TIDMDCD
RNS Number : 8017A
DCD Media PLC
31 May 2019
The information communicated in this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
DCD Media Plc
("DCD Media" or the "Company")
Audited results for the year ended 31 December 2018
DCD Media and its subsidiaries, the independent TV distribution
and production group (the "Group"), today report results for the
year ended 31 December 2018.
Financial Summary
Continuing operations:
-- Revenue GBP7.05m (2017: GBP10.24m)
-- Gross profit GBP1.64m (2017: GBP2.52m)
-- Operating (loss)/profit (GBP0.07m) (2017: GBP0.52m)
Discontinued operations:
-- Revenue GBP0.0m (2017: GBP0.35m)
-- Gross profit GBP0.0m (2017: GBP0.28m)
-- Operating profit/(loss) GBP0.03m (2017: (GBP0.14m))
Group results:
-- Operating (loss)/profit (GBP0.04m) (2017: GBP0.38m)
-- Adjusted EBITDA (GBP0.03m) (2017: GBP0.80m)
-- Adjusted (loss)/profit before tax (GBP0.04m) (2017: GBP0.75m)
Please refer to the table within the Performance section within
the Group Strategic Report for an explanation of the profit
adjustments.
Business highlights
-- The fourth series of Penn & Teller: Fool Us successfully
aired on the CW Network in the US, as well as an additional one
hour Penn & Teller: April Fool Us special triggering a further
commission for 2019 to be produced by 1/17 Productions and
September Films.
-- DCD Rights concluded a new format deal for season 12 of long
running and factual September Films' series, Bridezillas. Ten
episodes have been commissioned by WEtv USA to be distributed
internationally by DCD Rights.
-- Season 4 of Rize TV's popular CBBC teen talent show, Got What
it Takes? aired in November 2018 with the final to be concluded in
Q2 2019 and the winner performing at BBC Radio 1's Big Weekend.
-- DCD Rights catalogue grew from 2,700 to over 3,000 hours of
programming continuing its policy to acquire long running factual
series alongside quality drama, high end documentaries and music
programming.
-- DCD Rights agreed to co-produce two new crime series with
First Look TV and UK TV Really Channel, Nurses Who Kill season 3
and 21st Century Serial Killers accordingly, both of which are to
be distributed internationally by DCD Rights.
-- Acorn TV acquired all rights in the USA to new DCD Rights
distributed drama My Life is Murder, launched at MIPCOM and
starring Lucy Lawless. The series delivers in 2019.
-- DCD Rights distributed high octane thriller, Romper Stomper,
which went on to win the prestigious Australian LOGIE Award for
Most Outstanding Miniseries of 2018.
-- DCD Rights partnered with AMC International in a new feature
documentary co-production by Bill & Ben Productions / Propellor
Films called An Accidental Studio. This is about George Harrison's
film company, Handmade Films, and is to be released in 2019.
-- DCD Rights continued to secure additional funding for content acquisition during the year
Overview
Trading for DCD Rights, the primary component of the business,
continued to be suppressed in 2018 following a weak top-line
performance as announced in the interim results for 2018.
Reported Group revenue, on continuing operations, for 2018 was
GBP7.05m compared to GBP10.24m in 2017. Gross profit for the year
was GBP1.64m compared to GBP2.52m, with an operating loss of
GBP0.07m while in 2017 the business delivered an operating profit
of GBP0.52m. Having completed the year-end audit we now report a
slight reduction in sales turnover and the overall operating
result, from the trading update released in February 2019 to now,
as a consequence of adjustments made during this process.
Continued investment in programming acquisitions in the DCD
Rights catalogue increased significantly during 2018 to 3,000 hours
of high quality drama, factual and entertainment programming,
adding over 300 hours in the year. Although DCD Rights has
continued to make progress on acquiring new titles and expanding
its growing catalogue in recent years, sales revenue generated from
the increased investment into new content in 2018 did not fully
materialise (acquisition spend in 2017 and 2018 was GBP13.4m and
GBP14.4m respectively). This is partly as a consequence of a loss
of several larger scale Video On Demand (VOD) deals which were
anticipated in the year and also because the business has focused
more on the drama genre which has a longer lead time to deliver
sales revenue. Thus, despite the high levels of acquisition, the
revenue figures for the year lagged behind those of 2017.
The majority of the increase in inventory manifesting itself in
top-line sales contracts is not due for delivery until 2019. So as
the interaction with customers remains strong and the global sales
footprint has increased, DCD Rights sales revenue generated from
the increased investment into the acquisition of new content in
2017 and 2018 may only be fully realised in 2019 and beyond.
In spite of the challenging conditions at a sales level, the
team have made significant progress in developing depth in the
catalogue, continuing a policy to acquire long-running factual
series alongside quality drama, high-end documentaries and music
programming.
Notably, two new crime series co-productions were agreed by DCD
Rights with First Look TV and UK TV Really channel to produce
Nurses Who Kill season 3, as well a 21st Century Serial Killers,
both of which are to be distributed internationally by DCD Rights.
In the North American market, Acorn TV acquired all rights in the
USA to new DCD Rights distributed drama My Life is Murder, launched
at MIPCOM and starring Lucy Lawless. The series delivers in
2019.
DCD Rights distributed high-impact thriller Romper Stomper which
scooped the prestigious Australian LOGIE Award for Most Outstanding
Miniseries as well as Most Outstanding Supporting Actress of 2018
for Jacqueline McKenzie. DCD Rights partnered AMC International in
a new feature documentary co-production by Bill & Ben
Productions/Propellor Films for AMC Networks International, An
Accidental Studio, about George Harrison's film company, Handmade
Films, to be released in 2019.
The Directors are pleased to note that core formats vesting in
the production entities have again been recommissioned under
co-production and format arrangements which provides both continued
cash flow for the Group and a growing library of 'owned' content to
complement the third-party rights held under licence.
The fourth series of Penn & Teller: Fool Us successfully
aired on the CW Network in the US, as well as an additional one
hour April Fool Us special, triggering a further commission for
2019 to be produced by 1/17 Productions and September Films. DCD
Rights concluded a new format deal for season 12 of long running
factual series Bridezillas commissioned by WEtv USA and to be
distributed internationally by DCD Rights. Popular teen talent
show, Got What it Takes? produced by Rize TV was commissioned for a
further season by CBBC.
It is, however, notable that the cable television market
operators, who provide the cornerstone marketplace for DCD Rights,
have contracted their content acquisition budgets as a consequence
of the pressure from the SVOD (Subscription Video On Demand)
growth. The so-called 'cable cutting' phenomena has been gaining
momentum in recent years as OTT (Over The Top) delivery has heaped
pressure on the high fixed-cost base models of traditional cable
providers. So, while the SVOD new entrants have acquired original
content, the DCD Rights sales team have felt the effects from the
downturn in the cable TV market.
The market conditions in 2019 continue to be challenging and
have been exacerbated in the UK, particularly by the continuing
uncertainly as a result of the 2016 EU referendum.
As a further backdrop to the markets, the trading conditions
across the world were very recently destabilised by a number of
major global channel mergers and acquisitions taking root, as the
world of cable TV continued to consolidate against the ongoing
growth of the world VOD and SVOD networks. Many networks had a hold
on acquisitions whilst changes took place, however, we believe the
continued growth and quality of the DCD Rights catalogue carefully
curated toward the market will hold us in good stead as that
continues. The Group is well positioned to react to the new
environment as the market settles and offers new opportunities from
the proliferations of new VOD channels as well as the cable and
broadcast networks.
David Craven, Executive Chairman and Chief Executive Officer,
commented: "We are clearly disappointed that a number of factors
combined in the year to impact what was a continuously growing
sales revenue pattern over the previous five years.
"The market is certainly in flux presently and we expect more
uncertainty as the transition to digital content delivery and
consumption continues. Given the ongoing investment in programming,
through the support from our funding providers, the Directors
believe the company is well placed to benefit from the emergent new
order of digital delivery together with the traditional platforms
which it will continue to support. While those sales in discussion
and negotiation for 2019 are promising, obtaining commitment
remains an ongoing challenge for the sales team.
"The key challenge moving forward is to ensure the business
acquires the best available content for the existing funding and
indeed sources award-winning, popular content to showcase in the
library for the coming years, not just for 2019. It is notable that
spending on DCD Rights acquisitions in 2018 was GBP1m greater than
in 2017 and that 300 hours of additional, high quality content have
been added to an already impressive catalogue.
"Therefore, in spite of the tough trading conditions, the
Directors believe the work to drive investment into new programming
coupled with the Group's strong brand and underlying catalogue
remain attractive and the team is focused on optimising the
performance of the rights library across the various global
markets."
For further information please contact:
Lucy Pryke Stuart Andrews / Carl Holmes /
Investor Relations/ Media Relations, Giles Rolls
DCD Media Plc finnCap
Tel: +44 (0)20 3869 0190 Tel: +44 (0)20 7220 0500
ir@dcdmedia.co.uk
Executive Chairman's review
The core rights business continued to grow its catalogue but saw
a year-on-year revenue drop with a poor, marginally loss making,
EBITDA performance for the financial year.
The sales and acquisition team focused in the year on continuing
to build a strong commercial catalogue of successfully long running
factual series. At the beginning of the year DCD Rights' major
drama, six-part Australian thriller Romper Stomper, premiered in
the UK on BBC 3. Additionally, the drama was acquired by Starz
cable network in the US as well as winning the prestigious
Australian LOGIE award for Most Outstanding Miniseries later in the
year. Strong market feedback, in part, validates the shift towards
more drama which although is a competitive marketplace, drives
buyer interest more than almost any other genre.
The food and cookery catalogue kicked off the year with the
launch of a further James Martin series, James Martin's American
Adventure, launched at MIP TV where a number of key pre-sales were
announced to Discovery Germany. During the year, the cookery shows
continued to sell to cable networks around the world and were
bolstered with the addition of further high-profile series, Brent
Owens Unwraps Mauritius, Ainsley Caribbean Kitchen, as well as Eat
Grow Love, all launched at MIPCOM.
MIP TV also saw the signing of a number of global deals across
the factual and factual entertainment portfolio, including Aussie
Gold Hunters to Viasat World and a series of deals with Discovery
for Mama June.
Last year the business reported that an agreement had been
reached with WEtv in the US to bring back the iconic, long-running
show Bridezillas, in a new series of the September Films format to
be produced by WEtv. This new series reinvigorates the catalogue
which sees more than 200 episodes of Bridezillas featured within
the DCD Rights factual entertainment portfolio. AT MIP TV,
Bridezillas was secured by Nine Network Australia, and Medialaan
Belgium, and in the UK, ITV signed season 8 of Marriage Boot Camp
Reality Stars.
DCD Rights announced a deal with UK Indie Production company,
Tern TV, for more than 30 hours of new series in factual
programming to include Emergency Helimedics, Art Detectives, Best
Laid Plans as well as Flights from Hell which sold to multiple
territories including Nine Network Australia, TV2 Denmark, Channel
8 Israel and Sky New Zealand.
In the digital world, the final quarter of 2018 saw the first
results of a new partnership deal with Ammo in the US, distributing
multiple DCD Media titles on Amazon, as well as new digital outlets
such as TUBI, VUDU and ROKU, all new growth channels largely
supported by advertising. DCD Rights continued its relationship
with the larger players such as Hulu and Netflix and the other key
subscription channels as they evolve and others join. VOD
distribution continued to grow as a sales opportunity throughout
the year, with deals concluded with STAN in Australia, as well as
RTE Eire and Iflix in Asia amongst others.
The Board would like to thank the management team and staff at
DCD Media for their hard work and dedication in the fiscal year and
for their support in difficult trading conditions.
D Craven
Executive Chairman and Chief Executive Officer
30 May 2019
Group strategic report
Strategic outlook
We have a dedicated management team leading the Group through
the challenges we are facing and believe through their hard work,
we will deliver a stronger performance in 2019. Market conditions
remain challenging and trading was weak in the year, however, the
business may yet see the benefits of the investment made in its
catalogue throughout 2018 and relationships with long-standing
clients continue to develop as we engage these buyers with the new
content offerings from the library. Converting sales pipeline to
contractual commitment is challenging, however, we have a dedicated
management team leading the Group through these challenges and
through their hard work the Directors are reasonably optimistic
that the sales engagement will be converted into top-line
performance.
Review of divisions for the year to 31 December 2018
Rights and Licensing
DCD Rights
DCD Rights catalogue increased significantly during 2018 to
3,000 hours of high-quality drama, factual and entertainment
programming, adding over 300 hours.
The team has been working closely with existing and new
independent producers, which has seen the growth of distribution
led co-productions structured through a combination of market
pre-buys combined with DCD Media investment. This has the benefit
of tailoring programming more specifically toward the international
market as well as fulfilling demand from key cable channels who
pre-buy in order to meet their viewer needs and brand the shows as
network originals. In a highly competitive market for acquisitions,
the creation of market led programming in partnership with
producers is a trend that we see increasing over the coming years.
This delivers not only programming in demand from our customers,
but DCD Media also benefits from equity shares in programming in
lieu of the early investment and partnership.
This partnership programming has led to longer lead times for
delivery, which we continue to balance against the acquisition of
network commissioned programming. The sales and acquisition team
focused on continuing to build a strong commercial catalogue of
successful and long running factual series. To that end, the first
half of 2018 saw the launch of Aussie Gold season 3, two seasons of
Facing the Fire, Bridezillas season 11, Marriage Bootcamp 9 &10
as well as two seasons of Mama June.
At MIP TV, the DCD Rights team announced the signing of a number
of global deals across the factual and factual entertainment
portfolio, including with Discovery for Facing the Fire, to Viasat
World for Aussie Gold Hunters, and a series of deals with Discovery
for the Mama June. Nine Network Australia and Medialaan Belgium
acquired the new Bridezillas series, and in the UK, ITV signed
season 8 of Marriage Boot Camp Reality Stars.
DCD Rights announced an agreement with UK Indie Production
company, Tern TV, for more than 30 hours of new series in factual
programming to include Emergency Helimedics, Art Detectives, Best
Laid Plans as well as Flights from Hell which sold to multiple
territories including Nine Network Australia, TV2 Denmark, Channel
8 Israel and Sky New Zealand.
Crime programming continued to be a key seller, with Real
Detective selling to Sony TV in the UK, DCD Rights agreed two crime
series co-productions with First Look TV to produce 21st Century
Serial Killers (7 x 60minute episodes) as well as Nurses Who Kill 3
(10 x 60minute episodes), both in association with UK TV's Really
Channel.
The food and cookery catalogue kicked off the year with the
launch of a fresh offering from the hugely successful James Martin
series, James Martin's American Adventure. The production launched
to market at MIP TV where a number of key pre-sales were announced
including to Discovery Germany. During the year, the cookery shows
continued to sell to cable networks around the world and were
bolstered with the addition of further high-profile series, Brent
Owens Unwraps Mauritius, Ansley Caribbean Kitchen, as well as Eat
Grow Love, all launched at MIPCOM.
The music programming catalogue continued to sell and the team
agreed a deal for a second season of The Great Songwriters
following the success of season 1, as well as over ten hours of
concert programming.
In the drama genre, six-part Australian thriller Romper Stomper
premiered in the UK, on BBC 3. The intense and powerful drama was
acquired by Starz cable network in the US to premier in 2019. The
catalogue benefited from an agreement with STV to market the
original Taggart, Rebus and Dr Finlay series and in new production,
investment was agreed in three new drama series for 2019
delivery.
MIPCOM saw the announcement of new cornerstone drama series My
Life is Murder which is a 10-part detective series, staring Lucy
Lawless the New Zealand actress and singer who played the title
character in television series Xena: Warrior Princess. DCD Rights
announced a significant pre-sale to Acorn TV in North America and
the series is due to deliver in May 2019.
DCD Rights continued to successfully represent the BBC's Open
University catalogue and launched Magic Numbers: Hannah Fry's
Mysterious World of Maths at MIPCOM which stacked up strong
international sales including to TV Ontario, Knowledge Network
Canada, NRK Norway, SVT Sweden as well as RTL Germany and numerous
other territories. To compliment this catalogue the factual team
also announced other new independent documentaries such as The
Nile: 5000 Years of History with Bethany Hughes with pre-sales to
SBS Australia and Viasat Scandinavia and Eastern Europe.
As digital distribution becomes an ever-important element across
the DCD Rights sales network, a new partnership deal with Ammo in
the US was agreed, distributing multiple Group titles on Amazon, as
well as new digital outlets such as TUBI, Vudu and ROKU which are
all new growth channels largely supported by advertising. DCD
Rights continued to work with the large VOD providers such as Hulu
and Netflix and the other key subscription channels as they evolve
and others emerge in the market. VOD distribution continued to grow
as a sales opportunity throughout the year, with deals concluded
with STAN in Australia, as well as RTE Eire and Iflix in Asia
amongst others.
The Company continued to benefit from its successful
relationships with third party funding partners, which enjoy strong
and consistent returns to their investors; leading to an increase
in available funding for programme advances from July 2018. The
additional funding has clearly already augmented the library and is
likely to drive sales in the short to medium term as the content
acquisitions flowing from the extra funding deliver in 2019 and
beyond.
As traditional broadcasters and now technology based networks
compete for control of the viewing experience, the consumer-facing
business model is evolving, yet content remains at the heart of the
rights industry. What is clear is that, whatever the delivery
mechanism, broadcasters need distribution partners. In this new
world of almost limitless choice where new entrants can acquire,
create, and distribute interesting content, the winners will be
those who deliver compelling content that meets the need to be
entertained and informed. DCD Rights is well-placed to continue its
growth against this backdrop.
Productions
The DCD Media productions division comprised the following
brands:
September Films London, UK
UK
Rize Television London, UK
The output of September Films is overseen by DCD Media and
complimented by the Group's Rights and Licensing division.
September Films
September Films agreed to co-produce, with US based 1/17
Productions, a further series of the highly successful
entertainment show, Penn & Teller: Fool Us. This is the fifth
season produced in the US and the sixth season overall. It will
consist of 13 episodes and continue to be hosted by Alyson Hannigan
and again feature the world famous magicians Penn & Teller. The
show will continue to be aired on The CW network in the US.
September Films will continue to be involved in the production
of future series of Penn & Teller: Fool Us. The company
continues to review its library of formats and titles.
Rize
Rize continues to be involved in the production of Got What It
Takes? which is now into its fourth series and began to air in Q4
2018. The third series finished in April 2018 culminating with the
winner playing at BBC Radio 1's Big Weekend summer festival.
Rize USA will continue to be involved in the production of
future series of Got What it Takes?.
Performance
At a turnover level, the Group delivered GBP7.05m in revenue,
all from continuing operations compared with GBP10.24m in 2017. The
market is certainly in flux presently and we expect more
uncertainty as the transition to digital content delivery and
consumption continues. Specifically, several anticipated VOD deals
failed to materialise in the year that were a feature of the sales
performance in 2017.
The Group made an operating loss for the year of GBP0.04m (2017:
profit of GBP0.38m), which is stated after impairment and
amortisation of intangible assets, including goodwill and trade
names.
Adjusted EBITDA and Adjusted PBT are the key performance
measures that are used by the Board, as they more fairly reflect
the underlying business performance by excluding the significant
non-cash impacts of goodwill, trade name and programme rights
amortisation and impairments.
The headline adjusted EBITDA in the year ended 31 December 2018
was a loss of GBP0.03m (2017: profit of GBP0.80m), inclusive of
GBP0.01m of foreign exchange gains (2017: GBP0.27m).
Adjusted continuing loss before tax for the Group was GBP0.03m
in 2018 (2017: profit of GBP0.76m).
The following table represents the reconciliation between the
operating (loss)/profit per the consolidated income statement and
adjusted (loss)/profit before tax and adjusted Earnings Before
Interest Tax Depreciation and Amortisation (EBITDA):
Year ended Year ended
31 December 31 December
2018 2017
GBPm GBPm
Operating (loss)/profit per statutory
accounts (continuing operations) (0.07) 0.52
Add: Discontinued operations (note
9) 0.03 (0.14)
Operating result per statutory accounts (0.04) 0.38
Add: Amortisation of programme rights
(note 11) 0.00 0.02
Add: Impairment of programme rights
(note 11) 0.01 0.01
Add: Amortisation of trade names (note
11) 0.00 0.20
Add: Depreciation (note 12) 0.03 0.05
EBITDA 0.00 0.66
Add: (Profit)/loss on discontinued
operations (0.03) 0.14
Adjusted EBITDA (0.03) 0.80
Less: Net financial income/expense
(note 7) 0.02 (0.00)
Less: Depreciation (note 12) (0.03) (0.05)
Adjusted (loss)/profit before tax (0.04) 0.75
----------------------------------------- ------------- -------------
Intangible assets
The Group's consolidated income statement and consolidated
statement of financial position has again this year been impacted
by the amortisation and impairment of intangible assets, see note
11.
The Group has not charged any amortisation or impairment of
goodwill and trade names for the year (2017: charge of GBP0.20m),
however, did recognise a small impairment charge of GBP0.01m (2017:
GBP0.01m) to clear off the remaining balance of programme
rights.
The accounting implications, in terms of the effect of reporting
impaired intangible assets under International Financial Standards,
are explained below.
Goodwill
The Directors have assessed the carrying value of goodwill
attributable to September Films and have booked no impairment in
2018 (2017: GBPNil). This is in light of the back-end catalogue
income expected to be received within the business.
Trade names
Trade names are amortised over ten years on a straight line
basis. In 2018, no charge of amortisation was made as the trade
name balance was fully amortised in the prior financial year. The
carrying value of trade names was GBPNil (2017: GBPNil).
Restructuring costs
Restructuring costs of GBP0.03m (2017: GBPNil) have been
disclosed in the consolidated statement of comprehensive income.
These are in relation to small charges incurred within Sequence
Post Ltd, the post production business, that ceased trading in
November 2017.
Earnings per share
Basic loss per share in the year was 1p (year ended 31 December
2017: profit of 17p) and was calculated on the loss after taxation
of GBP0.04m (year ended 31 December 2017: profit of GBP0.42m)
divided by the weighted average number of shares in issue during
the year being 2,541,419 (2017: 2,541,419).
Balance sheet
The Group's net cash balances have increased to GBP2.3m at 31
December 2018 from GBP1.3m at 31 December 2017. A substantial part
of the Group cash balances represent working capital commitment in
relation to its rights business and is not considered free cash.
The increase in the year is largely due to temporary movements in
receivables and payables in working capital.
At the year end, the Group had an available gross overdraft
facility of GBP0.30m and a net facility of GBP0.15m.
Shareholders' equity
Retained earnings as at 31 December 2018 were GBP(60.6m) (2017:
GBP(60.6m)) and total shareholders' equity at that date was GBP2.9m
(2017: GBP2.9m).
Current trading
Market conditions remain challenging and the business has yet to
see the benefits of the investment made in its catalogue throughout
2018 although, relationships with long-standing clients continue to
develop as we engage these buyers with the new content offerings
from the library.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance, financial
position and borrowings are set out above. In addition, note 16 to
the consolidated financial statements sets out the Group's
objectives, policies and processes for managing its financial
instruments and risk.
The Group's day-to-day operations are funded from cash generated
from trading and the use of an overdraft facility with other
activities funded from a combination of equity and short and
medium-term debt instruments. The overdraft facility reduced from
GBP0.175m to GBP0.15m during the year and has recently been
extended to November 2019. The overdraft will be reviewed further
by the Group's principal bankers, Coutts & Co ("Coutts"), on 30
November 2019 but the Directors have a reasonable expectation that
an overdraft facility will continue to be available to the Group
for a period in excess of 12 months from the date of approval of
these financial statements.
In considering the going concern basis of preparation of the
Group's financial statements, the Board has prepared profit and
cash flow projections which incorporate reasonably foreseeable
impacts of the ongoing challenging trading environment. These
projections reflect the management of the day-to-day cash flows of
the Group which includes assumptions on the profile of payment of
certain existing liabilities of the Group. They show that the day
to day operations will continue to be cash generative.
The Directors' forecasts and projections, which make allowance
for potential changes in its trading performance, show that with
the ongoing support of its shareholder and its bank; the Group can
continue to generate cash to meet its obligations as they fall
due.
The Directors have regular discussions with the Group's main
shareholders and its principal bankers and have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the annual report and financial statements.
Key Performance Indicators (KPIs)
Year ended Year ended
31 December 31 December
2018 2017
GBPm GBPm
----------------------------------------- ------------- -------------
Revenue from continuing operations 7.05 10.24
Continuing operating (loss)/profit from
operations (0.07) 0.52
Adjusted EBITDA (0.03) 0.80
Adjusted (loss)/profit before tax (0.04) 0.75
------------------------------------------ ------------- -------------
Principal risks and uncertainties
General commercial risks
The Group's management aims to minimise risk of over-reliance on
individual business segments, members of staff, productions or
customers by developing a broad, balanced stable of production and
distribution activities and intellectual property. Clear risk
assessment and strong financial and operational management is
essential to control and manage the Group's existing business,
retain key staff and balance current development with future growth
plans. As the Group operates in overseas markets, it is also
subject to exposures on transactions undertaken in foreign
currencies.
Production and distribution revenue
Production revenue will fall as the Group has ceased to pursue
productions in development and is due to focus on its two current
franchises. Distribution revenue is forecast to rise as this
division is the prime focus of the Group going forward.
Funding and liquidity
Costs incurred during production are not always funded by the
commissioning broadcaster. The Group policy is to maintain its
production cash balances to ensure there is no financial shortfall
in the ability to produce a programme. It is inherent in the
production process that the short-term cash flows on productions
can sometimes be negative initially. This is due to costs incurred
before contracted payments have been received, in order to meet
delivery and transmission dates. The Group funds these initial
outflows, when they occur, in three ways: internally, ensuring that
overall exposure is minimised; through a short-term advance from a
bank or other finance house; or through a short-term loan from
Timeweave Ltd, its main shareholder, which will be underwritten by
the contracted sale. The Group regularly reviews the cost/benefit
of such decisions in order to obtain the optimum use from its
working capital.
Securing funding from external parties to grow the catalogue
through acquisition is key to the rights and licencing business.
The Board is comfortable given the relationships with current
funding partners they have adequate resources to meet their
acquisition plans for the foreseeable future.
The Group's cash and cash equivalents net of overdraft at the
end of the period was GBP2.3m (2017: GBP1.3m) including certain
production related cash held to maintain the Group policy. The
Group debt consists primarily of an overdraft and accrued
management recharges due to Timeweave. Details of interest payable,
funding and risk mitigation are disclosed in notes 7, 15 and 16 to
the consolidated financial statements.
Exchange rate risk
Management review expected cash inflows and outflows in source
currency and when required, take out forward options to protect
against any short-term fluctuations.
D Craven
Executive Chairman and Chief Executive Officer
30 May 2019
Group report of the Directors for the year ended 31 December
2018
The Directors present their report together with the audited
financial statements for the year ended 31 December 2018.
Principal activities
The main activities of the Group in the year continued to be
distribution and rights exploitation and content production. The
main activity of the Company continued to be that of a holding
company, providing support services to its subsidiaries.
Business review
A detailed review of the Group's business including key
performance indicators and likely future developments is contained
in the Executive Chairman's Review and Group Strategic Report on
pages 4 to 9, which should be read in conjunction with this
report.
Results
The Group's loss before taxation for the year ended 31 December
2018 was GBP0.02m (2017: profit of GBP0.38m). The result for the
year post-taxation was GBP0.04m (2017: profit of GBP0.42m) and has
been carried forward in reserves.
The Directors do not propose to recommend the payment of a
dividend (2017: GBPNil).
Directors and their interests
At 31 December 2018 At 31 December 2017
Ordinary Deferred Ordinary Deferred
shares shares of shares shares of
of GBP1 each of GBP1 each
GBP1 each GBP1 each
----------- ----------- ----------- -----------
N Davies Williams 781 69,317 781 69,317
----------- ----------- ----------- -----------
D Craven - - - -
----------- ----------- ----------- -----------
N McMyn - - - -
----------- ----------- ----------- -----------
A Lindley - - - -
----------- ----------- ----------- -----------
Mr Lindley and Mr McMyn are Non-Executive Directors. Biographies
of the Company's Directors can be found on page 15.
Other than as disclosed in note 19 to the consolidated financial
statements, none of the Directors had a material interest in any
other contract of any significance with the Company and its
subsidiaries during or at the end of the financial year.
Substantial shareholdings
The Company has been notified, as at 30 May 2019, of the
following material interests in the voting rights of the Company
under the provisions of the Disclosure and Transparency Rules:
Name No. of GBP1 ordinary %
shares
Timeweave Ltd 1,818,377 71.55
Lombard Odier Investment Managers 664,728 26.16
Share capital
Details of share capital are disclosed in note 17 to the
consolidated financial statements.
Employee involvement
The Group's policy is to encourage employee involvement at all
levels as it believes this is essential for the success of the
business. There is significant competition for experienced and
skilled creative staff and administrators. The Directors are aware
of this and have looked to encourage and develop internal resources
and to put in place succession plans. In addition, the Group has
adopted an open management style to encourage communication and
give employees the opportunity to contribute to future strategy
discussions and decisions on business issues.
The Group does not discriminate against anyone on any grounds.
Criteria for selection and promotion are based on suitability of an
applicant for the job. Applications for employment by disabled
persons are always fully considered, bearing in mind the respective
aptitudes of the applicants concerned. In the event of members of
staff becoming disabled, every effort will be made to ensure that
their employment with the Group continues and that appropriate
training is arranged. It is the policy of the Group that the
training, career development and promotion of disabled persons
should, as far as possible, be at least comparable with that of
other employees.
Financial instruments
Details of the use of financial instruments by the Company are
contained in note 16 to the consolidated financial statements.
CORPORATE GOVERNANCE
Statement of compliance
The Group has adopted a framework for corporate governance which
it believes is suitable for a company of its size with reference to
the key points within the UK Corporate Governance Code issued by
the Financial Reporting Council ("the Combined Code").
DCD Media Plc's shares are quoted on AIM, a market operated by
the London Stock Exchange Plc. From the 28 September 2018 there was
a requirement for AIM listed entities to explain how they adhere to
a recognised Corporate Governance policy.
The corporate governance framework which the group operates,
including board leadership and effectiveness, board remuneration,
and internal control is based upon practices which the Board
believes are proportional to the size, risks, complexity and
operations of the business and is reflective of the group's values.
Of the two widely recognised formal codes, the Board decided to
adhere to the Quoted Companies Alliance's (QCA) Corporate
Governance Code for small and mid-size quoted companies (revised in
April 2018 to meet the new requirements of AIM Rule 26). The full
code and how the Company adheres to this can be found on the
Group's website at
www.dcdmedia.co.uk/investors/corporate-governance .
The QCA Code is constructed around ten broad principles and a
set of disclosures. The QCA has stated what it considers to be
appropriate arrangements for growing companies and asks companies
to provide an explanation about how they are meeting the principles
through the prescribed disclosures.
We have considered how we apply each principle to the extent
that the board judges these to be appropriate in the circumstances,
and below we provide an explanation of the approach taken. A full
explanation for each principle can be seen on the website
accordingly. Consideration to the ownership of the business is key
in where the board deviate from any QCA code directives. The
company is owned 97.71% by two institutional investors with the
four board members made up of three directors from Timeweave Ltd,
its majority shareholder. Timeweave Ltd owns 71.55% and Lombard
Odier Investment managers 26.16% accordingly.
The Directors confirm that the annual report and accounts, taken
as a whole, is fair, balanced and understandable while providing
the information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
Board composition and compliance
The Board recognises its collective responsibility for the
long-term success of the Group. It assesses business opportunities
and seeks to ensure that appropriate controls are in place to
assess and manage risk.
The Board of DCD Media currently comprises two executive
Directors and two non-executive Directors. During a normal year
there are a number of scheduled board meetings with other meetings
being arranged at shorter notice as necessary. The Board agenda is
set by the Chairman in consultation with the other Directors.
The Board has a formal schedule of matters reserved to it for
decision which is reviewed on an annual basis.
Under the provisions of the Company's Articles of Association,
all Directors are required to offer themselves for re-election at
least once every three years. In addition, under the Articles, any
Director appointed during the year will stand for election at the
next annual general meeting, ensuring that each Board member faces
re-election at regular intervals.
The Directors are entitled to take independent professional
advice at the expense of the Company and all have access to the
advice and services of the Company Secretary. The Company will take
all reasonable steps to ensure compliance by Directors and
applicable employees with the provisions of the AIM Rules relating
to dealings in securities.
Board evaluation
While there is no formal evaluation of the board on an annual
basis in place the director's and the committees do evaluate the
contribution of each on an ongoing basis. The board recognise the
importance of evaluating the performance of each individual member
but also recognise that for the size of company this form of
self-evaluation is sufficient currently. Going forward as the
company grows we will look to utilise external facilitators in
future board evaluations.
The Board has established an Audit, Nomination and Remuneration
Committee. All are formally constituted with written terms of
reference. The terms of reference are available on request from the
Company Secretary.
Audit Committee
During the financial period under review, the members of the
Audit Committee were Neil McMyn (Chairman) and Andrew Lindley. The
responsibilities of the committee include the following:
-- ensuring that the financial performance of the Group is
properly monitored, controlled and reported on;
-- reviewing accounting policies, accounting treatment and
disclosures in the financial reports;
-- meeting the auditors and reviewing reports from the auditors
relating to accounts and internal control systems; and
-- overseeing the Group's relationship with external auditors,
including making recommendations to the Board as to the appointment
or re-appointment of the external auditors, reviewing their terms
of engagement, and monitoring the external auditors' independence,
objectivity and effectiveness.
During the year, the committee met to review audit planning and
findings with regard to the Annual Report. In addition, it reviewed
the appointment of auditors, and agreed unanimously to re-elect
SRLV Audit Limited.
Remuneration Committee
During the financial period under review, the members of the
Remuneration Committee were Neil McMyn (Chairman) and Andrew
Lindley.
The responsibilities of the committee include the following:
-- reviewing the performance of the Executive Directors and
setting the scale and structure of their remuneration with due
regard to the interest of shareholders; and
-- overseeing the evaluation of the Executive Directors.
Shareholder engagement
The Directors of the Company are open for discussion with
shareholders at any point. Furthermore, they seek to keep
shareholders informed through detailed full year and interim
results notices, the AGM, RNS releases, an up to date and detailed
website as well as through more modern platforms such as Twitter
and LinkedIn. The Company promotes the AGM as a chance to ask
questions and discuss issues face to face with the board. Given
that only 2% of shares are in the public domain (outside of the two
major institutional investors) there has been little shareholder
engagement in the past few years at the AGM.
Strategy and business model
We aim to deliver original, inspiring and popular television
programmes and media content for clients around the world, enabling
them to achieve high audience satisfaction and ratings.
Furthermore, we aim to become the world's top independent TV rights
distributor.
Staff and corporate culture
We encourage a collaborative, innovative and respectful culture
across our workforce. We aim to empower our staff as much as
possible and to ensure they feel involved with the business and its
overall strategy. The business has a minimal level of staff
turnover, and while the team is only small, we believe this is
testament to the fact that the business is so connecting from top
down. We have regular one-to-one meetings with key management
personnel to ensure staff are engaged. These, along with team
meetings allow for corporate culture to be encouraged and to allow
staff to see how they affect it and how they can impact it.
Internal control
The Board has overall responsibility for ensuring that the Group
maintains a sound system of internal control to provide it with
reasonable assurance that all information used within the business
and for external publication is adequate, including financial,
operational and compliance control and risk management.
It should be recognised that any system of control can provide
only reasonable and not absolute assurance against material
misstatement or loss, as it is designed to manage rather than
eliminate those risks that may affect the Group achieving its
business objectives.
Going concern
For the reasons set out in the Executive Chairman's Review, the
Directors consider it is appropriate to continue to adopt the going
concern basis in preparing the annual report and financial
statements.
Supplier payment policy
The Company and Group's policy is to agree terms of payment with
suppliers when agreeing the overall terms of each transaction, to
ensure that suppliers are aware of the terms of payment and that
Group companies abide by the terms of the payment.
Share capital
Details of the Company's share capital and changes to the share
capital are shown in note 17 to the consolidated financial
statements.
Resolutions at the Annual General Meeting
The Company's AGM will be held on Thursday 27 June 2019.
Accompanying this Report is the Notice of AGM which sets out the
resolutions to be considered and approved at the meeting together
with some explanatory notes. The resolutions cover such routine
matters as the renewal of authority to allot shares, to dis-apply
pre-emption rights and to purchase own shares.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union, and the parent company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (Financial Reporting Standard 102 "The
Financial Reporting Standard applicable in the United Kingdom and
Republic of Ireland' and applicable law). Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether IFRSs as adopted by the European Union and
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the consolidated
and parent company financial statements respectively; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and of the Company and
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website
(www.dcdmedia.co.uk) in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors' responsibility also
extends to the on-going integrity of the financial statements
contained therein.
Charitable and political donations
Group donations to charities worldwide were GBPnil (2017:
GBPnil). No donations were made to any political party in either
year.
Auditor
A resolution to re-appoint SRLV Audit Limited as the Company's
auditors will be put forward at the AGM to be held on 27 June
2019.
Disclosure of information to the auditors
In the case of each of the persons who are Directors at the time
when the annual report is approved, the following applies:
-- so far as that Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- that Director has taken all the steps that they ought to have
taken as a Director in order to be aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
Directors' Report approved by the Board on 30 May 2019 and
signed on its behalf by:
D Craven
Executive Chairman and Chief Executive Officer
30 May 2019
Consolidated income statement for the year ended 31 December
2018
Year ended Year ended
31 December 31 December
2018 2017
Note GBP'000 GBP'000
----------------------------------------------- ----- ------------- -------------
Revenue 4 7,051 10,243
Cost of sales (5,392) (7,708)
Impairment of programme rights 5,11 (19) (13)
----------------------------------------------- ----- ------------- -------------
(5,411) (7,721)
Gross profit 1,640 2,522
Administrative expenses:
- Other administrative expenses (1,715) (1,792)
- Amortisation of trade names 5,11 - (209)
(1,715) (2,001)
Operating (loss)/profit (75) 521
Finance costs 7 17 (2)
(Loss)/profit before taxation (58) 519
Taxation 8 (13) 40
(Loss)/profit after taxation from continuing
operations (71) 559
----------------------------------------------- ----- ------------- -------------
Profit/(loss) on discontinued operations
net of tax 9 35 (137)
(Loss)/profit for the financial year (36) 422
(Loss)/profit attributable to:
Owners of the parent (36) 422
(36) 422
----------------------------------------------- ----- ------------- -------------
Earnings per share attributable to the equity holders of the Company
during the year (expressed as pence per share)
Basic (loss)/profit per share from continuing
operations (2p) 22p
Basic earnings per share from discontinued
operations 9 1p (5p)
Total basic (loss)/profit per share 10 (1p) 17p
----------------------------------------------- ----- ------------- -------------
Diluted (loss)/profit per share from
continuing operations (2p) 21p
Diluted earnings per share from discontinued
operations 9 1p (5p)
Total diluted (loss)/profit per share 10 (1p) 16p
----------------------------------------------- ----- ------------- -------------
Consolidated statement of comprehensive income for the year
ended 31 December 2018
Year ended Year ended
31 December 31 December
2018 2017
GBP'000 GBP'000
----------------------------------------- ------------- -------------
(Loss)/profit for the financial year (36) 422
Total comprehensive income (36) 422
------------------------------------------ ------------- -------------
Total comprehensive income attributable
to:
Owners of the parent (36) 422
(36) 422
----------------------------------------- ------------- -------------
Consolidated statement of financial position as at 31 December
2018
Company number 03393610
As at As at
31 December 31 December
2018 2017
Note GBP'000 GBP'000
------------------------------------ ----- ------------- -------------
Non-current assets
Goodwill 11 1,017 1,017
Other intangible assets 11 - 19
Property, plant and equipment 12 27 35
Trade and other receivables 13 279 64
------------------------------------ ----- ------------- -------------
1,323 1,135
Current assets
Trade and other receivables 13 9,071 10,937
Cash and cash equivalents 22 2,276 1,323
11,347 12,260
Total assets 12,670 13,395
Current liabilities
Unsecured convertible loan 15 - (73)
Trade and other payables 14 (9,769) (10,378)
Taxation and social security 14 (42) (48)
(9,811) (10,499)
Total liabilities (9,811) (10,499)
------------------------------------ ----- ------------- -------------
Net assets 2,859 2,896
------------------------------------ ----- ------------- -------------
Equity
Equity attributable to owners of
the parent
Share capital 17 12,272 12,272
Share premium account 17 51,215 51,215
Equity element of convertible loan - 1
Own shares held (37) (37)
Retained earnings (60,591) (60,555)
Equity attributable to owners of
the parent 2,859 2,896
Total equity 2,859 2,896
------------------------------------ ----- ------------- -------------
The consolidated financial statements were approved and
authorised for issue by the Board of Directors on 30 May 2019.
D Craven
Director
Consolidated statement of cash flows for the year ended 31
December 2018
Year ended Year ended
31 December 31 December
2018 2017
Cash flow from operating activities including
discontinued operations GBP'000 GBP'000
---------------------------------------------------- --- ------------- -------------
Net (loss)/profit before taxation (23) 382
Adjustments for:
Depreciation of tangible assets 12 29 47
Amortisation and impairment of intangible
assets 11 19 246
Net bank and other interest charges 7 (17) 2
Corporation tax (14) -
Net cash flows before changes in working
capital (6) 677
Decrease/(increase) in trade and other receivables 13 1,650 (1,793)
(Decrease)/increase in trade and other payables 14 (651) 387
Cash from continuing operations 993 (729)
Cash flow from discontinued operations
---------------------------------------------------- --- ------------- -------------
Net profit before taxation 35 (137)
Adjustments for:
(Profit)/loss on discontinued operations (35) 137
---------------------------------------------------- --- ------------- -------------
Net cash flows before changes in working
capital - -
Cash from discontinued operations - -
Cash from operations 993 (729)
Interest received/(paid) - (2)
Net cash flows from operating activities 993 (731)
Investing activities
Sale of property, plant and equipment 12 - 13
Purchase of property, plant and equipment 12 (21) (4)
Net cash flows used in investing activities (21) 9
Financing activities
Repayment of finance leases - (23)
Repayment of loan - (133)
Settlement of convertible loans (19) -
Net cash flows from financing activities (19) (156)
Net increase/(decrease) in cash 953 (878)
Cash and cash equivalents at beginning of
year 1,323 2,201
Cash and cash equivalents at end of year 22 2,276 1,323
---------------------------------------------------- --- ------------- -------------
Consolidated statement of changes in equity for the year ended
31 December 2018
Equity Equity Amounts
element attributable attributable
of Own to owners to
Share Share convertible Translation shares Retained of the non-controlling Total
capital premium loan reserve held earnings parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- ------------ ------------ -------- --------- ------------- ---------------- --------
Balance at 31
December
2016 12,272 51,215 1 - (37) (60,977) 2,474 - 2,474
Profit and
total
comprehensive
income
for the year - - - - - 422 422 - 422
Balance at 31
December
2017 12,272 51,215 1 - (37) (60,555) 2,896 - 2,896
---------------- ------- -------- ------------ ------------ -------- --------- ------------- ---------------- --------
Loss and total
comprehensive
income for the
year - - - - - (36) (36) - (36)
Disposal of
convertible
loan notes - - (1) - - - (1) - (1)
Balance at 31
December
2018 12,272 51,215 - - (37) (60,591) 2,859 - 2,859
Notes to the consolidated financial statements for the year
ended 31 December 2018
During the year, the principal activity of DCD Media Plc and
subsidiaries (the Group) was the worldwide distribution of
programmes for television and other media; the Group also
distributes programmes on behalf of other independent
producers.
DCD Media Plc is the Group's ultimate parent company, and it is
incorporated and registered in England and Wales. The address of
DCD Media Plc's registered office is 9th Floor, Winchester House,
259 - 269 Old Marylebone Road, London, NW1 5RA, and its principal
place of business is London. DCD Media Plc's shares are listed on
the Alternative Investment Market of the London Stock Exchange.
DCD Media Plc's consolidated financial statements are presented
in Pounds Sterling (GBP), which is also the functional currency of
the parent company. Amounts are presented in rounded thousands. The
accounts have been drawn up to the date of 31 December 2018.
1 Principal accounting policies
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out below. The
policies have been consistently applied to all the years presented,
unless otherwise stated. The Group financial statements have been
prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations
(collectively IFRSs) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("Adopted
IFRSs"), and with those parts of the Companies Act 2006 applicable
to companies preparing their financial statements under Adopted
IFRSs.
Basis of preparation - going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Executive Chairman's Review and the Strategic
Report. The financial position of the Group, its cash position and
borrowings are set out in the performance section of the Strategic
Report. In addition, note 16 sets out the Group's objectives,
policies and processes for managing its financial instruments and
risk.
The Group's day-to-day operations are funded from cash generated
from trading and the use of an overdraft facility of GBP0.15m
(GBP0.175m at 31 December 2017) with other activities funded from a
combination of equity and short and medium term debt
instruments.
The Group's overdraft facility has been extended by its
principal bankers until 30 November 2019. The Directors have a
reasonable expectation that an overdraft facility will continue to
be available to the Group for the foreseeable future and beyond the
current extension period.
In considering the going concern basis of preparation of the
Group's financial statements, the Board have prepared profit and
cash flow projections which incorporate reasonably foreseeable
impacts of the ongoing challenging market environment.
The Directors' forecasts and projections, which make allowance
for reasonably possible changes in its trading performance, show
that, with the ongoing support of its lenders and its bank, the
Group can continue to generate cash to meet its obligations as they
fall due.
The Directors, after making enquiries, have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the annual report and financial statements.
The financial statements do not include the adjustments that
would result if the Group or Company were unable to continue as a
going concern.
Changes in accounting policies
A number of amendments to standards issued by IASB become
effective from 1 January 2018. These have been reviewed and no
adjustments deemed necessary. Those becoming effective from 1
January 2019 have not been adopted early by the Group. Management
have reviewed these standards and believe none are expected to have
a material effect on the Group's future financial statements.
Application of new and revised International Financial Reporting
Standards (IFRSs)
New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
Issued Effective
Standard Description date date
----------------------------- ------------------------------------- ------- ----------
IFRS 9 Financial Instruments Amendments regarding prepayment Oct-17 Jan-19
features with negative compensation
and modifications of financial
liabilities
----------------------------- ------------------------------------- ------- ----------
IFRS 17 Insurance Original issue May-17 Jan-21
Contracts
----------------------------- ------------------------------------- ------- ----------
IAS 28 Investments Amendments regarding long-term Oct-17 Jan-19
in Associates and interests in associates and joint
Joint Ventures ventures
----------------------------- ------------------------------------- ------- ----------
IFRS 16 Leases Relates to measurement, presentation Jan-16 Jan-19
and disclosure of leases
----------------------------- ------------------------------------- ------- ----------
No early adoption has been taken up where permitted on any of
the above revisions, amendments and original issue IFRSs.
Revenue and attributable profit
Production revenue represents amounts receivable from producing
programme/production content and is recognised over the period of
the production in accordance with the milestones within the
underlying signed contract. Profit attributable to the period is
calculated by capitalising all appropriate costs up to the stage of
production completion, and amortising production costs in the
proportion that the revenue recognised in the year bears to
estimated total revenue from the programme. The carrying value of
programme costs in the statement of financial position is subject
to an annual impairment review.
Where productions are in progress at the year end and where
billing is in advance of the completed work per the contract, the
excess is classified as deferred income and is shown within trade
and other payables.
Distribution revenue arises from the licensing of programme
rights which have been obtained under distribution agreements with
either external parties or Group companies. Distribution revenue is
recognised in the statement of comprehensive income on signature of
the licence agreement and represents amounts receivable from such
contracts.
All revenue excludes value added tax.
Basis of consolidation
The Group financial statements consolidate those of the Company
and of its subsidiary undertakings drawn up to 31 December 2018.
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.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Non-controlling interests
For business combinations completed prior to 1 July 2009, the
Group initially recognised any non-controlling interest in the
acquiree at the non-controlling interest's proportionate share of
the acquiree's net assets. For business combinations completed on
or after 1 July 2009 the Group has the choice, on a transaction by
transaction basis, to initially recognise any non-controlling
interest in the acquiree which is a present ownership interest and
entitles its holders to a proportionate share of the entity's net
assets in the event of liquidation at either acquisition date fair
value or, at the present ownership instruments' proportionate share
in the recognised amounts of the acquiree's identifiable net
assets. Other components of non-controlling interest such as
outstanding share options are generally measured at fair value. The
Group has not elected to take the option to use fair value in
acquisitions completed to date.
From 1 July 2009, the total comprehensive income of non-wholly
owned subsidiaries is attributed to owners of the parent and to the
non-controlling interests in proportion to their relative ownership
interests. Before this date, unfunded losses in such subsidiaries
were attributed entirely to the Group. In accordance with the
transitional requirements of IAS 27 (2008), the carrying value of
non-controlling interests at the effective date of the amendment
has not been restated.
Goodwill
Goodwill represents the excess of the cost of a business
combination over, in the case of business combinations completed
prior to 1 January 2010, the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired and, in the case of business combinations completed on or
after 1 July 2009, the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired. For business combinations completed prior to 1 July 2009,
cost comprises the fair value of assets given, liabilities assumed
and equity instruments issued, plus any direct costs of
acquisition. Changes in the estimated value of contingent
consideration arising on business combinations completed by this
date are treated as an adjustment to cost and, in consequence,
result in a change in the carrying value of goodwill.
For business combinations completed on or after 1 July 2009,
cost comprised the fair value of assets given, liabilities assumed
and equity instruments issued, plus the amount of any
non-controlling interests in the acquiree plus, if the business
combination is achieved in stages, the fair value of the existing
equity interest in the acquiree. Contingent consideration is
included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, re-measured subsequently through profit or loss. For
business combinations completed on or after 1 January 2010, direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
Property, plant and equipment
Property, plant and equipment are stated at cost net of
depreciation and any provision for impairment. Depreciation is
calculated to write down the cost less estimated residual value by
equal annual instalments over their expected useful lives. The
rates generally applicable are:
Motor vehicles 25% on cost
Office and technical equipment 25%-33% on cost
The assets' residual values and useful lives are reviewed at
each statement of financial position date and adjusted if
appropriate.
Other intangible assets
Trade names
Trade names acquired through business combinations are stated at
their fair value at the date of acquisition. They are amortised
through the statement of comprehensive income, following a periodic
impairment review, on a straight line basis over their useful
economic lives, such periods not to exceed 10 years.
Programme rights
Internally developed programme rights are stated at the lower of
cost, less accumulated amortisation, or recoverable amount. Cost
comprises the cost of all productions and all other directly
attributable costs incurred up to completion of the programme and
all programme development costs. Where programme development is not
expected to proceed, the related costs are written off to the
statement of comprehensive income. Amortisation of programme costs
is charged in the ratio that actual revenue recognised in the
current year bears to estimated ultimate revenue. At each statement
of financial position date, the Directors review the carrying value
of programme rights and consider whether a provision is required to
reduce the carrying value of the investment in programmes to the
recoverable amount. The expected life of these assets is not
expected to exceed 7 years.
Programme rights (continued)
Purchased programme rights are stated at the lower of cost, less
accumulated amortisation, or recoverable amount. Purchased
programme rights are amortised over a period in-line with expected
useful life, not exceeding 7 years.
Amortisation and any charge in respect of writing down to
recoverable amount during the year are included in the statement of
comprehensive income within cost of sales.
Leased assets
Property, plant and equipment acquired under finance leases or
hire purchase contracts are capitalised and depreciated in the same
manner as other property, plant and equipment, and the interest
element of the lease is charged to the statement of comprehensive
income over the period of the finance lease. Minimum lease payments
are apportioned between the finance charge and the reduction of the
outstanding liability by using an effective interest rate. The
related obligations, net of future finance charges, are included in
liabilities.
Rentals payable under operating leases are charged to the
statement of comprehensive income on a straight line basis over the
period of the lease.
Inventories
Inventories comprise pre-production costs incurred in respect of
programmes deemed probable to be commissioned, and finished stock
of DVDs available for resale. Where it is virtually certain
production will occur, pre-production costs are capitalised in
inventories and transferred to intangibles on commencement of
production. Finished stock of DVDs available for re-sale is also
included within inventories. Inventories are valued at the lower of
cost or recoverable amount.
Programme distribution advances
Advances paid in order to secure distribution rights on third
party catalogues or programmes are included within current assets.
Distribution rights entitle the Company to license the programmes
to broadcasters and DVD labels for a sales commission, whilst the
underlying rights continue to be held by the programme owner. The
advances are stated at the lower of the amounts advanced to the
rights' owners less actual amounts due to rights owners based on
sales to date.
Impairment of non-current assets
For the purposes of assessing impairment, assets are grouped
into separately identifiable cash-generating units. Goodwill is
allocated to those cash-generating units that have arisen from
business combinations.
At each statement of financial position date, the Group reviews
the carrying amounts of its non-current assets, to determine
whether there is any indication those assets have suffered an
impairment loss. If any such indication exists the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Goodwill is tested for impairment
annually. Goodwill impairment charges are not reversed.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value and value in use based on an internal discounted cash flow
evaluation.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits. Bank overdrafts that are repayable on demand are included
as a component of cash and cash equivalents. Bank overdrafts are
shown in current liabilities on the statement of financial
position. Overdrafts are included in cash and cash equivalents for
the purpose of the cash flow statement.
Discontinued operations
The results of operations disposed during the year are included
in the consolidated statement of comprehensive income up to the
date of disposal.
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operations or is a subsidiary acquired exclusively with a
view to resale, that has been disposed of, has been abandoned or
that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated
statement of comprehensive income as a single line which comprises
the post-tax profit or loss of the discontinued operation along
with the post-tax gain or loss recognised on the re-measurement to
fair value less costs to sell or on disposal of the assets or
disposal groups constituting discontinued operations.
Equity
Equity comprises the following:
-- Share capital represents the nominal value of issued Ordinary shares and Deferred shares;
-- Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue;
-- Equity element of convertible loan represents the part of the
loan classified as equity rather than liability;
-- Translation reserve represents the exchange rate differences
on the translation of subsidiaries from a functional currency to
Sterling at the year end;
-- Own shares held represents shares in employee benefit trust;
-- Retained earnings represents retained profits and losses; and
-- Non-controlling interest represents net assets owed to non-controlling interests.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs from its tax base, except for
differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
statement of financial position date and are expected to apply when
the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Foreign currency
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the statement of financial position
date. Exchange differences arising on the settlement and
retranslation of monetary items are taken to the statement of
comprehensive income.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at the exchange rate ruling at the
statement of financial position date. Income and expense items are
translated at the average exchange rates for the year. Exchange
differences arising are classified as equity and transferred to the
Group's retained earnings reserve.
Financial instruments
Financial assets and financial liabilities are initially
recognised in the Group's statement of financial position when the
Group becomes a party to the contractual provisions of the
instrument at their fair value and thereafter at amortised
cost.
Trade receivables
Trade receivables are recorded at their amortised cost less any
provision for doubtful debts. Trade receivables due in more than
one year are discounted to their present value.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are reported in a separate allowance account with the
loss being recognised within administrative expenses in the
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Convertible loans
Convertible loan notes are regarded as compound instruments,
consisting of a liability component and an equity component. At the
date of issue the fair value of the liability component is
estimated using the prevailing market interest rate for similar
non-convertible debt. The difference between the proceeds of issue
of the convertible loan note and the fair value assigned to the
liability component, representing the embedded option to convert
the liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity
components of the convertible loan notes based on their relative
carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity.
The interest expense of the liability component is calculated by
applying the effective interest rate to the liability component of
the instrument. The difference between this amount and the interest
paid is added to the carrying amount of the convertible loan
note.
Bank borrowings
Bank borrowings are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the year to
repayment is at a constant rate on the balance of the liability
carried in the consolidated statement of financial position.
Finance charges are accounted for on an effective interest method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the year in which they
arise.
Trade payables
Trade payables are stated at their amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded as the
proceeds received, net of direct costs.
Retirement benefits
The Group contributes to the personal pension plans for the
benefit of a number of its employees. Contributions are charged
against profits as they accrue.
2 Segment information
Under IFRS 8 the accounting policy for identifying segments is
based on the internal management reporting information that is
regularly reviewed by the senior management team.
The Group has two main reportable segments:
-- Rights and Licensing - This division is involved with the
sale of distribution rights, DVDs, music and publishing deals
through DCD Rights.
-- Production - This division is involved in the production of television content.
The Group's reportable segments are strategic business divisions
that offer different products to different markets, while its Other
division is its head office function which manages activities that
cannot be reported within the other reportable segments. They are
managed separately because each business requires different
management and marketing strategies.
Uniform accounting policies are applied across the entire Group.
These are described in note 1 of the financial statements.
The Group evaluates performance of the basis of profit or loss
from operations but excluding exceptional items such as goodwill
impairments. The Board considers the most important KPIs within its
business segments to be revenue, segmental adjusted EBITDA and
adjusted profit before tax.
Inter-segmental trading occurs between the Rights and Licensing
division and the Production divisions where sales are made of
distribution rights. Royalties and commissions paid are governed by
an umbrella agreement covering the Group that applies an
appropriate rate that is acceptable to the local tax
authorities.
Segment assets include all trading assets held and used by the
segments for their day to day operations. Goodwill and trade-names
are allocated to their respective segments. Segment liabilities
include all trading liabilities incurred by the segments. Loans and
borrowings incurred by the Group are not allocated to segments.
Details of these balances are provided in the reconciliations
below:
2018 Segmental analysis - income statement
Production Rights Post Other Total
and Production 2018
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- ------------ -------- --------
Total revenue 534 6,716 - 49 7,299
Inter-segmental revenue (200) - - (48) (248)
--------------------------------------------- ----------- ----------- ------------ -------- --------
Total revenue from external customers 334 6,716 - 1 7,051
Group's revenue per consolidated statement
of comprehensive income 334 6,716 - 1 7,051
--------------------------------------------- ----------- ----------- ------------ -------- --------
Operating profit/(loss) before tax
- continuing operations 440 (572) - 58 (74)
Operating profit before tax - discontinued
operations 35 - 35
Operating profit/(loss) before interest
and tax 440 (572) 35 58 (39)
Impairment of programme rights 19 - - - 19
Depreciation - 29 - - 29
Segmental EBITDA 459 (543) 35 58 9
Continuing adjusted EBITDA 459 (543) - 58 (26)
Discontinued adjusted EBITDA - - 35 - 35
Net finance (expense)/income (1) - - 18 17
Depreciation - (29) - - (29)
Segmental adjusted profit/(loss) before
tax 458 (572) 35 76 (3)
--------------------------------------------- ----------- ----------- ------------ -------- --------
Continuing segmental adjusted profit/(loss)
before tax 458 (572) - 76 (38)
Discontinuing segmental adjusted profit
before tax - - 35 - 35
--------------------------------------------- ----------- ----------- ------------ -------- --------
2018 Segmental analysis - financial position
Production Rights Post Other Total
and Production 2018
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ------------ -------- --------
Non-current assets - 27 - - 27
-------------------------------- ----------- ----------- ------------ -------- --------
Reportable segment assets 82 11,425 - 146 11,653
Goodwill 393 624 - - 1,017
Total Group assets 475 12,049 - 146 12,670
-------------------------------- ----------- ----------- ------------ -------- --------
Reportable segment liabilities (48) (9,197) - (566) (9,811)
Total Group liabilities (48) (9,197) - (566) (9,811)
-------------------------------- ----------- ----------- ------------ -------- --------
2017 Segmental analysis - income statement
Production Rights Post Other Total
and Production 2017
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ ----------- ----------- ------------ -------- --------
Total revenue 409 9,925 349 65 10,748
Inter-segmental revenue (91) - - (65) (156)
------------------------------------------------ ----------- ----------- ------------ -------- --------
Total revenue from external customers 318 9,925 349 - 10,592
Discontinued operations - - (349) - (349)
Group's revenue per consolidated statement
of comprehensive income 318 9,925 - - 10,243
------------------------------------------------ ----------- ----------- ------------ -------- --------
Operating (loss)/profit before tax
- continuing operations (194) 1,155 - (440) 521
Operating loss before tax - discontinued
operations - - (137) - (137)
Operating (loss)/profit before interest
and tax (194) 1,155 (137) (440) 384
Amortisation of programme rights 24 - - - 24
Impairment of programme rights 10 - - 3 13
Amortisation of goodwill and trade
names - - - 209 209
Depreciation - 34 13 - 47
Segmental EBITDA (160) 1,189 (124) (228) 677
Continuing adjusted EBITDA (160) 1,189 - (228) 801
Discontinued adjusted EBITDA - - (124) - (124)
Net finance expense (10) - - 8 (2)
Depreciation - (34) (13) - (47)
Segmental adjusted (loss)/profit before
tax (170) 1,155 (137) (220) 628
------------------------------------------------ ----------- ----------- ------------ -------- --------
Continuing segmental adjusted (loss)/profit
before tax (170) 1,155 - (220) 765
Discontinuing segmental adjusted (loss)/profit
before tax - - (137) - (137)
------------------------------------------------ ----------- ----------- ------------ -------- --------
2017 Segmental analysis - financial position
Production Rights Post Other Total
and Production 2017
Licensing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------- ------------ -------- ---------
Non-current assets - 35 - - 35
-------------------------------- ------------ ----------- ------------ -------- ---------
Reportable segment assets 128 12,049 42 159 12,378
Goodwill 393 624 - - 1,017
Total Group assets 521 12,673 42 159 13,395
-------------------------------- ------------ ----------- ------------ -------- ---------
Reportable segment liabilities (56) (9,338) (62) (970) (10,426)
Loans and borrowings - - - (73) (73)
Total Group liabilities (56) (9,338) (62) (1,043) (10,499)
-------------------------------- ------------ ----------- ------------ -------- ---------
3 Discontinued operations
In November 2017, the Board made the decision to cease trading
within Sequence Post Ltd. The business had been loss making and
following a notification to increase rental charges the business
was no longer viable. The staff were made redundant in November
2017. The business did not trade in 2018 with only a small number
of accounting adjustments occurring.
Year ended Year ended
31 December 31 December
2018 2017
Result of discontinued operations GBP'000 GBP'000
---------------------------------------------------- ------------- -------------
Profit/(loss) from discontinued operations before
tax 35 (137)
Tax expense - -
Profit/(loss) from discontinued operations after
tax 35 (137)
---------------------------------------------------- ------------- -------------
Basic earnings per share (pence) 1p (5p)
4 Earnings per share
The calculation of the basic profit per share is based on the
profit attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The
calculation of diluted profit per share is based on the basic
profit 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 other dilutive options and other potential
ordinary shares.
Weighted 2018 Weighted 2017
average Per share average Per share
Loss number amount Profit number amount
GBP'000 of shares pence GBP'000 of shares pence
-------------------------------- --------- ---------- ---------- ---------- ----------- -----------
Basic and diluted (loss)/profit
per share
(Loss)/profit attributable
to ordinary shareholders (36) 2,541,419 (1) 422 2,541,419 17
At the end of December 2018, there were no convertible loan
balances, and as such there was no potential dilution in earnings
per share. As a result, diluted and actual earnings per share are
the same. In 2017, had the convertible loan balance held at the
year-end been converted at the respective conversion prices the
number of shares issued would have been 2,614,288 and diluted
earnings per share would have decreased to 16 pence were this
transaction to take place.
5 Goodwill and intangible assets
Trade Programme
Goodwill Names Rights Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- -------- ---------- --------
Cost
------------------------------------------------- --------- -------- ---------- --------
At 1 January 2017 17,388 8,036 36,946 62,370
At 31 December 2017 17,388 8,036 36,946 62,370
------------------------------------------------- --------- -------- ---------- --------
At 1 January 2018 17,388 8,036 36,946 62,370
At 31 December 2018 17,388 8,036 36,946 62,370
------------------------------------------------- --------- -------- ---------- --------
Amortisation and impairment
------------------------------------------------- --------- -------- ---------- --------
At 1 January 2017 16,371 7,827 36,890 61,088
Amortisation provided in year in cost
of sales - - 24 24
Impairment provided in year in cost of
sales - - 13 13
Amortisation provided in year in administrative
expenses - 209 - 209
At 31 December 2017 16,371 8,036 36,927 61,334
------------------------------------------------- --------- -------- ---------- --------
At 1 January 2018 16,371 8,036 36,927 61,334
Impairment provided in year in cost of
sales - - 19 19
At 31 December 2018 16,371 8,036 36,946 61,353
------------------------------------------------- --------- -------- ---------- --------
Net book value
At 31 December 2018 1,017 - - 1,017
------------------------------------------------- --------- -------- ---------- --------
At 31 December 2017 1,017 - 19 1,036
------------------------------------------------- --------- -------- ---------- --------
Goodwill and trade names
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination.
Details of goodwill allocated to cash generating units for which
the amount of goodwill so allocated is as follows:
Goodwill carrying amount
Segment (note 31 December 31 December
3) 2018 2017
GBP'000 GBP'000
------------------------------ ---------------------- ------------- ------------
Cash generating units (CGU):
DCD Rights Ltd Rights and Licensing 624 624
September Films Ltd Production 393 393
1,017 1,017
----------------------------------------------------- ------------- ------------
Goodwill and trade names are allocated to CGUs for the purpose
of the impairment review. The recoverable amounts of the CGUs are
determined from value in use calculations. The key assumptions for
the value in use calculations are those regarding the discount
rates and expected profitability of the CGUs over the future seven
years. Management estimates discount rates using pre-tax rates that
reflect current market assessments of the time value of money and
the risks inherent in the CGUs.
The Board performs an annual impairment review of all intangible
assets, including goodwill and trade names. The recoverable amounts
of all the above CGUs have been determined from value in use
calculations. Detailed budgets and forecasts cover a two year
period to December 2020. The forecasts are then extrapolated for a
further five years using models that estimate the distribution
income profile of the GGU's library. The Board uses this seven year
period of projection as it believes it is reasonably aligned with
the expected lifespan of a TV production. The impairments arising
from this value in use calculation are recorded below.
Impairment charge
Segment (note 31 December 31 December
Goodwill 3) 2018 2017
GBP'000 GBP'000
----------------------------- ---------------- ------------ ------------
Cash generating units (CGU):
September Films Ltd Production - -
- -
----------------------------- ---------------- ------------ ------------
Amortisation charge Impairment charge
Segment 31 December 31 December 31 December 31 December
Trade names (note 3) 2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------- -------------- ------------ -------------- ------------
Cash generating units
(CGU):
September Films Ltd Production - 209 - -
- 209 - -
---------------------- ------------- -------------- ------------ -------------- ------------
The key assumption used for value in use calculations is the
discount factor applied to the forecasts.
The rate used to discount the forecast cash flows is 4.1% for
all CGUs. If the discount rates used were increased by 3% to 7.1%,
the carrying value of goodwill would still not be impaired.
Discount factor
31 December 31 December
2018 2017
% %
------------------------------ --- ---------------- ------------
Cash generating units (CGU):
DCD Rights Ltd 4.1 6.9
September Films Ltd 4.1 6.9
Programme rights
The Board performed an impairment review of programme rights
held by the business. The full balance brought forward from the
prior year was written off in the 2018 and there is nothing further
to amortise or impair at the current time.
6 Interest bearing loans and borrowings
Due within one year
31 December 31 December
2018 2017
GBP'000 GBP'000
------------------------------ --------------- --------------
Bank overdraft (secured) - -
Convertible debt (unsecured) - 73
- 73
---------------------------------------------- --------------
The principal terms and the debt repayment schedule for the
Group's loans and borrowings are as follows as at 31 December
2018:
Nominal Year of
Currency rate % maturity
3.5 over
Bank overdraft (secured) Sterling Base Rate 2018
Convertible debt (unsecured) Sterling 8.0 2018
Bank borrowings
The bank overdraft has been extended to 30 November 2018, but is
repayable on demand. The Directors expect an overdraft facility to
be available to the Group for the foreseeable future.
Bank overdrafts are secured by a fixed charge over the Group's
intangible programme rights and a floating charge over the
remaining assets of the Group.
Convertible debt
Convertible debt is unsecured and is subordinate to the bank
overdraft.
7 Other information
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2018 or
the year ended 31 December 2017 but is derived from those accounts.
Statutory accounts for 2017 have been delivered to the registrar of
companies, and those for 2018 will be delivered in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2017 or 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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