TIDMWKS
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 | Costa Theo, Chairman | 020 7612 0030 |
| Group plc | Andy Ordonez | |
+----------------------------+-----------------------+---------------+
| | | |
+----------------------------+-----------------------+---------------+
| Astaire Securities | Antony Legge | 020 7492 4750 |
| Plc | Gavin Burnell | |
+----------------------------+-----------------------+---------------+
| | | |
+----------------------------+-----------------------+---------------+
| 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 GBP300,000 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 GBP1,188,000. As GBP241,000 of this loss relates to restructuring
costs, including the severance package of the former CEO, Norman Humphrey, the
Group's ordinary losses were GBP947,000. This compares unfavourably with the
loss in 2008 of GBP625,000. 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 GBPnil).
PERFORMANCE
Group turnover has fallen from GBP2,606,000 in 2008 to GBP2,334,000 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 GBP300,573 to GBP322,453; 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 GBP297,000 against the ongoing carrying value.
The Group reduced its annual overhead by GBP500,000 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 |
+-------------------------------------------------+-------+---------+---------+
| | | GBP | GBP |
| | | 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 | | (1,188) | (625) |
| shareholders | | | |
+-------------------------------------------------+-------+---------+---------+
| | | | |
+-------------------------------------------------+-------+---------+---------+
| Earnings per share | 3 | | |
+-------------------------------------------------+-------+---------+---------+
| Basic (pence) | | (0.62) | (0.33) |
+-------------------------------------------------+-------+---------+---------+
| Diluted | | (0.62) | (0.33) |
+-------------------------------------------------+-------+---------+---------+
| Dividend | | - | - |
+-------------------------------------------------+-------+---------+---------+
+------------------------------------------------------+---------+---------+
| Consolidated Statement of Comprehensive Income for | 2009 | 2008 |
| the year ended 31 December 2009 | | |
+------------------------------------------------------+---------+---------+
| |GBP'000 |GBP'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 | As at | | As at | As at |
| | | 31 Dec | 31 Dec | | 31 Dec | 31 Dec |
| | | 2009 | 2008 | | 2009 | 2008 |
+------------------+----+-----------+----------+----------+----------+---------+
| | | GBP000 | GBP000 | | GBP000 | GBP000 |
+------------------+----+-----------+----------+----------+----------+---------+
| Non current | | | | | | |
| assets | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Property and | | 11 | 21 | | 8 | 15 |
| equipment | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| 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 | | 293 | 549 | | 1 | 264 |
| equivalents | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| | | 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 | | (2,170) | (1,617) | | (1,220) | (794) |
| liabilities | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Net assets | | 549 | 1,737 | | 602 | 4,285 |
+------------------+----+-----------+----------+----------+----------+---------+
| | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Shareholders' | | | | | | |
| equity | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Called up share | | 4,394 | 4,394 | | 4,394 | 4,394 |
| capital | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Share premium | | 8,688 | 8,688 | | 8,688 | 8,688 |
| account | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Retained | | (12,371) | (11,183) | | (12,480) | (8,797) |
| earnings | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Minority | | (162) | (162) | | - | - |
| interest | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
| Equity | | 549 | 1,737 | | 602 | 4,285 |
| shareholders' | | | | | | |
| funds | | | | | | |
+------------------+----+-----------+----------+----------+----------+---------+
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2009
+--------------------------------------+----+---------+---------+
| GROUP | | 12 | 12 |
| | | Months | Months |
| | | Ended | Ended |
| | | 31 Dec | 31 Dec |
| | | 2009 | 2008 |
+--------------------------------------+----+---------+---------+
| | | GBP000 | GBP000 |
+--------------------------------------+----+---------+---------+
| Cash flows from operating | | | |
| activities: | | | |
+--------------------------------------+----+---------+---------+
| Operating loss | | (1,175) | (625) |
+--------------------------------------+----+---------+---------+
| Non-recurring charge for | | 1 | 88 |
| compensation for loss of office to | | | |
| former chairman | | | |
+--------------------------------------+----+---------+---------+
| 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 | | (490) | (900) |
| activities | | | |
+--------------------------------------+----+---------+---------+
| | | | |
+--------------------------------------+----+---------+---------+
| 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 | | (3) | (13) |
| activities | | | |
+--------------------------------------+----+---------+---------+
| | | | |
+--------------------------------------+----+---------+---------+
| Cash inflow/(outflow) before | | (493) | (913) |
| financing | | | |
+--------------------------------------+----+---------+---------+
| | | | |
+--------------------------------------+----+---------+---------+
| 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 | | 236 | 498 |
| activities | | | |
+--------------------------------------+----+---------+---------+
| | | | |
+--------------------------------------+----+---------+---------+
| Net (decrease)/ increase in cash and | | (257) | (415) |
| cash equivalents | | | |
+--------------------------------------+----+---------+---------+
| Cash and cash equivalent at | | 549 | 964 |
| beginning of year | | | |
+--------------------------------------+----+---------+---------+
| Cash and cash equivalent at the end | | 293 | 549 |
| of year | | | |
+--------------------------------------+----+---------+---------+
| Less: funds held on trust for third | | (229) | (139) |
| parties. | | | |
+--------------------------------------+----+---------+---------+
| | | 64 | |
| Available cash at bank and in hand | | | 410 |
+--------------------------------------+----+---------+---------+
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2009
+----------------+-------------+---------+---------+----------+-----------+---------+
| GROUP | Number of | Share | Share |Minority | Income | Total |
| | shares |capital |premium |interest |Statement | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | GBP | GBP | GBP | GBP | GBP |
| | | 000's | 000's | 000's | 000's | 000's |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| At 1 January | 147,502,437 | 4,394 | 8,688 | (162) | (11,183) | 1,737 |
| 2009 | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Share capital | - | - | - | - | - | - |
| issued | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Share issue | - | - | - | - | - | - |
| costs | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Retained loss | - | - | - | - | (1,188) | (1,188) |
| for the year | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| At 31 December | 147,502,437 | 4,394 | 8,688 | (162) | (12,371) | 549 |
| 2009 | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
+----------------+-------------+---------+---------+----------+-----------+---------+
| COMPANY | Number of | Share | Share |Minority | Income | Total |
| | shares |capital |premium |interest |Statement | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | GBP | GBP | GBP | GBP | GBP |
| | | 000's | 000's | 000's | 000's | 000's |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| At 1 January | 147,502,437 | 4,394 | 8,688 | - | (8,797) | 4,285 |
| 2009 | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Share capital | - | - | - | - | - | - |
| issued | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Share issue | - | - | - | - | - | - |
| costs | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| Retained loss | - | - | - | - | (3,683) | (3,683) |
| for the year | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
| At 31 December | 147,502,437 | 4,394 | 8,688 | - | (12,480) | 602 |
| 2009 | | | | | | |
+----------------+-------------+---------+---------+----------+-----------+---------+
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 |Earnings |Earnings | Weighted |Earnings |
| | | average | per | | average | per |
| | | number | share | | number | share |
| | | of | | | of | |
| | | shares | | | shares | |
+------------------+----------+-----------+----------+----------+-----------+----------+
| | GBP |thousands | pence | GBP |thousands | pence |
| | 000's | | | 000's | | |
+------------------+----------+-----------+----------+----------+-----------+----------+
| Basic earnings | (1,188) | 190,402 | (0.62) | (625) | 190,402 | (0.33) |
| per share - | | | | | | |
| Earnings | | | | | | |
| attributable to | | | | | | |
| ordinary | | | | | | |
| shareholders | | | | | | |
+------------------+----------+-----------+----------+----------+-----------+----------+
| | | | | | | |
| Dilutive effect | - | - | - | - | - | - |
| of options | | | | | | |
+------------------+----------+-----------+----------+----------+-----------+----------+
| Diluted earnings | (1,188) | 190,402 | (0.62) | (625) | 190,402 | (0.33) |
| per share | | | | | | |
+------------------+----------+-----------+----------+----------+-----------+----------+
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
END
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