage of the considerable opportunity presented by its vertical integration and market positioning, it will require further external funding going forward.  To this end we continue our discussions with potential funding sources and hope to reach a positive conclusion by the end of 2010.

 

BOARD CHANGES

James Atherton resigned as non-executive director in December 2009 to pursue his other business interests.  As part of the group restructuring, the roles of Chief Executive Officer and Chief Financial Officer were made redundant and Norman Humphrey left the board January 2010.  I would like to thank them both for their time and dedication over the years and wish them well for the future.

 

FINANCIAL REVIEW

During the 12 months to December 2009, The Works Media Group made a retained loss of £1,188,000.  As £241,000 of this loss relates to restructuring costs, including the severance package of the former CEO, Norman Humphrey, the Group's ordinary losses were £947,000.  This compares unfavourably with the loss in 2008 of £625,000.  This is a direct result of releasing two less films in 2009 in UK Distribution without any corresponding reduction in overhead.

 

DIVIDEND

The Directors do not recommend the payment of a dividend in respect of 2009 (2008 £nil).

PERFORMANCE

Group turnover has fallen from £2,606,000 in 2008 to £2,334,000 in 2009.  This is due to our deliberate strategy of reducing the amount of films we released through UK Distribution to preserve cash.  However, turnover was up at the Works International from £300,573 to £322,453; this 7% increase is attributable to the re-invigoration of this operation, as discussed later.

 

The group continues to recognise the impact difficulties in the UK domestic television market and a softening of DVD sales had on its catalogue value, and made a cautionary provision of £297,000 against the ongoing carrying value. 

 

The Group reduced its annual overhead by £500,000 in December, as a result of the restructuring.  The impact of this has been borne largely by the central administration in an attempt to keep the individual business units operating effectively.  Further cuts may be necessary in 2010 if the business does not recover.

 

DISTRIBUTION ACTIVITY

UK Distribution released seven films in cinemas, eight on DVD and eight on video on demand during 2009.  It had been releasing films at the rate of one a month until June 2008, when the rate of release was deliberately halved to conserve working capital.  The lower release frequency has continued in 2009, but it is hoped that this will slowly change as the business recovers.

 

The best performing title of the year in the theatres was Anvil! The Story of Anvil.  However, it was our 2008 release, Mongol: The Rise to Power of Genghis Khan, that made a material contribution in 2009 having sold 350,000 DVDs to date.  Other titles released in the year include Fireflies in the Garden starring Julia Roberts and Blind Dating with Chris Pine.

 

INTERNATIONAL SALES

It was our intention to reinvigorate The Works International in 2009 and I am pleased with the progress to date.  The relationship with the independent fund, Quickfire Films, an independent film financing fund, has delivered five films to us to sell to date and we expect this relationship to strengthen further going forward.  The Works International has a growing reputation in the international marketplace as a purveyor of commercial documentaries.

 

The highlights of 2009 were Louie Psihoyos's The Cove which won the Oscar for best documentary and I Am Love with Tilda Swinton.  This is the second year in a row that a film the Works International represents has won the Oscar for Best Documentary.  As previously mentioned, turnover in this division is improved on 2008 despite a severe downturn in the international film marketplace in 2009 and I see that as a positive sign of things to come.

 

New films for sale in 2010 are the documentary Countdown to Zero, from the producers of The Cove, the comedies Hector and the Search for Happiness and Zonad, the drama Nuummioq and the thriller Dossier K.     

 

CURRENT OUTLOOK AND FUTURE PROSPECTS

The newly restructured The Works Media Group Plc should be in good shape going forward now that its costs have been brought in line with its revenue.  The Works International's move to become a sales agency for bigger, commercial films continues and we expect to see it selling that type of film in 2010.

 

Economic conditions in the UK continue to be challenging.  The UK DVD market has yet to return to the volume of sales of 2007.  The TV market too has not recovered and appetite for independent films is negligible. We will continue to trade conservatively and within our current funding facilities until these markets improve.

 

Costa Theo, Chairman

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2009

 


Note

2009

2008



£ 000's

£ 000's





Revenue


2,334

2,605





Cost of sales


(1,315)

(1,464)





Gross Profit


1,019

1,141





Selling and distribution costs


(37)

(44)





Administrative costs


(2,156)

(1,722)

Operating loss


(1,174)

(625)





Investment income


-

2





Finance costs


(14)

(2)

Loss before taxation


(1,188)

(625)





UK corporation tax


-

-





Loss for the period attributable to equity shareholders


(1,188)

(625)





Earnings per share

3



Basic (pence)


(0.62)

(0.33)

Diluted


(0.62)

(0.33)

Dividend


-

-

 

 

Consolidated Statement of Comprehensive Income for the year ended 31 December 2009

2009

2008


£'000

£'000

Net loss for the year

(1,188)

(625)

Other comprehensive income/(loss) for the year

-

-

Total comprehensive loss for the year

(1,188)

(625)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the year ended 31 December 2009

 



Group


Company



As at

31 Dec 2009

As at

31 Dec 2008


As at

31 Dec 2009

As at

31 Dec 2008



£000

£000


£000

£000

Non current assets







Property and equipment


11

21


8

15

Investments


11

11


466

466



22

32


474

481

Current assets







Inventory


1,847

1,976


-

-

Receivables


557

797


1,347

4,334

Cash and cash equivalents


293

549


1

264



2,697

3,322


1,348

4,598

Total assets


2,719

3,354


1,822

5,079








Current liabilities







Payables


(1,070)

(819)


(406)

(246)

Accruals


(342)

(104)


(64)

(48)

Deferred revenue


(8)

(194)


-

-



(1,420)

(1,117)


(470)

(294)

Non current liabilities







Revolving loan


(750)

(500)


(750)

(500)

Total liabilities


(2,170)

(1,617)


(1,220)

(794)

Net assets


549

1,737


602

4,285








Shareholders' equity







Called up share capital


4,394

4,394


4,394

4,394

Share premium account


8,688

8,688


8,688

8,688

Retained earnings


(12,371)

(11,183)


(12,480)

(8,797)

Minority interest


(162)

(162)


-

-

Equity shareholders' funds


549

1,737


602

4,285

 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2009

 

GROUP


12 Months

 Ended

31 Dec 2009

12 Months

 Ended

31 Dec 2008



£000

£000

Cash flows from operating activities:




Operating loss


(1,175)

(625)

Non-recurring charge for compensation for loss of office to former chairman


1

88

Depreciation


12

10

Profit on disposal of non current assets


-

-

(Increase)/Decrease in inventory


128

(283)

(Increase)/Decrease in debtors


241

370

Increase/(Decrease) in creditors


303

(460)

Net cash generated by operating activities


(490)

(900)





Cash flows from investing activities




Interest received


-

2

Purchase of non current assets


(3)

(15)

Sale proceeds on disposal of non current assets


-

-

Net cash generated by investing activities


(3)

(13)





Cash inflow/(outflow) before financing


(493)

(913)





Cash flows from financing activities




Interest paid


(14)

(2)

Loan finance


250

500

Issue of ordinary share capital


-

-

Share issue costs


-

-

Net cash received from financing activities


236

498





Net (decrease)/ increase in cash and cash equivalents


(257)

(415)

Cash and cash equivalent at beginning of year


549

964

Cash and cash equivalent at the end of  year


293

549

Less:  funds held on trust for third parties.


(229)

(139)

 

Available cash at bank and in hand

 

 

64

 

410

 

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2009

 

GROUP

Number of shares

Share capital

Share premium

Minority interest

Income Statement

Total



£ 000's

£ 000's

£ 000's

£ 000's

£ 000's















At 1 January 2009

147,502,437

4,394

8,688

(162)

(11,183)

1,737








Share capital issued

-

-

-

-

-

-








Share issue costs

-

-

-

-

-

-








Retained loss for the year

-

-

-

-

(1,188)

(1,188)








At 31 December 2009

147,502,437

4,394

8,688

(162)

(12,371)

549

 

COMPANY

Number of shares

Share capital

Share premium

Minority interest

Income Statement

Total



£ 000's

£ 000's

£ 000's

£ 000's

£ 000's















At 1 January 2009

147,502,437

4,394

8,688

-

(8,797)

4,285








Share capital issued

-

-

-

-

-

-








Share issue costs

-

-

-

-

-

-








Retained loss for the year

-

-

-

-

(3,683)

(3,683)








At 31 December 2009

147,502,437

4,394

8,688

-

(12,480)

602



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

 

GOING CONCERN

The distribution and exploitation of feature films is a project related business.  The cash forecast of the group builds upon the premise of exploiting its current and future catalogue of film titles in the upcoming 12 months.  However, future income streams of recently completed films cannot always be reliably ascertained at the Balance Sheet date, but management has a reasonable expectation that the group will have adequate resources to continue its operations for the foreseeable future and therefore provide the necessary support to the company. For this reason, the Directors have determined that the financial statements should continue to be prepared on the going concern basis.

 

2. RELATED PARTY TRANSACTIONS

On 31 October 2008, the group secured a borrowing facility with Milcoz Films, a company in which Costa Theo is a major shareholder and director.  Further details are disclosed in note 17 of the Group's Report and Accounts.

 

Other than the above, no transactions with related parties were undertaken such as are required to be disclosed under International Accounting Standard 24.

 

3. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders' dividend 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 calculation:


2009

2008


Earnings

Weighted average number of shares

Earnings per share

Earnings

Weighted average number of shares

Earnings per share


£ 000's

thousands

pence

£ 000's

thousands

pence

Basic earnings per share  - Earnings attributable to ordinary shareholders

(1,188)

190,402

(0.62)

(625)

190,402

(0.33)

 

Dilutive effect of options

 

-

 

-

 

-

 

-

 

-

 

-

Diluted earnings per share

(1,188)

190,402

(0.62)

(625)

190,402

(0.33)

 

4. PUBLICATION OF NON-STATUTORY ACCOUNTS

The accounts set out above do not constitute statutory accounts as defined by Section 428 of the UK Companies Act 2006. The balance sheets at 31 December 2009 and the income statement, cash flow statements and statement of changes in equity for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditors' opinion is unqualified. The results for the period ended 31 December 2008 have been extracted from the statutory accounts for that period, which contain an unqualified auditors' report.

 


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