RNS Number:4828P
Chorion PLC
08 September 2003
Embargoed until 7.00am on 8 September 2003
Chorion PLC
Results for the six months ended 30 June 2003
Agatha Christie TV deal and growing demand for Noddy to drive substantially
increased profitability by year end
Chorion PLC, the brand creation and management business, today announced that it
is confident that the good progress it has made in the first six months of 2003
will feed through into substantially increased profitability by year end.
Agatha Christie television drama and increased demand for Noddy will be the key
drivers to increasing profitability.
In March, Chorion and London Weekend Television signed an output deal with ITV
for a minimum of four new Agatha Christie dramas a year for at least the next
four years. The first four dramas - all of which star David Suchet as Hercule
Poirot - have now gone into production.
The phenomenal success of Make Way for Noddy, Chorion's computer generated
animation series, is driving increased demand for Noddy product both in the UK
and overseas. The international rollout of the television series is set to
generate strong returns and there are now more than 80 licensees globally
selling over 400 product lines, from toys and videos to clothing and food.
Nicholas James, Chief Executive of Chorion, said:
"Most of our income for the second half of 2003 is already contracted thanks to
the deals we have signed with ITV and Noddy licensees. This gives us
unprecedented financial visibility and the confidence that we will deliver
substantially increased profits at the year end".
- Ends -
Enquiries:
Rachel Whetstone
Tel: 020 7404 5344
There will be a presentation to analysts at 9.30am today at 100 Wood Street,
London EC2V 7AN.
An interview with Nicholas James, Chief Executive, will be available on
Chorion's website (www.chorion.co.uk) from 11.00am.
Chief Executive's Review
Company Update
We have made excellent progress in the first six months of 2003. All of our
brands are comfortably meeting the targets set for them. We are therefore
confident of delivering substantially increased results by the year end in line
with market expectations.
For the six months ended 30 June, our turnover was marginally up at #4.2 million
(2002: #4.1 million), and operating profits were #700,000. The first half of
2002 included non-recurring revenues of approximately #800,000 and delivered
operating profits of #1.2 million. The non-recurring revenues included
substantial receipts from the one-off sale of the UK broadcast rights of all 100
episodes of the Make Way for Noddy TV series. Stripping out these non-recurring
items, the underlying growth in Chorion's core businesses in the six months to
June 2003 is:
- TV, video and film revenues increased by 94% to #1.3 million (2002:
#679,000) thanks to our four year Agatha Christie ITV output deal and our six
year Universal Video Noddy deal;
- Merchandising revenues were up 13% to #555,000 (2002: #489,000) due
to increasing demand for Noddy product; and
- Publishing revenues rose by 8% to #1.8 million (2002: #1.7 million)
as a result of the success of Christie audio books and our new educational
children's products, Learn English with Noddy and Noddy Early Learning.
These results are entirely in line with management forecasts. Chorion's
financial performance is usually weighted towards the second half of the year.
This is particularly so in 2003 because Noddy retail sales will be much stronger
in the run-up to Christmas and the Agatha Christie TV films will be delivered in
November and December.
Importantly, and in contrast with previous years, most of our income for the
second half of 2003 is already contracted thanks to the deals we have signed in
the first half and to our minimum guarantee publishing arrangements. This gives
us unprecedented financial visibility and the confidence that we will deliver
substantially increased profits at the end of the year.
Key Targets
At the start of 2003 we set ourselves a number of clear, objective and
challenging targets for the year to drive revenues and future growth across all
of our brands. These have given real focus to the business and I am delighted
to report that we are already well on our way to meeting the majority of them.
Return Poirot to UK television screens
In March, Chorion and London Weekend Television (LWT) signed a deal with ITV for
a minimum of four new classic Christie dramas per year for at least the next
four years. The deal is a significant step forward for Chorion, as it
guarantees ongoing UK television revenues. Filming on the first four dramas -
Death on the Nile, Five Little Pigs, The Hollow and Sad Cypress - began on 7
July. They all star David Suchet as Hercule Poirot. The first three TV films
will be delivered in November and December of 2003 and the fourth in January
2004 as forecast.
Cast new Miss Marple television series in the UK
As part of our new four year deal with ITV, we will produce a new series of
Marple dramas and there has been a lot of press speculation about who will play
the new Miss Marple. Kevin Elyot, the award-winning playwright, is currently
writing the all-important first script of the new series. We have a long list of
potential candidates to play Miss Marple that we will begin to shortlist once
the script is written.
Increase publishing minimum guarantees from 75% to 80% of publishing
budget
We are well on the way to achieving this. Key to our progress has been the
Agatha Christie publishing deal with Hayakawa, a major Japanese publishing
house, that will re-launch Christie in Japan in October.
Put either Maigret, Campion or Fen into development in the UK
Now that we have secured a British broadcasting deal with Christie, we are in
early discussions with principal cast, writers and broadcasters on which of our
other crime brands would be the most fruitful property to develop next. Maigret,
Georges Simenon's pipe smoking Parisian detective and Gervase Fen, Edmund
Crispin's womanising Oxford don, both have good potential. Indeed, Maigret is
now back in print in the UK for the first time in ten years.
Acquire new content
In addition to developing properties from within our existing portfolio we
remain interested in acquiring new brands. This will mean increasing our
development focus to encompass both new and existing brands. We have therefore
appointed Len Dunne as Director, Brand Development. Len brings to Chorion both
proven ability to develop brands and essential strategic marketing skills.
Previously with Anheuser-Busch, Hasbro and Entertainment Rights, Len has worked
on key brands such as Budweiser, Pokemon, Star Wars and Action Man. The addition
of Len to the senior management team will help us to better develop and exploit
our existing brands and to identify new brands for acquisition.
The Group will develop new content both from its existing properties and through
acquisition. The Group has a range of facilities totalling up to #20 million
available to fund its business development and acquisition strategy. The Group's
net debt was #5.1 million at the half year. Consequently, coupled with its
strong balance sheet and cashflow, the Group has significant resources at its
disposal for future expansion.
Increase Noddy penetration in the UK - greater merchandising presence
Make Way for Noddy was the most highly rated pre-school programme amongst three
to five year olds in the UK in June (Source: BARB/DGA, June 2003) attracting
over 30% viewing share - nearly three times as much as properties such as Bob
the Builder, Teletubbies and Tweenies. The programme continues to perform
strongly and Five plans to keep the series on air throughout the remainder of
2003.
Our target is for Noddy product to generate a minimum of #20 million worth of
sales at retail, from which we earn a royalty, by the end of 2003 - this
compares with an estimated #5 million worth of sales at retail in 2002. We now
have licensees developing and selling product in all the most important
merchandising categories - from toys, games and stationery to clothing, books
and videos. For the first time, Noddy will have a major presence at Christmas in
leading high street retailers and supermarkets including listings in Argos,
Boots, Early Learning Centre, Mothercare, Sainsbury's, Tesco, Toys R Us and
Woolworths.
As a result of all of our licensing activity in 2003, we are confident that
Noddy's value at retail will meet our target by year end.
Launch the new 100 episodes series of Make Way for Noddy in France
France is Noddy's biggest market outside Britain. Make Way for Noddy was
launched on France 5, the terrestrial broadcaster owned by France Television, in
March 2003 and now has an average rating of 34% among 4-10 year olds and
regularly rates over 40%. (Source: Mediametrie, May 2003). Independent
research company Logistix Kids found, in May 2003, that Noddy was the most
popular character in France with pre-school children. On the back of this
success, we have now licensed over 35 French product categories and our
licensing partners include Universal, Mattel, Tomy and Hachette. We have
listings in all key retailers including Auchan, Carrefour, Casino, FNAC and
Leclerc. Christmas 2003 will be a very busy period for the brand.
Sign Master Toy deal for Noddy
The success of Noddy has generated considerable interest in a Master Toy Licence
in Europe. We are in the advanced stages of negotiation with a number of toy
partners. These new partnerships will ensure continued growth for Noddy in 2004
and beyond.
Sign US partner to exploit Noddy
This is our most ambitious and challenging target - one which we have always
recognised would span both 2003 and 2004. The USA is a key market but the
initial American Noddy launch in the 1990s, which took place before Chorion had
purchased the TV rights from the BBC and before the new Make Way for Noddy
series was created, was not a success. Overcoming this legacy will not be easy.
To address these prejudices, we have now completed extensive market research
and testing of Noddy with parents and young children in the US. The results
have been extremely positive and will enable us now to further progress
discussions with broadcasters with a view to ensuring that Noddy is on air in
the USA in 2005.
Identify second children's property to develop
Having firmly established Noddy, we are keen to identify and develop our next
children's property. We have three properties, all from Blyton, in the initial
stages of development.
Dividend
As was made clear at our AGM, we are currently reviewing the Group's dividend
policy in the light of our expansion plans and their cash flow requirements.
The Board intends to acquire new content, while also developing brands from our
existing portfolio. Growing the business in this way will require additional
investment. Once we have decided on the level of that investment, we will
announce the conclusions of our dividend review.
Share Consolidation
Chorion has today separately announced that it is proposing a consolidation of
its ordinary share capital on the basis of 1 new ordinary share of 30p for every
30 existing ordinary shares. This proposed consolidation will, we believe, help
improve the attractiveness and marketability of Chorion's shares by increasing
the price per share and by offering a tighter bid offer spread. We expect it to
become effective on Monday 27 October 2003. We will be offering shareholders
with fewer than 10,000 existing ordinary shares a free dealing service to enable
them to sell their shares without paying commission.
Staff
Finally, I would like to thank all our staff for their hard work and loyalty.
The last six months have been extremely exciting for Chorion and, as a result of
the progress that we have achieved, Chorion is now well positioned to deliver
strong growth in 2003 and beyond.
Unaudited Consolidated Profit and Loss Account
for the six months ended 30 June 2003
Six Months Six Months Year to
to 30 June to 30 June 31 Dec
2003 2002 2002
Notes #'000 #'000 #'000
Turnover 2 4,176 4,075 9,273
Cost of sales (316) (69) (324)
Gross profit 3,860 4,006 8,949
Administrative expenses (3,184) (2,769) (8,267)
Group operating profit
Continuing operations:
- Ongoing before amortisation 1,108 1,648 1,519
- Amortisation of intangibles (432) (411) (837)
Group operating profit 676 1,237 682
Interest receivable and similar income 5 5 11
Interest payable and similar charges (159) (37) (260)
Profit on ordinary activities before 522 1,205 433
taxation
Tax on profit on ordinary activities 3 (268) (487) (592)
Profit/(loss) on ordinary activities after 254 718 (159)
taxation
Equity minority interests (184) (212) (631)
Profit/(loss) for the financial year 70 506 (790)
Retained profit/(loss) for the financial 70 506 (790)
year
Earnings/(loss) per share 4
Basic 0.01p 0.10p (0.15p)
Diluted 0.01p 0.10p (0.15p)
Adjusted (before amortisation of 0.10p 0.18p 0.01p
intangibles)
Unaudited Consolidated Balance Sheet
at 30 June 2003
30 June 2003 30 June 31 Dec
2002 2002
Notes #'000 #'000 #'000
Fixed assets
Intangible fixed assets 5 31,133 31,567 31,393
Tangible fixed assets 6 1,032 992 951
Film & TV and other related investments 7 18,798 15,190 15,850
50,963 47,749 48,194
Current assets
Debtors due within one year 7,765 8,837 8,886
Cash at bank and in hand 3,418 1,727 584
11,183 10,564 9,470
Creditors: amounts falling due within one year (6,346) (2,304) (4,423)
Net current assets 4,837 8,260 5,047
Total assets less current liabilities 55,800 56,009 53,241
Creditors: amounts falling due after more than (8,500) (6,646) (5,500)
one year
Total net assets 47,300 49,363 47,741
Capital and reserves:
Called up ordinary share capital 5,175 5,175 5,175
Merger reserve 31,795 31,795 31,795
Profit and loss account 3,005 4,248 2,935
Equity shareholders' funds 39,975 41,218 39,905
Preference share capital - 50 50
Total shareholders' funds 39,975 41,268 39,955
Equity minority interests 7,325 8,095 7,786
47,300 49,363 47,741
Unaudited Consolidated Cash Flow Statement
for the six months ended 30 June 2003
Six months to Six months to
30 June 2003 30 June Year to 31 Dec
2002 2002
Notes #'000 #'000 #'000
Net cash inflow from operating activities 8 2,085 1,905 3,354
Returns on investments and servicing of finance
Dividends paid to minority shareholders (15) - (639)
Bank charges and interest paid (159) (37) (310)
Interest received 5 5 11
(169) (32) (938)
Taxation 138 (673) (1,246)
Capital expenditure and financial investment
Purchase of tangible fixed assets (171) (184) (326)
Purchase of intangible assets (172) (323) (366)
Investment in films (1,555) (484) (739)
Other investments (322) - (964)
(2,220) (991) (2,395)
Acquisitions and disposals
Acquisition of minority shareholding in subsidiary - - (209)
- - (209)
Net cash (outflow)/inflow before financing (166) 209 (1,434)
Financing
New bank loans 3,000 5,000 5,500
Repayment of loan to Urbium Bars PLC - (4,167) (4,167)
3,000 833 1,333
Increase/(decrease) in cash in the year 9 2,834 1,042 (101)
Notes to the Financial Statements
for the six months ended 30 June 2003
1. Accounting Policies
Basis of preparation
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards in the United Kingdom.
The accounting policies adopted by Chorion PLC are consistent with those
disclosed in the Report and Accounts of Chorion PLC for the year ended 31
December 2002.
Basis of consolidation
These accounts have been prepared on a merger accounting basis assuming that the
Group has traded in its current, de-merged form throughout all periods reported
on.
2. Segmental information
Turnover, profit before taxation and net assets by class of business
The Group only has one class of business which is the exploitation of
intellectual property rights. The Group's turnover has been analysed by revenue
stream as follows:
Six months to 30 Six months to Year to
June 2003 30 June 31 Dec 2002
2002
#'000 #'000 #'000
Publishing/Audio/Magazine 2,023 2,175 4,853
Television/Video/Films 1,363 1,210 2,975
Merchandising 555 489 769
Other 235 201 676
4,176 4,075 9,273
3. Taxation
Six months to 30 Six months to Year to
June 2003 30 June 31 Dec 2002
2002
#'000 #'000 #'000
Current Tax
UK Corporation tax at 30% on the profit for the period 268 487 592
268 487 592
4. Earnings per share
The calculation of basic earnings/(loss) per share is based on profit/(loss)
after tax and minority interests of #70,000 (2002 interim: #506,000; 2002 final:
(#790,000)) and a weighted average number of ordinary shares in issue of
517,522,949 (2002 interim: 517,529,637; 2002 final: 517,499,802).
The calculation of adjusted earnings per share uses the basic earnings before
amortisation of intangible assets.
The diluted earnings per share is based upon basic earnings, and the weighted
average number of shares in issue, as adjusted for the dilutive effect of
options treated as exercisable at the period end.
5. Intangible fixed assets
Goodwill Copyrights Total
#'000 #'000 #'000
Group
Cost:
At 1 January 2003 713 33,052 33,765
Additions - 172 172
At 30 June 2003 713 33,224 33,937
Amortisation:
At 1 January 2003 146 2,226 2,372
Charged in period 48 384 432
At 30 June 2003 194 2,610 2,804
Net book value:
At 30 June 2003 519 30,614 31,133
At 31 December 2002 567 30,826 31,393
6. Tangible fixed assets
Total
#'000
Group
Cost:
At 1 January 2003 1,715
Additions 171
Disposals (150)
At 30 June 2003 1,736
Depreciation:
At 1 January 2003 764
Charged in period 90
Disposals (150)
At 30 June 2003 704
Net book value:
At 30 June 2003 1,032
At 31 December 2002 951
7. Film & TV and other related investments
Other Film & TV Total
#'000 #'000 #'000
Group
Cost:
At 1 January 2003 964 19,386 20,350
Additions 322 2,909 3,231
At 30 June 2003 1,286 22,295 23,581
Amortisation:
At 1 January 2003 18 4,482 4,500
Charged in period 35 248 283
At 30 June 2003 53 4,730 4,783
Net book value:
At 30 June 2003 1,233 17,565 18,798
At 31 December 2002 946 14,904 15,850
8. Reconciliation of operating profit to net cash inflow from operating
activities
Six months to 30 Six months to Year to
June 2003 30 June 2002 31 Dec
2002
#'000 #'000 #'000
Group operating profit 676 1,237 682
Amortisation of intangible assets 432 411 837
Amortisation of film & TV and other related investments 283 278 837
Depreciation 90 99 282
Decrease in debtors 967 159 96
(Decrease)/increase in creditors (363) (279) 620
Net cash inflow from operating activities 2,085 1,905 3,354
9. Reconciliation of net cash flow to movement in net debt
Six months to 30 Six months to Year to
June 2003 30 June 31 Dec 2002
2002
#'000 #'000 #'000
Increase in cash in period 2,834 1,042 (101)
New bank loans (3,000) (5,000) (5,500)
Non-cash movement - 36,870 36,870
Repayment to Urbium Bars PLC - 4,167 4,167
Changes in net funds from cash flow (166) 37,079 35,436
Net debt at start of period (4,916) (40,352) (40,352)
Net debt at end of period (5,082) (3,273) (4,916)
The interim results do not constitute full accounts within the meaning of
Section 240 of the Companies Act 1985.
The comparative figures for the year ended 31st December 2002 are extracted from
the latest Group audited accounts. The report of the auditors KPMG Audit Plc,
was unqualified and did not contain a statement under Section 237(2) or (3) of
the Companies Act 1985.
Copies of the interim statement will be sent to shareholders and are available
for inspection at the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
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