TIDMCOO
RNS Number : 3543D
Coolabi PLC
22 March 2011
Coolabi plc
("Coolabi" or "the Company")
Final unaudited results for the year ended 31 December 2010
Coolabi plc (AIM: COO), the media company focused on the
ownership and creative management of high quality intellectual
property assets, announces final unaudited results for the year
ended 31 December 2010.
Financial Highlights
-- EBITDA up 164% to GBP0.54m (18 months to 31 December 2009:
GBP0.20m)
-- Profit After Tax of GBP0.28m (18 months to 31 December 2009:
loss of GBP1.12m), an improvement of GBP1.40m
-- Basic EPS of 0.4p (18 months to 31 December 2009: loss of
3.5p)
Financial Highlights (12 months to 31 December 2009 comparative
review)
-- EBITDA up 41% to GBP0.54m (12 months to 31 December 2009:
GBP0.38m)
-- Profit After Tax of GBP0.28m (12 months to 31 December 2009:
loss of GBP0.66m), an improvement of GBP0.94m
Operational Highlights
-- Poppy Cat - series to air in UK in May and already pre-sold
to 16 TV territories; key US broadcast deal secured
-- Purple Ronnie - contract renewed with Hallmark for 4 years;
increased digital presence, with iPhone and Facebook Apps
launched
-- Scarlett & Crimson - UK retail success with Boots and
Superdrug; expansion set with US launch in 2011
-- Bagpuss, Clangers & Ivor the Engine- update of materials
and artwork ahead of new licensing and merchandising initiative;
Bagpuss No. 1 selling retro toy for Christmas 2010 (source: Daily
Mail)
-- TV Production - ratings success and award nominations for
Dead Gorgeous, back catalogue exploited internationally
Corporate Highlights
-- Successful share placing and agreement on additional banking
facilities
Commenting, William Harris, Chairman of Coolabi, said:
"I am pleased to report that the outlook for Coolabi remains a
positive one, despite prevailing market conditions. Our established
brands, such as Purple Ronnie, have held up well at retail and,
most encouragingly, our new property, Poppy Cat, has created
significant interest and commitment from both broadcasters and
licensees, confirming the high quality of the intellectual property
assets that the company holds. For these reasons, we remain
confident that we can continue to grow our portfolio of
intellectual property assets in 2011 and thus continue our
successful strategy of organic growth."
Contacts:
Coolabi plc Tel: 020 7004 0980
Jeremy Banks, Chief
Executive
Tim Ricketts, Finance
Director
Evolution Securities Tel: 020 7071 4300
Bobbie Hilliam / Chris
Clarke
Walbrook PR Ltd Tel: 020 7933 8780
Paul McManus Mob: 07980 541 893 or paul.mcmanus@walbrookpr.com
Chairman's Statement
Overview
2010 has been another year of good progress for Coolabi, driven
by strong organic growth from our portfolio of intellectual
properties. Importantly, the results include the first contribution
from our new internally-developed animated pre-school series, Poppy
Cat, which will be launched on TV in May 2011.
Results
Whilst we are once again reporting a positive EBITDA for the
period, this is the first time that we have reported a positive
Profit after tax. EBITDA (Earnings before interest, tax,
depreciation, amortisation, share based payment costs and
exceptional items) for the year ended 31 December 2010 was
GBP0.54m, a 164% increase over the EBITDA of GBP0.20m in the 18
month period ended 31 December 2009 ("2009"). Profit after tax was
GBP0.28m, a very significant improvement over the loss after tax of
GBP1.12m reported in 2009.
During 2009, the Directors changed the year end from 30 June to
31 December to improve the usefulness of the financial statements,
giving rise to the comparative 18 month period. The Company has
included, where appropriate, pro forma 2009 calendar year results
to allow like for like comparison.
A full analysis of the financial results is provided in the
Finance Director's Review.
Share Placing & Additional Banking Facilities
On 13 October 2010, we announced that we had raised GBP434,484
through a placing of 7,241,406 new ordinary shares of one penny
each at a price of 6 pence per share with certain existing
institutional shareholders. As anticipated in our Interim Statement
released in September 2010, the net proceeds are being used to
continue and accelerate the development of our portfolio of
intellectual properties.
On 22 October 2010, we announced that we had agreed additional
bank facilities with Coutts & Co. amounting to GBP620,000 to be
used largely for the purpose of improving and developing the
company's portfolio of intellectual properties and to supplement
the placing.
Staff
We are fortunate to have such a dedicated and hard-working team
at Coolabi and on behalf of the Board, I would like to thank them
for their significant contribution to our progress over the last
year.
Outlook
I am pleased to report that the outlook for Coolabi remains a
positive one, despite prevailing market conditions. Our established
brands, such as Purple Ronnie, have held up well at retail and,
most encouragingly, our new property, Poppy Cat, has created
significant interest and commitment from both broadcasters and
licensees, confirming the high quality of the intellectual property
assets that the company holds. For these reasons, we remain
confident that we can continue to grow our portfolio of
intellectual property assets in 2011 and thus continue our
successful strategy of organic growth.
William Harris
Chairman
22 March 2011
Chief Executive's Review
Coolabi has continued to make good progress in the period under
review, with EBITDA (our key measure of financial performance) up
164%. I am particularly pleased that we are also today reporting
the group's first Profit after tax.
Strategy
Our strategy is to build a diversified portfolio of
cash-generative intellectual property ("IP") assets that have
international appeal across a broad range of media platforms.
Accordingly, our current portfolio of assets is diversified in
terms of both genre and media of exploitation, and maturity - from
established properties to those in their infancy and others in
development.
This strategy is gradually building a stream of highly visible
and consistent revenue, which is underwritten by financial
guarantees from our licensees. We believe that this will make
Coolabi increasingly attractive to investors.
Review of the Period
The group has again concentrated on driving good organic growth
from its assets, some of which we have acquired and enhanced and
some of which we have developed internally.
It remains the case that retailers and consumers are often drawn
to established, classic IP assets (like Bagpuss or Purple Ronnie)
during difficult financial times. This was perfectly demonstrated
by the success of Bagpuss over the Christmas period. Bagpuss soft
toys were listed as the top-selling items at Past Times for
Christmas and The Daily Mail reported that Bagpuss was the No. 1
selling retro toy for Christmas 2010. However, a growing proportion
of Coolabi's growth is forecast to come from the development and
exploitation of new IP assets.
I am, therefore, particularly pleased to be able to report that
2010 is the first year in which one of our internally developed
assets, Poppy Cat, has made a material financial contribution to
the group and that the early momentum shown by Poppy Cat has
demonstrated our ability to launch successfully a new IP asset in
this challenging trading environment. I am very excited by the
potential of Poppy Cat and expect its financial contribution to
continue to build into 2011 and beyond.
This again shows what this team can achieve, even in this most
difficult of markets, by combining quality IP with the right
strategy and execution.
The activity across our portfolio and the stage of development
of our IP assets can be summarised as follows:
i) Poppy Cat
Internationally successful pre-school favourite based on the
hugely popular book series (over 2.5 million books sold to date) by
Lara Jones. Coolabi owns the copyright in the TV series with its
co-production partner and therefore will benefit directly from the
ancillary exploitation derived from the series.
Our 52 x 11 minute animated TV series for pre-school viewers has
been co-produced with King Rollo Films, our established
award-winning partner.
Poppy Cat was introduced to the licensing and merchandising
community at a dedicated event in September 2010 and to a wider
audience shortly afterwards at Brand Licensing Show. International
TV sales activity commenced in October 2010. We have been delighted
with the response to the series.
Broadcast
Commissioned by Nickelodeon Jr. in the UK and due to air first
in May, the series has been sold to a further 16 territories
internationally so far - all before its first episode has been
broadcast.
With this in mind, I am thrilled to be able to add to that
number today, in announcing that the series has secured a tier one
broadcast partner in the US with Sprout. Sprout, a 24-hour
pre-school channel available on air, on demand and online, is a
partnership between NBC Universal and PBS, amongst others, and
currently broadcasts to over 50 million homes in the US. This
announcement represents a major coup for Coolabi and the platform
that Sprout affords us opens up this all important territory for
licensing and merchandising activity.
Negotiations are also ongoing in a number of other significant
broadcast markets which I hope to be able to announce in due
course.
Licensing & Merchandising
We are making good progress with the initial phase of our
licensing and merchandising sales programme, starting first with
our home market, the UK. On 26 January, we announced that we had
signed our first four licensing deals for Poppy Cat, with Macmillan
for TV tie-in books, Aykroyd and TDP Licensing Ltd for character
nightwear, Jumbo Games for games and puzzles and Redan Publishing
for magazines. We have since appointed clothing licensee
Silver-knit to produce Poppy Cat branded outerwear and I am hopeful
that we will be able to announce a master toy deal with a leading
toy company shortly.
In addition, as the series continues to be sold internationally,
so our licensing and merchandising sales programme will now be
expanded overseas. Poppy Cat has been presented to a number of
potential agents in relevant territories and I look forward to
making further announcements in this regard in due course.
ii) Purple Ronnie
100% owned and a British institution with a track-record of
success dating back more than 20 years. Well established in its
core categories in the UK (greetings cards and books) with the
potential to expand into new categories and territories.
The attractions of Purple Ronnie to us, when acquiring it in
2007, are just as prevalent today; an enduring track record of
generating significant cashflow in the UK, a resilience to economic
cycles and a minimal requirement for capital investment. As such,
the brand continues to be an important source of cashflow for the
group.
Purple Ronnie has had a strong year in its core categories in
this difficult market and is well positioned for targeted
development in 2011.
Category progress - greeting cards
Purple Ronnie greetings card sales in the UK have continued to
perform well, despite the more general decline in the market for
greetings cards. Notably, Mother's Day card sales were up 15% over
2009. This impressive performance culminated in December with the
securing of a new four year minimum guarantee contract with the
leading greetings card company, Hallmark. We are delighted that
this new contract has been achieved with Hallmark, which has been
Purple Ronnie's greetings card partner since 2004. Excitingly, this
contract also covers Hallmark's new digital initiatives such as the
online personalised card service which launched successfully last
year and which featured Purple Ronnie strongly in its
promotion.
Category progress - publishing
The multi-year product development partnership with Macmillan
that we negotiated shortly after we acquired Purple Ronnie
continues to perform well.
Macmillan's publishing strategy for the brand continues to be
based around Purple Ronnie's particular strength in 'occasions'
supported by a strong back list. Nearly 90,000 units were sold into
market during the year. Highlights included a 20% year-on-year
increase in sales for Valentine's Day 2010, with four titles making
it into the top ten of the Sunday Times Best Seller list, and the
publication of 'Purple Ronnie's Secret Santa' in Christmas 2010.
Three new titles will be released by Macmillan in the first half of
the year.
Category progress - gifts
The 2010 highlights in Purple Ronnie gifts included a dedicated
novelty gifting range in over 650 Clinton's stores during the run
up to Valentine's Day 2010 and a welcome return to Debenhams for
Christmas 2010 with a novelty men's gifting range.
Brand development
Having secured the strategically important renewal of the
multi-year deal with Hallmark, we have continued to focus our brand
development efforts on digital opportunities, seeking to enhance
Purple Ronnie's pre-eminent position in the UK as the vehicle for
social expression and bring him to the attention of new
audiences.
A key part of this has been to make sure that Purple Ronnie is
available to consumers to match their current 'digital lives'. Step
one, in 2010, was the launch of two Purple Ronnie iPhone
applications ('Apps"). Step two, in 2011, has been to launch a
dedicated Facebook App, which gives users an instant 24/7 means to
communicate with their friends using Purple Ronnie's poems and
personalised imagery. The App uses the current 'fremium' model - it
is free to download but charges are then levied to access and use
enhanced content.
We are very pleased to report that in the space of just 5 weeks
since its launch for Valentine's Day 2011, the App has attracted
more than 25,000 active users, comfortably exceeding initial
expectations and, perhaps more importantly, demonstrating the
brand's ongoing resonance with all forms of social expression.
We look forward to developing further this strategic
opportunity.
iii) Scarlett & Crimson
Scarlett & Crimson is in its infancy as a property. Jointly
owned with its creator, Ged Backland, and with exploitation
controlled internationally by Coolabi, this tween/teen girl
property has been developed from the start to be design-led and to
fill a gap in the market which exists internationally
Our efforts have continued to be focussed on building the
presence of the property in its target market of fashion/cosmetics.
Here, our strategic decision to partner with beauty industry
luminaries Ruby Hammer and Millie Kendall continues to bear fruit
and Scarlett & Crimson branded product has again performed
well.
The initial Scarlett & Crimson cosmetics range, in
association with Ruby & Millie, went into over 300 Boots stores
in the UK in Autumn 2009, positioned as a first teen cosmetics line
and aimed at the Christmas gift market. The first range was a
sell-through success and, as announced in July, Boots reordered for
2010 with an all new expanded product range of nine items, from six
previously, with the number of stores increased to over 370. This
second cosmetics range saw significant year-on-year sales increases
and I am pleased to report that Boots has ordered a refreshed range
for 2011.
At Superdrug, a new everyday cosmetics and accessories range was
launched in almost 400 stores and 180 stores respectively in May
2010. A number of these products have sold exceptionally well, with
'Punk Your Eyes' eyeliner being award nominated. The range also won
Best New Design Packaging Award at Pure Beauty 2010. Importantly,
the PR secured as a result of this activity has been impressive,
with coverage in Vogue, Cosmopolitan, Glamour and The Times
Magazine, amongst many others.
These early successes have led to a number of other retailers
beginning to stock Scarlett & Crimson product, including ASOS
and Urban Outfitters. This is another encouraging early development
and one I hope we will build on during the course of 2011.
In June 2010, we announced two important deals extending the
brand's presence in North America, underlining the property's
potential for rapid international expansion. The first agreement
was with leading beauty company Japonesque, to manufacture and
distribute Scarlett & Crimson cosmetics specifically designed
for the US and Canadian markets. The range will be launched in
spring 2011 and sold through North American beauty retail channels.
The second was an extension of theexisting UK agreement with Ruby
Hammer and Millie Kendall to cover all global product development
of Scarlett & Crimson beauty products.
iv) Bagpuss, Clangers & Ivor The Engine
Enduring British children's classics created by Oliver Postgate
and Peter Firmin. Coolabi is the international licensing agent and
distributor of all of the existing TV series.
Over the past 12 months there has been a complete update of all
the Bagpuss and Clangers materials, with new artwork and
photographic imagery now available for exploitation. Several
generations of the creators' families were involved in the process
which saw Peter and Joan Firmin re-making a new Mother Clanger
(since the original was stolen in the early 1970s). All
photographic work was creatively directed by Peter Firmin himself,
with sets and props being newly created by Peter's granddaughter.
In addition, Daniel Postgate, himself a successful children's
author and illustrator and Oliver Postgate's son, has created a
series of new Bagpuss images which have already been launched as
greetings cards in the UK.
The production of these images was the necessary pre-cursor to a
new licensing and merchandising initiative and early progress has
been most encouraging. For example, The Daily Mail reported that
Bagpuss was the No. 1 selling retro toy for Christmas 2010, with
Clangers at No. 9, and the Bagpuss Posh Paws soft toys were
reported as the top-selling items by Past Times for Christmas.
Also during the year, the original series of Bagpuss, Clangers
& Ivor The Engine were launched on iTunes, immediately becoming
three of the top five kids shows available for download. Since
launch, their popularity has remained strong, with all three still
featuring on the iTunes kids chart.
v) Literary Estates
Eric Ambler (51% owned), Michael Innes (100% owned) and John
Creasey (100% owned).
We are very satisfied with the performance of these three small
literary estates that we purchased in 2009, with net earnings
comfortably exceeding pre-acquisition levels. Literary estates
remain an important area of interest and opportunity for us.
vi) Television Production
The Company's production strategy is to develop high-quality,
low-risk television series utilising our existing development
portfolio and rights library. Initially kick-started through the
acquisitions of the children's assets of Zenith Entertainment and
Indie Kids, this strategy is now supplemented by ongoing in-house
development. We have a particular focus on projects that are
capable of being significantly financed before production commences
and that have potential for exploitation into other areas,
especially licensing.
As covered in more detail above, our focus during 2010 has been
on the production of our new pre-school animated series of Poppy
Cat. However, we have a number of exciting production assets in
development and I look forward to announcing progress in this
regard during the course of the year.
It is also worth mentioning that our BBC/ABC Australia
children's live-action co-production, Dead Gorgeous proved a
ratings success both in the UK and Australia. In addition, Series 1
was nominated for two Australian television awards and was BAFTA
nominated in the UK.
Our back catalogue of programming assets, which includes The
Large Family, King Arthur's Disasters, The Worst Witch, Fungus The
Bogeyman, Bagpuss and Famous 5, continues to be exploited
internationally and delivers good earnings to the group.
Outlook
We remain focussed on the pursuit of attractive organic growth.
However, whilst Coolabi remains the size it is, the group will
remain susceptible to the vagaries of the macro-economic
environment. Only with scale, in the form of a broad range of
diversified, performing IP assets and brands, can this
susceptibility be effectively managed.
I am particularly pleased, therefore, that the progress to date
with Poppy Cat has demonstrated that it is possible to develop and
launch successfully a new IP asset in this challenging trading
environment. This again shows what the team at Coolabi is capable
of when combining quality IP with the right strategy and
execution.
Jeremy Banks
Chief Executive
Finance Director's Review
Highlights
Financial Key Performance Indicators for the 12 months ended 31
December 2010 ("12ME 2010")
-- EBITDA (Earnings before interest, tax, depreciation,
amortisation, share based payment costs and exceptional items);
GBP535k, an increase of GBP333k (164%) from GBP202k in the 18
months ended 31 December 2009 ("18ME 2009") and an increase of
GBP155k (41%) from GBP380k in the pro forma 12 months ended 31
December 2009 ("12ME 2009").
-- Gross profit; GBP1,996k, a decrease of GBP41k (2%) from
GBP2,037k in 18ME 2009 and an increase of GBP360k (22%) from
GBP1,636k in 12ME 2010.
-- Normalised operating cash absorbed by the Company (Net cash
absorbed by operating activities adjusting for the cashflow effect
of exceptional items) has improved by GBP309k to an absorption of
GBP140k in 12M 2010 from an absorption of GBP449k in 18ME 2009.
The increase in EBITDA from 18ME 2009 of GBP333k has largely
been achieved because of the increase in gross margin generated
from production of GBP313k and reduction in Operating expenses of
GBP374k due to the 12 month rather than 18 month period, offset by
a reduction in gross margin generated from licensing of GBP354k due
again to the shorter 12 month period.
Critically, Operating expenses have continued to be tightly
controlled, the ratio of Operating expenses to Gross profit
improving to 0.7 times this period from 0.9 in the comparative
period.
During 2009 the directors decided to change the year-end from 30
June to 31 December to improve the usefulness of the financial
statements giving rise to the comparative 18 month period. Further
analysis of the pro-forma 2009 calendar year results is set out
below.
As previously reported, in October 2010, the Company entered
into further new banking facilities with Coutts & Co. for an
aggregate value of up to GBP620k.
Consolidated Statement of Comprehensive Income
Revenue in the period decreased 15% to GBP2,856k (18ME 2009:
GBP3,357k). Licensing & merchandising revenue decreased by
GBP534k to GBP1,383k (18ME 2009: GBP1,917k). This decrease of 28%
is due to the 50% longer comparative trading period. Film &
television revenue, which this year included the delivery of Poppy
Cat as opposed to the delivery of Dead Gorgeous and The Large
Family Series 2, is up by GBP32k to GBP1,473k in 12ME 2010 from
GBP1,441k in 18ME 2009. Operating expenses were GBP1,461k (18ME
2009: GBP1,835k), the decrease being due to the shorter comparative
trading period. The ratio of Operating expenses to Gross profit has
improved from 0.9 times in 18ME 2009 to 0.7 times in the current
year. EBITDA has improved by 164% to GBP535k (18ME 2009:
GBP202k).
Operating loss has decreased by GBP1,126k to GBP132k from
GBP1,258k in 18ME 2009 due to the improved EBITDA, a decrease in
amortisation charged on intangible assets because of the shorter
comparative period and that there are no exceptional items in the
current period, as opposed to the exceptional charge of GBP364k in
18ME 2009. Operating profit before amortisation of intangible
assets and exceptional items was GBP508k an improvement of GBP399k
against 18ME 2009 of GBP109k.
As the group is in a net loss position, no tax is payable. The
Income tax credit relates to deferred tax movements arising from
the intangible asset amortisation charge in the period and the
creation of a deferred tax asset relating to the utilisation of
historic losses as future profits are now considered probable under
IFRS.
Earnings per share
Basic and diluted earnings per share for the year are 0.4p (18ME
2009 loss of 3.5p).
Net Debt
Net Debt was GBP1,129k as at 31 December 2010 an increase of
GBP395k from 31 December 2009. This is due to the Company
continuing to invest in brand development across its portfolio,
including Poppy Cat, and its overall working capital
requirements.
Overall facilities available to the Company were increased in
the year by GBP620k with the provision of a new development loan
facility and increased overdraft to further support the development
of the Company's intellectual properties. Gross borrowings under
these facilities were GBP1,178k as at 31 December 2010, with
GBP341k falling due for repayment in the next 12 months.
In addition to these facilities the Company entered into a
production financing facility with Coutts & Co. in order to
assist with the cashflow funding of the Poppy Cat television
series. This facility is secured by the assignment of the
production's contracts to the bank, with the bank advancing the
value of the underlying contracts prior to receipt of the
contracted payments. The amount outstanding under this facility as
at 31 December 2010 was GBP1,353k.
Consolidated Statement of Financial Position
As at 31 December 2010 the carrying value of television
productions increased by GBP1,937k to GBP2,263k, mainly due to the
delivery of Poppy Cat during the year, net of the amortisation
provided of GBP477k.
Goodwill and Other intangible assets mainly comprise assets
created on the acquisition of other businesses. Amortisation of
these assets amounted to GBP640k during the period.
The deferred taxation provision of GBP1,124k arises as a result
of the requirement under IFRS to provide for deferred taxation on
intangible assets arising on acquisition. The Group has recognised
a deferred tax asset of GBP277k. Accumulated trading tax losses for
are GBP3,446k.
Comparison with pro-forma results for the year ending 31
December 2009
Key figures on a calendar year basis are as follows:-
Year ended Year ended
31 December 31 December
2010 2009
GBP'000 GBP'000
-------------- ------------------------ -------------
Revenue 2,856 2,828
-------------- ------------------------ -------------
Gross profit 1,996 1,636
-------------- ------------------------ -------------
EBITDA 535 380
-------------- ------------------------ -------------
Tim Ricketts
Finance Director
Consolidated Statement of Comprehensive Income
12 months 18 months
to to
31 December 31 December
2010 2009
GBP GBP
Revenue 2,855,595 3,357,326
Cost of sales (859,784) (1,319,874)
Gross profit 1,995,811 2,037,452
Operating expenses (1,460,701) (1,834,996)
---------------------------------------------- ----------- -----------
Earnings before interest, tax, depreciation,
amortisation, share-based payment costs and
exceptional items 535,110 202,456
---------------------------------------------- ----------- -----------
Depreciation (23,703) (24,386)
Share-based payment costs (3,574) (69,150)
Exceptional items - (364,141)
Amortisation of intangible assets (639,919) (1,002,377)
Total administrative costs (2,127,897) (3,295,050)
---------------------------------------------- ----------- -----------
Operating loss (132,086) (1,257,598)
Interest charged (64,587) (125,707)
Interest received 153 1,125
Loss before income tax (196,520) (1,382,180)
Income tax credit 473,575 261,346
----------- -----------
Profit/(loss) after tax 277,055 (1,120,834)
Other comprehensive income - -
----------- -----------
Total comprehensive profit/(loss) for
the year 277,055 (1,120,834)
----------- -----------
Profit attributable to minority interests 56,360 16,186
Profit/(loss) attributable to parent's
equity holders 220,695 (1,137,020)
Basic profit/(loss) per share total
and continuing 0.4p (3.5p)
Diluted profit/(loss) per share total
and continuing 0.4p (3.5p)
Consolidated Statement of Financial Position
Company number: 3735898
as at as at
31 December 31 December
2010 2009
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 124,400 43,404
Intangible assets
Television production 2,263,223 324,862
Goodwill 1,331,528 1,300,425
Other intangible assets 4,327,791 4,906,596
8,046,942 6,575,287
----------- -----------
Current assets
Inventories 188,161 243,126
Trade and other receivables 2,013,313 935,593
Cash and cash equivalents 48,605 620,735
2,250,079 1,799,454
Total assets 10,297,021 8,374,741
----------- -----------
LIABILITIES
Current liabilities
Trade and other payables (1,022,848) (751,287)
Production finance borrowings (1,353,310) -
Current portion of long term borrowings (341,442) (309,260)
----------- -----------
(2,717,600) (1,060,547)
----------- -----------
Non-current liabilities
Deferred consideration (34,000) (51,000)
Deferred tax liabilities (1,123,911) (1,320,468)
Long term borrowings (836,176) (1,045,505)
----------- -----------
(1,994,087) (2,416,973)
----------- -----------
Total liabilities (4,711,687) (3,477,520)
Net assets 5,585,334 4,897,221
=========== ===========
EQUITY
Attributable to the equity holders
of the Company
Share capital 5,215,122 5,142,708
Share premium account 5,854,116 5,519,046
Profit and loss account (5,514,751) (5,739,020)
----------- -----------
Total shareholders equity 5,554,487 4,922,734
Minority interest in equity 30,847 (25,513)
----------- -----------
Total equity 5,585,334 4,897,221
=========== ===========
Consolidated Statement of Changes in Equity
Share Profit
Share premium Minority & loss Total
capital account interest account equity
GBP GBP GBP GBP GBP
Balance as at 1
July 2008 4,905,208 3,969,411 - (4,671,150) 4,203,469
Transactions
with owners
Issue of share
capital 237,500 1,549,635 - - 1,787,135
Share-based
payment
costs - - - 69,150 69,150
Minority
interest
acquired - - (41,699) - (41,699)
---------- ---------- --------- ------------ ------------
237,500 1,549,635 (41,699) 69,150 1,814,586
Loss and total
comprehensive
loss for the
year - - 16,186 (1,137,020) (1,120,834)
---------- ---------- --------- ------------ ------------
Balance at 31
December 2009 5,142,708 5,519,046 (25,513) (5,739,020) 4,897,221
Transactions
with owners
Issue of share
capital 72,414 362,070 - - 434,484
Share issue
costs - (27,000) - - (27,000)
Share-based
payment
costs - - - 3,574 3,574
---------- ---------- --------- ------------ ------------
72,414 335,070 - 3,574 411,058
Profit and
total
comprehensive
profit for
the year - - 56,360 220,695 277,055
---------- ---------- --------- ------------ ------------
Balance as at
31 December
2010 5,215,122 5,854,116 30,847 (5,514,751) 5,585,334
---------- ---------- --------- ------------ ------------
Consolidated Statement of Cash Flows
12 months 18 months
to to
31 December 31 December
2010 2009
GBP GBP
Cash flows from operating activities
Loss before taxation (196,520) (1,382,180)
Adjustments for:
Depreciation 23,703 24,386
Amortisation of intangible assets 1,116,999 1,002,377
Share-based payment costs 3,574 69,150
Interest expense 64,434 124,582
(Increase)/Decrease in inventories (83,202) (71,385)
(Increase)/Decrease in trade and
other receivables (800,700) (516,791)
(Decrease)/Increase in trade payables (258,976) (10,487)
----------- -----------
Cash absorbed by operations (130,688) (760,348)
Interest paid (9,092) (46,536)
Income taxes paid - (6,609)
Net cash absorbed by operating activities (139,780) (813,493)
----------- -----------
Cash flows from investing activities
Acquisition of subsidiaries, net of
cash acquired (17,000) (1,600,452)
Purchase of property, plant and equipment (105,139) (6,169)
Purchase of other intangible assets (61,109) (221,236)
Television production (1,832,902) (324,862)
Interest received 153 1,125
Net cash absorbed by investing activities (2,015,997) (2,151,594)
----------- -----------
Cash flows from financing activities
Proceeds from issue of share capital 434,484 1,900,000
Share issue costs (27,000) (112,865)
Preference shares redeemed - (20,000)
Production facility utilisation 1,353,310 -
Trading facility utilisation (177,147) 1,354,765
Net cash generated by/(used in) financing
activities 1,583,647 3,121,900
----------- -----------
Net increase/(decrease) in cash and
cash equivalents (572,130) 156,813
Cash and cash equivalents at beginning
of year 620,735 463,922
----------- -----------
Cash and cash equivalents at end of
year 48,605 620,735
----------- -----------
Principal Accounting Policies
General
The directors approved this preliminary announcement on 21 March
2011.
The Group's financial statements have not yet been delivered to
the registrar of companies, nor have the auditors reported on them.
Copies of the annual report will shortly be posted to shareholders
and copies will be available from the company's registered office
at 1(st) Floor Watergate House, 13-15 York Buildings, London, WC2N
6JU.
Nature of operations and general information
Coolabi plc is the Group's ultimate parent company. It is
incorporated and domiciled in England. Coolabi plc's shares are
listed on the Alternative Investment Market of the London Stock
Exchange.
In September 2009 the group elected to change its accounting
reference date from 30 June to 31 December with immediate effect,
in order to improve the usefulness of the Group's financial
statements. The prior year encompasses 18 months and the current
year 12 months - the figures presented in these statements are
therefore not directly comparable.
Coolabi plc's consolidated financial statements are presented in
Pounds Sterling (GBP), which is also the functional currency of the
parent company.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union.
The financial statements have been prepared using the
measurement bases specified by IFRS for each type of asset,
liability, income and expense. The measurement bases are more fully
described in the accounting policies below and are in accordance
with the Companies Act 2006 and applicable International Financial
Reporting Standards as adopted by the European Union.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
-- IFRS 9 Financial Instruments (effective 1 January 2013)
-- IAS 24 (Revised 2009) Related Party Disclosures (effective 1
January 2011)
-- Amendment to IAS 32 Classification of Rights Issues
(effective 1 February 2010)
-- IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments (effective 1 July 2010)
-- Prepayments of a Minimum Funding Requirement - Amendments to
IFRIC 14 (effective 1 January 2011)
-- Improvements to IFRS issued May 2010 (some changes effective
1 July 2010, others effective 1 January 2011)
-- Disclosures - Transfers of Financial Assets - Amendments to
IFRS 7 (effective 1 July 2011)
-- Deferred Tax: Recovery of Underlying Assets - Amendments to
IAS 12 Income Taxes (effective 1 January 2012)
The directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the consolidated financial statements of the Group as reported
except for additional disclosures. The accounting policies have
been applied consistently throughout the Group for the purposes of
preparation of these consolidated financial statements.
Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 31 December
2010. Subsidiaries are entities over which the Group has the power
to control the financial and operating policies so as to obtain
benefits from its activities. The Group obtains and exercises
control through voting rights.
Unrealised gains on transactions between the Group and its
subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
asset transferred. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the purchase
method. The purchase method involves the recognition at fair value
of all identifiable assets and liabilities, including contingent
liabilities of the subsidiary, at the acquisition date, regardless
of whether or not they were recorded in the financial statements of
the subsidiary prior to acquisition. On initial recognition, the
assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also
used as the bases for subsequent measurement in accordance with the
Group accounting policies. Goodwill is stated after separating out
identifiable intangible assets. Goodwill represents the excess of
acquisition cost over the fair value of the Group's share of the
identifiable net assets of the acquired subsidiary at the date of
acquisition.
Accounting estimates and judgements
The preparation of consolidated financial statements under IFRS
requires the Group to make estimates and assumptions that effect
the application of policies and reported amounts. Estimates and
judgements are based on historical experience and other factors
including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from
these estimates. The estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying
amount of assets and liabilities are discussed below.
Intangible assets
The recognition and valuation of intangible assets requires
management to assess the probability of expected future economic
benefits, based on their best estimates of the specific economic
conditions that will prevail over the estimated useful economic
life of the assets. This includes making assumptions on the timing
and amount of future incremental cash flows generated by the assets
and the selection of an appropriate cost of capital.
Judgement is required in assessing the degree of certainty to
attach to the flow of economic benefits, based on evidence
available at the date of recognition. Furthermore, management must
estimate the expected useful life of an asset, and for those with a
finite life they must determine an appropriate amortisation
policy.
Impairment of goodwill
The Group is required to test, at least annually, whether
goodwill has suffered any impairment. The recoverable amount is
determined according to its estimated value in use. The use of this
method may require the estimation of future cash flows and the
choice of a suitable discount rate in order to calculate the
present value of these cash flows.
Revenue
Licensing and merchandising
Non-refundable advances are recognised upon contract signature
in accordance with the substance of the contract, providing the
company has performed all its contractual obligations. Royalties
earned in excess of such advances are recognised in the period to
which they relate.
Film and television
Licence fees are recognised when a licence agreement has been
signed by both parties, and delivery to the broadcaster or relevant
contracting party has occurred.
Intangible assets
Intangible assets are recognised if they satisfy the qualifying
criteria set under IAS 38. They are stated at cost less accumulated
amortisation and accumulated impairment losses, if any. The methods
of amortisation chosen reflect the patterns in which the assets'
future economic benefits are expected to be consumed. Impairment
reviews are undertaken if there are indications of impairment, as
assessed at the reporting date.
The following are the main categories of intangible assets:
Intangible assets with an indefinite useful life:
Goodwill
Goodwill representing the excess of the cost of acquisition over
the fair value of the Group's share of the identifiable net assets
acquired is capitalised and reviewed annually for impairment in
accordance with IAS 36.
Intangible assets with a finite useful life:
Intangible assets with a finite useful life are recognised
initially at fair value. They are amortised to the income statement
over their useful lives, which are reviewed on an annual basis. The
residual values of intangible assets are assumed to be zero.
Impairment reviews are undertaken if there are indications of
impairment, as assessed at the reporting date.
Directors use the following indicators to determine an assets'
useful life:
-- Expected usage of the asset by the group
-- Typical product life cycles, and those of similar assets
-- Levels of maintenance required to maintain an asset
Intangible assets acquired through business combinations
The fair value of intangible assets acquired as a result of
business combinations are capitalised and amortised on a straight
line basis through the income statement. The rates applied, which
represent the directors' best estimate of the useful economic
lives, are:
Contracts Life of the contract
Brand and relationships 10 years
Digital assets
Digital assets, including websites and digital applications, are
capitalised at cost and amortised on a straight line basis through
the income statement. The rates applied, which represent the
directors' best estimate of the useful economic lives, are:
Digital assets 3 years
Websites 3 years
Intangible assets continued
Internally generated assets
Internally generated assets are capitalised at cost and
amortised in line with future expected earnings over the directors'
best estimate of the useful economic lives of the projects of 10
years.
Television production
Production costs are capitalised if estimates of future income
from all sources exceed the capitalised amount. Per production, the
costs capitalised are relative to the proportion of total revenues
expected to arise from further exploitation. These intangible
assets are amortised against the revenues associated with future
anticipated exploitation.
Production costs are capitalised only when:
-- The future economic benefit of the project is probable
-- An intangible asset is created that can be separately
identified
-- It is probable that the intangible asset created will
generate future economic benefits and
-- The cost of the intangible asset can be measured
reliably.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of
depreciation and any provision for impairment.
Depreciation is calculated to write down the cost less estimated
residual value of plant and equipment by equal annual instalments
over their estimated useful economic lives. The rates generally
applicable are:
Computer Equipment 33%
Furniture, Fittings &
Equipment 20%
Brand Style Guides 20%
Material residual value estimates are updated as required, but
at least annually, whether or not the asset is revalued.
Operating lease agreements
Leases where substantially all of the risks and rewards of
ownership are not transferred to the Group are treated as operating
leases. Rentals under operating leases are charged against profits
on a straight line basis over the period of the lease.
Inventories
These costs represent expenditure on projects in development,
valued at the lower of cost and net realisable value. Licensed
product held for resale is valued at the lower of cost or net
realisable value, after making allowance for obsolete and slow
moving items.
Financial instruments
Financial assets and liabilities are recognised on the Group's
balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets
The Group's financial assets comprise trade and other
receivables. Trade and other receivables are recorded initially at
fair value and subsequently at amortised cost less any provision
for impairment, based on the receivable ageing, the Group's
previous experience with the debtor and known market intelligence.
Any impairment is recognised in the income statement.
Financial liabilities
The Group's financial liabilities comprise borrowings, trade and
other payables. They are classified and accounted for according to
the substance of the contractual arrangement entered into, and
stated at amortised cost. All interest-related charges and, if
applicable, changes in the instrument's nominal value are included
in the income statement line items "interest charged" or "interest
received", determined under the effective interest method.
Exceptional items
Items of significant income or expenditure which are one-off
transactions are classed as exceptional on the face of the income
statement, to show more accurately the underlying performance of
the Group.
Impairment testing of goodwill, other intangible assets and
property, plant and equipment
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill is allocated to those cash-generating units
that are expected to benefit from synergies of the related business
combination and represent the lowest level within the Group at
which management monitors the related cash flows.
Goodwill, other individual assets or cash-generating units that
include goodwill, other intangible assets with an indefinite useful
life, and those intangible assets not yet available for use are
tested for impairment at least annually. All other individual
assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the
assets' or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation.
Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying
amount of goodwill. Any remaining impairment loss is charged pro
rata to the other assets in the cash generating unit. With the
exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may no
longer exist.
Sale and leaseback transactions
Where film and television assets have been partly financed via
sale and leaseback arrangements, the proceeds of the sale of the
master negative, and the corresponding loan obligation in respect
of the lease rental commitment over the period of the lease, are
not recognised as an asset or liability on the balance sheet. They
are shown by way of a note to the accounts as it is considered that
this properly reflects the nature of the transaction as a
refinancing of the original production costs, as the risks and
rewards of ownership have been retained by the Company. Under IAS
39 "Financial Instruments: Recognition & Measurement", each
sale and leaseback transaction entered into by the Group has, from
inception, failed to meet the definition of an asset and liability
and has therefore not been recognised in these financial
statements. The Group has applied guidance from SIC-27 "Evaluating
the Substance of Transactions Involving the Legal Form of a
Lease".
Taxation
Current tax is the tax currently payable based on taxable profit
for the year.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and
joint ventures is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future. In addition, tax
losses available to be carried forward as well as other income tax
credits to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at
the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where
they relate to items that are charged or credited directly to
equity (such as the revaluation of land) in which case the related
deferred tax is also charged or credited directly to equity.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand.
Equity
Equity comprises the following:
-- Share capital: the nominal value of equity shares.
-- Share premium account: the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue.
-- Profit and loss account: retained profits.
Foreign currencies
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Assets and
liabilities in foreign currencies are translated at the rates of
exchange ruling at the balance sheet date. Exchange differences are
taken to the profit and loss account in arriving at the operating
result for the year.
Share-based payments
Equity settled share-based payments are measured at fair value
(excluding the impact of any non-market vesting conditions) at the
date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight line
basis over the vesting period, based on the Group's estimate of
shares that will eventually vest and adjusted for the effect of non
market-based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
restrictions on exercise and behavioural considerations.
Upon exercise of share options, the proceeds received net of
attributable transactions costs are credited to share capital and,
where appropriate, share premium.
The assumptions in respect of all options granted are based
on:
-- Volatility: determined by calculating the historical
volatility of the Company's share price over the previous year.
-- Expected life: based on the average contractual life adjusted
for management's best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
-- Risk-free rate of return: yield of a UK government gilt over
the expected life at the date of grant.
Any decrease in the fair value of options modified during the
year is ignored.
Notes to the Consolidated Financial Statements
1. 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/or interest, on the
assumed conversion of all dilutive options and other dilutive
potential ordinary shares.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below:
31 December 31 December
2010 2009
------------ ------------
Profit/(loss) for the year attributable
to the parent's equity holders 220,695 (1,137,020)
Weighted average number of ordinary
shares in issue during the year 49,784,670 32,842,034
Basic EPS (pence) 0.4 (3.5)
Weighted average number of ordinary
shares in issue or under option during
the year 51,512,811 32,842,034
Fully diluted EPS (pence) 0.4 (3.5)
Reconciliation of weighted average number of ordinary shares in
issue during the year to weighted average number of ordinary shares
in issue or under option during the year:
Weighted average number of ordinary
shares in issue during the period 49,784,670 32,842,034
Weighted average number of ordinary
shares under option during the period 1,728,141 -
----------- -----------
Weighted average number of ordinary
shares in issue or under option during
the period 51,512,811 32,842,034
----------- -----------
2. Publication of non-statutory accounts
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 435 of the Companies Act 2006. The summarised consolidated
balance sheet at 31 December 2010 and the summarised consolidated
income statement, summarised consolidated cash flow statement and
associated notes for the year then ended have been extracted from
the Group's 2010 financial statements. Those financial statements
have not yet been delivered to the registrar of companies, nor have
the auditors reported on them.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFEAVEILFIL
Coolabi (LSE:COO)
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